MUA to strike in Brisbane on Friday Oct 3, 2014
The Maritime of Union of Australia (MUA) has advised it will take limited industrial action on Friday, October 3 at the Port of Brisbane. All members of the MUA employed by DP World Brisbane will engage in a stoppage of four hours duration from 11am until 3pm, and a stoppage of eight hours from 3pm until 11pm. This follows Lloyd’s List Australia’s previous advice of limited stoppages at Sydney on October 1 (Wednesday) and Melbourne on October 2 (Thursday). In a statement, DP World Australia said it strongly disagrees with this action taken by the MUA and believes it is “neither required nor deserved”. “This action is disruptive to our customers and to the broader transport and logistics industry, which depend on efficient and reliable waterside operation through our terminals,” DP World said.
Victoria’s exports hit record high
Victoria’s food and fibre exports reach a record $11.4bn for 2013/14 due to increased demand for red meat with ongoing interest from China. The value of the state’s food and fibre exports grew by over $1bn, with trade to China growing 15% to $2.7bn. Premier Dennis Napthine and minister for agriculture and food security Peter Walsh announced the results contained in the 2013-14 Victorian Food and Fibre Export Performance Report at Melbourne’s Wholesale Fruit and Vegetable Market. Meat exports, according to the report, have risen to be the state’s highest valued export, up 36% to $2.34bn while dairy exports have increased by 23% to $2.29bn. Horticulture exports have risen almost 50% to $894m due to demands for almonds, table grapes and citrus fruit. Mr Walsh said the results demonstrate Victoria was right to focus on the premium markets of north Asia, Southeast Asia and the Middle East where middle-class populations were expanding and demand growing.
Is it tax time for internet trade?
Federal minister for immigration and border protection Scott Morrison announced on September 17 the Joint Review of Border Fees, Charges and Taxes. This review will be led by the Australian Customs and Border Protection Service (ACBPS) and will be conducted jointly with the Department of Agriculture.
The review has the following goals:
• exploring deregulation opportunities to minimise, where possible, the administrative burden for industry and government and to consider better aligning border charges levied by the Commonwealth;
• achieve at minimum a revenue neutral position, balancing user charging arrangements for the management and protection of our border without unduly impeding economic growth and Australia’s international competitiveness;
• explore opportunities to consolidate the number of border fees, charges and taxes, and reduce complexity associated with their collection;
• incentivise industry towards efficient and compliant behaviour while ensuring an appropriate distribution of costs across the users of Australia’s border; and
• align fees and charges with future border initiatives, new services being requested by industry and longer term objectives.
So what are the likely changes from the review? Perhaps the most contentious issue is the current low-value threshold? Currently any import consignment under the value of $1000 is exempt from paying duty, GST and import processing charges. Will the threshold be reduced and will the review examine whether low-value consignments should be subject to any form of border fee, charge or tax? Australian bricks and mortar retailers would undoubtedly like to see this but would the wider public be impressed?
Source: Paul Zalai, director Freight & Trade Alliance (FTA)
China Merchants backs second major Sri Lanka port investment
China Merchants, China’s biggest port operator, is to co-invest US$601m with a major mainland construction company in a second phase of port development in Sri Lanka. China Merchants Holding (International) and China Harbour Engineering Co will build and operate a container terminal at Hambantota Port in the south of Sri Lanka. The two companies will hold 65% a joint venture with Sri Lanka Ports Authority. The announcement was orchestrated to coincide with a visit to Sri Lanka by China’s president Xi Jinping, who pledged further support for investment and aid along what Beijing terms the maritime silk road that runs from China through the Indian Ocean to Africa. China Merchants already has a large port project in Sri Lanka. It is involved in an existing joint venture with Sri Lanka Ports Authority, to develop Colombo International Container Terminal (CICT). China Merchants holds 85% of this joint venture and has invested US$500m. China has also pledged US$1.4bn to build the Colombo Port City project as part of the maritime silk road scheme. China Communications Construction Co will build the port city on a 233 ha reclaimed site. The development aligns China’s interests in establishing a greater commercial and military presence in the Indian Ocean with Sri Lanka’s ambitions to become a maritime centre to compete against Dubai and Singapore. The terminal at Hambantota will consist of two 100,000 dwt container berths and two 10,000 dwt feeder berths. Like the agreement on CICT, China Merchants will hold a concession for 35 years, after which it will hand over operation to Sri Lanka Port Authority. China Merchants has an option to keep the Hambantota concession for another five years.
