With the Productivity Commission considering submissions to their inquiry into Australian Maritime Logistics, the Maritime Union of Australia is calling on the Commission to ignore some of the tired and self-serving analysis of some industry contributors and focus on the important issue of restoring domestic shipping capacity and freeing Australian businesses and consumers from the grip of international shipping cartels.
The inquiry into maritime logistics by the Productivity Commission was hastily called by the Federal Government in December 2021 amidst a supply chain crunch caused by the short-sighted ineptitude of Scott Morrison’s response to the Omicron wave of COVID-19.
Predictably, the inquiry has attracted the usual union bashing from industry players and various self-interest groups, including Shipping Australia Limited (which represents international rather than Australian shipping lines) and major employers like Svitzer Towage who are practicing their lines ahead of hearings at the Fair Work Commission to terminate their workers’ employment agreements.
The Maritime Union has for many years been highlighting the structural, long-term decline of Australian shipping and the perilous impacts for Australian businesses and consumers of our growing national dependence on services provided by international shipping cartels.
The rapid consolidation of container shipping lining companies through mergers, takeovers, and new forms of Alliances between companies has resulted in 90-95% of vessel cargo capacity in Melbourne, Adelaide and Fremantle being controlled by the three major global container shipping Alliances, and 70-80% in Sydney and Brisbane. In Melbourne, the top four container liner companies, in only two Alliances, now control 76% of vessel cargo capacity in Q4 2021 – up from 54% in Q2 2017.
The real-world impacts of these developments are far more significant for Australian society than the lawful industrial bargaining processes which so many industry players would seek to shift all blame to.
For large parts of 2021, fewer than one in five container vessels on the critical high-volume Asia to Australia and New Zealand routes arrived on time for their container terminal time slots. Within a year, freight rates from China to Australia and New Zealand more than doubled, and from Europe they have more than quadrupled.
The social and economic consequences, including massive upward pressure on inflation, caused by spiralling freight costs and cartel-driven scarcity are causing significant cumulative impacts on Australian consumers and business.
The Productivity Commission should not fall into a trap set for it by noisy complainants in the freight and shipping sectors who stand to benefit from this scarcity and price gouging.
Clearly these groups want the Inquiry to focus on industrial relations matters at Australian seaports as a smokescreen for the broader issues that threaten to exacerbate Australia’s already vulnerable position at the end of long global supply chains for the simple reason that scarcity, delay and uncertainty actually drive up prices and therefore boost these businesses’ profits.
In fact, while many industry players want to paint a picture of doom and gloom on the waterfront as a justification for wage-cuts and mass casualisation, container terminal productivity as measured by the ship rate (a combination of capital and labour productivity) has dramatically improved over the last 22 years, rising from under 30 container moves per hour to over 60 containers moves per hour.
Labour productivity (measured by the labour rate) has steadily risen since 1998-99 rising from around 22 containers per hour to around 50 per hour.
For stevedoring companies, increased demand during the last financial year sent profit margins soaring, with a 9.9% baseline in 2019-20 rising to a staggering 20.8% margin in 2020-21. Total revenue rose from $1.427 billion to $1.665 billion.
Workers at NSW ports serviced 28% more ships in September 2021 compared to September 2020, using the same levels of labour and the same equipment. This demonstrates the willingness of our workforce to lift productivity and deliver, especially under challenging and high-risk circumstances arising from the COVID-19 pandemic.
In respect of international benchmarking, much of the available evidence indicates that Australian port efficiency is by no means lagging, as suggested by some employers. Rather, Australian ports have consistently achieved internationally comparable crane rates, which have been achieved without compromising safety.
To illustrate this, Australia’s five major ports had an average crane rate of 31 containers per hour in 2018, compared to rates of between 28 to 35 containers per hour at ports in the US, UK, Belgium, South Africa and New Zealand, according to analysis prepared for the Western Australian Government’s Westport project.
Instead of trading blows in an inane public debate initiated by big business that pits the Australian community against a skilled and proud workforce, the Maritime Union seeks to reframe the debate as one about economic resilience, seaport productivity and the importance of Australia’s domestic supply chain security.
Despite three years of rolling natural disasters, pandemic and economic upheaval, the Federal Liberal Government has continued to undermine Australian cabotage – a protective measure employed by most maritime countries, such as the US, Canada and Japan, to ensure domestic shipping capacity is retained and maintained in the national interest.
Rather than using the resources of a Productivity Commission Inquiry to undermine trade unions on the waterfront, the Government should take heed of the Maritime Union’s long running campaign to restore Australian shipping.
Not only would this be an insurance policy in times of disaster or indeed international crisis, it would directly undermine the rampant price gouging and greed of major international shipping companies who’ve wilfully put the Australian community in such a perilous position.
