Freight & Trade Alliance (FTA) is a peak body for the international trade sector with a vision to establish a global benchmark of efficiency in Australian border related security, compliance and logistics activities. FTA represents more than 350 businesses including Australia’s largest logistics service providers and major importers.
The Australian Peak Shipper Association (APSA) is the peak body for Australia’s containerised exporters designated under Part X of the Competition and Consumer Act 2010 and by the Federal Minister of Infrastructure and Transport of the Day. APSA plays an important role in representing Australia’s major exporters, and other peak bodies, in respect to international logistics and trade policy matters.
update on advocacy activity
In March 2019, FTA / APSA presented to the Senate Committee on Rural and Regional Affairs and made a formal submission to the “inquiry into Policy, Regulatory Taxation, Administrative and Funding Priorities for Australian Shipping recommending:
“That the Government takes urgent action to address unregulated and spiralling infrastructure charges. While shipping lines have been the beneficiaries of increased competition in stevedoring, Australian shippers have not seen any of those benefits and now are paying twice for container terminal services. It is an unsustainable situation, it is damaging to our economy, and it will only worsen if there is no intervention” The alliance has maintained our engagement with the Australian Competition and Consumer Commission (ACCC) and delighted that they have met their commitment to support for our advocacy activity on this matter.
Australian shippers face significant headwinds in 2019. The shipping line market is rapidly consolidating, supply chain costs are increasing, and there are significant concerns regarding the effectiveness of Part X in being able to achieve basic protections.
APSA strongly believes that the Government needs to work with industry in strengthening the protections that exist for our exporters in respect to sea freight services. This can be achieved via collaborating with APSA and other relevant industry bodies in identifying what protections are required. It is a rapidly evolving industry and we fear that the existing legislation has already been left behind. Overwhelmingly, State and Federal Governments need to take a more active role in Australia’s sea freight supply chain. Our economy, and the ability of our exporters to compete in international markets, depends on it.
Recommendation 1: Strengthen service protections
That Australia strengthens minimum levels of service and minimum notification period requirements for all international shipping line services in Australia. This should include a non-negotiable minimum notification period for the introduction of new rates and charges, or changes to existing rates and charges. This is equivalent to the protections that already exist in the U.S. for their shippers. These protections must be enforceable. Given the non-use of Part X by many shipping lines (due to consolidation), these requirements should also sit outside of the Part X regime.
Infrastructure charges and Terminal Handling Charges (THCs)
The Container stevedoring monitoring report 2018-19 released (6 November 2019) reported higher Infrastructure Surcharges imposed on trucks and rail operators at ports helped the container stevedoring industry increase average revenue per container lift for the first time in seven years,
The addition of a third stevedore in Sydney, Melbourne and Brisbane has added competition at a time when the number of stevedore clients, international shipping lines, has significantly reduced due to consolidation. The combination of increased competition with a greatly reduced client base has caused a restructure in terminal pricing.
Competition has resulted in stevedores reducing the prices they charge shipping lines to attract or retain business. That lost revenue has then been recovered via landside charges, or “infrastructure charges”, an unregulated charge for access to international container terminals.
The result has been a disaster for Australian exporters, who have, in some cases, such as Melbourne, experienced price increases of over 2,000%, in only a few short years.
To make matters worse, while the international shipping lines are receiving more competitive quayside rates, they are not passing on those savings to their shippers.
In fact, in many cases, shipping lines have increased the Terminal Handling Charges that they are charging shippers, at a time when Australian shippers are now also paying the stevedores for the same in-terminal services via landside “infrastructure charges”.
Shippers are paying twice for the same services, and both of those prices are increasing. It is unsustainable, it is without international parallel, and it requires the urgent intervention of the Australian Government.
Recommendation 2: Terminal Handling Charges / infrastructure charges
That the Government takes urgent action to address unregulated and spiralling infrastructure charges. While shipping lines have been the beneficiaries of increased competition in stevedoring, Australian shippers have not seen any of those benefits and now are paying twice for container terminal services. It is an unsustainable situation, it is damaging to our economy, and it will only worsen if there is no intervention.
Container detention and demurrage practices
Container detention and demurrage practices (how shipping lines recover costs for the use of their equipment) is becoming an increasing issue in Australia and other parts of the world.
Unlike Australia, however, U.S. regulators are proactively responding to the needs of industry.