DPWA Brisbane – Automation fails and how the failures developed over time
“Rubbish!” That’s the view of freight forwarders about the performance of DP World’s Brisbane terminal. “DP World is the worst of the stevedores in Australia. If you were to order the stevedores in ranking, Patrick is well ahead, then Hutchison – even their fledgling operation,” fumed one annoyed forwarder. Another described DPWA’s service in Brisbane as being “a nightmare”. A third added that DP World’s service caused “endless dramas unforseen, charges beyond belief. Below acceptable.” And a fourth described their service as the “deplorable operations of DP World.” DPWA’s new $250m semi-automated terminal, which took five years to complete, has had frequent and repeated failure of the automated modules which, as we have been reporting over the last few months, has in turn led to a lack of service to the industry.
• Installation of the automated system caused some “inevitable teething problems,” according to a statement of May 19 from a DP World Australia (DPWA) statement.
• DP World Australia CEO Paul Scurrah elaborated on these problems in an exclusive, and a largely unpublished, interview with Lloyd’s List Australia of mid-to-late May 2014.
• Truck turnaround times were 75 minutes plus “on most days” with the odd occasion where they were “two or three hours”, Mr Scurrah said in the same interview.
• During the interview with Lloyd’s List Australia he additionally commented:
“We’ve always been incredibly satisfied with the hardware and its performance from the first ship serviced, and that was to be expected. What was also to be expected was if there were to be any issues, it would be around the software – that played out, and proved, to be true. “What has happened between now and then has been a continual improvement in the software – tweaking that and ironing out the bugs. And I call them ‘bugs’ because they are not major issues, but they do have an impact. “Every time you take the software offline it has an impact on the productivity. So we are seeing far less instances of having to take the software offline and in fact it is getting to levels we would expect it to be at – but also you’ve got technicians who are getting more used to knowing how to deal with those issues as they arise. “So something that might have taken four hours to fix in February has taken 20 minutes to fix now [May]. And our team members who are required to operate the equipment are also getting far more experienced. “So you don’t like to have this happen but there is always an element of trial and error. And we have gone through that trial and error. “I can’t guarantee that nothing will go wrong, nobody can, but what we can guarantee is that the experience we’re building up and the quality of the software now is enough to be world-leading.” Mr Scurrah also confessed at the time that “as you transition away from an old operation, and into a new one, inevitably, there is a potential for customer impact. “And in recent times, that has been most noticeable with our truck turnaround times and our landside performance in Brisbane. “I think the pressure put on the business by making the decision to shut off by the end of March upped the volume that was going through the new facility quite substantially. “In hindsight, we might have paced that a little differently. But it has also put us to the sword a lot quicker to get a lot more urgency to fix it… So I think doing it that way exposed some of the bigger issues to us earlier, so it was a period of pain for us.”
• At the time, Port of Brisbane general manager Peter Keyte also told Lloyd’s List Australia that the port did not receive any complaints about delays at DPWA Brisbane before April 28, which was the date when the stevedore actually went live with the automated system.
“We know they were trialling the system, obviously, for the previous couple of months, but we had no complaints during the trial period because they were still operating their old forklift reach-stacker operation anyhow,” Mr Keyte said. April 28 to mid-to-late May is a period of about three weeks.
• By mid-May, Mr Keyte was reporting that truck turnaround times were down to 40 minutes and were improving every day.
“In any new system, you’re going to have glitches, so while we hoped that they weren’t going to be as bad as what they were, in the early stages, they certainly threw the resources at it to fix it as quickly as they could,” Mr Keyte said in mid-May. He added that there was a period for about two weeks where there were “significant delays” caused by issues with their software.
• Meanwhile, Patrick Logistics had introduced a demurrage charge for waiting times in excess of one hour after experiencing frequent delays “for more than three months” at DPWA Brisbane.
At the time, Warwick Krigstein, a national sales and business development manager at Patrick Terminals and Logistics, told Lloyd’s List Australia that his company had experienced extensive delays at DPWA (Hutchison too). “Patrick has absorbed the significant, additional, costs which these unexpected delays have caused, as it has always been prepared to do when there are temporary delays. “These delays, however, have continued for more than three months and Patrick Logistics can no longer bear these costs without some contribution from its customers,” Mr Krigstein said at the time.
