ARA calls for urgent resolution of DP World dispute

The Australian Retailers Association (ARA) has reiterated calls for an urgent resolution to an industrial relations dispute over pay and conditions at one of the nation's leading port terminal operators, which the peak body claims has resulted in a backlog of two to eight weeks in shipments with 48,000 containers standing idle.

ARA CEO Paul Zahra said it has now become critical that both DP World and the Maritime Union of Australia (MUA) bring the dispute to a head as a matter of urgency, so as to minimise any further adverse impacts for importers, retailers and consumers.

"Australian retailers need unimpeded access to the global supply chain to operate and this industrial action is starting to have an unacceptable impact on the flow of goods from overseas suppliers into our sector," says Zahra.

"All categories are affected but we are particularly concerned about perishable food, fresh produce, pharmaceuticals and other essential goods including back-to school merchandise.

"That’s why we need DP World and MUA to resolve their differences in the interests of the Australian economy and consumers."

Retailers have reported delays and significant out-of-stocks, and remain concerned around the potential impact on pricing further adding to the cost-of-living crunch.

"Up until now, retailers have managed to minimise the impact of this industrial action on consumers," Zahra says.

"However, we are increasingly concerned that the inconvenience of out-of-stocks and delays in fulfilling customer orders could soon escalate into higher prices on everyday essentials if the situation is not resolved soon.

Zahra notes that throughout the pandemic Australian retailers demonstrated tremendous agility and ingenuity in response to supply chain disruptions.

"However, the underlying pressure on the supply chain is ever present and with geo-political wars this will only intensify in coming months due to external forces entirely out of our control as a country," he explains.

"That’s why we are urging the parties to get back to the negotiating table and resolve their differences in good faith quickly, to stop a bad situation from getting worse."

Why finding a solution is in the national interest

A supply chain expert from RMIT University says if the issue is not handled with care it could lead to "social chaos", while an industrial relations expert from the university describes the matter as in the "national interest".

Dr Vinh Thai, a professor of logistics and supply chain management and founder of the Australian Maritime Logistics Research Network (AMLRN), says highlights several possible effects from industrial actions at ports, such as:

Delayed or no work on cargo loaded and discharged at wharfs, yards and gates. This can lead to longer time in ports for ships and cargoes, and higher costs, including the inventory carrying costs for shippers and shipping lines;
Delayed ships at Australian ports leading to shipping frequency being slowed down, creating a longer waiting time for import and export cargoes;
Longer time at ports for import cargoes meaning higher prices when they reach the end-users, while for export cargoes it implies the loss of export time-competitiveness;
Higher price of import cargoes may add to inflation and, of course, the rising cost of living, while loss of export competitiveness implies the negative impact on the nation’s balance of payment. All can contribute to social chaos; and
Onflow delays in supply from the shore e.g. warehouses, distribution centres and retailers such as supermarkets.

“While the Union has the right to enact industrial actions to protect the workers’ rights, the port operators also have their justifications as industrial actions can lead to disastrous impacts not only on their own business but also on supply chains, the national economy, and society," says Dr Thai.

“Given that DP World accounts for 40% of Australia’s port throughput, the issue has to be handled with care.”

Distinguished Professor Anthony Forsyth says resolving the matter is in the national interest, but dismisses comparisons with the 1998 waterfront dispute.

"While there is some potential for the current dispute to cause disruption to supply chains and the national economy, this is a regular form of industrial conflict over pay and conditions – nothing like the 1998 episode, in which the Howard Government and Patrick Stevedores sought to de-unionise the waterfront.

“DP World is lobbying the Federal Government to intervene, using a power in the Fair Work Act that enables the Employment Minister to terminate industrial action if it threatens to cause harm to the welfare of the community or damage to the Australian economy.

"That ministerial power has never been exercised and it is unlikely we will see a Labor Government use it in this case."

Forsyth, who specialises in collective bargaining, trade unions, union education, labour hire and the gig economy, says DP World could instead seek an order from the Fair Work Commission, terminating the Maritime Union of Australia’s (MUA) industrial action on the same grounds of harming the community or the economy.

"DP World would have to provide evidence that the union’s work bans are having a crippling effect on stevedoring services and disrupting the supply chain of essential goods and products," he says.

"However the MUA’s strategy appears to be carefully calibrated to ensure that the work bans do not cross the threshold that would see them terminated by the Commission.

“As the dispute drags on, the Albanese Government will come under increasing pressure to steer the parties towards a resolution in the national interest."