Longshoremen around Australia are walking out on the job for two-, three- and four-day strikes in the latest collective employment dispute. A series of work bans on overtime and shift extensions is also now in effect.
Workers in highly unionised sectors in Australia enter into three-year collective employment contracts, known locally as Enterprise Bargaining Agreements, which are negotiated between employers and their unions.
Strikes and industrial action is lawful during the Enterprise Bargaining period provided that certain procedures are followed.
Reasons for the strike
Waterfront workers at DP World Australia are striking against automation, outsourcing, cuts to income protection insurance and changes to existing bargaining agreements, according to their union, the Maritime Union of Australia (MUA). The MUA is a division of the Construction Forestry Maritime Mining & Energy Union. The MUA describes its adversary, DP World Australia, as pressing a “savage agenda of job cuts and attacks on rights and conditions.”
MUA Assistant National Secretary Warren Smith said “our members have shown incredible patience in an attempt to reach resolution with DP World, including agreeing to hold off on any form of industrial action for three months, but despite that goodwill management are refusing to budge on these key issues. This major escalation of industrial action is about sending a clear message to management that the safety, dignity and job security of wharfies are absolutely non-negotiable. We are fully committed to reaching an agreement as quickly as possible, however we will not sell our conditions, compromise our core claims, or undermine industry standards to do it.”
Port by port; action by action
Brisbane went on strike this morning and it is it the first in a series of 48- to 96-hour work stoppages planned by the MUA.
Sydney and Fremantle will strike Thursday and Friday. Melbourne, which handles over three million twenty-foot equivalent unit shipping containers, will be on strike Wednesday, Thursday, Friday, Saturday and until the early hours of this coming Sunday.
The union is also organising work bans, bans on upgrades, bans on overtime and bans on shift extensions.
Employer fightback!
Marine terminal operator DP World Australia is fighting back and has challenged the legality of some of these proposed industrial actions. A decision by the industrial umpire, the Fair Work Commission, is due on Monday.
DP World Australia has advised industry that, owing to working bans and limitations, the ability of the marine terminal operator to meet schedules will be affected.
Trucking industry consequences
Peter Anderson, CEO of the Victorian Transport Association (VTA), said that trucking companies will be “hugely” affected as “schedules will be stuffed up, volumes will be down and there will be a backlog.”
While ships arriving to unload at Australia may try to divert, the strike is nationwide so Anderson surmises shipping lines will simply tell vessels to slow down and arrive late in order to avoid the strike altogether. That would have the beneficial effect for the shipping lines of saving large amounts of fuel and therefore large amounts of cash too.
However, as Anderson explains, that has very adverse effect on the local transport operators.
“It’s not the lack of activity today, it’s the extra activity in three or four days time. If I can’t get into the terminal to pick up or return my boxes, will I’ll be fined? We’ll likely have to pay demurrage and penalties. And we’ll have twice as much work on Saturday and Sunday and the clock will be ticking. So they’ll [the marine terminal operators] will fine us.”
Battling the backlog
And, as Anderson points out, working over the weekend to clear the backlog won’t just involve truck drivers. Transport companies will have to deploy managers, administrative staff and yard workers too. Labour costs go up over the weekend because Australian law generally requires enhanced rates to be paid for weekend and overtime working.
“Everyone will be under the pump next week,” he said.
“The shipping lines won’t care. They’ll start charging fees. The stevedores [marine terminal operators] don’t care. It’s all done by computers, and they don’t care. We’re worried about a lack of flexibility and demands that we can’t meet,” he explained to FreightWaves.
Anderson doesn’t foresee and immediate impact on the general consumer because warehouses will be holding inventory and acting as a buffer. However, he did point out that perishables such as reefer cargoes and medical goods could be adversely affected.
Another industry source, who asked not to be identified, also pointed out that one of the other terminal operators, Hutchison Ports Australia (part of international conglomerate C K Hutchison) is also operating without a current and valid Enterprise Bargaining Agreement.
“It’s all a bit of tinderbox,” the source told FreightWaves.
Cause of the conflict
The source indicated that the root cause of the current conflict is that the marine terminal operators need to drive their costs down. They are being squeezed by their customers (the shipping lines), which now have greater pricing power than previously as consolidation has reduced their numbers. Plus shipping lines have banded together and have formed consortia that negotiate as one.
At the same time that their customers gained pricing power, on the land-side in Australia, marine box terminal operators lost it. There is much greater competition than before. Five or six years ago, there were really only two main marine container terminal operators – DP World Australia (DPWA) and Patrick Terminals. Today, there are five: DPWA; Patrick; VICT (Melbourne only); Hutchison (Brisbane and Sydney); and Flinders Ports (Adelaide only; local monopoly).
“Stevedores [marine terminal operators] do need to drive their costs down, especially given the consortia and the competition. It’s not a duopoly any more. That tension is the most fascinating thing that is happening,” the source said.
But who wins, really?
The source argued that, although the MUA is seeking better terms and conditions, winning might not ultimately benefit its members.
“Would it really play out in the MUA’s favor? Stevedores could end up with no services,” the source says, pointing out that new entrant VICT in Melbourne has apparently secured up to 20 percent of the market.
The VTA’s Anderson argues that, because of consolidation and competition, the terminal operators simply cannot give in. But, he argues, it means they will negotiate higher rates. And they will seek to recover their costs from the transport (i.e. trucking) industry.
“Melbourne in particular, and ports in Australia, will become the most expensive ports in the Southern Hemisphere,” Anderson told FreightWaves.