Last year, the U.S. FMC conducted an investigation into “Conditions and practices relating to detention, demurrage, and free time in international oceanborne commerce”. During the investigation the FMC served twenty-three ocean carriers and forty-four marine terminal operators with interview questions and document requests. The investigation was a result of a petition by a coalition of 26 organisations, including local shippers, freight forwarders and customs agents, calling for the adoption of a formal position by the U.S. regulator on what constitutes “just and reasonable rules and practices”.
Common issues identified by U.S. shippers in their testimony included “delays involved with U.S. government holds”, “labour issues” and “unclear demurrage and detention billing and dispute resolution systems.”
Each of these concerns apply to the Australian context.
While shipping lines have every right to be recompensed for extended equipment use, shippers should not be forced to pay for events that are outside of their control. In Australia, that issue was particularly pronounced when reports were received that Australian shippers were slapped with detention invoices during the Victoria International Container Terminal (VICT)-MUA industrial dispute in 2018. The Maritime Union of Australia (MUA) blockaded Melbourne’s Webb Dock terminal in December 2017. No containers entered or left the terminal for over 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.
Another important issue is the lack of clarity in how detention and demurrage policies are applied and how disputes are settled. For many shipping lines disputes are resolved on a “case-by-case” basis, with several carriers having no written policy on how to handle disputed invoices and no clear policy or process in how they should be managed.
Container detention and demurrage practices (how shipping lines recover costs for the use of their equipment) is becoming an increasing issue in Australia and other parts of the world.
Unlike Australia, however, U.S. regulators are proactively responding to the needs of industry.
Last year, the U.S. FMC conducted an investigation into “Conditions and practices relating to detention, demurrage, and free time in international oceanborne commerce”. During the investigation the FMC served twenty-three ocean carriers and forty-four marine terminal operators with interview questions and document requests. The investigation was a result of a petition by a coalition of 26 organisations, including local shippers, freight forwarders and customs agents, calling for the adoption of a formal position by the U.S. regulator on what constitutes “just and reasonable rules and practices”.
Common issues identified by U.S. shippers in their testimony included “delays involved with U.S. government holds”, “labour issues” and “unclear demurrage and detention billing and dispute resolution systems.”
Each of these concerns apply to the Australian context.
While shipping lines have every right to be recompensed for extended equipment use, shippers should not be forced to pay for events that are outside of their control. In Australia, that issue was particularly pronounced when reports were received that Australian shippers were slapped with detention invoices during the Victoria International Container Terminal (VICT)-MUA industrial dispute in 2018. The Maritime Union of Australia (MUA) blockaded Melbourne’s Webb Dock terminal in December 2017. No containers entered or left the terminal for over 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.
Another important issue is the lack of clarity in how detention and demurrage policies are applied and how disputes are settled. For many shipping lines disputes are resolved on a “case-by-case” basis, with several carriers having no written policy on how to handle disputed invoices and no clear policy or process in how they should be managed.
Containers subject to border holds
In Australia, detention charges caused by “border holds”, or containers being inspected at the Container Examination Facility (CEF), are a major and recurring issue for our shippers.
While the Australian Border Force (ABF) has arrangements in place with stevedores to offer free storage arrangements if the cargo report was lodged within statutory timeframes, shipping lines will still apply detention fees for late container de-hire, even though the shipper or freight forwarder has no control over the container during that time. If container detention and demurrage practices were “just and reasonable”, the container detention clock should start from the time the container becomes available after CEF processing, not from the time the container is discharged from the vessel.
Container detention and demurrage practices remain a major issue in Australia. Some detention, demurrage, and per diem fees are unfair because our ability to receive cargo and return equipment is out of our control.
Australian shippers strongly believe that regulators should follow the lead of the U.S. to develop standard and transparent industry practices.
Empty container management
Transport operators are reporting a growing number of issues in respect to the way shipping lines are managing empty container movements, with a surge of “re-direction” notices (where the shipping line instructs a transport operator to pick up or return a container to a certain depot, then changes the
direction). The issue has reached a crisis point where Australian transport operators have now applied an industry-wide broad surcharge to recover costs of related inefficiencies (futile truck trips, more truck kms travelled, extra handling costs, etc.)
In what is a reasonable request from the Australian transport industry, they are now asking shipping lines for a minimum 24-hour notice period for re-directions. To date, the shipping lines have not agreed to any such basic standards.
This issue is symptomatic of a larger issue, where key decisions are now being made offshore by foreign shipping lines, with inadequate controls, understanding, or oversight, from relevant Australia regulators, despite our country being totally dependent on shipping line services.
Recommendation 3: Stronger oversight of the sea freight supply chain
State and Federal Governments need to take a more proactive role to develop standard industry practices in relation to detention and demurrage, empty container management and other sea freight supply chain activities.