Dockside delays continue to impact deliveries

NEW-VEHICLE delivery times are being severely impacted by an increased need for biosecurity screening at all Australian ports, causing unprecedented on-water queueing, wharf congestion and dealership stock issues, which GoAuto understands is having a flow-on effect on business stability, particularly for smaller and regional dealerships.

Port of Melbourne corporate relations manager Simon Watson told GoAuto the delays ultimately stem from an increased number of improperly stored vehicles at overseas ports prior to departure for Australia.

Mr Watson said that vehicles are being parked in substandard conditions for longer than usual periods – owing largely to previous delays surrounding microprocessor and other parts shortages – which is resulting in contamination from what is known as biosecurity risk material (BRM), or soil, plant and insect matter that poses an unacceptable risk to Australia’s fragile agriculture, forestry and fisheries industries.

“We are seeing strong demand for new motor vehicles into Port of Melbourne, and with this an increase in BRM arriving on these vehicles. This includes soil, plant debris, seeds and live insects which are not present in Australia,” Mr Watson told GoAuto.

“Such exotic pests and diseases if established pose a real threat to our food production and agriculture industries, therefore biosecurity risk management through the Port of Melbourne remains a key focus.

“We understand that a proportion of the increase in BRM is due to seasonality, but there has also been a significant increase in BRM due to new vehicles being stored for long periods in paddocks and parking areas due to global supply chain issues.

“This has left vehicles exposed to the elements, where they inadvertently collect BRM while held at port of loading.”

For Australian new-car dealers, the flow-on effect of these dockside delays is just the latest in a series of COVID-19 related disruptions.

GoAuto spoke with a prominent dealer principal at a Melbourne-based dealership network, who said the lack of communication surrounding vehicle delivery times, coupled with existing pandemic-related issues, are causing a great deal of uncertainty for OEMs, dealerships and customers.

The DP, who wished to remain anonymous, said dealerships are growing tired of being placed in the centre of a situation that is largely out of their control, saying greater transparency from local automotive terminal management – and OEMs – would go some way toward alleviating the uncertainty faced at a dealership level.

Mr Watson said Port of Melbourne was effectively operating above capacity and that BRM contamination was impacting vehicle delivery times.

The facility is working alongside the Department of Agriculture, Forestry and Fisheries to try and expedite the process as much as possible. However, on-water and on-dock queueing is now an unavoidable consequence of the thorough screening process that must be carried out.

Mr Watson said the issue, coupled with a 17 per cent rise in new vehicle imports over the past 12 months, has resulted in an increase of detected BRM contamination to 88 per cent nationally, and 91 per cent of all new vehicles found entering the Port of Melbourne.

“On entry to Port of Melbourne, vehicles that are found with biosecurity risk material require treatment by an industry treatment provider to eliminate the risk before they are released,” he explained.

“The Port of Melbourne has been working closely with the Department of Agriculture, Forestry and Fisheries (DAFF), the terminal operators and the automotive industry to ensure everything that can be done locally and offshore to increase the efficiency of treatment is being done, without compromising biosecurity.”

However, the DP told GoAuto the uncertainty and lack of communication was “the hardest part” to deal with.

“We are trying to deliver on a customer satisfaction and experience level that is very hard to maintain. We’ve got our hands tied. We just can’t get the information we need, and in our experience, the OEMs aren’t necessarily getting that information either,” he said.

“Telling a customer ‘we don’t know’ just simply isn’t good enough. But the fact of the matter is, we don’t know. We simply aren’t getting any information.”

Mr Watson said it was his understanding that all automotive terminals across Australia are impacted by the issue, emphasising that shortcuts in procedure pose an unacceptable risk to the national $51 billion agriculture, forestry and fisheries export industries, $50 billion tourism industry, and environmental assets estimated to be worth more than $5.7 trillion.

The DP was sympathetic to the need to import vehicles safely but said that it was only through unofficial channels that he had any understanding of the situation at all.

“We appreciate the motivation behind this is that cars need to get into the country safely, and we understand that customer relationships probably aren’t something port and DAFF staff are ultimately responsible for. But I can say we didn’t have these kinds of issues prior to the COVID-19 pandemic,” he told GoAuto.

He explained that although issues relating to the contamination of vehicles had occurred prior to the pandemic, the situation now was such that some smaller dealerships were at risk of losing their business entirely.

“We have heard that a lot of this is down to the fact that cars have been parked in unsuitable locations prior to embarkation, which is how the contamination occurs. Given that is a known issue, there should be more done to address the issue at this end – there are scores of ships waiting to berth and thousands of vehicles awaiting screening,” he stressed.

“We are seeing a 25- to 28-day delay on what we would call ‘normal’. That means we are effectively adding a month to the delivery time of vehicles. In usual terms, a vehicle leaving Japan, for example, would be at our dealership a month later. You could count on it. Now, we’re probably pushing that out by another month at least.

“It is being caused by congestion at the wharf. That much we know. There simply isn’t the capacity to deal with this many vehicles – and now every vehicle needs to be cleaned.”

According to the DP, customers and staff are feeling the pinch with commission-based sales staff particularly hard hit.

“It’s not only that we’re unable to deliver the kind of customer experience we need to deliver, either. There are months now where the financial side of things is becoming very tough,” he said.

“With differing volumes month to month, and our sales staff living largely off commission, there are months where we have staff whose wages are down by as much as 50 per cent, through no fault of their own. We’re helping them out, of course. But as you can imagine that is just one implication for dealerships at the moment.

“We have cash flow issues, as do OEMs. They’re being charged by the ports for holding stock. Transport companies are also charging more. It really is a no-win situation.

“The other thing people fail to realise is that if, for example, a car company can’t sell its cars in Australia, then it may look to other markets to offload stock, which will create even longer delays for customers here. Competition globally is huge, and that’s a very real fear for us.

“When you add all of this to the uncertainty of the Australian economy, then I think you can see how dealerships are affected. I know of dealers – smaller and regional dealers – who simply won’t survive the next 12 months. It is really very hard.”

Conversely, the higher than usual volumes of cars being transported across the globe is paying dividends for the owners of roll-on / roll-off (RoRo) shipping lines.

Wallenius Wilhelmsen’s head of global market insights, Erik Solum, said in a recent statement that his team is cautiously optimistic about the industry’s fortunes over the next 12 months, with shipping capacity expected to “remain tight”.

“The global economy is facing slowing growth; there is a strong likelihood of recessions in Europe and the US. High inflation and rising interest rates continue the financial turbulence,” he said.

“Yet, the outlook for the RoRo shipping industry is more positive as we still see pent-up demand for light vehicles. We also expect the high and heavy (vehicle) segment to remain solid.

Mr Solum said the global fleet comprises some 600 larger RoRo vessels in total and that capacity is “tight and expected to remain tight going forward”.

He said there are only 11 new vessels on global order books that are expected to be delivered between now and the end of the year, and that the optimisation of space and quick turnarounds are vital to optimising capacity.

“The low numbers of new vessels coming this year has limited impact on the general capacity situation. My competent and smart colleagues have a constant eye on how we stack our vessels to optimise capacity,” he said.

“(But) it is important our customers have a longer-than-usual horizon when planning their logistics.”