A meeting this morning between DP World Australia, the Maritime Union of Australia (MUA) and Australian transport minister Tony Burke has proved unsuccessful, and the port strikes will go on to the end of the month.  

Dock workers throughout Australia have been striking since October in a pay dispute against port operator DP World. DP world estimated this has cost the economy A$1.34bn. 

The meeting took place this morning and resulted in Mr Burke refusing to intervene, despite being requested to do so by DP World and multiple stakeholders in Australian shipping. This led the MUA again extending strike action to 30 January. 

Maersk warned customers today that port operations at Sydney, Melbourne, Freemantle and Brisbane will see bouts of two-hour work stoppages every day from 22 January. 

According to Sky news Australia, Mr Burke said: ““I’ve made clear to both groups today that I have no intention of intervening. I’ve made clear that I have an expectation that they will reach agreement.” 

However, he indicated that he sympathised with the union.  

“I think Australians are sick to death of having highly profitable companies say everything is the fault of them having to pay their workforce the same as their competitors.” 

The director of Australian freight forwarder Neolink, Sean Crook, told The Loadstar: “This is a situation that the government cannot avoid and have to get involved at some point. 

“At the moment, you have a stalemate between an overseas-controlled entity not budging, the union wanting significant pay increases and a government refusing to play mediator – all the while Australian consumers and businesses have to deal with inefficient supply chains and increased costs, which ultimately will not allow us to compete on the global stage.” 

Mr Crook warned that carriers were increasing freight rates, not only because of Red Sea issues on the Europe to Australia tradelane, but also due to the incredibly slow vessel turnarounds at ports. He said: “As inflation eases, I am concerned that an increase in costs, lower productivity and efficiency will ultimately flow through to Australian consumers at a period where the cost of living here is on the rise.” 

Mr Burke did recommend that the Fair Work Commission could aid a resolution. He said: “It is in the interests of everybody, that they negotiate and they use the Fair Work Commission to help them with that conciliation.” 

However, Mr Crook warned that even if a resolution was reached, it might not last. 

He said: “There is a real chance that, even if a deal gets done, we could see collective bargaining agreements expire in 2025, which would create massive concerns.”  

Australia’s federal government rejected plans for the country’s first wind port saying that it would have “unacceptable impacts” on the environment and wildlife and in the process has also created a major challenge to the first planned offshore wind farms. The federal government reached its decision in mid-December and it became public today, January 8, with both the Port of Hasting Corporation which was to host the staging and assembly area, and the government for Victoria saying they would explore their alternatives.

Australia has only recently joined the global efforts to develop renewable energy from offshore wind farms. The country went through a lengthy process of setting the regulatory framework before selecting the coast off Victoria to host the country’s first projects. The area was selected in 2022 focuses on a stretch of the coast covering a little more than 12 miles in the Gippsland region near the town of Golden Beach.

Victoria has a goal of developing 2 GW from offshore wind by 2032 and 9 GW by 2040. However, one of the many challenges was a review that found none of the ports in the region were suited to supporting the development of large offshore wind farms.

Plans were developed at the state-owned Port of Hastings which called for dredging approximately 227 acres including a wetlands area. They planned to reclaim approximately 70 acres to create a large-scale staging and assembly point for the country’s first two offshore wind farms.

 

Rendering of the proposed wind port assembly and staging area (Port of Hastings Corporation)

 

The corporation that operates the port highlights the Port of Hastings was selected as the most suitable area because it has a large area of available land close to deep water channels. It also has channel capacity and is close to existing port facilities. The wind port was tied to the first two projects off Gippsland and Portland.

“The proposed action is likely to cause irreversible damage to the habitat of waterbirds and migratory birds and marine invertebrates and fish,” concluded Tanya Plibersek, Minister for the Environment and Water, in her statement of reason for the decision. She specifically cites the impacts of destroying or substantially modifying the wetlands. She also cites that the dredging would disrupt tidal flow in the area.

Under Australian law, the decision is a final ruling without a means for appeal. The state government or the port operator however could elect to take the federal government to court, but that would create a lengthy delay.

