Supply chain congestion

Backlog for wool dumping and containerisation

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Wool dumping facility closure causing major congestion in wool supply chain.

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Delays in shipments of wool of up to three weeks are affecting the Australian wool industry's supply chain due to building congestion at wool dumping facilities in Melbourne.

The congestion has been caused by a breakdown of machinery at one of Melbourne's main wool dumping centres causing increased pressure on the two remaining operating dumps.

Fox and Lillie shipping manager Phil Lowrie said the domestic issue is just adding to the problems for the industry as the global shipping catastrophe continues.

"Domestically there is now a backlog in getting wool dumped and containerised," Mr Lowrie said.

"There are normally three main facilities in Melbourne which dump and pack wool for containerisation, but with one broken down and no longer dumping for 20-foot container shipment it has put a lot of pressure on the other two dumps."

Normally when wool is shipped out of Australia it is a relatively quick process. Wool can be purchased one week and shipped the following week.

But the congestion at the wool packing facilities is resulting in a two to three-week delay.

Farm bales are compressed by hydraulic machines at the dumping centres to allow more bales to fit into shipping containers. Three farm bales are roughly compressed into the size of one farm bale under enormous pressure.

"Generally this is performed to destinations where freight is more expensive," Mr Lowrie said.

"For example, it costs a lot of money to ship a container of wool to Europe so it pays to get as much into a container as possible.

"Whereas it's relatively cheap to ship a container to China, freight rates are probably a seventh to China than to what they are to Europe.

"When you work it out there is very little difference in shipping a 20-foot container to China and a 40-foot container. You are better off shipping farm bales in a 40-foot container and not dumping the wool and saving that cost."

Shipping lines, according to Mr Lowrie, are making record profits.

Trade lanes out of China to Europe and America are being keenly contested with freight rates going through the roof, reportedly up to five times to what they normally are.

But he said fortunately for the wool industry, China is where most of our wool is currently destined.

"At the moment 85 to 90 per cent of our wool is going to China. They have handled the Covid-19 situation better than most and business is continuing," Mr Lowrie said.

"With China we have an outlet for our wool and we still are able to ship to China and without being smashed with freight rate increases out of Australia into China.

"For us, it has been more a question of being able to get space on with certain shipping lines. The freight rate debacle is out of China to other parts of the world."

The story Supply chain congestion first appeared on Farm Online.

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