Patrick to impose ‘infrastructure surcharges’ from July 10

By: Anjali Behl


Sydney, Fremantle, Fisherman Islands and East Swanson Dock Terminals to be affected by the move as industry joins in protest

Patrick to impose ‘infrastructure surcharges’ from July 10
Patrick's announcement follows DP World's decision to impose major port access charges.

 

Patrick Container Terminals will impose new "infrastructure surcharges" in Melbourne, Sydney, Brisbane and Fremantle starting July 10.

The change includes introduction of infrastructure surcharges at the Sydney and Fremantle Terminals and increasing existing infrastructure surcharge at the Fisherman Islands and East Swanson Dock Terminals.

The company says the new surcharge on containers at Sydney and Fremantle brings these terminals in line with Patrick's other terminals.

The rates of the surcharges are:

  • Sydney $25.45 per box
  • Fremantle $4.76 per box
  • Fisherman Islands $32.55 per box
  • East Swanson Dock $32.00 per box.

Patrick’s decision comes three months after DP World imposed container surcharges at its Sydney and Melbourne Terminals, a move that sparked intense criticism from the container haulage industry. 

The Container Terminal Alliance Australia (CTAA), Road Freight NSW (RFNSW) and the Victorian Transport Association (VTA) are up in arms against the move, calling it a disappointing decision that will adversely affect the landside container transport sector.

RFNSW GM Simon O’Hara says the industry had feared this announcement following DP World’s decision in March.

"When the DP World Australia tax was introduced, some of our members reported that they stood to lose up to $150,000 per year," O’Hara says.

"We dread to think what this latest charge is going to do to their operating margins."

Their ire notwithstanding, both CTAA and VTA have acknowledged Patrick’s decision to change payment terms for customers.

Patrick says it recognises these charges might affect the working capital requirements of its transport and logistics customers and therefore it has decided to extend credit terms for all Patrick 1-Stop charges, including vehicle booking system (VBS) and infrastructure surcharges, from the current seven-day terms to 30 days.

"The one consolation in this news is that Patrick has listened to concerns about the cash flow implications in the industry and changing their payment terms to 30 days," CTAA director Neil Chambers tells ATN.

"It shows that Patrick understands the cash flow issue facing the industry.

"By increasing the payment deadlines, operators will be able to spread out cash flow across their operations."

CTAA says it will urge DP World and other stevedores to implement a similar change across its operations.

VTA CEO Peter Anderson says transport operators will have no choice but to pass on these additional charges to their customers.

"At a time when operators are facing unprecedented increases to infrastructure and road user charges in and around the Port of Melbourne, it is important to ensure the increases are passed on through the supply chain for freight businesses to remain sustainable and viable in a competitive trading environment," Anderson says.

"Customers need to understand that the costs of doing business for transport operators are increasing rapidly, and that transactional costs such as this surcharge ultimately must be worn by consumers of goods and services."

CTAA says the stevedores should either absorb increased operating costs or negotiate their collection through their commercial clients – the shipping lines.

"Should the shipping line then opt to pass on this cost, it can be negotiated on a commercial basis between themselves and their client importers, exporters or freight forwarders," Chambers says.

He recommends container transport businesses to have discussions with stevedores to resolve these issues.

"Container transport operators must call for discussion with the stevedores to establish proper service level agreements (SLA), including agreed performance measures, and appropriate mechanisms to have a say in how the millions of dollars collected through these taxes are spent to improve landside container logistics efficiencies and productivity," Chambers says.

He says stevedores have adopted a "take it or leave it" approach to impose charges without appropriately consulting stakeholders and on short deadlines. 

"As we said when DP World made its recent announcements, it is very disturbing that the stevedores can simply offset their rising costs by unilaterally implementing levies on parties in the supply chain who have no strong contractual relationship with the stevedores, with no consultation and at short notice," Chambers says.

"The additional stevedoring competition on the east coast of Australia has naturally led to highly competitive market negotiations for stevedoring contracts and a commercial reluctance by the stevedores to negotiate higher prices with shipping lines to cover their rising costs of doing business.

"Perversely though, it seems that this doesn’t faze Patrick or DP World, because they can offset these costs through imposing Surcharges on other parties who can’t push back."

CTAA blames regulatory authorities including the Australian Competition and Consumer Commission (ACCC) and governments for "abandoning" the container transport sector and allowing stevedores to enjoy an "unfettered" control over the market.

"The ACCC and government have, so far, done nothing that we are aware of to stop them [stevedores] from imposing these charges and allowing the market to bear the additional costs," Chambers tells ATN.

"This morning, we’ve brought these latest announcements by Patrick to the further attention of the ACCC and asked them again to intervene.

"Will the ACCC intervene? That’s a matter for the competition watchdog, but if not, it’s a real sign to us that the system is broken and needs to change."

Patrick says the decision has been triggered by factors including the current market conditions and ongoing issues related to port privatisations.

The stevedore says as costs related to rent, land tax and Council rates continue to soar, it has been notified of certain property rental increases of over 140 per cent, some of which are backdated to July 1, 2015.

"These increases place a significant additional cost burden on our operations," a company statement notes.

"Patrick incurs rising terminal infrastructure maintenance costs relating to the landside interface operations. This maintenance is essential to continue to provide our customers with superior service levels."

But RFNSW is not convinced with Patrick’s reasoning.

"Patrick blames rising terminal costs for this new unilateral charge, but surely they can look at improving their own operational efficiencies, rather than cynically shifting costs on to carriers," O’Hara says.

"We believe the tax will probably be used to off-set the costs of ongoing privatisation of the terminals.

"There is little doubt this additional tax will continue to financially impact on many smaller, family-owned trucking companies who are already suffering as a result of the DP World Australia levy and other cost pressures, like rate changes to the General Carriers Contract Determination (GCCD)."

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