In their application for the project, they wrote, “If port facilities are not available to support the offshore wind industry in time for the development of the first offshore wind farm, growth in Victoria’s offshore wind sector will be curtailed due to a lack of suitable port infrastructure. Further, delays in port upgrades will lead to constraints for offshore wind developers, ultimately reducing the volume of renewable energy generated through offshore wind compromising Victoria’s clean energy milestones.”

The Port of Hastings Corporation acknowledged today, that it has received the decision. It reports that it is currently considering options. Similarly, the Victoria government said it would study the options. Speaking to the local media, government officials said they would not be deterred from moving forward with the plans for offshore wind energy.
Among the options they can explore are revising the proposal to address the concerns and resubmitting it. They could also look to relocate the operation to a new location but that would also require submitting a new proposal for review. Media reports are that the Star of the South wind farm, likely to be Australia’s first, was also assessing Geelong or Bell Bay in Tasmania as secondary sites for construction and staging of materials.

Ocean Network Express’s (ONE) hapless containership ONE Orpheus (104,525 dwt) was forced to suspend its operations after the incident in the Suez Canal at the beginning of the month. The ship arrived in Turkey yesterday, December 25 after unloading its containers.

The company had first reported that there were delays in completing the repairs to the 1,102-foot (336-meter) containership due to weather issues in Egypt. Built in 2008 and operated by NYK for ONE. The ship lost navigation control and grounded in the Suez Canal after hitting a floating bridge on December 6. Claims consultant WK Webster in its casualty report said there were indications “that the vessel sustained a significant breach to the starboard hull above the waterline as a result of the collision.”

The repairs were reportedly completed and the ship departed from Egypt on December 17. ONE was advising customers that she was expected to reach Rotterdam on December 26, but then without further explanation, the voyage was canceled. Two days after departing from Egypt, ONE informed customers that “she will require additional urgent repair” meaning the vessel would not be able to continue her voyage as planned.

The trip was terminated in Piraeus mid-week last week. She arrived on December 20 and stayed till December 23 with all the laden containers being offloaded at the Greek terminal. ONE was planning to make arrangements for further transshipment of the containers from Greece to their destinations.

The vessel was moved first south of the Dardanelles and then made the transit into the Sea of Marmara north of Canakkale, Turkey. She anchored there yesterday, December 25. The reports are that the vessel will need to go into dry dock to complete the repairs from her incident in the Suez Canal.

Webster is telling clients that based on the decision to remove the ship from service for repairs shippers may see General Average invoked. They are warning that shippers might be required to post security before they can receive their containers.

There have been no additional reports so far on what caused the vessel to ground during the transit. The Suez Canal Authority blamed problems with the vessel’s rudder which led to the steering failure.

Container import volumes at the main U.S. ports containers ports continued to grow into the fall leading to a later than expected peak this year and prompting forecasts for continuing year-over-year growth in 2024. With the U.S. economy appearing to be on a sustainable growth path, the National Retail Federation is projecting record total sales volumes for the 2023 holiday season and strong growth in import volumes in the first quarter of 2024 compared to weak volumes early in 2023.

Import volumes surprised the retail trade group which had last month lowered its forecast for container volume in its monthly Global Port Tracker report. The group reported that it believed most imported holiday season merchandise had already arrived by September and that inbound cargo volume at the nation’s major container ports was expected to slow during the remainder of 2023.

“We originally thought peak season would come in August but imports kept growing in September and again in October,” said Jonathan Gold, Vice President for Supply Chain and Customs Policy at the NRF. “Whether it was merchandise for retailers or cargo for other businesses, that’s a good sign for the economy and for the holiday shopping season.”

The report highlights that October’s import volume was a higher than expected 2.05 million TEUs at the major U.S. ports topping September’s 2.03 million TEU and marking the fifth consecutive month of month-over-month gains. October was also the first month to show year-over-year gains in volume since June 2022.

As a result, the National Retail Federation is raising its outlook for fourth-quarter import volumes by over five percent compared to a reduced forecast issued last month. While they still project that the year’s import volumes will be down 12.4 percent versus 2022, they believe the strength of the economy will lead to continued gains going forward.

