Shipping monopolies jeopardise Australian trade

Australia must loosen the grip of international shipping cartels on our supply chains

Shipping cartels now dominate and jeopardise Australian trade. A rapid consolidation of the liner trade through mergers, takeovers and alliances has left the overwhelming majority of vessel cargo capacity in all Australian terminals in the hands of three major global alliances. Freight prices from China to Australia alone have more than doubled.

So concludes the Maritime Union submission to the Productivity Commission inquiry into Australia’s maritime logistics.

The union submission recommends a strategic fleet and renewed domestic shipping capacity so as to free Australian importers and consumers from the grip of international shipping cartels. “The greed and avarice of the shipowners who have been going through a process of monopolisation and price gouging has resulted in an under capacity in shipping services and huge profits,” national officers reported to monthly meetings in February.

“To demonstrate the obscene levels of monopolisation at the root of supply chain issues, Australia in 1996 had eight shipping lines to choose from. By 2020 it was down to three,” they reported.

It is not just the union that is highlighting the shipping cartel issue. Organisations such as the Freight and Trade Alliance (FTA) and the Export Council of Australia clearly identify price gouging as the top concern in maritime logistics. Representatives of international shipping, however, blame the unions.

“The Morrison Government called for the Productivity Commission inquiry in December 2021 during a supply chain crunch caused by the short-sighted ineptitude of Scott Morrison’s response to the Omicron wave of Covid-19,” Paddy Crumlin said in a statement. “Predictably the inquiry attracted the usual union bashing from some industry players.”

Crumlin stressed the MUA had for many years highlighted the structural, long-term decline of Australian shipping and its impacts for Australian businesses and consumers.

He described our growing national dependence on services provided by international shipping cartels as perilous.

The union submission contends Australia’s maritime logistics system and supply chains are struggling due to an over relevance on unregulated foreign-registered ships.

Reliability is down and capacity is squeezed. Vessels are shifting out of the Australian trades to more lucrative European markets. Port calls are down 30-40 per cent in Adelaide and Fremantle. Shipments are often late.

An earlier Productivity Commission report into Australian supply chains found ‘further investigation is required to ascertain whether the existing transport of essential goods is particularly vulnerable to disruption’.

However, many in the maritime industry have expressed concern that the report did not adequately reflect how close these supply chains have come to failure, or the multiple human rights abuses that their operation depends upon.

The union submits Australia should act against shipping cartels and regulate international shipping, by repealing Part X (exemption) of the Competition and Consumer Act 2010, which regulates international liner shipping of cargo travelling to or from Australia.

The Australian government should establish a Regulator of International Shipping, the union submits. This would be a new, independent and strong statutory body to ensure international shipping operating to Australia meets all human rights and legal obligations and serves the needs of the Australian public.

“International shipping lines also have a disproportionate political influence in Australia,” the MUA submission notes. “They continue to be exempted from normal competition laws. While obsessing about competition between container terminal operators, Australian governments have ignored the waves of reform of the regulation of international shipping around the world.”

This began in 2002 when the OECD recommended that exemptions for rate-fixing container liner agreements be removed from national legislation.

“Australia in 1996 had eight shipping lines to choose from. By 2020 it was down to three.”

PORT PRODUCTIVITY

At the same time the submission documents how container terminal productivity has dramatically improved over the last two decades. Container moves per hour are up from under 30 to over 60. Labour productivity too has risen from around 22 containers per hour in 1999 to around 50 per hour in 2021. Profit margins have soared for stevedoring companies, doubling from a 1995 baseline in 2021. In just the last financial year, total revenue rose from $1.43B to $1.66B.

The submission uncovers failures in port automation that have lowered productivity in recent years, however. Automated stacking crane operations in the yard fail to keep pace with skilled workers in quay cranes loading and unloading vessels.

DPW data obtained by the union shows gross quay crane moves per hour in 2011 at 27 per hour compared to 24.2 in 2021 at automated operations.

In a chilling expose the submission finds that only five of the top 50 world ports meet labour and human rights standards under ILO Core Labour Conventions.

The full submission is available on the MUA website. •