Australia’s Christmas Nightmare

Many Australians could be in for a rude awakening this Christmas. 

As Australia finally emerges from lockdowns, it appears that everything is returning to normal; pubs, hairdressers and schools are reopening, international travel is resuming, and the holiday season is nearly upon us.

However, the pandemic is still very much in full effect globally, and this is beginning to have serious implications for Australians moving towards Christmas. 

It’s becoming well known that there’s an ongoing supply chain crisis that’s driving up the cost of goods in Australia, however, the Australian Competition and Consumer Commission (ACCC) has recently stated that things may be even worse than previously imagined. 

In a report released on Thursday, the commission mentioned that supply chain disruptions have driven up sea freight costs by seven times what they were pre-pandemic, and that many of these costs could be pushed onto consumers.

As a response to these disruptions, the ACCC urged Australians to consider purchasing Christmas presents now in order to prevent clogging up the system.

“The more we spread the Christmas purchasing out over a longer period, the better it will be for everybody.”

And, on top of higher sea freight costs, shipping container costs are up fourfold, says the chief executive of the Australian Retailers Association, Paul Zahra.

“At a global level, retailers are reporting that the capping of incoming flights has put significant pressure on shipping, and we are seeing container costs escalating up to four times their usual rate,” Zahra says.

Zahra went on to say that Australia’s supply chains are “under incredible pressure at the moment and there’s a myriad of issues at play here that are creating the perfect storm for retailers and consumers.”

This “perfect storm” described by Zahra refers to a shortage of workers, timber and pallets to move shipments around warehouses, a rise in freight costs and closures in Chinese ports, just to name a few of the factors leading to this supply chain crisis. 

According to the Sydney Morning Herald, “The ACCC has heard reports that global apparel giant Nike is now paying as much as $20,000 to ship a container of sneakers, rather than the typical $2,000, making it effectively unprofitable to sell some sneakers.”

Port Problems

On top of a shortage of shipping containers, as well as delays and the closure of several ports in China, the ACCC noted in its recent report that Australia’s ports have seen better days. 

In fact, out of 351 global container facilities, Sydney’s Port Botany and Adelaide were both highlighted as some of the most inefficient ports globally. 

This is because the in-port time for ships in Australian ports is four times as long as Japan and more than double the time that ships sit idly in China.

The ACCC notes that “the fact that shipping lines cannot obtain adequate access to Australia’s most populous city is making the situation even more challenging for many Australian businesses.”

Speaking on the bottleneck issues of Australian ports, Myer’s chief executive John King commented at Myer’s annual general meeting on Thursday, stating: 

 “We are watching closely and we are concerned about what is happening in terms of container ships and I think at the ports it’s a problem that will continue well into next year,” Mr King said.

And, if all of this weren’t enough, strikes are now unfolding across ports throughout Australia, as announced by the Maritime Union of Australia (MUA). The strikes have seen 12-hour stoppages three times a week at the Port of Melbourne.

The industrial dispute centres around who can and cannot be fired,  as well as fighting for pay rises for workers. 

Anthony Scali, the chief executive of ASX-listed furniture retailer Nick Scali, warned of significant delays in product deliveries to his customers, citing the strikes and “extortion” of freight rates. 

“Delays depend on strikes and apparently there are more (waterfront) strikes planned for November which will make it worse. There are delays from the ports, getting goods off the wharf but the biggest problem is the extortion of freight rates and that is the real threat to the economy because you are going from $1000 to $7000 to $10,000 for a shipping container.”

It isn’t just Christmas

Not being able to get your loved one the Christmas present they want this year is one of many unfortunate costs of the global pandemic – but it doesn’t just stop at Christmas. 

In fact, Myer’s CEO John King believes these supply chain issues will last well into 2022. 

This means that many of the additional costs faced by companies will be passed onto consumers, and your dollar simply won’t go as far as it used to.

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