Christmas at Risk: Supply Chains Falter as Port Towage Operator Suspends Half of Workforce

A container ship is loaded at the main Botany port in Sydney, Australia, on April 16, 2020. Saeed Khan/AFP via Getty Images

Supply chains in Australia are on the edge of a new crisis that may put Christmas at risk due to an escalating industrial dispute between a towage operator and unions.

On Nov. 14, the Danish tug boat company Svitzer, which is the largest employer of seafarers in Australia, announced that it would lock out about 590 workers–half of its workforce–in 17 metropolitan and regional ports across the country starting from Nov. 18.

The employees, which the company said were represented by the Maritime Union of Australia, the Australian Institute of Marine and Power Engineers, and the Australian Maritime Officers Union (AMOU), will be suspended for an indefinite period.

Svitzer said it had been working with the unions to finalise a new enterprise agreement for workers at the 17 ports since 2019.

However, the company noted that ongoing industrial action organised by the unions was harming its ability to carry out business operations around the country, forcing it to implement the lockout policy.

Tugboats return to their base after assisting the 'Toro Orient' through Newcastle Port in Newcastle, Australia, on July 30, 2015. Cameron Spencer/Getty Images

“Our goal all along has been to reach a new enterprise agreement, and we have exhaustively negotiated in good faith to try to do this,” Svitzer Managing Director Nicolaj Noes said in a statement.

“We had hoped it would never come to a lockout– but we are at a point where we see no other option but to respond to the damaging industrial action underway by the unions.”

Svitzer said there had been over 1,100 instances of protected industrial action taken at the company since October 2020, with new strikes notified by the unions on an almost daily basis.

The company added that since Oct. 20, it had received 250 notices of protected industrial action, which equals nearly 2,000 hours of stopped work.

How does the Lockout Affect Australian Supply Chains?

According to the industry peak body Port Australia, the country conducts 98 percent of its trade through ports. Therefore, ports have a vital role in Australia’s supply chain.

While large commercial ships can manoeuvre at ease at sea, they have difficulty getting in and out of ports due to their sizes, especially in crowded facilities.

This is where tugboats come in handy. With their special designs, they can tow large ships and push them into docks, making it safer and easier for ships to enter or leave ports.

Tugboats assist the 'Oriental Treasure' bulk carrier ship through Newcastle Port in Newcastle, Australia, on July 30, 2015. Cameron Spencer/Getty Images

Svitzer is a major towage operator in Australia, employing over 500 seafarers and carrying out about 50,000 harbour towage tug jobs annually.

The company has 100 vessels and serviced 28 ports and terminals around Australia and Papua New Guinea.

Due to its size, any major disruption in Svitzer’s operation will likely affect port activities across Australia, which in turn, impact the country’s supply chains.

Unions’ Response

Following Svitzer’s announcement, Paddy Crumlin, the national secretary of the Maritime Union of Australia, warned that the decision would throw Australia’s supply chain into chaos and effectively put the company out of service.

The secretary also defended the industrial action and criticised the company for allegedly refusing to negotiate in good faith.

“At every turn, the three maritime unions have sought to drag the management team back to the negotiating table and work on a mutually agreeable outcome,” he said in a statement.

“Svitzer representatives have repeatedly turned up to negotiations with sudden and unreasonable demands which they know will derail the negotiation process.”

Furthermore, Crumlin said Svitzer had reaped massive profits in the past three years due to the supply chain pressures caused by COVID-19 while giving workers a wage freeze amidst soaring inflation.

He added that tugboat crews were seeking better pay, job security and working conditions, but Svitzer had undermined negotiations with its employer-led militancy and procedural sabotage.

“The actions of Svitzer today replicate Qantas’ actions but, in fact, go far further in the damage to ports and port users. And the flow-on effects that will have on Australian businesses and consumers are extraordinary,” he said.