Terminal problems causing "pain" for regional agriculture exporters

The situation is a continuation of supply chain disruptions triggered by the Covid pandemic and shocked by geopolitical events, such as the Ukraine war and Houthi attacks on commercial vessels effectively shutting down shipping through the Suez Canal and extreme weather disasters and industrial wharves unrest domestically.

However, container grain exporters have told ACM Agri that while the current volatility of sea freight has grabbed the headlines, massive rises in terminal access fees are causing more heartburn.

Sam Batters, general manager at CHS Broadbent, a Victorian grains business with a strong presence in the container exports space, said the terminal price hikes were far more of a concern than the costs of containers, with evidence of cost surges around container shortages caused by the unrest in the Red Sea.

He pointed to Australian Competition and Consumer Commission data that showed a near five-hold increase in terminal access charges over the period from 2017-18 to 2022-23, from $25.30 per container in 2017-18 to $117.30 in 2022-23.

According to industry sources, once terms and conditions and other charges are factored in the figures range from closer to $40.10 to $150.80.

Early analysis of the 2023-24 season shows an explosion in charges, which are now as high as $222.84 per container.

The percentage of total industry revenue per container lift raised from terminal fees has grown from less than 10 per cent in 2017-18 to over a third in 2022-23.

"These costs are having a disproportionate impact on high volume commodities like grain compared to lower volume, higher value goods like processed foods or electronic goods," Mr Batters said at this week's Victorian Farmers Federation grains group annual conference in Horsham.

"Around 13pc of Victoria's grain is exported by container and with more and more costs embedded at the terminals this is having an impact on our ability to be internationally competitive."

Meanwhile, Container Transport Alliance Australia director Neil Chambers said problems caused by terminal price and freight rate hikes were being compounded by major congestion problems at Port of Melbourne.

He said the site's three biggest stevedore operations were dealing with unique situations, with new truck slotting arrangements introduced by Patricks causing "hiccups", while DP World had lost a large slab of capacity due to major infrastructure renewal work and Victoria International Container Terminal were "almost at terminal capacity" due to a recent surge in new business.

"The upshot of all that is regional exporters are hurting big time trying to get their boxes out. When most commodities are on, they're on, stone fruit out of Central Victoria at the moment is on, you can't just leave it on the tree," he said.

"I've never seen congestion like it, to be honest, the pain that the logistics chain has gone through, particularly since the start of the DP World industrial dispute, has been some of the worst I've ever seen.

"And unfortunately it's continuing for various other reasons despite that dispute being settled, so we're not getting much fresh air unfortunately."

The DP World dispute with the Maritime Workers Union ended earlier this month following four months of rolling strikes that crippled the freight network.

Mr Chambers said exporters of all commodities were "struggling" to meet ship departure times, including railed freight as the final movement of a rail journey is to load the containers on to a truck to be taken to the ship.

"That causes congestion back through the chain and you end up with a whole bunch of boxes congesting the rail head being stacked all over the place. Grain and a whole plethora of exporters are finding it difficult to get enough export slots," he said.

Mr Chambers said the issues for regional exporters particularly are that "if they have come down from regional locations they cannot be taken back to the regional location" and so must be stored near the port.

"Refrigerated containers full of high-value meat must be kept on power, for example. When there is congestion like this and they miss slots to get the boxes into the terminals you must find a home for them somewhere closer to the port and you have to find somewhere to plug them in," he said.

Other additional costs then include multiple use of lifts, additional truck mileage and fuel to move containers around storage, the "significant costs" of added storage requirements, the double- and triple-handling of some containers and penalties faced by exporters by not meeting contractual obligations with overseas buyers.

Mr Chambers said the impacts were particularly harsh for lower value products, like grains and hay, where additional logistic costs "really cut into the bottom line because your margins per ton of cargo are much thinner" than for higher-value cargo like meat.

Meanwhile, electricians at DP World's Brisbane terminal continue industrial action as part of pay deal negotiations.