THE 2016-2017 financial year, like every other, has delivered its fair share of supply chain disruptions for Australia’s shippers. From illegal and drawn out industrial action, to emergency biosecurity measures and Chinese government waste import restrictions, it has been a wild ride.
The question is, have the foreign-owned and operated shipping lines supported their Australian customers through these crises, or have they sought to profiteer?
It is estimated that the top ten carriers in shipping now control almost 90% of the world’s deep-sea market. Marine Insights estimates that Maersk Line now represents 21% of the global market, recently overtaking MSC after the acquisition of Hamburg Süd in December 2017.
After the Hanjin collapse in August 2016 and the Great Southern Shipping debacle of late 2016, Australian shippers generally accept that a stable market is a good market. Reliability and stability are beginning to appear at the top of shipper surveys, beating out transit times and freight rates. The shippers that were lured onto the rocks by the bargain basement rates of Great Southern Shipping’s new service in 2016 would probably agree with that thinking.
But, with the growing consolidation in the liner shipping market, will we see a deterioration of customer service?
On 16 January 2018, the Department of Agriculture and Waters Resources (DAWR) announced unprecedented emergency procedures for the treatment of brown marmorated stink bugs (BMSB). One hundred percent of containers ex-Italy were to be held for fumigation treatment. The department provided only 24 hours’ notice, such was the biosecurity threat. The container freight stations (CFS) were quickly overwhelmed by the volume. Depot representatives highlighted extensive delays in fumigation with one noting that they turned away 65 containers and another quoting a backlog of 117 containers to be processed.
In response, the department considered options to allow fumigation at facilities other than those authorised under 1.1 and 1.3. Approved Arrangements. While more sites were made available, there remained a shortage of fumigators with the necessary expertise and accreditation to manage the workload.
Inevitably, these delays resulted in a wave of detention and demurrage claims.
Initially, most shipping lines took a blanket approach to the issue and outright rejected claims for leniency. It was a case of “computer says no”, an automatic response, with no consideration to the circumstances.
On appeal from Freight & Trade Alliance (FTA) and the Australian Peak Shippers Association (APSA), most of the major lines then moderated their response, offering leniency on a “case-by-case basis.” In real terms this meant Maersk, Cosco and others extended their free days for affected containers. While the extensions often did not cover the full impact of the delays, we acknowledge that some consideration was given. Other lines, however, offered no extensions and casually collected their detention fees, despite the very clear government directives.
The Victoria International Container Terminal (VICT) industrial action provides us with another customer service tale of despair. As most readers know, the Maritime Union of Australia (MUA) blockaded Melbourne’s Webb Dock terminal in December 2017. No containers entered or left the terminal for more than two weeks. While the terminal itself did the honourable thing and did not attempt to recover storage charges, some lines have since pursued container detention for the full period of the dispute. Even though it was impossible to collect a container during that time. Any reasonable observer would agree that the detention clock should have only started when the picket was lifted and the gate was opened.
Container detention on Christmas Day has been another subject of ongoing contention. Last year, Maersk Line issued extra import and export container demurrage and detention free days in recognition of the limited working hours during the year end public holiday period. Christmas and New Year were both announced as free time. Other lines did not, with lines continuing to treat Christmas Day as the first day of availability for container detention and charging accordingly. Even though stevedores had limited operations on Christmas Day, many empty container parks and container freight stations were closed, many transport operators were closed, customs was in full shutdown and biosecurity was in partial shutdown. Their reasoning? The first free day starts from the date of container discharge, as per global company policy.
It’s important to note that Australia has many smart, capable and customer-centric shipping line executives. Many good outcomes have been achieved by locally based shipping line executives championing the cause of Australian shippers to their overseas offices. To those local champions, we take our hats off. Customer service isn’t the ability to recite global company policy on demand. Customer service is humans helping humans, particularly in a market like Australia where relationships drive business decisions.
It’s not a race to the bottom. The successful lines have more than low freight rates in their toolkit.
Meanwhile, in the United States, the Federal Maritime Commission (FMC) unanimously voted to investigate claims made by a coalition of shippers and port users that some detention, demurrage, and per diem fees are unfair because their ability to receive cargo and return equipment are out of their control. It’s a familiar story and the rest of the world will be watching these events with keen interest.