Australian exporters are facing significant cost increases following the escalation of conflict in the Middle East and the effective disruption to commercial shipping through the Strait of Hormuz, one of the world's most critical maritime trade routes.
Following attacks on vessels in the region, most commercial shipping has ceased transiting the Strait, leaving hundreds of ships trapped in the Persian Gulf and Gulf of Oman while others divert or delay voyages.
In response to the heightened security risk, container shipping lines have imposed war-risk surcharges ranging between approximately US$1,500 and US$4,000 per container, in many cases applied to cargo already in transit.
Freight & Trade Alliance (FTA) General Manager – Freight Policy & Operations and representative of the Australian Peak Shippers Association (APSA) Tom Jensen said exporters have limited options when such charges are imposed.
"In Australia, we have no regulation to force shipping lines to have a notification period."
Mr Jensen said the financial impact is already being felt by Australian exporters.
"We've had one particular member say they've been impacted by up to 600,000 US dollars ($855,000) just from surcharges."
"That's one exporter in Australia, so if it's costing them 600,000 US dollars, you can imagine how much some of the other ones might be paying as well."
Sectors heavily reliant on refrigerated container exports are particularly exposed to the surcharges.
"So that 4000 dollars US per refrigerated container would affect a lot of our meat exporters and our fresh produce exporters, which do carry some significant volumes to the Middle East."
Mr Jensen also highlighted the challenge of surcharges being imposed on cargo already at sea.
"It's hard to swallow when shipping lines impose (a surcharge) on cargo already in transit as opposed to new bookings."
Mr Jensen pointed to the regulatory model in the United States, where the Federal Maritime Commission (FMC) oversees shipping practices and requires notice periods for certain surcharges.
"The shippers and the exporters in the US can trade fairly and at least renegotiate market prices with their buyers … rather than just cop the loss themselves. But in Australia's case, we don't have regulation around that."
"It doesn't give our exporters a fighting chance to remain commercially viable and adjust pricing. Instead, they're blindsided."
The disruption comes as trade between Australia and the Middle East continues to grow, particularly in agricultural exports such as red meat, grains and fresh produce, which rely heavily on containerised shipping to the region.
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