Deloitte report sells port haulage firms down the Yarra

By: Rob McKay


‘Hands off’ recommendation as container trucking and domestic interests carry cost

Deloitte report sells port haulage firms down the Yarra
Melissa Horne

 

The Victorian government will look first at a voluntary initiative to address the vexed issue of port terminal access charges on haulage firms but will keep regulation of the sector as an option, according to ports and freight minister Melissa Horne.

The comments are in a draft Port Pricing and Access Review Summary foreword related to a Deloitte report that the government confirms is being kept under wraps due to "commercial in confidence" considerations.

However, the recommendations in the report by consultancy Deloitte fail to give succour to port-container haulage firms, preferring an increase in "transparency" and "monitoring".

The outcome is expected to be examined closely by other state governments.

"There is no compelling case for economic regulation of stevedore charges at the Port of Melbourne at this time," the Deloitte report states.

As Horne notes, the Port Pricing and Access Review is the first state-based review of stevedore infrastructure charges that have caused disruption and costs to be injected into trade and container transport.

The state government is now considering what response to make.

"The response may include setting new voluntary standards to improve transparency, cooperation and accountability across all supply chain players so smarter decisions can be made," Horne says.

"That may mean providing a transparent rationale for how cost increases are determined and when they are to be applied.

"The standards may also help drive better landside access and performance by measures such as container turnaround time, road carrier service levels, rail operator service levels and on-time performance measures for both stevedores and land transport operators.

"Any monitoring would take a phased approach.

"However, if voluntary standards don’t deliver pricing transparency or greater efficiency, progression to mandatory standards through regulation may be warranted.

"However, the Victorian Government would not be considering economic regulation until the ACCC [Australian Competition and Consumer Commission] has completed its review of Part X of the Competition and Consumer Act 2010 (Clth) later this year.

"Increasing supply chain costs are not unique to the Port of Melbourne. They are national challenges impacting all ports.

"There is a case for cross-jurisdictional representations to the Commonwealth on this issue."

While the issues being prevalent in every state with a major container port, federal transport minister Michael McCormack washed his hands of it on release of the ACCC’s critical appraisal of access charges in its late 2018 Container stevedoring monitoring report.

That remained unchanged after last year’s report and despite the ACCC making plain it had no power to regulate as there was no competition component it could identify.


See how NSW is tackling the container access charges issue, here


The report does accept there is a misalignment between stevedore payment periods and those between land transport operators and cargo owners resulting in cash flow burdens for transport operators even in cases where ‘mark-ups’ were possible.

It also accepts that the infrastructure charges increase the cost to cargo owners, plus a range of mark-ups and other costs contributing to higher nominal supply chain costs.

Despite that, the report recommends:

  • setting of standards to increase transparency, cooperation and accountability between supply chain participants and inform their decision making.
  • incorporation of measures in the standards to improve pricing transparency including notification of the way in which price changes are made, the timing of price changes and the underlying rationale for cost increases.
  • incorporation of measures in the standards to improve landside access and performance including: container turnaround time; road carrier service levels; rail operator service levels; on-time performance metrics for both stevedores and land transport operators.
  • taking a phased approach to monitoring port supply chain costs.
  • should voluntary standards fail to deliver improved pricing transparency or operational efficiency - progression to mandatory standards through regulation may be warranted.
  • a phased approach recognises that the factors leading to increased costs across the Victorian port supply chain are national challenges impacting all ports, so any consideration of economic regulation should be informed by the findings of the current ACCC review of Part X of the Competition and Consumer Act.

 

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