China cancels a fifth of its January container ships as DP World calls for waterfront reform

There are 54,330 containers delayed due to ongoing industrial action at the nation’s second biggest port operator and a fifth of ships from China have scrapped Australia plans.

One fifth of all container ships from China cancelled their January services to Australia because of the ongoing industrial dispute at the nation’s second-biggest ports operator, DP World, which on Monday told a government inquiry it was time for reform on the waterfront.

DP World faced a senate inquiry into the Albanese government’s ‘closing loopholes’ industrial relations bill, and under questioning called for industrial reform at the ports.

“I think there does need to be reform in terms of industrial relations on the waterfront,” said DP World head of corporate affairs Blake Tierney after questioning by Senator Jackie Lambie. “We have customers who are at breaking point.”

The last time there was major industrial relations reform at the waterfront was in 1998 when Patrick Stevedores – backed by the Howard government – fired its staff, triggering dramatic scenes at picket lines and brought in a new workforce it had been secretly training in Dubai.

This dispute pits the union-backed Labor Party that is in the midst of trying to make major reforms to industrial regulations to support workers – against corporate desire for profits and consumers suffering cost of living pressures from near record high inflation.

DP World Australia at Port Botany in Sydney. Picture: Jenny Evans/Getty Images

DP World believes this current industrial relations dispute – over pay and rostering – has cost the nation $84m a week since it began in October last year.

This figure was dismissed by Workplace Relations Minister Tony Burke last week and at the government inquiry on Monday DP World was asked to provide the workings from the economist who had prepared the estimate.

Mr Tierney said he was “very confident” that the figures prepared by a third party, economic firm HoustonKemp were accurate and said he would release the background information by Thursday.

“I think we need to be careful questioning data when the economist is a leading expert within the country,” said Mr Tierney. “To dispute numbers from an economic level can be quite dangerous.”

The Freight & Trade Alliance (FTA) director Paul Zalai, who provided the supporting vessel logs about the number of cancellations of China ships, said if anything, the figures provided by DP World underplayed the cost.

When considering the cancellations from China and ship “go slows” to avoid being stuck at congested ports, his group believes the dispute is costing the nation even more, putting the figure at $20m per day or $140m per week.

“Our members have been describing it in a couple of different ways, one is ‘a death by 1000 cuts’ and other saying he ‘was slowly getting strangled’,” said Mr Zalai.

“The big thing from our perspective is international shipping,” Mr Zalai added. “The foreign owned shipping lines are looking at how they service Australia. Particularly out of China now there are a lot of blanked or cancelled sailings and that will probably continue.”

About 99 per cent of Australia’s international trade by volume is carried by sea. There are now 54,330 containers delayed either getting into or out of the DP World’s terminals in Melbourne, Sydney, Brisbane and Fremantle.

“If we’ve really got to wait until about June of this year before the Fair Work Commission is forced to arbitrate, that’s just too long,” Mr Zalai said.

These delays and spoilage of food items is leading to rising costs in a time where cost of living pressures are considered the biggest problem for Australian consumers.

At Monday’s senate inquiry, DP World came under fierce questioning over its own rising charges. Mr Tierney admitted under questioning that the stevedore firm had increased its charges by 300 per cent over five years at it’s Port Botany terminal in Sydney.

The DP World executive also confirmed that the Dubai-based company has a global profit margin of 25 per cent.

Labor senator and trade unionist Tony Sheldon asked DP World whether it had paid any corporate tax in Australia over the past eight years. Mr Tierney said he would take that question on notice.

Tax issue aside, DP World used the senate inquiry to again ask for a mechanism in the industrial relations laws to allow faster intervention by the FWC for mandatory arbitration, which is currently nine months unless ordered by the government.

“It needs to be taken back to six months,” said Mr Tierney. “Our industry is unique in the sense it causes a large impact on the economy and also the supply chain, so there needs to be some form of exemption to make sure (the action) can’t have such a dire impact on the supply chain and to small businesses and to exporters and importers.

DP World also flagged issues with the multi-employer bargaining and said as currently worded the, it “may restrict flexible agreement creation, effectively stopping productivity improvements”.

Many of the stevedores have raised fears that if all of their enterprise bargaining agreements were up for negotiation at the same time, the MUA could have the ability to close down the ports.

DP World vice president of people Mark Ratcliffe told the inquiry that if the stevedores ended up in a multi-employer bargaining situation, the action that DP World has been seeing for the last three-plus months of stop works and transport stoppages could be extended nationally.

“We are concerned it could cripple the ports,” Mr Ratcliffe said. “All the other major port and terminal operators have their enterprise agreements expiring between March of this year and December of next year.”

The fight between DP World and the Maritime Union of Australia is over pay and rostering. DP World stevedores are currently paid on average 17 per cent less than that of larger rival Patrick Corp, with the stevedore arguing its staff are less productive.

DP World said its average salary for port staff is between $130,000 and $140,000.

Last Friday the MUA’s industrial action ramped up to include not allowing any trucks or trains into any of DP World’s terminals in Sydney, Melbourne, Brisbane and Fremantle to deliver or remove containers.