BEEF exporters are now facing the real possibility they may have to let go of lucrative global markets due to a lack of ability to get timely freight, particularly in the case of high-value chilled product.
They are calling for warnings from the Australian Competition and Consumer Commission around Australia's part in the global shipping crisis to be acted on immediately.
The ACCC has just released a report outlining the full extent of destabilisation in the global container freight supply chain, which paints a dire picture of the pressure Australian food exporters are under courtesy of delayed shipments, the shortage of containers and rapidly rising freight rates.
The ACCC found freight rates on key global trade routes are about seven times higher than they were a little over a year ago. Beef exporters say they are paying $15000 today for a container they paid $2000 for two years ago.
The pandemic created a logistical nightmare on the sea as lockdowns, border closures and travel restrictions shifted consumer demand from hospitality services towards manufactured household goods that are typically transported in containers.
That has exacerbated over the past few months to the point where a number of Australian food exporters are now struggling to meet their contractual obligations. Some smaller businesses have been squeezed out altogether and larger businesses are so concerned their cargo will not arrive in time for the upcoming key shopping peak season that they have started to buy their own shipping containers and are chartering their own vessels to transport the cargo, the ACCC reported.
The ACCC considers that the operation of the global supply chain will be restored, and freight rates will fall once the shocks caused by the pandemic stop. However, Australia risks becoming a less attractive destination for shipping lines unless productivity, workplace relations, and supply chain inefficiencies are addressed, it warns.
Red meat exporter lobby group the Australian Meat Industry Council has been arguing for Federal Government action in four key areas, all of which the ACCC report also recommended.
They are: addressing escalating industrial action on waterfronts; regulation to prevent privatised ports from levying excess rents and charges; government investment in infrastructure to fix inefficiencies caused by a lack of ships and the creation of increased space at empty container parks.
A survey conducted by AMIC showed increased freight rates were consistent across all ports and regions and ranged from 50 to 300 per cent when compared to shipping rates from pre-COVID times.
The regions most affected for Australian red meat exports were North Asia and China, where 100 per cent of exporters surveyed reported that they had experienced difficulty accessing export containers for product destined for this region.
South East Asia, the Middle East and North Africa, Europe and South America followed.
AMIC chief executive officer Patrick Hutchinson said shipping lines were omitting Australian ports to focus their business on the more profitable ex-China to United States route.
Refrigerated containers, which the red meat export industry relies upon for the export of chilled and frozen product, were being converted into dry containers to increase capacity for the shipping of non-perishables goods on more lucrative shipping routes, he said.
The shipping issue goes a lot deeper than just the cost of containers and shipping, the AMIC research found.
The supply of critical imports of packaging, ingredients and machinery had been disrupted and without those, the Australian meat processing industry will have great difficulty manufacturing and supplying local demand let alone export, it said.
The situation was becoming more and more severe week by week, Mr Hutchinson said.
"Logistics is massive for our industry, given we export 70pc of the beef we produce," he said.
"What does it mean for our future if all shipping lines only sit between Shanghai and Los Angeles?"
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