Posted by Ian FAIRNIE on Jul 07, 2024
Shipping Costs - Don’t blame it all on COVID
If there is anything John Park doesn’t know about international freight charges, I’d be very surprised.  He definitely knows his stuff.
John is Head of Business Operations with the Freight and Trade Alliance, and previously was Regional Manager WA for the Customs Brokers and Forwarders Council of Australia for over 20 years.  He is also married to President Tom’s mother!
I wonder if in future times the designation BC might also mean "Before COVID", because before COVID, freight rates from China to Fremantle were fairly stable, around US$800/container (65-70% of our freight comes China).  Ships would arrive at Fremantle, undergo Customs and Quarantine clearances, get unloaded, “dehired", and head off with empty containers to get them filled up with goods, then sail somewhere else.
COVID saw the rates increase 650% to as high as $6,000, and ships would often bypass Fremantle, where the time for Customs and Quarantine clearance was taking several days longer than say the Port of Melbourne.  And increasingly the ships would depart Australia leaving the empty containers behind.  At one stage there were 60,000 empty containers left behind just in Sydney!  Anyone in WA waiting for a delivery would then have to arrange to bring the goods here overland (more $$$) that’s if the train doesn’t derail on the Nullarbor.
Then things started to settle down regarding COVID, but EBA (Enterprise Bargaining Agreement) discussions between stevedores like Patricks, and wharfies meant lightning labour strikes; and then Houthi rebels began blocking access to the Red Sea and the Suez Canal.  This meant freight started to find its way to Europe via the Cape of Good Hope (South Africa) to Port Valencia, Spain, adding days and extra costs for shipping, and reducing freight services to ports in the East Mediterranean.
Port of Valencia
And just when it finally seemed freight shipping costs and times were becoming predictable, in March 2024 the Good Ship Dali crashed into the Francis Scott Key Bridge, blocking access to the Port of Baltimore.  In 2023, this port handled more than 444,000 passengers and 52.3 million tons of foreign cargo valued at $80 billion.  It was the second-largest U.S. port for coal, and had been the leading port for automobiles and light trucks for 13 straight years, handling more than 847,000 vehicles in 2023.
Francis Scott Key Bridge and the GS Dali
John didn’t think things would settle down soon, as he reminded us it is WA Government policy to move the Fremantle Port container terminal to a a new port, the Westport container terminal at Kwinana.  The estimated construction cost of Westport Is $4 billion and even if that is close to the eventual cost, it is likely there will be environmental restrictions imposed to protect marine life, including sea grass, in Cockburn Sound.
Bringing all this closer to Applecross Rotary, Wheelchairs for Kids Australia operations are grinding to a halt because essential parts for the wheelchairs they need to build are stuck on a ship somewhere.  Hopefully Greg Hebble will have some good news for us when he speaks to our Tuesday breakfast meeting on 15 July.
Missed John's presentation? click here for the ZOOM recording.