Trucking operators accessing container terminals at the main box-ports in Australia will likely be subject to delays and increased truck turnaround times due to a spread of industrial unrest to Australia’s biggest stevedore, DP World Australia (DPW). Shipping schedules in Asia and around the world might be thrown off too because of the industrial action.
DP World Australia is Australia’s largest longshoreman company by volume of container lifts. Australia had about 5.1 million container lifts (equivalent to about 8.0 million twenty foot equivalent units) in 2017-2018 financial year. DPW Australia is the biggest longshoreman company by volume and it accounts for about 44.4 percent of those container lifts, according to the federal competition watchdog.
DPW Australia is now in dispute with the militant Maritime Union of Australia (MUA). Incidentally, it should be noted that the MUA is part of the even-more-militant Construction Forestry Maritime Mining and Energy Union (CFMMEU).
Industrial action is coming
Orders were granted by the local employment tribunal on Tuesday February 12 allowing the union to ballot the DPW Australia workforce on whether or not to take industrial action. Securing a successful ‘yes’ vote is an essential step as a workforce-authorised strike in pursuit of an enterprise agreement gives that industrial action official legal protection. In turn, that means that the employer cannot then apply to the employment tribunal to have the action terminated and/or financial penalties imposed on the union.
The Maritime Union is seeking authorisation from the workforce to hold an unlimited number of stoppages. They may be one hour in length, four hours in length, eight hours, 12 hours or 24 hours. These strikes may be organised to happen consecutively. The union is also seeking an unlimited number of bans on the performance of upgrades, on shift extensions, on the performance of overtime, on the performance of call-ins or late calls, of working continuous cranes or work though crane gangs, performance of working advanced or delayed start times, rolling stoppages of one hour at the end of breaks or rest periods.
To the best knowledge of the FreightWaves Australia Correspondent, who has been reporting on the Australian waterfront for about nine years, the longshoremen workforce has never failed to vote in favour of the union’s proposed strike action.
The MUA will also hold a two-hour meeting at the West Swanson terminal (Port of Melbourne) next Thursday, February 21. “Trucks that arrive during this period will not be serviced until operations re-commence,” says the Freight & Trade Alliance, a local, privately-owned trade association. The last truck slots in the vehicle booking system will be available at 11:00 a.m. and the first slots available thereafter will be at 3:00 p.m. onwards.
The consequences of box terminal work-stoppages can be quite severe. A new judgment by the local employment tribunal has enabled a fascinating inner-peek into the commercial workings of a box terminal in the run up to a strike.
Not enough notice
DPW Australia asked the federal employment tribunal for an order to extend the pre-industrial action notice period from three to five days. Notice has to be given by the Maritime Union before any strikes otherwise that industrial action is not legally protected. The employment tribunal agreed to grant that notice on the grounds that third parties, the maritime shipping lines, would suffer exceptional adverse consequences. The Maritime Union is appealing that decision.
In giving its reasons, the employment tribunal referred to the evidence from a very senior manager at DPW Australia – one “Mr Hulme”, who is the General Manager Operations at Port Botany.
In evidence, Mr Hulme explained the nature of basic longshoremen operations that happen at a stevedoring terminal. He went on to discuss the consequences of delays in a given port, namely, that there is a consequent cascade of delays at subsequent ports of call. While it may be possible to make up that delay, it is not guaranteed, and it can only be achieved at the cost of increased fuel consumption, he testified. Alternatively, a ship can omit a port of call, or it can reduce its container exchange but that could mean boxes that were supposed to be loaded onto the vessel are left on the wharf.
“The issue of delays in port becomes acute where delays in Australia flow on further and require that a service omits a port of call in another region. The cost of this will be borne by the vessel operator which may or may not be the shipping line. Depending on the relevant arrangements Mr Hulme estimated the cost of omitting a port can be in the range of AU$200,000 to $400,000,” the judgment reads.
In U.S. dollar terms that’s extra costs in the region of US$142,000 to US$283,000 for omitting a port.
Costs are incurred by discharging boxes at alternative ports and reloading them on different vessels; increasing the speed of a ship to meet the new schedule; and extra storage charges are applicable to export containers that cannot be loaded on the original vessel.
The General Manager gave the example of the A3N and the A3S services, which originate in Japan and China respectively and then, on different routes, visit various ports in Asia and Australia. They take 42 and 35 days to complete their respective circuits and the Japan-origin route uses six ships while the China-origin route uses five ships. Mr Hulme added that DP World also acts as longshoreman for vessels on about 10 other shipping routes that call at ports in Asia, the Americas, Europe and/or New Zealand.
“In each case delays in Australia can potentially result in significant consequences much further afield,” the local employment tribunal noted.
The General Manager gave evidence that DPW Australia will try to sub-contract the stevedoring of a ship if industrial action is due, but, he testified, it was not an attractive option as the longshoreman company forgoes most of the revenue from the port of call and, in some cases, loses money. Subcontracting is also difficult at some ports, such as Fremantle, which have lesser stevedoring capacity.
Mr Hulme indicated that arranging a full sub-contract for discharge and loading of a ship requires six to seven days’ notice. And that’s because the longshoreman’s receiving yards for export containers will already be accepting boxes. Some export containers will already be in staging yards and moving them to another terminal would involve too much cost and delay to be feasible. In such cases, the ship operator has one of two options. It could call at two terminals in the same port – an option that would be extraordinarily costly owing to two sets of fees for tugs, berthing and so on. Or it can sail light without having taken all the boxes it was originally supposed to have carried.
The general manager also told the employment tribunal that there are time constraints on the ability of the stevedore companies to move the boxes – a box exchange could exceed 2,000 containers in 24 hours but road and rail transport cannot handle that many containers in that time.
Industrial disputation between DPW Australia and the Maritime Union is just getting started; FreightWaves Australia will continue to provide updates in due course.