- AUSTRALIA'S LEADING MARINE INSURANCE SPECIALIST
Australian shipping container storage in short supply
It comes as no surprise that the shipping industry is experiencing new and unprecedented challenges due to the current COVID-19 pandemic.
One of the biggest challenges traders are facing is simply the lack of storage space, as warehouses, ports, and container yards reach capacity due to supply chains slowing significantly, and some stopping all together.
Each year millions of Ten Foot Equivalent Units (TEU’s) are shipped around the globe making up 80% of the world’s trade.
Restrictions have seen businesses around the globe shut up shop and countries go into lockdown, leaving cargo stranded and containers unable to be moved, unpacked or put back into service rotation.
So where is it ending up?
Our local expert and Head of Marine, Andrew Kidd reveals that Australia is experiencing increased pressure on its container storage capacity and will continue to do so while global trade is in the process of recovering.
Victoria has been hit hard with the backlog of TEU’s with conditions expected to worsen before they ease as China starts up production and goods begin arriving, adding to the already overflowing parks and spaces here in Australia.
“With normal routes having changed for ships due to port closures, there’s been a significant increase in blank sailings, leaving containers unmoved for weeks, or even months, and subsequently clogging up valuable space,” says Andrew.
As Australia looks to slowly ease restrictions, the industry looks to their contingency plans in order to manage the repositioning of containers once the virus begins to subside and supply chains pick up pace again.
“While retail outlets have had reductions in sales, orders that were made in the months and weeks prior to the restrictions are now coming through our ports, clogging up the system,” he adds.
Food and pharmaceuticals remain a priority cargo, while manufacturing and construction industries are facing big delays, as are businesses such as Australia Post.
“We are seeing costs rise throughout the supply chain as a consequence of the container shortage,” says Andrew.
He also notes that operators are facing detention and demurrage (D&D) charges should they be unable to unpack and return containers to shipping lines.
In defence of the D&D charges, the shipping line lobby group, Shipping Australia, said it was essential in order to incentivise quick turnaround times to keep containers in the supply chain and out of storage spaces.
“Fortunately, there’s been some great initiatives to help keep things moving, such as removing truck curfews for freight movements. There will be more changes to come no doubt, but being prepared and patient is important.”
While there are still some struggles to come for shipping and logistics, we’re always here to help. If you need to make a claim or require assistance, contact the Marine Protect team on 1800 684 669 or speak to your local office.