Stevedore monitoring report also shows container handling slide
Australian Competition and Consumer Commission (ACCC) highlights for the second year in a row significant regulatory issues surrounding stevedores’ unilateral and uncontrolled use of infrastructure surcharges on container trucking and rail providers.
The ACCC used its 2019 Container stevedoring monitoring report to echo 2018 concerns on behaviour that trucking bodies, in particular, complain amounts to exploitation and injects unwarranted extra costs into the container logistics chain and ultimately imports and exports.
“It is understandable that stevedores seek to recover some costs of upgrading port facilities from transport operators because they, like the shipping lines, benefit from the investment,” ACCC chair Rod Sims says.
“But because port users have limited ability to move their business in response to a stevedore raising its infrastructure charge, the stevedores face less competitive pressure to keep the charges down.
“While the infrastructure charges only represent 12 per cent of the stevedores’ revenues today, the outcome of this may be that importers and exporters end up paying more to ship goods.”
The ACCC foresees port users continuing to be subject to increasing infrastructure charges, with Hutchison increasing its charges in Sydney in November and DP World increasing charges at all its terminals from January 2020.
DP World Australia plans to lift its surcharges by 447 per cent. Read here
The monitoring report also notes that container throughput numbers have fallen again and that stevedore income is becoming increasingly reliant on the surcharges.
It makes five main findings:
- the industry faced weak demand in container stevedoring services. Total lifts fell, with full container lifts falling significantly
- competition has further reduced the dominance of incumbent stevedores Patrick and DP World. VICT is flourishing, while Hutchison has more work to do to be viable.
- revenue per lift rose despite increased competition. Stevedores have off set falling revenues by increasing infrastructure charges
- industry profits remain subdued due to soft demand and higher costs. Some stevedores reported much higher profits, while the profitability of others worsened
- various productivity indicators improved significantly in 2018–19. Productivity of some Australian container ports now appears on-par with comparable international ports.
It also notes that consolidation amongst shipping lines has increased their bargaining power.
The Transport Workers’ Union (TWU) has taken up the cudgels, accusing the stevedores ” heaping financial pressure on transport companies and putting safety at risk”, pointing to the ACCC report showing stevedore revenues generated by access fees rising 63 per cent to $167 million in 2018/19.
Despite a drop in growth rates because of the decline in the economy stevedores still grew their overall revenues by 1.3 per cent to $1.371 billion, the increase mainly generated by the infrastructure charge.
“This infrastructure charge is a pure and simple money grab and while it grows the coffers of the stevedores it is bringing trucking companies at the ports to their knees, with all the safety implications that has,” TWU national secretary Michael Kaine says.
“Trucking companies are telling us their margins are just too tight and that this charge is putting an unnecessary burden on their businesses.
“It is not possible to heap financial pressure on the transport industry without resulting in serious consequences for the viability of operators and safety on the roads.
“The effect of this is that businesses are stretched to the limit where they must delay vital maintenance on their trucks, where drivers are pushed to work long hours, speed and skip their rest breaks just to get the job done.
“When this happens safety is compromised and people get injured and die.
“We have called on the federal government time and again to address this issue but we are constantly met with silence. Now they can see how the charge is helping to balloon the revenues of stevedores while transport companies are left to go bust and run on empty.”.
TWU NSW branch secretary Richard Olsen says stevedores had been exposed over the infrastructure charge after it emerged that NSW port had in fact previously dropped rent charges.
“Stevedores in the past said they had to increase infrastructure charges because of increased rents in NSW. That turned out to not be true and yet stevedores continue to increase their charges,” Olsen adds.
“We want transport operators able to run good businesses, keep safety as the number one priority and pay their drivers a fair rate. This charge instead gouges them and is putting businesses at risk.”
The ACCC’s report can be found here.