The rising operational costs of empty container management are generating a significant negative impact on the financial efficiency of container transport operators in Sydney. According to a press release on July 2018, Container Transport Alliance Australia (CTAA), a nationwide coalition of container logistics firms, are voicing out on this ever more pressing issue. The CTAA has reason to believe that said inefficiencies are being caused by bad practices on the part of the shipping lines as well as the reduced productivity of certain empty container parks in the city.
Lost in translation
CTAA director Neil Chambers expressed his concern for the data flow – or rather, the lack thereof – between shipping lines and their receiving container transport firms. In particular, the CTAA has pointed out that only about 6 in 10 of empty containers in Sydney have their corresponding EDI data encoded into the electronic handling systems – a proportion much lower than the 8 in 10 containers with EDI data in Melbourne and 9 of 10 in Fremantle.
EDI, short for Electronic Data Interchange, is a communication protocol (much like IP or FTP in consumer systems) in widespread use in the shipping and freight industry that allows systems that support the protocol to be able to send and receive information about a given shipping container, provided that said information has already been encoded into the system. This information can include the identification data of a given shipping container, its contents, and/or the tracking or shipping information associated with that container for that particular shipment. Said system has been optimised to handle large amounts of data that can be shared between the shipping lines, the ports handling the shipments, and the senders and receivers of said shipment.
If the EDI data for a shipping container is missing, however, additional time must be spent to make sure the shipping container passes through smoothly. The information for said shipping container must be processed and encoded manually; truck drivers must be supplied with the correct information about said shipping container before they are ready to transport; and empty container park staff must also manually process information of both the shipping containers and the drivers – all of which could be avoided had EDI data been encoded into the shipping container.
Of this issue, Neil Chambers stats that: “There are two major shipping lines that simply don’t provide any electronic information about empty containers – OOCL and Evergreen. Several others provide the information less than 40% of the time – COSCO (Five Star Shipping), Ocean Network Express (ONE), and Hyundai Merchant Marine. We’d like to see a commitment from these shipping lines, and the others, to try to increase the EDI exchange of data on empty container return instructions in Sydney towards 100%.”
Running out of space
The CTAA has also raised concerns about the dropping performance of the DP World Logistics Australia container parks 1 and 2 in Port Botany, caused by an increase in the number of empty containers being moved to the site by shipping lines. On top of that, there has also been an increase in the number of redirections made by the shipping companies themselves, ordering their shipping containers to be moved to Sydney ports and empty container parks on relatively short notice. According to information from the CTAA, Sydney ends up having to deal with an average of 85 redirection notices per month according to the CTAA – about double that in Melbourne.
Because of these business practices, empty container parks in Sydney suffer significant hits to their performance, the CTAA noting in particular a recent drop in the container moving speed of the DP World Logistics parks to about half of their original capabilities due to their ever dwindling storage space. Because of this, container transport operators will have no choice but to stage these empty containers through their own facilities until they can finally be transported to their intended destinations. This of course results in further complications resulting in delays and additional costs that the transport operators have to shoulder on their own.
“This [shipping container redirections] occurs because shipping lines want empties returned to specific places, including to railhead facilities for export use and direct return to the wharf,” Chambers said about the issue. “This saves the shipping lines their own costs of handling empties through traditional empty container parks and being responsible for the cost of repositioning the boxes themselves. The difficulties for transport operators arise because little notice of these redirections occurs, meaning that transport operational planning has become a lot harder, and futile truck trips can occur when containers are rejected from their original return location if the redirection notice is missed or is sent at the last minute.”
Risk of container detention
The aforementioned delays caused by empty container parks running out of space and the last minute container redirections by shipping companies are also contributing to another, more expensive problem: container detention charges. These are fines that must be shouldered by the container transporters when the empty container has not reached its set destination within a predetermined time limit. Under normal operating circumstances this problem would only be an afterthought as best; however, because of the issues previously mentioned in this article, empty containers are set back by enough delays that the detention time limit allotted to them ends up running out, forcing container transporters to pay for these detention charges.
The CTAA notes that these charges imposed upon them are due to delays caused by the shipping companies which are out of their control. Speaking of this issue, Chambers states that “Transport operators need to reinforce their business rules with customers about adequate notice of containers being ready for empty return (normally two working days), and should not accept any container detention claims caused by delays outside of their direct control. Also, importers and forwarders should be proactive in seeking an extension of time from shipping lines for the return of empty containers when delays threaten a breach.
“CTAA Alliance companies are seeking meetings with DPW Logistics, other ECP and with shipping lines through Shipping Australia Limited (SAL) to try to find sustainable solutions. We also continue to liaise with NSW ports and with the NSW Government about the current difficult situation.”