Monday 19th Nov, 2018

INDUSTRY OPINION: Major equipment shortage impacting agri-exporters

The Australian Peak Shippers Association (APSA) has received urgent feedback from our agri-exporter members regarding a major shortage of equipment in the availability of food quality 20ft empty containers for export.

The perceived shortage appears to have affected all the major shipping lines and is particularly acute in Brisbane and Adelaide. We understand that some grain shippers have now shifted away from Brisbane due to the shortages as the supply of equipment remains in high deficit. This situation will be amplified by the late chickpea season and Chinese New Year, where we don’t expect the imbalance to correct for another four to six weeks, at the very least.

In this environment, a growing number of shipping lines have introduced extra fees on shippers, including, in some instances, a 100% increase in cancellation fees and what some members regard as an excessive “repositioning fee” for access to containers.

While most shippers have not needed to cancel packing due to lack of equipment, we have had shippers forced to changed shipping lines or roll shipments as they were unable to get a release, as well as predictable spikes in futile trips.

So what is causing this shortage- reduced supply or increased demand?

Rumours abound that sweeper vessels were visiting Australia and collecting empty 20 footers, which, if confirmed, would warrant outrage. The lines concede that sweeper vessels have visited Australia but have only collected 40 footers, where there is an oversupply. The lines maintain that the shortage of food grade 20 footers is a result of high demand, not reduced supply. Either way, the concept of “sweeper vessels” is a hard one to swallow, at a time when shipping lines are not releasing empty containers for export.

Ultimately there is no gain in Australia signing Free Trade Agreements and yielding record grain crop outputs, if we don’t have the availability of shipping line services and equipment to get our products to the international markets. Australia should have a freight advantage that is not subject to an operational environment that makes us uncompetitive.

APSA has fielded concerns from members that the current perfect storm of lack of equipment, blank sailings and the pursuit of freight rate increases is an orchestrated one, on the back of a record grain harvest and good international conditions. We certainly hope that is not the case.

If the shortage is the result of a sudden freight surge, as the lines suggest, then shippers and shipping lines need to have a close look at their equipment planning processes, particularly in how they work with seasonal agri-exporters.

Where to from here?

We hope that Australia’s international sea freight requirements, driven by the needs of our exporters, will be at the forefront of the upcoming National Freight Strategy process. The National Freight Strategy is shaping up as a seminal event for our industry in 2017, the first real chance for the Australian Government to drive holistic and nationwide freight reforms, transcending state Government agendas and departmental politics. It’s important work and, if it’s done with integrity, it will influence Government and commercial decision making for many years to come. But if it is going to deliver real economic benefits, Australia’s export supply chain needs to be at its heart.

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