Changes to a container shipping lines ‘tax’ on Australia’s congested supply chain system are underway and causing deep concern among trucking firms that service ports and domestic freight forwarders.
Three of the world’s largest lines and one subsidiary have reduced, from August 1, the free time a container can go through the system from 10 consecutive days to seven days.
By Rob McKay | August 6, 2012
Changes to a
container shipping lines ‘tax’ on Australia’s congested supply chain system are underway and causing deep concern among trucking firms that service ports and domestic freight forwarders.
Three of the world’s largest lines and one subsidiary have reduced, from August 1, the free time a container can go through the system from 10 consecutive days to seven days.
After that, a ‘detention charge’ applies.
Maersk, Mediterranean Shipping Company (MSC), CMA CGM and its local subsidiary, Australian National Line, had warned of the move on, June 29.
For MSC, the seven days will start from the day an import container leaves its ship to when a full export containers is returned.
The “tariffs” for 20-foot and 40-foot dry or refrigerated (reefer) containers – they start at $75 a day for the smallest dry but can rise to $410 a day after 22 days for a 40 foot reefer – is charged to importers and exporters.
Such costs are often passed on to trucking firms and can be a source of friction between them, importers, empty container parks and shipping lines.
Some progress being made at the large container ports by some state representative bodies.
Victorian Transport Association (VTA) Chief Executive Neil Chambers warns the move will increase international trade costs and describes the tighter rules as “a blatant exercise in revenue-raising by these market dominant shipping lines.”
“The shipping lines know that many shippers will not achieve these container turnaround times through their inland logistics chains,” Chambers says.
“As a result, the shipping lines are banking on collecting many more thousands of dollars in container detention charges per annum to boost their flagging freight rate revenues.” Chambers says.
“Add in weekends, perhaps a public holiday, quarantine inspections and treatments, Customs X-ray, inland transport, time to pack or unpack the container, then the time needed to return the empty container to a de-hire facility – in many instances it will be impossible to achieve this task in seven calendar days.”
The VTA recommends road transport operators require at least two business days’ notice from their clients of the availability of empty containers for de-hire.
“Everyone needs to be mindful of the lead times needed to undertake the transport task effectively, including the return of the empty container to the designated Empty Container Park.” Chambers says
“The VTA recommends to road transport operators that they should require at least two business days’ notice from their clients of the availability of empty containers for de-hire.”
With the implementation of the Containerchain system at all of the major empty container parks (ECP) in Melbourne, notification windows for truck arrivals are not always available at short notice for trucks to be serviced at the designated ECP, he warns.
“Also, some ECPs are still only open 7am to 4pm, Monday to Friday, adding to the difficulties in returning empties before container detention applies.
“We recommend that transport operators should charge the true costs of additional handling and administration when they need to stage containers through their transport depots, including times when empties must be staged before they can be transported for de-hire at the required empty container park.
“Importers, exporters and freight forwarders need to factor in these new container detention rules.
“They should have in place systems to track container ‘free time’, and should make early contact with shipping lines if it becomes clear that containers will not be able to be returned before container detention fees apply.”
For its part, the Customs Brokers and Forwarders Council of Australia (CBFCA) has sought to discuss the changes with the lines involved, with little positive response.
CBFCA Executive Director Stephen Morris says that “if Australian port and supply chain efficiency met the benchmark of other global port and supply chains then such change may be acceptable.
“However it does not.
“Considering the current mismatch of operating hours in the supply chain, container availability, Customs and biosecurity interventions , the return of the empty container to a de-hire facility with limited operating hours will make it difficult to meet the seven calendar days.
“As to the reason for change Maersk advised it was part of the Maersk global standards to bring Australia in line with the rest of the world.
“What Maersk has failed to take into consideration in its global benchmark decision is that the port and supply chain efficiency in Australia is not at global best practice or standards.”
He adds that it is important to note that Maersk determines which empty container parks that will receive its containers in Australia and needsto ensure it plays its part in improving efficiency as to availability of containers as well as ensuring operating hours at their ECP met industry’s needs, as well as Maersk’s needs.
Morris also points to the inequity of the charges, with big national and multinational customers – such as major retailers and global logistics providers – likely to gain preferential treatment compared with small and medium operators.
While discounting the likelihood of a breach of competition rules, given that not all lines have made the changes, Morris points out that international transport operators have tend to operate “beyond the scope of legislation, with surcharges and other things” and some have been found to have acted illegally.
“This should come out of an appropriate consultation process with, as far as possible, equitable arrangements between all people who participate in supply chain and logistics arrangement,” Morris says.
“However, we know one size does not fit all.”
