Wednesday 24th Oct, 2018

INDUSTRY OPINION: Solutions not surcharges needed in the empties dehire debate

Photo: Shutterstock
Photo: Shutterstock

MY ARTICLE titled “Empty container dehires – no more happy returns” published last week has been the catalyst for much discussion and we thank members of the Freight & Trade Alliance (FTA) and Australian Peak Shippers Association (APSA) and DCN readers for their feedback.

A summary of the main points and further commentary is provided below.

A short term measure or long term strategy
A concern exists that direct empty returns will impact on the commercial viability of existing empty container parks. A situation could occur whereby empty container parks close their doors and reuse or sell valuable land for other commercial purposes. That could leave us with congested ports if we have a reduction in dehire locations should stevedores return their focus and resource utilisation on servicing the projected growth of import and export volumes.

Stevedore feedback clearly states that their focus on empty container management is not short-term measure and that their vertical integration into logistics activities deliberately incorporates this important element of supply chain operations. 

While this commitment is reassuring, we have also received feedback from shippers (cargo owners) and freight forwarders that the spread of activities of the stevedores in its own right is a growing threat to Australia’s international supply chain.

A fear exists that the control of terminal access, coupled with port-rail and empty container management will give stevedores preferential treatment to their own logistics operations and the ability to administer unregulated cost structures on third parties.

The 2017 introduction and subsequent increases of “infrastructure charges” by the two dominant stevedores have amplified these concerns.

Flexibility in determining dehire locations
There appears to have been minimal consultation with one independent observer responding that shipping lines must be loving the industry response “Threats of new surcharges, friction between various landside interests, talk of additional terminal gate congestion – all distracts from shipping lines’ main aim, which is to save them money at their convenience.”

As highlighted by Maersk Line, the immediate beneficiary from the direct dehire reform are shipping lines who are clearly looking at this as another cost cutting measure “we can no longer afford to absorb the transport and depot costs for import containers that cannot be reused for export bookings”.

The reality is that it is extremely unlikely that the shipping lines will pass on this cost saving to clients.

Can industry benefit in any other way as a result of this change in practice?

In a perfect world we would have open competition whereby the logistics sector could nominate their preferred dehire destination and / or re-use of the empty container for export.

This would facilitate more effective truck utilisation by nominating facilities closest to clients or to facilitate two-way running of containers to and from the terminal. Competition would no doubt generate efficiencies including the likelihood of improved truck turnaround times, extended operating hours and a reduction in transport slot booking costs.

As the logistics sector matures and more sophisticated technology solutions evolve, FTA / APSA will continue to advocate for solutions to meet improved operational outcomes.

Stevedore performance
The technology seems to be working effectively in situations where the shipping line nominate the stevedore as the dehire location. In these situations the transport operator simply needs to enter the container number with 1-Stop automatically generating the Pre-Receival Advice (PRA).

Transport operators also benefit from stevedores operating 24/7 operations and in Port Botany they enjoy predictable truck turnaround times largely attributable to the management of the Port Botany Landside Improvement Strategy (PBLIS) regulations.

Feedback on this process from Sydney based transport operators have generally been positive with one commenting “We haven’t seen dehires for Maersk to the CTO. We do however dehire there for CMA CGM, COSCO, OOCL, HAMBURG SUD and it works very well – the more shipping lines on board the better”.

Melbourne is a different story.

As highlighted in a member notice and media release titled “Empty Container Direct Dehire to Wharf – Melbourne Surcharge”, the Container Transport Alliance Australia (CTAA) states in comparison with other Australian ports, the Port of Melbourne has some stevedore direct empty de-hire practices that can be characterised as “extremely transport unfriendly”.

CTAA states that transport operators in Melbourne can no longer commercially absorb the additional costs and have called for “genuine cost recovery to ensure business viability”.

A need to address the root cause rather than surcharges
FTA / APSA last week contacted CTAA expressing concerns about an industry body advocating for the introduction of yet another surcharge. In what appears to be a measure to bring issues to a head, this approach poses the unacceptable threat of adding yet another layer of cascading costs on the supply chain.

FTA / APSA followed up with direct discussions with DP World Australia executives who outlined their planned remedial action, which includes the deployment in the upcoming week of additional infrastructure at their West Swanson facility. Hopefully we will see immediate and sustainable operational improvements.

Industry engagement forums are regularly facilitated by NSW Port Ports and Transport for NSW. This is a contributing factor for the continuously improving operations at Port Botany allowing transport operators and other key stakeholders to be consulted on the evolution of PBLIS regulation, operating reforms, process design and implementation.

It is imperative that the root cause of the problems faced in Melbourne can be rectified and we call on genuine engagement between stevedores, transport operators, shipping lines and the broader logistics sector to generate sustained process improvements.

Do we leave this all to the disparate sectors of commerce to sort out or is time for government or the port lease holders to monitor performance and facilitate co-design of processes.

Please share your views on this blog or direct to me at pzalai@FTAlliance.com.au

Paul Zalai is director at Freight & Trade Alliance (FTA) and an advocate of the freight and trade sectors.
www.FTAlliance.com.au





Send this to friend