Australians thinking of buying Christmas presents from overseas should do themselves and the economy a favour by ordering early, competition watchdog Rod Sims says.
The Australian Competition and Consumer Commission chair said the nation had been hit hard by disruptions in global supply chains due to the coronavirus crisis, with freight costs soaring, empty containers piling up and industrial disputes slowing down the nation’s ports and making them unattractive to shipping lines.
He said that in normal times Christmas orders came “in a big lump and the system can handle that, but at the moment the system won’t be able to handle it”.
“So the more we spread the Christmas purchasing out over a longer period, the better it will be for everybody.”
Covid-19 has caused major disruption to global supply chains, raising sea freight costs about seven times above what they were before the crisis, the ACCC said in a report on Thursday.
The supply chain woes, which are caused by the ripple effect of China closing ports because of coronavirus cases, has retailers urging people to plan ahead and led to fears that the traditional Christmas shopping bonanza could be ruined.
But the ACCC said that even without the coronavirus, Australia’s ports were in bad shape, with the productivity of stevedores flatlining despite investing billions into infrastructure over the past decade and shipping lines becoming bigger and more powerful.
Citing research by the World Bank and IHS Markit, the ACCC said that even before the pandemic Australia’s two big ports, Melbourne and Sydney, were in the bottom 15% of global ports, ranked by efficiency.
Stevedores have also been hit with higher costs after ports were privatised, according to ACCC research.
The regulator said that during the pandemic the average time a ship spent idle at berth in Port Botany increased from 11.9 hours to 21.2 hours, leading some shipping lines to skip the port entirely.
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Australia’s exporters are also suffering because they are competing against empty containers, which shipping lines want to move back to places like China where they can be put to work.
The competition regulator called for more investment in infrastructure so that ports can take larger ships, service them by rail and deal with the mountains of empty containers.
Industrial relations and restrictive work practices at stevedores should be addressed, privatised ports regulated so that rents and charges are kept reasonable and a law enabling global shipping groups to legally form cartels should be abolished, the ACCC said.
The ACCC said shipping line capacity fell during the pandemic, leading them to concentrate on more lucrative routes such as Asia to North America, at Australia’s expense.
“It’s an enormous problem,” Sims said.
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“It means that if you’ve got fewer shipping lines wanting to come here then you’ve got high freight rates, because those that are coming here will charge more.
“And if you’ve got less ships coming here then you’ve got less reliable delivery times and a longer period between delivery times, and that mucks up the ordering system.”
Sims said he did not want to take sides in industrial fights between the Maritime Union of Australia and stevedoring companies that have resulted in widespread industrial action, including bans on overtime and working at a higher grade.
However, he said it was “a dreadful time on top of everything else for us to be having industrial activity”.
“Once the pandemic is over, everything should get back to some sense of normality,” he said.
“But we have, I think, a potential continuing problem because we’re continuing to have industrial relations issues that other countries don’t have, where we’ve got ports that have been privatised and they’re not regulated.”
