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Port Report: Strikes intensify as Australia braces for more longshoreman unrest

Members of the Maritime Union of Australia protest outside the DP World Australia marine container terminal in Melbourne (July 2019). Photo: Maritime Union of Australia

Another two day strike has been called at the DP World Australia container terminal at Port Botany, Sydney, Australia, as the longshoreman’s strike intensifies. The new strikes follow hot from a series of strikes around Australia last week including a four day strike in Melbourne.

Local experts predict that neither side will back down.

The new strike will start at 06:00 a.m. on Thursday July 18 and will last for 48 hours. That means that the last time zone at the DP World Australia Terminal, Port Botany, will be 05:00 a.m. on the same day and the gates will close at 06:00 “sharp”. Operations will resume at 06:00 a.m. two days later.

Thursday’s 48 hour strike at Port Botany is not the only strike this coming week. Early in the morning of Tuesday July 16, a 24 hour strike has been declared at the DPW container terminal in the east coast port of Fremantle. It will run from 06:00 a.m. on Saturday July 20. FreightWaves has also heard of rumours of stoppages to be declared at DPWA’s container terminal at the Port of Brisbane. However, we have been unable to confirm if that industrial action is taking place.

Conflict: the root cause

The cause of the conflict is rooted in Australian employment law.

Australian workers, should they so choose, have the right to negotiate with their employer to create a company-wide type of collective employment contract called an “Enterprise Bargaining Agreement”. Each EBA lasts for three years. Work can continue even when an EBA is expired and the workers continue to work under the existing (albeit expired) conditions. Workers are then given back-pay when the new EBA is agreed.

The last DP World Australia EBA ran out in February 2019 but the company and the workers’ representative, the militant Maritime Union of Australia (MUA), have been negotiating for a new EBA from September 2018.

Workers are allowed to take industrial action to force their employers to come to, and do a deal at, the negotiating table.

Conflict: points of contention

The key conflict areas in this dispute are port automation and the removal of income protection insurance.

Maritime Union of Australia Assistant National Secretary Warren Smith said: “we want job saving protections and commitments from the company in the advent they decide to automate. If they aren’t automating then we want DP World to commit to that for the life of the agreement. We reject our traditional work being outsourced. It is a union-busting exercise and we are prepared to fight it. Our jobs are not for sale to the lowest bidder.”

He also took aim at the proposal to eliminate income protection insurance.

“DPW have tried to remove income protection insurance from workers. We don’t accept workers and their families being left worse off because DPW wants to use income protection and the welfare of our families as a bargaining chip”, Smith said.

Income protection insurance explained

The purpose of income protection insurance is to provide all workers with a capped replacement wage if an employee cannot work due to personal injury or illness.

In the previous round of enterprise bargaining, the Union secured the right for workers to have income protection insurance. It was paid for by diverting up to two percent of employee pay into an insurance fund.

Under Australian employment law, workers are also entitled to ten days employer-paid “personal leave” at full pay. Personal leave is normally taken by employees when they are sick or if they are caring for an immediate member of the family who is sick. The unused portion of personal leave accumulates from year to year. So an employee who works for two years and doesn’t take any personal leave will have twenty days of accumulated entitlement. A three-year worker, provided no personal leave had been taken, would have thirty days, and so on.

Under the terms of the last EBA, if a sick worker was paid income protection insurance while ill, then the worker would not also have to claim a day of statutory personal leave. So if the payment income protection insurance payments were stopped for any reason then the employee could then start claiming his or her legal entitlement to personal leave.

The income protection policy was due to expire on March 1 this year, one day after the EBA itself expired.

“The spark that lit the fuse in the workplace…”

In September the company and the union had a meeting. Union officials claimed it was agreed between the parties that the income protection insurance policy would continue
until the next EBA was agreed, despite the March 1 expiry date of the policy.

Company executives said the continuation of the income protection insurance policy was not agreed.

It appears that the position of the company hardened shortly thereafter.

It wrote to employees in late January saying that: “if your representatives do not agree a rollover [of the EBA] by 4 February, the opportunity to lock-in certainty, the real increase in wages and Income Protection is lost.”

Then, on February 7, DP World sent an email to employees.

“From 1 March 2019 DP World Australia (DPWA) will provide you a two percent pay increase on your base wage… This is money which was provided to your Union-nominated IP [income protection] provider for the life of the [EBA]. Once the [EBA] expires, that money needs to be provided direct to you. It is now your choice to decide whether to keep that money or to continue paying for IP. If you choose to continue IP, you will need to purchase it directly from your chosen provider,” the company wrote.

Since that email there have been several rounds of litigation in the Fair Work Commission, the national employment tribunal, along with escalating rounds of industrial action.

This [email] was the spark that lit the fuse in the workplace,” a Fair Work Commissioner said in one of Commission’s judgments.

Protection for lawful strikes

Strike action is protected by Australian law as long as the parties are engaged in enterprise bargaining and provided the proper procedures are followed. The “protection” means that employers cannot sack, discipline, or otherwise take adverse action against employees engaging in industrial action.

Unprotected industrial action, however, can be terminated by the local employment tribunals and rogue strikers are not safe from disciplinary action by their employers. Unprotected striking workers could also find themselves on the wrong end of various lawsuits alleging breaches of Australian employment law.

