Supply chains have been absolutely cooked for about 12 months now.
It currently cost US$12,000 to get a container from China to Australia’s east coast, a stunning 1400% increase on the start of the pandemic.
But that’s not the biggest issue; ports are congested due to managing Covid-19 cases and rampant demand for eCommerce has seen shippers prioritise lucrative freight routes from China into the United States.
This is great for the ship liners. Danish freight giant Maersk tripled EBITDA to US$24 billion in 2021.
But it’s not so good if you’re running a business Down Under.
Getting a container to Australia on time is a tough business right now.
Can’t get worse? Think again. An invasive stink bug is about to make things even harder for many importers.
Last Monday the Department of Agriculture, Water and the Environment added China as an emerging country of risk for the brown marmorated stink bug until the end of the season on April 30 after detections of live bugs in some containerised commodities from China.
You know all those Made in China jokes you’ve heard? Yeah, this could cause some delays.
Made in China?
Previous efforts to control the brown marmorated stink bug have focused on other countries where it has been identified in cargo coming to Australia.
David Aherne, the managing director of freight forwarder Across the Ocean Shipping, said quarantine and fumigation orders on goods coming from Italy a couple of years ago caused two week delays in some containers being processed.
But the inclusion of China on the list for the first time would create a far larger backlog in fumigation warehouses.
“If you bear in mind that normally when goods pass through quarantine in Australia, you’re looking normally about 24 hour turnaround time,” he said.
“Pre-Christmas because of the sheer demand quarantine was out to nine days just to get things moving. We’ve seen two years ago with typical containers from Italy, where the stink bug was prevalent, we had clients waiting up to two weeks for their container to be fumigated here in Australia upon arrival.
“Now if you think of how many containers Australia imports from China it’s going to be massive, massive delays for importers here in Australia. We’re already seeing fumigation warehouses that offer this stinkbug fumigation pushing out fumigation to three-four weeks.”
That comes in at an extra $200 for each day the container remains in detention, Aherne said, costs likely to be passed on to consumers.
“I guarantee that three out of the four things that you pick up around you right now are made in China,” he said. “Hundreds of 1000s of containers a year are imported into Australia from China.
“Importers are struggling to get space out of China right now, because the demand is so high.
“You imagine all those containers land in Australia that potentially need to be inspected and fumigated. The knock on effects can be massive.”
Supply chain ‘fractured’
The DAWE said it would “redirect resources from current BMSB verification activities to conduct verifications on Chinese origin goods to ensure there is no additional resources required by the department to conduct the new inspections and no additional delays to be experienced by importers through increasing levels of intervention.”
But Aherne believes the designation of China, the world’s largest container exporter, as an emerging risk country will further hit supply chains he described as “fractured”.
He said the Federal Government should increase its investment in fumigation warehouses to improve its ability to process goods.
“The notice has been coming for a while,” he said. “We have a list of countries where stinkbug spread is prevalent which has been getting longer and longer.
“From our point of view, it’s more frustration and we care about our clients and the goods they bring in, and we see the hurt they feel when they’re slugged with 1000s of dollars of extra charges because of detention and fumigation.
“Ultimately, there’s a lot of small businesses struggling to stay alive with COVID and the way freight prices have increased.
“This is just going to be another kick in the guts for a lot of small businesses that rely on imports.”