Coronavirus disruption starting to be felt in transport


Warning against pressure falling on freight with panic buying yet to abate

Coronavirus disruption starting to be felt in transport
An artist’s image of the coronavirus, Covid-19

 

Freight transport bodies and experts are signalling the coronavirus impacts on supply chains are starting to hit hard on those charged with ensuring the economy works.

As some supermarkets are the target of panic buying and alleged hoarding by speculators, the Western Roads Federation (WRF) is calling for calm as retailers seek to restock shelves and noting that its warning two weeks ago of the disruption of import container freight through is coming to fruition.

WRF CEO Cam Dumesny tweets that reports of large scale lay offs have commenced in some sectors of transport and logistics as the supply chain impact "begins to bite".

In the same vein, Container Transport Alliance Australia (CTAA) the crisis and the resulting lull in container trade is having a cash-flow impact on container transport operators Australia-wide.

WRF warns that pressure to restock shelves must not translate to pressure on transport companies and drivers.

"The safety of drivers and all members of our transport and logistic industry must remain paramount," it says.

The WRF urges transport companies who believe they are being pressured to swiftly contact Western Roads Federation or their state transport association, who can take immediate action on their behalf, anonymously if required.

Transport companies should not respond to undue pressure as they could well be risking a serious Chain of Responsibility (COR) breech, it warns.


Read how the situation is changing for Chinese supply chains, here


"We are extremely proud that nearly every sector of the WA economy has contacted WRF to congratulate it on its leadership on Covid-19 virus issues," Dumesny says.

"The leadership of WRF and our other state transport associations in leading state-level responses has been outstanding.

"WRF has taken the lead in pushing for a co-ordinated state level response by government and major business groups in identifying and managing the supply chain risks.

"As stated by Victorian Transport Association last week, all transport operators are strongly encouraged to contact their state transport association to ensure that they remain updated and connected to the latest information and advice."

Port pain

Plummeting trade volumes out of China and the flow-on effect to containerised trade from other countries, means that transport operators’ equipment and labour are idle, leading to a significant cash-flow squeeze, according to CTAA director Neil Chambers.

"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," Chambers says.

"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."

He notes that one of the largest cash-flow outlays for transport operators are the stevedore landside infrastructure (terminal access) charges and vehicle booking system (VBS) fees, which must be paid well in advance of the amounts being able to be recovered from transport customers.

Additionally, empty container depot notification fees must be settled on very 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." Neil Chambers noted.

"CTAA has written to the major container stevedore companies, and to Containerchain – who act as the agent for the collection of Notification Fees on behalf of their empty container depot clients – seeking an extension of payment terms.

"We’ve also expressed the view, on behalf of all container transport operators in Australia, that in the current dire trade circumstances, stevedores and empty container depots should be sympathetic to genuine cases of payment hardship brought to their attention by transport operators."

"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," Chambers says.

NSW outlook

In New South Wales, state body Road Freight NSW (RFNSW) reports it is working with industry partners and other stakeholders on contingency plans to provide support to its members affected by the dire economic consequences of the spread of the coronavirus on the Australian transport industry.

With significant reliance on trade from China, RFNSW reports that rapidly-diminishing container and air-freight volumes of Chinese imports, particularly manufactured consumer goods, have started to negatively impact local supply chains.

"A growing number of truck operators are telling us their businesses are being severely pressured and disrupted by the flow-on effects that the Coronavirus is having on Australian trade and logistics," RFNSW chief executive Simon O’Hara says.

"Mass freight cancellations from China have caused imports to dry-up and conversely, Chinese production plants are still in shut-down mode, limiting shipping of raw materials from Australia.

"Either way, the knock-on effects of the Coronavirus have hit local transport operators hard – and this diminished level of trade is unsustainable, particularly for our members who are small, family-run businesses.

"Looking ahead, even when Chinese manufacturers pick-up production again, and freight begins to flow again, there will be a two to three month lag in the supply chain, given that ships typically spend several weeks at sea.

"Our members are already operating on incredibly tight margins and this downturn is a real threat to their viability. RFNSW is working closely with our partner AI Group, our fellow industry organisations and most importantly, our members, so we can mitigate this threat to local businesses – we’re also calling on banks and other lenders to show some understanding and patience with truck operators struggling with repayments during these tough times."

 

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