• DPWA disputed the justification for the charge and accused Patrick Logistics of implementing an opportunistic charge and that Patrick Logistics used “misinformation” to justify that charge.
Questions that DPWA declined to answer
• What challenges specifically have been encountered with the automated system at the DP World Brisbane terminal and how has this impacted on productivity?
• Do you think the situation has been resolved?
• Was there adequate communication with stakeholders/ customers/ truck drivers and employers prior to the implementation of the automated stacking system?
• What form did this communication take and did it allow for feedback?
• What is considered the respectable level of reliability for the automated stacking system?
• What equipment/ software have failed and what contingency plans were drafted to combat such issues?
• Have these plans been implemented?
• Have these plans been monitored and if so what are the key performance indicators that measure progress?
• Were these issues considered in your risk assessment?
• Has there been adequate communication with customers/ truck drivers/ employers since problems were first encountered and if so, what form did this communication take?
• What are performance standards for truck turnaround times and container servicing times?
• Was the automated system implemented on schedule and within budget?
• The customer and carrier bulletin says a number of changes have occurred in recent times to ensure improved communication re ASC outages, increased coverage of VBS. How many changes and what are they?
• What volume has been moved outside of the modules into the ‘old terminal’?
• The last paragraph of the customer service bulletin talks of “of the poor service delivery”. What was the target of delivery, what was the control zone and by how much/many did these variances actually breach the control zone?
• I understand that in DP World’s Carrier Access Agreement there is a specification that DP World reserves the right to cancel a time zone but will give one hour’s notice where possible. How many times has this been achieved in light of the module difficulties?
• Have any claims been made against DP World for out-of-pocket costs due to the issues with the modules?
• Has there been any damage to freight due to these issues?
Source: Lloyds List
Non-compliant vehicles to be quarantined at cost to importer
From October 1 imports of vehicles into Australia identified as noncompliant at the first port of discharge will be ordered into quarantine for full inspection and any treatment required. Additionally, in the upcoming trial, all other vehicles from the same cargo entry line cannot be removed from subsequent discharge ports without inspection and treatment ordered to mitigate identified risks by Department of Agriculture officers.
This increased regulation to manage identified risks will be on a full-fee-for-service basis,” a spokesperson for the department told Lloyd’s List Australia. “For non-compliant importers these new measures will considerably increase time taken to discharge and significantly increase costs. “Normal surveillance regulation will continue for compliant importers.” Currently all new vehicles imported to Australia are subject to surveillance inspections on arrival by departmental officers to ensure compliance with entry requirements (ie. that they are free from biosecurity risks). Full-fee-for-service regulation (full inspections, directions for treatment and reinspection once cleaned or treated) and associated costs to industry are only applied if biosecurity risk material is found. “We will be working closely with industry to trial the new inspection and regulation process on identified new vehicle imports. “This is essential given the numbers of vehicles that may be held now on arrival.” The trial is being conducted with the full support of the Federated Chambers of Automotive Industries (FCAI). At the same time the department is also working to develop and implement better pest-management systems in collaboration with major exporters and importers. Once noncompliance is identified on the new vehicles at the initial discharge port, all new vehicles at that port and any subsequent discharge port may be ordered into quarantine for full inspection on a fee-for-service basis.
Container ports struggle with the worst congestion in 20 years
Congestion at key Asian ports is the worst it has been over the last 20 years and the situation looks set to continue, according to two executives from one intra-Asia carrier. Damian BrettSpeaking to Containerisation International, MCC Transport chief executive Tim Wickmann and chief commercial officer Naresh Potty said that schedule reliability was becoming increasingly difficult to maintain because of the congestion, which began around March. Mr Potty named Manila as the worst-performing port but said that Hong Kong, Shanghai, Qingdao, Incheon and Cat Lai in Ho Chi Minh City were also badly affected. Hong Kong congestion is causing particular issues for carriers, they said. Mr Wickmann said the problem appeared to be partly caused by the complicated nature of vessel-sharing agreements, with cargo for several carriers being carried on a single ship that then needs to transfer to each of the carriers’ feeder, barge and intermodal service providers. This has greatly increased the number of inter-terminal transfers. “I have to say that I have been in this business for more than 24 years and I don’t think I have experienced anything as operationally challenging as I have over the last six months,” said Mr Wickmann.
