Market Overview

Striking Longshoremen Cause Chaos At Australian Box Terminals

Striking Longshoremen Cause Chaos At Australian Box Terminals

Rolling strikes by workers at the Hutchison Ports Australia box terminals in Sydney and Brisbane started at 6:00 a.m. (Australian Eastern Standard Time) yesterday January 17 and are causing landside logistics chaos. Truck turnaround times have increased to four hours, FreightWaves was told by Peter Anderson, the CEO of the Victorian Transport Association, a trucking industry body. He added that the disruption is going to be "ongoing."

Hutchison Ports Australia is one of three container terminal competitors in Australia and it has about a six percent market share. It has about 300,000 container crane lifts compared to an industry total of about 5.1m container lifts. The other two main stevedores are DP World Australia and Patrick Terminals. Hutchison Ports Australia is part of the Hong Kong-headquartered Hutchison Ports, which employs over 30,000 people and operates ports or terminals in 26 countries around the world. Hutchison Ports, is part of the global conglomerate CK Hutchison Holdings.

Immediately prior to the strike, one landside industry executive, who declined to be identified, forecast that "turnaround times will be horrible… you can imagine the effect on the landside. The interface will deteriorate; turnaround times will blow out. Prepare for a rocky ride."

The executive pointed out that there's nothing that can be done from an operational viewpoint. If a trucker is instructed by a customs broker or freight forwarder to pick up an import box or drop off an empty box to/from Hutchison, then that's what the trucker has to do.

The immediate operational consequences of the strike action are posing difficulties for the local supply chain.

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"On imports, it snowballs throughout the supply chain. It will have cascade effects. You have your own forecast for when the box arrives, and when it will move to the next stage. It's a constant administrative headache. Importers, exporters and landside logistics operators are going to suffer through poor service," the executive stated. He also highlighted a problem for the export of goods and commodities from Australia – namely that ships have cut-off slots. If exporters don't get the box to the ship in time, the ship will not wait, so there will potentially be short shipments.

Rolling strikes throughout the day

Earlier this week, industry was notified of rolling industrial action, which is taking the form of two hours of work followed by a 30-minute stoppage. This pattern repeats throughout the day. Further, and extended industrial action will take place if, as seems highly likely, there is no agreement any time soon between Hutchison Ports Australia and the highly militant Maritime Union of Australia.

A Hutchison spokesman informed FreightWaves that he was not authorised to say anything. However, the union has released a public statement.

As only the Maritime Union of Australia (MUA) has given its views on the nature of the dispute and, at this point, FreightWaves has been unable to either confirm or refute its comments.

The union claims that the company is demanding a 2.5 percent cut to superannuation (i.e., the money that employers contribute to their workers' pension funds); cuts to entitlements to take sick days; cuts to parental leave; cuts to redundancy pay; cuts to long service leave (this is an Australian holiday entitlement in which employers are required by law to pay workers at least a couple of months of vacation [depending on circumstances] once the employee has completed 10 years of service); wage cuts of up to A$10 an hour (US$7.17); a freeze on wages; reductions to safety standards including the loss of full-time first-aiders; and the removal of personal protective equipment.

We'll not have our conditions cut!

FreightWaves spoke to the union's Assistant National Secretary, Warren Smith, who stated, "The company's come out with claims that any person would believe are incendiary! We've been able to deliver the Holy Grail on productivity. But we are being rewarded with automation and job cuts. They want to cut redundancy, long service and [contributions to pension funds]. They're saying that they want to bring it back to the statutory minimum. They want to take it away? Good – they can have 10 boxes an hour. We'll not have our conditions cut!

Smith continued, stating, "Long service leave on the waterside accrues at 1.3 weeks every year and gives 13 weeks leave. They want to cut the accrual rate to 0.667 weeks, which means 15 years service to get the same long service leave. Redundancy is three weeks pay for every year of service for a maximum of 52 weeks. They want to take it to a maximum of 12 weeks. They want to cut our redundancy? And have a robot take our jobs? That's an invitation to industrial action."

They want to cut our redundancy? And have a robot take our jobs? That's an invitation to industrial action."

Smith indicated that the two sides were "not close," to an agreement, pointing to the fact that the workers are taking industrial action to pressure the employer into doing a deal.

"We are not negotiating away the historical rights of workers in Australia. We're not going to do it," Smith told FreightWaves.

That last comment goes to the heart of the dispute.

The landside logistics executive explained that when Hutchison entered the Australian market in Brisbane in 2013, it entered into its first collective agreement with the union. However, it appears that the company may have conceded too much in that first agreement, which now, of course, acts as the starting point for subsequent negotiations for new agreements. That happens every three or four years.

The executive explained that Hutchison was trying "to wind back the effects of a really bad deal… the management are desperate to wind themselves out of that bad deal."

But, he added, "the MUA are not in the business of unwinding anything. It's not in the track record of the MUA to accept a reduction."

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Posted-In: Australia Freight FreightwavesEarnings News Global Markets General


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