FTA/APSA report greater federal acceptance of need for flexibility
Australia’s major container ports are about to come under unprecedented strain and a leading trade body warns that existing compliance and logistics systems weaknesses may choke them.
With the container chain long subject to policy neglect, the weaknesses face being laid bare as a surge as pent-up imports from China meets sclerotic customs and landside container handling practices exacerbated by rigidities enforced by container shipping lines and stevedores.
Now Freight and Trade Alliance/Australian Peak Shippers Association (FTA/APSA) is saying those bearing much of the brunt are withdrawing their exposure to risks as liquidity dries up.
“Customs brokers are no longer accepting the cash-flow imposition of making up front import statutory charge payments and recouping costs from importers on a disbursement basis,” FTA director Paul Zalai says.
“The ‘new normal’ leaves importers to either make up front payments to customs brokers or to register via the Integrated Cargo System [ICS] to make direct EFT payments of import statutory charges.
“This is already generating early warning signs that containers may become stranded at our wharves, with importers struggling with insufficient cash flow to clear goods into home consumption.”
Without action, FTA sees the following happening:
- congestion at the ports, leading to increasing delays to all containers that are “block stacked” at terminals, jeopardising the timely release of essential goods
- while limited storage may be available off port, the goods must be held under customs control until they are paid and released – limited capacity exists at current customs controlled premises being gazetted in accordance with Sec15 or licensed in accordance with Sec 77G of the Customs Act 1901
- as the port congests, trade slows, equipment such as shipping containers, required for exports will not be available
- increased costs across the supply chain, with precedent suggesting that stevedores and shipping lines would give little (if any) reprieve for associated storage or late empty container return penalties, this in turn compounds costs faced by importers (including increasing Infrastructure Surcharges administered by stevedores) and the cash flow of customs brokers
- delays in returning empty containers within required time frames, resulting in an equipment shortage within supply chain not being able to fulfil export requirements – as experienced in Europe and Asia, relating to reefer containers held up in China, a worldwide shortage of prescribed equipment attracted surcharges of up to $1,000 per container.
Read Paul Zalai’s thoughts on container line competition protections, here
But with the Covid-19 crisis freeing up sometimes closed minds, FTA/APSA reports federal government movement, following a submission to the National Covid-19 Coordination Commissionand correspondence with federal Treasury, the Australian Taxation Office (ATO) and the Australian Border Force (ABF)advocating for deferral of import statutory charges – duty, GST and import processing charges.
It also follows advice to deputy prime minister and transport minister Michael McCormack “outlining concerns that in this unprecedented economic environment, many import businesses face the genuine risk of being unable to maintain business continuity and that impacts as outlined above will be experienced at our national container ports”.
“FTA/APSA has received assurances that the federal government remains committed to ensuring supply chains continue to function by avoiding congestion at our border,” the pairing says.
“We understand that the ABF is working behind the scenes on possible deferral options and will work with Treasury, the ATO and border agencies to promptly deploy solutions on a need basis.
“FTA/APSA will continue to collect data from members to demonstrate the seriousness of the issues raised and will continue advocacy for early pre-emptive (rather than reactionary) Covid-19 relief measures.”