ACCC report sparks TWU concern and DP World defiance

By: Rob McKay


Union calls for greater regulation while stevedore prepared for scrutiny

ACCC report sparks TWU concern and DP World defiance
Michael Kaine

 

There were a range of sector and industry responses to the Australian Competition and Consumer Commission’s (ACCC’s) Container stevedoring monitoring report 2017-18, which focused particularly on the fraught and hot issue of container terminal access charging.

TWU

The Transport Workers Union (TWU) made the earliest response to the ACCC report, calling for state and federal governments to regulate the stevedores in view of the impact of fee hikes on supply chains.

The TWU sees the fee hikes as causing financial problems for transport operators at the ports which will have an impact on safety.

"Drivers and transport operators have been voicing concerns since these fee hikes began. Now the ACCC has backed their concerns and spoken about the impact they are having," TWU national secretary Michael Kaine says.

"Governments need to step in and regulate this industry or risk safety at the ports."

The union insists the issue would have been dealt with had the Road Safety Remuneration Tribunal (RSRT) not been abolished, saying "evidence was being presented to show how a financial squeeze from the top was resulting in transport operators and drivers under pressure to cut safety corners".

"We had in place a watchdog which was beginning the process of regulating the top of the supply chain at the ports to ensure safety is the number one priority," Kaine says.

"The watchdog was hearing from port drivers who were giving evidence about delays, lack of training, badly maintained vehicles and poor rates which do not reflect the time or cost required to carrying out work.  

"The federal government tore down this body and now we have the unfettered greed of stevedores unleased on the transport industry. This is exactly what happens when regulatory gaps are left to fester.

"The ACCC report shows stevedores are still highly profitable, making $60 million profit with revenues up 6.8 per cent to $1.3 billion. This industry must end its squeeze on transport.

"We welcome the Victorian government’s review into pricing and charges at the ports. We urge the review to be carried out with the utmost urgency and for other state governments to follow suit."


Read about the TWU’s earlier intervention in the access charges debate, here


The union points out the ACCC report refers to the lack of choice for transport operators at the ports.

It quotes the report as saying: "Transport operators have no ability to choose a stevedore that has lower infrastructure charges" and "There is an incentive for stevedores to increase infrastructure charges."

The report also reflects evidence it was given that, while the burden of handling and passing on the extra costs is being shouldered by container haulage firms, more burdensome for smaller operators that larger ones, some have sought to claw back more.

"The ACCC understands that transport operators are largely passing on the charge to their customers, with many including a mark-up in order to recover some or all of their additional costs associated with the charge," the report says.

"The ACCC is aware of smaller operators including mark-ups almost as high as 100 per cent in some cases, while some large operators are including low to no margins in passing on the charge.

"However, the scale of criticism from transport operators conveyed to both the ACCC and made in public suggest that many are not able to fully recoup all the costs associated with the charges."

DP World Australia

For its part, DP World Australia (DPWA) was much more relaxed, given the realities of rising port costs are recognised in the ACCC report.

But not all its findings were to the company’s taste.

"As expected, the report confirms that industry profits continued to decline," a DPWA spokesperson tells ATN.

"We are pleased to see that the report confirms contextual factors which led to our decision to increase infrastructure access charges at our three east coast terminals, effective from 1 January 2019.

"These include: an increase in port capacity; the increased market power of shipping lines; increases in property-related costs; a substantial investment in infrastructure, and; a sharp fall in profitability for all stevedores.

"We note the ACCC finds that there may be some justification for the use of charges, that it’s not unreasonable for stevedores to seek to recover some costs from the landside, and that it has no view on the appropriateness of the current charges.

"We don’t agree with concerns about the potential impacts of Infrastructure access charges throughout the supply chain.

"Evidence from previous years shows that the increases can be, and are, passed through the supply chain.

"This is, in fact, what happened in 2017.

"Evidence from previous years shows that the increases led to very small increases to the prices of delivered goods. The increase in the Infrastructure Access Charge to be applied at West Swanson from 1 January 2019 would, for example, add just one-tenth of a cent to the delivered cost of an iPhone.

"Such increases can be passed through without dampening demand, as is evidenced by growth numbers following previous increases in charges.

"We note the ACCC’s remarks that the recent rises in infrastructure access charges may warrant review by state policy makers.

"We are prepared to make our case – for a more equitable pricing structure for all users, for ongoing investment and for our sustainable future - in any forum."

The stevedore also flagged its continuing willingness to defend its corner

"We were pleased to note the comments earlier this month by ACCC chairman, Rod Sims, who was supportive of our argument on the need to rebalance revenue recovery. ‘We told them [the stevedores] that a better way to characterise it was to talk to the revenue recovery story.

"DP World is being quite upfront about that and I thank them for that. The stevedores’ profits, we understand, are still under pressure and they are using it [infrastructure fees] to offset revenue losses elsewhere,’ Mr Sims told The Financial Review. Further, DP World Australia always has, and always will, work within existing monitoring or regulatory frameworks.

"A financially healthy stevedoring industry is vital for the long term economic well-being of Australia."

Meanwhile, DPWA did not flinch in the face of the Victorian government’s accelerated review into regulating pricing and charges, as well as access to and from the Port of Melbourne.

"Our industry has been monitored by the ACCC for the past 20 years, and during that time we have been transparent about the reasons for increases in charges and fees," the spokesperson says.

"The ACCC has just completed its annual review of the stevedoring industry, and we expect it will confirm a significant driver of increases at the Port of Melbourne is the greatly-increased rent imposed by the Victorian government in the wake of privatisation. 

"If the Victorian government wants to spend taxpayers’ money investigating itself, the new port owners and the cost increases that they have caused, we will happily participate.

"We are prepared to make our case for a rebalancing of revenue recovery, so that cost recovery is more equitable across landside and quayside operators, in any forum."

More industry reaction to come.

 

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