Logistics

Botany rail choke exacerbates Sydney container crisis

Liz Wells, June 28, 2021

A vessel bound for Singapore on the berth at Patrick Australia’s Sydney AutoStrad Terminal at Port Botany earlier this month. Photo: Bob Wood, Chatswood Portography

A THREE-WEEK throttling of rail paths into Patrick Australia’s Port Botany container terminal is slapping unforeseen charges of up to $20 per tonne on grain and pulse exports going out of Sydney.

Starting on Friday, the contraction in rail slots available at Botany’s biggest portside container terminal has come as the Maritime Union of Australia looks to negotiate a new workplace agreement with Patrick Australia at its Sydney AutoStrad Terminal.

While rail services to other container terminals are expected to continue as normal, industry sources say most of the vessels carrying exports to market generally berth at Patrick.

The additional charges relate to double or triple handling of boxes coming from regional NSW which now have to go into other sites until they can be received by Patrick.

Worsening situation

Rail is the major means of delivering containerised agricultural freight including grain, pulses, cotton and meat to Botany’s three portside container terminals as operated by DP World, Hutchison, and Patrick.

Others exist in Sydney away from the port, and sources have told Grain Central they are already congested as Australia’s second-biggest container port struggles to cope with domestic and global logistics issues.

In recent months, Patrick has automated around half of its landside container area, and while this promises to increase efficiency in the longer term, it has reduced rail efficiency in the short term.

“Trains at Botany can wait for 12 hours to unload,” one source said last week.

“If that train can’t get to the port window to unload in time for the vessel, it goes next door to DP World.

“Then to get it from DP World to Patrick – only a few hundred metres – it might cost you $340 per box.”

Other sources said that figure was more like $380 per box.

“That cost goes back to the exporter or the farmer,” another source said.

“Most clients are getting pushed back; that can be a $30,000-$40,000 bill on every train arrival,” another said.

That cost goes back to the exporter or the farmer

Additional charges totalling around $200 per box come from delivering and retrieving a full container to and from a park instead of delivering straight to the export terminal.

A 20-foot container carries roughly 24 tonnes of grain or pulses, so around $15/t for the road leg, plus $8/t for container-park access looks like the norm until the export supply chain for containers out of Sydney improves.

“There’s massive reputational damage that you can’t have a reliable and predictable supply chain,” a source within the supply chain said.

“It’s on top of other issues with shipping.”

These are not unique to Australia, and relate to general rate increases from shipping lines as they juggle uncertainty in global freight flows.

Call for help

Freight & Trade Alliance (FTA) director and Australian Peak Shippers Association (APSA) secretary Paul Zalai said he planned to contact the Federal Attorney-General to see if a Fair Work Commission ruling could be sought to reopen more rail paths to Patrick before July 16.

Some exporters are trying to book road freight, already in tight supply and more expensive than rail at its best, from up-country to Patrick to meet vessels.

“They’re struggling to reach our markets,” Mr Zalai said.

“If all goes well, you’re going to have one extra move that will need to be paid for; that’s the best-case scenario.

“Every time something happens, I think ‘that’s the biggest problem’, until the next problem happens.”

Other sectors impacted

Fletcher International Exports (FIE) commodities and intermodal division general manager commercial and APSA vice chair Kurt Wilkinson said Patrick had cancelled FIE’s rail slots up to mid-July in response to the MUA action.

FIE is one of Australia’s biggest sheepmeat exporters, and ships more than 600 containers per week carrying meat, pulses, grain and other commodities from its base at Dubbo.

It also runs its own train into Port Botany.

“This will cause absolute mayhem flowing on to container parks,” Mr Wilkinson said.

“They’re already full; that’s the problem.”

Mr Wilkinson said meeting vessels coming into Botany was already a problem.

“Due to recent congestion in Botany, our trains have missed critical windows and paths, causing heaps of exports to miss vessels in the past fortnight.

“We’re very concerned.”

While the Botany choke is affecting other exports like cotton, meat and metal concentrates, grain and pulses have a lower value per tonne, and are less able to absorb the unforeseen charges.

“They’re technically low-margin products, and additional transport costs, when you start double handling, hurt.”

Limited lifts

Grain Central understands Patrick will lift “strips” of more than 50 or 70 containers from trains in limited windows up to July 16, but Pacific National head of agriculture Hugh Cox said that limit would cut out many agricultural customers.

“It’s rare we just discharge all our containers at the one stop; we might just have 20 going to Patrick.

“We’re struggling to get windows as it is, and grain and cotton is getting smashed.”

Mr Cox said he estimated exporters “wouldn’t be getting much change from $300-$500” per box due to landside issues at Botany.

“If it drags past three weeks, I don’t know what’s going to happen.”

Each train carrying ag freight from up-country can be servicing up to 15 different clients going to several destinations in Sydney.

Grain processor Manildra Group is one of the companies affected.

“We’ve lost all of our rail windows for the next three weeks,” Manildra Group national transport and logistics manager Mark Owens said.

“I’d say rail is 50-per-cent efficient at the moment because of all this congestion.”

Since COVID hit in February last year, exporters have had big problems getting empty 20-foot food-grade containers to pack.

With early new-crop pulses and grains expected in October, exporters are worried about the flow-on effect of the current situation at Patrick in making empty boxes from container parks and terminals accessible to up-country packers.

“Port Botany was already gridlocked, and there are trains taking fresh air up to northern NSW,” one source in the transport industry said.

Patrick response

In a statement provided to Grain Central, Patrick Terminals CEO Michael Jovicic said Patrick had held formal meetings with the MUA over the past 18 months in an effort to come to a mutually acceptable agreement. 

“We believed that we were close to agreement when the MUA launched this completely unnecessary industrial action last month,” Mr Jovicic said. 

“We are doing everything that we can to reach an agreement but the MUA seems determined to disrupt the supply chain at this critical time in pursuit of their own demands.”

Patrick said the industrial action incorporated one-hour stops each shift at 0500, 1300 and 2100 until July 15, and when combined with refusal to work through meal breaks as general standard practice to enable operational continuity, operational working time had been reduced by approximately 25pc.

“This industrial action is impacting and will continue to impact the Sydney rail service as the timing of the stoppages means that available operations within rail windows are limited,” the Patrick statement said.

For example a window of 0500-0700 will have one workable hour.

Patrick Terminals has made adjustments to rail windows including reducing capacity allocated from 4300 to 3200 lifts per week during this period, with the cancellation of 12 of 56 windows.

It said it would seek to reinstate the rail windows as soon as possible.

“We have engaged with all rail operators early to provide notice and assistance to work through the disruption, however, there will be an impact on customers.

“Patrick Terminals will continue to work closely with rail operators to minimise disruption and provide options to maximise throughput during this period of industrial action by the MUA.”

 

 

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