Crippling costs: How shipping continues to be hit by Covid

Shipping companies are passing on Covid-related costs to customers in the form of a new levy. What does it mean for ag?

Cargo ships at the Port of Melbourne. Shipping freight continues to feel the impact of the global coronavirus pandemic. Picture: Andrew Henshaw

Australia’s shipping industry continues to be plagued by the ongoing Omicron outbreak, with shipping companies implementing new container levies to alleviate the financial burden of the outbreak.

The new charge is the latest blow for an already struggling agricultural industry and supply chain, which has grappled with ongoing labour shortages and increased production costs in recent months.

The Victoria International Container Terminal recently announced a temporary Covid recovery tariff of $3.97 per container, effective February 1, 2022.

In a statement VICT chief commercial officer Patrick Chan said in the past two years of the pandemic, VICT had absorbed the cost of additional Covid requirements, “but due to the latest outbreak and overall increase in costs especially relating to Rapid Antigen Tests, we have no option but to apply a temporary tariff to recover some of the extraordinary costs”.

In Western Australia, Qube Holdings is understood to also be implementing a levy for east coast customers, at a cost of $28.50 per container.

Freight and Trade Alliance director Paul Zalai said the transport sector, stevedores, and others across the supply chain “are feeling the crippling impacts of the current Omicron outbreak”.

“Like all commercial parties, they have to decide whether they can absorb the cost, or pass it on, and at what rate,” Mr Zalai said.

Mr Zalai said the new tariffs would apply to all containerised freight.

The tariffs come as the shipping industry continues to be hit by delays at ports around the world.

An FTA and Australian Peak Shippers Association operational report for January 25 put Melbourne Patrick vessel delays about 11-12 days, due to slow recovery from Covid-related issues.

VICT delays are about two to three days, according to the report.

In Brisbane, Patrick vessel delays are about one to two days, with DP World vessel delays up to three days due to delays in Asia.

In Fremantle, Patrick terminal vessel delays are between one to three days, according to the report.