Fury as WA infrastructure surcharge control effort gets cold shoulder
Stevedore DP World Australia (DPWA) has put noses out of joint again with its latest, 447 per cent, infrastructure surcharge hike plan, especially in Western Australia.
The hike, due in 2020, comes as Fremantle Ports has been undertaking long-term lease negotiations which appear to also represent the first substantive effort in the country to rein in rampant increases.
The move has stung Fremantle Ports along with long-tern surcharge critic the Western Roads Federation (WRF).
“DP World’s announcement of a 447 per cent increase in its port infrastructure surcharge at Fremantle Port cannot be justified,” WRF says.
“Changing the name from Port Infrastructure Surcharge to a Terminal Access Charges, is merely semantics.
“The port infrastructure charges were introduced by DP World to cover increases in ‘occupancy costs’ and to increase productivity in line with infrastructure investment.”
It lists four main objections:
- there has been no change in its port lease costs, which is currently on a month by month renewal.
- nor has there been an observed investment by DP World in its infrastructure that would support a port productivity infrastructure since the introduction of the charge
- norcan it be argued that it is being used to build an investment fund when the medium to long term future ofthe port is uncertain. And no one invests in uncertainty
- the impost of the charge on road transport will inevitably mean some small to medium transport operators may be forced to absorb the charge, as they may be unable to pass it on to clients.
The national hike coincides with the Australian Competition and Consumer Commission (ACCC) releasing its 2019 Container stevedoring monitoring report.
Read about the ACCC pointing to unending surcharge hikes, here
Fremantle Ports CEO Chris Leatt-Hayter is moved to write an open letter to stakeholders
“As you may be aware, Fremantle Ports is in the process of negotiating a new lease with DP World for its container terminal in Fremantle,” Leatt-Hayter states.
“A key matter in those negotiations has been the level of infrastructure charges and future increases in those charges.
“In light of significant increases in such charges on the east coast of Australia, Fremantle Ports has been endeavouring, through the new lease negotiations, to provide certainty on the future level of infrastructure charges for all port stakeholders.
“Fremantle Ports’ objective is to ensure that future infrastructure charges are both reasonable and justified, while allowing stevedoring operators to appropriately recover a reasonable level of land-based operating costs and terminal investment during the lease term. This objective is consistent with Fremantle Ports’ role to encourage and facilitate trade.
“Whilst the above matters have been discussed in detail during negotiations, Fremantle Ports has not yet been able to agree a position with DP World on the future level of infrastructure charges.
“Notwithstanding these ongoing negotiations and agreement not being reached on a new lease, DP World has chosen to announce a significant increase to the current infrastructure charge to $45 per full container, to apply from 1 January 2020 (up from the current Infrastructure Charge of $8.22 per full container). DP World is doing this under its existing lease, which is currently continuing on a monthly basis.
“DP World’s action is disappointing, given the substantial effort both parties have made to reach agreement on new lease arrangements over the past months. It also confirms Fremantle Ports’ concerns about the level of future infrastructure charges that may eventuate if no agreed approach is in place under the new lease.
“Fremantle Ports is currently considering its position with regard to longer-term lease arrangements at Fremantle. It will continue to strive for fair and reasonable commercial arrangements that are in the interests of all port stakeholders.
“Fremantle Ports considers it important that you are advised of this development and the context in which it has occurred.”
DP World Australia declined to comment on the issue.
It is understood Freight & Trade Alliance (FTA)/Australian Peak Shippers Association (APSA) and Container Transport Alliance Australia (CTAA) is approaching the WA government seeking that it consider regulating the outcome.