In the past the MUA has typically used the tactics of rolling strikes along with overtime bans and a refusal to work shift extensions. And that’s the same pattern of tactics that can be seen in the current round of industrial action at DP World Australia.

Extensive and severe disruption

Extensive marine and landside disruption has been the consequence of the most recent rounds of industrial unrest.

Owing to the high stakes, and intense nature of the strikes, several sources who spoke to FreightWaves did so on condition of anonymity.

“The 96 hour strike last week at Melbourne was particularly severe,” said one industry observer who also commented that 12 ships and tens of thousands of boxes were affected. The source praised marine terminal operator DP World Australia, saying that the operator had “done a good job of minimising the impact through sub-contracting”.

The source reckons that the introduction of new marine terminal operators at the major Australian east coast ports – there was formerly a duopoly several years ago, now there are four operators – has been beneficial as it gives terminal operators more options for sub-contracting.

Effect on road carriers varies by location

Road carriers in various parts of Australia have been affected differently, likely reflecting the variety in intensity of strikes at separate locations. So far, the Maritime Union appears to have been heavily targeting the two biggest ports in Australia: Melbourne and Sydney (Port Botany).

The Port of Brisbane, in the State of Queensland, saw some strike action last week. However, the impact appears to have been limited. Gary Mahon, the CEO of the Queensland Trucking Association, spoke to FreightWaves.

“Our members say they are prepared for it and should be able to handle it A-O.K. I think it was John Howard, [a notable and recent former Australian prime minister] who coined the phrase ‘be alert but not alarmed’”.

One truck operator was “almost hysterical”

However, in the state of New South Wales the situation was particularly intense as two of the three terminal operators as Port Botany were down at the same time. One, DP World Australia, was subject to a strike. The second operator, Patrick Terminals, was non-operational owing to an off-site suicide.

“One [truck] operator was almost hysterical,” a source told FreightWaves. “It caused members a lot of difficulties to amend their schedules. One operator was absolutely stressed. There’s a big emotional impact,” the source said. He added that trucking operators are “at the bottom of the supply chain; we’re effectively left to carry the can”.

“Our members are just so reliant on the port. There’s been a dry-up of work. They go from normal operations to nothing to do. Then there will be a whole load of boxes coming off ships,” the source said.

He pointed out that truck operators have to meet the deadlines of shipping lines and marine terminal operators otherwise there is the possibility of being penalised with fines and demurrage. Meeting those deadlines in disrupted circumstances may require putting staff on overtime. But such events could blow out the terminal operator’s budget. He called for flexibility from empty container park operators and shipping lines on the thorny topic of fees and demurrage.

“A million boxes to move…”

The biggest effects were felt down at the Port of Melbourne, which is on the south-east coast of Australia. It’s also the country’s busiest box port, handling just over three million twenty foot equivalent shipping units in the last calendar year.

It was also on strike last week for four days.

Peter Anderson, CEO of the Victorian Transport Association, which represents truckers in the state of Victoria, spoke to FreightWaves.

“We’re still working our way through the backlog. We’ve got a million boxes to move. But we’ll really see the effect of the backlog this week. We won’t know the true effect until Wednesday,” he said.

Anderson added that the shipping lines had pushed back the arrival time for ships or had otherwise diverted the vessels to other ports, such as to Sydney to the north, or Adelaide to the west.

“There weren’t as many ships. There were none under the cranes at DP World. There were no ships at Patrick [Terminals] or at VICT,” Anderson explained.

Containers diverted to other ports would likely be sent by train into Melbourne.

Fees, penalties, demurrage

Anderson also raised the issues of fees and demurrage. Truckers are given three days to pick up a box or they start incurring penalties. They have seven days to get the box back, he told FreightWaves. Anderson pointed out it can cost A$100 a day for demurrage.

“If I’m a trucker, then it’s not my fault if I can’t pick it [the container] up. Road carriers are saying if they get penalised then they won’t pay,” he said.

He added that DP World have been preparing for the upcoming strike on Thursday and he can’t see either main party, DP World or the Maritime Union backing down.

“I can’t see it getting any better,” he says.

Ocean shipping executives are frustrated and annoyed

Members of the ocean shipping industry are also not best impressed by the industrial unrest either. Ocean shipping executives are frustrated and annoyed that marine terminal operators increase their standard fees by the cost of inflation every year with a premium on top and yet the terminals are subject to work stoppages.

“We have to pay CPI+ [consumer price index plus]. The “plus” is for making sure the port is run properly. They should have known the EBA negotiations were coming. It’s like an oil spill response. We don’t know when or where it will happen but in port there will be a response in less than 30 minutes. People should have contingencies in place. You would expect port operators to ensure that the port is operated in a way that the ship arrives and leaves in a timely fashion,” the executive said.

Like all the other parties in the supply chain, ocean shipping companies are also disrupted by industrial action and they too bear costs.

“Shipping lines quietly bear up all the flow-on effects of the strike. It can cost A$25,000 to $30,000 to redirect a ship from Sydney to Melbourne,” the executive said. That’s about US$17,600 to US$21,000.

The dispute between the Union and the terminal operator continues.

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