The retail group also raised its forecast for the first quarter of 2024 by 2.4 percent versus last month now calling for import volume of 5.45 million TEU between January and March 2024. That represents monthly gains versus 2023 of between nearly seven percent and more than 14 percent in February which was slowed in 2023 by the Lunar New Year and an extended holiday period in Asia.

The retailers highlight that in seven of the past 10 years, import volumes have peaked in October. They believe shippers accelerated shipments in 2021 and 2022 due to the fears of port congestion and last year’s threats of labor problems after the union contract expired on the West Coast.

Figures from Descartes Systems Group confirmed the anticipated slowing of volumes in November. They calculated a nine percent decline in volumes from October to November 2023 at U.S. ports, noting that while it was consistent with historical performance, it reflects a continuing decline in volumes from China.

“November has traditionally been a weaker month than October and while the decline is steep, it is consistent with other years’ performance,” commented Chris Jones, EVP Industry at Descartes.

They calculate that November’s volumes came in at just under 2.1 million TEU. It however was 7.4 percent higher than November 2022 and more than 10 percent higher than pre-pandemic November 2019.

Port officials in South Africa are reporting it is likely to take until 2024 and possibly till February to clear the current congestion that has built up at the container port in Durban. Consistently at the bottom of port rankings for efficiency, Durban is facing a crisis with more than 60 vessels reportedly waiting offshore and importers now saying they will not have expected merchandise in time for Christmas.

“The problem of port congestion is a complex one and it is something that was due to happen at some point, as a result of many years of underinvestment in equipment and its maintenance,” Transnet operator of the large container terminal at Durban wrote in a statement attributed to Board Chairperson, Andile Sangqu. “We need to caution that this is going to take some time as the lead times for some of the equipment is anything from 12 to 18 months,” said Sangqu in a media briefing.

Carriers have been warning customers for weeks that the situation in Durban had reached crisis level with the operator in part blaming bad weather in addition to staffing levels and equipment failures. Maersk at the beginning of November imposed a congestion fee between $200 and $400 per container for boxes shipped to South Africa from destinations beyond East and West Africa. MSC Mediterranean Shipping Company followed suit with a similar congestion fee and CMA CGM announced at the end of last week it will also be implementing a Port Congestion Surcharge of $200 per TEU bound for Port Elizabeth, Durban, and Cape Town beginning in December. Maersk and other carriers have also dropped port calls and announced changes to their rotation.

Transnet says with 63 vessels currently anchored off Port Durban and 20 booked for the two berths at the Durban Container Terminals it will take weeks to clear the backlog. They are working to increase the volume at the larger Pier 2 from a pace averaging 2,500 TEU a day over the past four weeks to a target of as many as 4,000 TEU daily. The historical average has been 3,300 TEU a day.  Even with the increased pace at Pier 2, they warn into could be 15 weeks, which would be the beginning of February before they can catch up.

The situation is looking only slightly better at Pier 1. They are going to try to raise the volume from the current 1,200 TEU a day to 1,500 TEU over the next few weeks. They expect it could take seven weeks to clear the backlog at Pier 1.

Durban has consistently ranked low for port operations. The World Bank’s 2022 report places Durban at 365 on a list of 370 ports. Transnet, however, cites weather as well as issues of equipment availability for the current problems. Ships are reporting the wait is three to four times the average time to offload in Durban.

The company says it is prioritizing the optimization of port operations and working to improve planning and forecasting leading to better anticipation of cargo volumes. Among the steps they are taking to address the slow turnaround times is increasing staff including a fourth shift.

While saying it is an urgent intervention to address the backlogs, Transnet reports it will take time to obtain new equipment. They are working to repair and refurbish critical port equipment but said it will last till August 2024. They are buying 16 gantry cranes for delivery by the second half of 2025 and four ship-to-shore cranes for delivery in FY 2025-2026.

Similar delays are reported to also be building at Richards Bay, which is the large breakbulk port for the mining industry. Transnet said it will be conducting an emergency meeting with port officials and the industry on Tuesday to work on a plan to address the problems at Richards Bay.