Wednesday, November 23, 2011

Dark Days for Bulk Freight and Container Lines as Strikes Hit the Supply Chain

From Road Haulage to Air Cargo - The Financial Problems Should Worry All Of Us
Shipping News Feature

WORLDWIDE – Strikes and lockouts seem to be the order of the day as the world faces numerous financial and political problems. As 2011 comes to an ignominious end the freight industry seems to be particularly vulnerable as disenchanted logistics workers seek to secure their future earnings at a time when world shipping tonnages fluctuate. Don’t hold your breath for a Happy New Year as bulk carriers struggle to reach economical freight rates and container lines tear up tariffs due to half empty ships and too many new builds looming. Road haulage although rallying slightly lately in some countries, must also battle the spectre of oversupply.

Currently, besides the horrific political situations in places like Syria and Egypt there are labour disputes far and wide. Negotiations in the Port of Auckland, New Zealand have broken down causing the likelihood of a backlog of containers which other ports may struggle to deal with. If matters are not resolved quickly a strike on the 8th and 9th of December will result according to the Maritime Union. The notice to strike has caused the Port of Auckland to declare the Bledisloe Wharf and Fergusson container terminals will lock out all staff from the 1st to the 5th December causing further disruption.

Although conventional cargoes are currently unaffected by the stoppages and empty containers are still being accepted at a separate terminal no end is currently in sight to the disagreement as ports like Tauranga say they are ready to soak up the excess freight.

In India the International Transport Workers Federation (ITF) are in dispute with local FedEx managers whom they say have victimised members of the local Global Domestic Courier Services General Employees’ Union (GDCS) and the discovery of new oil reserves off the Brazilian coast has sparked a pay and conditions row with local crews of offshore facilities who claim not only are they underpaid but that foreign labour, including US citizens, are being hired at even lower rates of pay.

Air freight companies are not immune with disputes causing disruption to Air France's Singapore services and the Qantas dispute continuing its acrimonious route seemingly destined to drag on as both sides publicly air their grievances. Meanwhile tomorrow may see flights severely disrupted by a day’s national strike which is also expected to have a severe impact on the supply chain with major factories like VW announcing 24 hour closures due to staff inability to travel and disruption to suppliers.

We predict another area of dispute will become a major bone of contention in the coming months, namely that surrounding the so called Jones Act whereby only US crews can be hired and US flagged vessels utilised on short sea or feeder services. The two sides of this argument both have an extremely firm foundation – just the recipe for conflict.

On one hand the unions and general labour force can claim that the Act is there to do what it was designed for, namely to ensure the standards required of shipping plying regularly to and from US ports. The Act also protects American jobs, which some say is a worthwhile pursuit whilst others would point to restrictive practices and the result that the actual cost of implementing the act means that the US will never be able to construct a really worthwhile short sea industry, to the cost of the environment and shippers and importers who are forced to use road or possibly rail freight services as a result.

Those who support a change in the law point across the Atlantic where a range of container and conventional cargo feeder services flourish with no trade impediments and with a beneficial effect on CO2 production and the cost to shippers.

Yesterday we wrote of the hope that all the relevant rail unions in the US would come around to the terms offered after the intervention of President Obama’s specially appointed committee, at the time of writing however three unions are still holding out, according to reports for a mere 0.4% increase in the next six years (they apparently asked for 19% and have been offered 18.4% if ‘insiders’ are to be believed).

Despite the recent elections we yet have not heard the last of further industrial action in Greece following the stoppages by the Panhellenic Seamen's Federation (PNO) and other logistics related workers last month as the country simmers over the Eurozone bail out situation. Already Greece’s two largest unions are set to down tools on the 1st December meaning both public and private sector workers will absent themselves for two days.

State owned railway BZD in Bulgaria failed to reach agreement with the country’s leading political figures today so the dispute there will begin tomorrow as threatened by the labour unions. All trains will apparently be halted as from tomorrow between 0800 to 1600 hours after the announcement of 2,000 redundancies coupled with fare rises and reduced passenger services. Hopefully freight services will be less affected due to the propensity to run cargo trains throughout the night.

With a series of ‘Stop the City’ protests continuing to affect trade from Oakland to London one can only hope that reasonable settlements can be reached for all these and the numerous other disputes that we currently see around us. To fail to do so will simply result in more stoppages and continuing misery into what might prove a very unhappy New Year.