Virus triggers cash flow pain for transport sector

THE coronavirus crisis and a resulting lull in container trade is having a worrying cash-flow impact on transport operators, Container Transport Alliance Australia director Neil Chambers says.

Mr Chambers said “plummeting trade volumes” out of China and the flow-on effects to containerised trade, meant transport operators’ equipment and labour were idle, leading to a significant cash-flow squeeze.

“Evidence has been provided to CTAA that some transport customers, freight forwarders and shippers, are delaying or postponing invoice payments to transport operators, clearly concerned about their own cash-flow situation during the current trade lull,” he said.

“This is heightening the current precarious cash-flow situation for many transporters.

“There is now a real concern that many container transport operators may experience significant difficulties in meeting current payment terms imposed by some parties in the supply chain as container trade volumes plummet, with trade not predicted to recover for some weeks yet.”

Mr Chambers said one of the largest outlays for transport operators were stevedore landside infrastructure charges (also known as terminal access charges) and vehicle booking system fees, which were paid “well in advance” of the amounts being recovered from customers.

CTAA director Neil Chambers. Image: David Sexton

Additionally, empty container depot notification fees had to be settled on short payment terms.

“It will not be in the interests of individual companies, or in the interests of the container transport logistics chain as a whole, if stevedores or empty container depots are quick to suspend accounts and deny access for operators who are struggling with strict payment terms,” Mr Chambers said.

“CTAA has written to the major container stevedore companies, and to Containerchain seeking an extension of payment terms,” he said.

Mr Chambers said in the current “dire trade circumstances”, stevedores and empty container depots should be sympathetic to transport operators’ “genuine cases of payment hardship”.

“It is feared that if we don’t pull together as stakeholders in the Australian container logistics industry during this current crisis, the landside landscape will be severely impacted, with long term participants exiting the sector,” Mr Chambers concluded.