Port of Newcastle fails to escape ACCC clutches

By: Rob McKay


Possible stevedore and trucking implications as appeal on decision to ‘declare’ services is knocked down

Port of Newcastle fails to escape ACCC clutches
Geoff Crowe says Port of Newcastle is disappointed by the decision

 

The full court of the Federal Court has reinforced the Australian Competition and Consumer Commission’s (ACCC’s) and Australia Competition Tribunal’s (ACT’s) powers over port charges.

In a unanimous decision, the Federal Court rejected a Port of Newcastle appeal against the ACCC’s decision to make its operations a ‘declared service’, in a case coal exporter Glencore brought after the newly privatised port raised service prices sharply.

The outcome means the ACCC retains oversight and regulation of port operations as they affect charges.

The case has been watched carefully by the trucking, freight and port container supply chain sectors, which are awaiting the ACCC’s decision on whether it will intervene over stevedores’ charges for container access at ports.

Glencore welcomes the judgement. 

"Since its privatisation for $1.75 billion in 2014, the Port of Newcastle has revalued its assets and increased shipping fees by in excess of 60 per cent without any change in the nature or quality of service provided," it says.

"The introduction of a reasonable regulatory constraint is critical for all users of monopoly-owned infrastructure."

The decision is a blow to Port of Newcastle, also known as Port of Newcastle Operations (PNO), which argues that service charges have failed to keep up with inflation over the past 20 years and which has warned of possible "unintended consequences" for other infrastructure providers.

It could also "introduce a new layer of costly regulation".

"This is a disappointing outcome, not just for Port of Newcastle but potentially for many other major infrastructure providers across Australia," CEO Geoff Crowe says.

"It could have wide-ranging implications for the profitability and value of nationally significant assets.

His company is still reviewing and assessing the implications and will complete that process before commenting further.

"Port of Newcastle will continue to engage proactively with its customers and the ACCC on this matter," the company says.

"Port of Newcastle has a commercial imperative to maximise trade volumes through the port and to ensure continued access for customers.

"Its business depends on its customers’ success. Port of Newcastle pricing remains competitive with other Australian ports."

The Australian Logistics Council (ALC) also noted the decision’s potential, saying it could have significant implications across the freight logistics industry.

"Today’s Federal Court decision seems to point to increasing ACCC involvement in pricing and access issues at ports," ALC MD Michael Kilgariff says.

"If that is going to be the case, then it is imperative that the ACCC ensures it is properly resourced with personnel who have had exposure to and experience in dealing with the complex and unique nature of these infrastructure assets.

"Any regulatory role played by the ACCC in the freight logistics sector must be fit-for-purpose.

"Pursuing a ‘template’ approach to regulation by merely imposing regulatory frameworks designed for other industries will do nothing to enhance supply chain efficiency.

"Indeed, it could well lead to inappropriate cost structures that have serious consequences for supply chains and the profitability of significant freight infrastructure.

"This is equally true whether we are discussing mergers and acquisitions, road pricing, rail pricing or port access charges."

The ALC reiterated its call for the ACCC to ensure it is sufficiently resourced and has personnel possessing actual experience in the operation and/or regulation of logistics infrastructure.

"There are many specialist and complex issues at work with the operation of supply chains and logistics infrastructure.

"It is not an industry that can be easily correlated with energy or communications regulation, but one that requires a bespoke regulatory approach."

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