Melbourne port supply chain issues: Costs to rise for consumers

Melboure’s ports are at bursting point with Covid-19 has causing massive backlog for supply chains — and you could bear the brunt of the cost.

Consumers will pay more for their deliveries as “exorbitant costs” are passed on by port supply chain companies with packed yards unable to accept more containers thanks to a Covid-induced backlog

The Victorian Transport Association say the backlog is costing transport companies $500,000 a day.

Transport companies unable to return empty containers within 10 days of collection from the wharf are being charged $250 per day by shipping lines, according to the VTA.

It says almost half a million dollars will be taken out of supply chain businesses each day over the next four weeks because of empty container fines.

Industry leaders say congestion of ships at ports, sick wharf staff, and a shortage of truck drivers are among the host of issues that have caused supply chain chaos worldwide.

A letter sent to Freight Transport Assistant Minister Scott Buchholz by the VTA, urges him to mediate on the “suffering” industry’s behalf to prevent price gouging of the sector and steeper fees being passed onto customers.

“This isn’t peculiar to Australia, we need to be able to alleviate the issues that are going to put exorbitant costs onto the consumer,” VTA chief executive Peter Anderson said.

“The stakeholders need to work together on this, this is a supply chain issue, not just affecting one sector.”

The VTA is asking shipping lines to extend their empty container return period from 10 days to 20 days, for the next two months to help the industry get on top of the backlog.

”By giving the transport companies this concession there will be the ability for this sector to invest in the additional resources necessary to overcome the empty container issues,” the letter reads.

“The systems that once worked with a great deal of effort are now becoming blocked and slowed as containers are not able to be delivered to customers and transport yards overflow with full and empty containers.”

Ports Australia chief executive Mike Gallacher said there was no doubt that extra costs would “find its way down to the consumer”.

“It needs to be a matter where the shipping lines sit down with the businesses calling for this respite to work through their problems,” he said.

“I think it’s important that the shipping lines have that conversation.”

Australian Retailers Association chief executive Paul Zahra said price hikes were a “flow-on” effect for retailers, with businesses reporting about a seven-times increase in supply chain costs.

“This is due to the sheer volume of products and supplies within the global supply chain and the profound shortage of freight space on ships, shipping containers and pallets exacerbated by limited flights into the country,” he said.

Assistant Minister Buchholz urged shipping lines to work with transport businesses and to agree to the VTA’s request.

“Give them a fair go by extending the 10 days limit to 20 days for a limited period of 8 weeks,” he said.

“I do not believe for one moment that Australian businesses are intentionally delaying their turn around, to incur penalties.”