Industry Issues, Transport Features

Inside the port problems impacting Australias supply chain

For this week’s feature, ATN looks into what is happening at the nation’s ports that is causing the freight and transport sectors to struggle

The COVID pandemic impacted the transport sector in a myriad of ways. Businesses ground to a halt. Freight deliveries were severely affected, with supermarket shelves often left empty. This is just the tip of the iceberg, as the aftershocks of COVID are still finding new ways to detriment Australian industries.

In the transport sector, port productivity and supply chain delays are the key symptoms of an ongoing issue.

“Late last year we first started seeing quite a bit of congestion at Australian ports, especially along the east coast,” RMIT University supply chain expert Professor Vinh Thai told ATN.

“There are several reasons for this congestion, with a main symptom being that lots of vehicles are coming to Australian ports and are now facing delays.”

For the past year, this has wreaked havoc in several spheres of the transport industry, including trucks, buses, coaches and trains. While vehicle manufacturers move to fulfil full order books and deliver products, long lead times and extra costs related to supply chain problems means it’s taking longer than ever before and costing more to complete deliveries.

A post-COVID surge in volumes aboard cargo movements is inundating ports and terminals all around the world, but particularly along Australia’s eastern seaboard. Thai says the relaxing of both COVID and trade restrictions has caused this flood of ships arriving at ports throughout this year.

For example, recent trade restrictions between China and Australia have been lifted, resulting in larger quantities of import and export volumes travelling between the two countries. For the years prior to 2023, COVID caused a backlog in the global supply chain. Now, the seatbelts are off and the relaxed circumstances means a surging volume of cargo is now arriving at Australian ports each day.

When it comes to roll-on, roll-off vessels that carry automobile traffic such as trucks, an increase in traffic is only slowing the time it takes to get these new vehicles away from ports and onto roads.

“A very important issue that is impacting the industry is quarantine and biosecurity requirements,” Thai says.

“All cargo coming into Australia must comply with our rules. When the ships arrive, cargo is offloaded and checked.

 Supply chain expert Vinh Thai

“When there’s then a shortage in labour for boat activity, including workers who offload the cargo from ship to shore and biosecurity checking staff, there’s a strain put on port productivity, resulting in these delays.”

In Thai’s experience throughout 2023 in particular, he says Australia’s unique port environment through its unions and industrial arms means productivity issues are yet to be fixed. This then has a flow-on effect, creating a backlog of ships at major ports that then results in lengthy delays for deliveries.

Thai says this situation is intensified at major ports such as Melbourne, where shipping lines are faced with even longer delays as the port tries to reduce the time that ships spend waiting to dock at the port.  

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“The ports want to make sure certain ships spend less time waiting for ports, meaning there’d be less vessels sitting at the port,” he says.

“This adds to the multiplier effect, with the lead time of receiving cargo into shores becoming longer and having an additional cost attached to it.”

The way major Australian ports work is through two main customers in the shipping line and the cargo owner. The shipping line serves the shipper to ensure cargo arrives at ports such as Melbourne, Brisbane or Newcastle.

However, when they know they’re going to face congestion at these ports and will be forced into sitting idle in a waiting area, shipping lines lose money.

“If a ship is sailing at sea, then shipping lines make money, but if it’s standing still then they lose,” Thai says.

“Depending on the size of the ship, every day sitting idle costs them money.

“Shipping lines have worked out the total cost of waiting and instead have begun skipping ports, heading to nearby ports to offload cargo before returning to their port of origin.

“For them, the sooner they leave an Australian port and head back, the better it is for the shipping line, as they can carry more cargo sooner. It’s an economic analysis from their perspective.”

From the shipper’s perspective, they’re forced to pick up their cargo from a different port then what they initially planned. It’s another supply chain problem to add onto the entire equation that is causing manufacturers and suppliers to struggle to fulfil orders.

Work is slowly being done into rectifying this issue. Last year, the ACCC began publishing reports into port productivity issues in Australia, with other voices such as Commonwealth Bank and Shipping Australia also following suit.

While ports can’t be optimised by physically expanding space, focus is instead on how to enhance productivity at the ports to move cargo through as quickly and as safely as possible.

From Thai’s perspective, his solution is all about planning ahead. While demand and supply problems still require future fixing, he wants to see transport companies work with suppliers and overseas vendors to identify any potential biosecurity risks and address them before they leave their port of origin, making the quarantine process in Australia quicker and easier.

“Planning is so important – we have to plan to minimise the impact of congestion within reason,” he says.

“Measures need to be put in place from the port of origin before cargo is even loaded onboard, meaning there’s a collaboration between the entire supply chain to ensure Australian companies can plan their own resources for the import of cargo ahead of time.

“If you can spend more time over at the original port to get the process right, then the total time taken to receive vehicles may be shorter than the current scenario we’re seeing.”

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