Contract and cranes for Patrick as customers criticise


Asciano has revealed a contract extension for stevedore Patrick with the world’s second-largest shipping line and confirmed crane investments a week after container-line representative body Shipping Australia took a heavy swipe at Port Botany productivity. <br /><br /> Patrick has secured a five-year Mediterranean Shipping Company (MSC) extension starting January 20, with MSC having the right of early termination at the end of year three. “The successful completion of another agreement with our long term customer, MSC, will see our Patrick operations handle approximately 550,000 containers nationally for MSC in the first year of the agreement,” Asciano CEO John Mullen says.

By Rob McKay | November 22, 2011

Asciano has revealed a contract extension for stevedore Patrick with the world’s second-largest shipping line and confirmed crane investments a week after container-line representative body Shipping Australia took a heavy swipe at Port Botany productivity.

Patrick has secured a five-year Mediterranean Shipping Company (MSC) extension starting January 20, with MSC having the right of early termination at the end of year three.

"The successful completion of another agreement with our long term customer, MSC, will see our Patrick operations handle approximately 550,000 containers nationally for MSC in the first year of the agreement," Asciano CEO John Mullen says.

"The renewed partnership with MSC is reflective of our real commitment to deliver customer service at our four container terminals in Brisbane, Sydney, Melbourne and Fremantle.

"Our team is working to provide consistent and reliable service to our customers in line with international best practice."

Asciano has nine new post-panamax quay cranes on order for its container terminals that will be delivered over the next 18 months and says Patrick is also investing in additional quayline port capacity, pavement upgrades, straddles, and other handling equipment "to ensure that the company can offer the highest levels of service on the Australian waterfront".

But the investments can’t come quickly enough for Shipping Australia, asCEO Llew Russell lambasts stevedore performance in Port Botany, long a bugbear of container hauling companies as well.

"The serious congestion at Port Botany over the last 18 months has resulted in significant cost impacts not only on the exporters and importers of NSW but also on Australia as a whole," Russell says.

"In a seven week period from 1 September to 20 October this year, 12 of our container carriers alone lost $12.12 million over 84 voyages in additional fuel costs as a result of delays waiting at the berth and/or speeding up in an attempt to maintain schedule integrity.

"Extrapolating over 12 months, the cost would be in the vicinity of $156 million for only 12 container shipping lines let alone all the container carriers serving the Australian trade.

"An important issue is the cascading effect on other ports of call in Australia.

"This cost impact is only the tip of the cost iceberg."

Direct and indirect costs arising from major congestion in one port includes:

  • requirement to omit both Australian and overseas port calls on occasion to recover the sailing schedule
  • omitted port calls create problems for repositioning containers to meet future demands
  • re-stow costs because programmed loading/discharge is completely disrupted
  • land bridging costs if another Australian port is used such as Port Kembla. This can result in loss of competitive advantage for the shipping line concerned
  • additional handling charges and transhipment costs
  • additional charter-hire costs for delays waiting for berths
  • vessel bunching waiting for a berth
  • pressure on empty container parks as a result of container terminals restricting empty container handling as a result of congestion.

"The causes of this congestion are many and varied but the serious industrial disruption has only added to the operational and equipment failure problems encountered," Russell adds.

"A light on the horizon is the ending of the 12-month negotiation of a new EBA between Patrick and the Maritime Union of Australia but the real effect or incurred productivity is yet to be confirmed.

"Furthermore, we are currently facing industrial disruption as DP World goes through the hoops of negotiating a new EBA.

"Shipping Australia has urged the Sydney Ports Corporation to negotiate effective Key Performance Indicators with Patrick’s stevedore along the lines of those previously negotiated with DP World which would result in financial penalties being applied for non-performance.

In an echo of similar to the Port Botany Landside Improvement Strategy, the shipping body believes penalties paid for non-performance should be paid to the shipping lines connected to the stevedore concerned as practical compensation for the cost of delays.

"If both stevedores are covered, this could definitely reduce the pressure to introduce congestion surcharges," Russell says.

"In the short-term, more radical solutions may need to be considered.

"These could involve investing in new container facilities at Port Kembla, as a number of vessels have been diverted to that port, fast-tracking Enfield and a new inter-modal terminal at Moorebank and expanding capacity on the M5 East."

Shipping Australia believes more freight on rail must be a priority and plans to release a paper on the commercial and practical problems in utilising intermodal terminals in metropolitan Sydney and Melbourne in early December and will include recommendations on how to progress these initiatives.

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