Trade body eyes federal pressure as Britnell demands control and eyes turn to stevedores
Container Transport Alliance Australia (CTAA) and Freight & Trade Alliance / Australian Peak Shippers Association (FTA /APSA) have issued trenchant responses to Victoria’s proposed Voluntary Port Of Melbourne Performance Model (VPPM) and draft protocol for stevedore access charges.
Championed by state ports and freight minister Melissa Horne following the Deloitte Pricing and Access Review, the VPPM, if adopted, will help cement in Victoria forced charges on imports and exports and the collection mechanism that have yet to be formally agreed on by state governments.
Horne’s state opposition shadow, Roma Britnell has also weighed into the debate, demanding regulation over which the government has “no control”.
“The Andrews Government has stood by and watched the Port of Melbourne become the nation’s most expensive to do business from as stevedores increased their infrastructure charges by 3,000 per cent,” Britnell says.
“The Government’s expedited enquiry took over a year to complete and in the time it took to compile that report, charges went up twice
“The response from Minister Horne is weak and uncontroversial and has announced almost two years later a set of voluntary standards for monitoring and transparency would be introduced.
“Under these guidelines stevedores will have to justify price rises and increases will be limited to once a year, but the Government will still have no control of how high that increase is.
“The Minister should be introducing enforceable regulation to ensure the State Government has the power to curtail out of control cost increases that are eventually passed onto exporters and consumers.”
FTA /APSA estimates the charges’ added cost compound the impacts of drought, bushfires and COVID-19 on the Australian economy to the tune of more than $300 million.
Much interest now turns to the stevedores’ reaction both to the initiative and regarding further charges, particularly before the deadline for data in support of the VPPM that Horne requests by the end of August.
“The Minister has confirmed that the Review’s findings did not identify a compelling reason at this time to regulate the infrastructure surcharge/infrastructure access charges or landside access charges currently being levied by stevedores, and accordingly there is no intention to proceed to regulation,” CTAA tells its members..
“This is disappointing, but understandable given that the Review’s findings mirror analyses from the ACCC Container Stevedore Monitoring Reports that the stevedores are not “price gouging”, but are focusing more attention on revenue generation from the landside to make up for the reduced revenue being generated from shipping lines due to fierce price competition in stevedoring services.
“Unfortunately, this still leaves container transport operators (road & rail) as the ‘bankers’ for the stevedores, having to pay the high stevedore landside access fees on relatively short payment terms, well before they are recovered from customers (typically 30 days or more from the end of the month in which the job was completed), and with no negotiation rights.
“This means that the cash-flow pressures & risks remain for transport operators, heightened in the current economic conditions.
Read about Horne’s VPPM message to transport and the VTA’s response, here
A silver lining for CTAA is the creation of access indicators for the Port of Melbourne against which performance at the port can be measured consistently – these are expected to feed into review of stevedores’ justifications for charges hikes.
“In relation to the second action, this aligns with the submissions made by CTAA to the Pricing & Access Review calling for appropriate independent measurement by Freight Victoria of performance indicators across all of the Melbourne container transport logistics chain, including the stevedore / transport interface, and in the empty container management chain as well,” it says.
“The Minister’s letter is right that post Covid-19 is the time when we must strengthen the resilience of the container freight logistics chain by improving the productivity and efficiency of critical aspects of the chain.
“In discussions with the Minister, her office, and Freight Victoria, we perceive the underlying view is that if stakeholders are reluctant to make the Voluntary Port of Melbourne Performance Model work, or actively resist it, then a pathway to regulation may become an option.”
Import/export response
Though transport has gained some clarity, FTA/APSA highlights that the financial and operational burden remains, not least on the trading companies and shippers “who ultimately pay the bills”.
“A monitoring process to oversee further price increases is NOT the answer – a sentiment that FTA / APSA has consistently expressed in dealings with the Victorian government, departmental representatives, consultants and the Minister herself,” FTA director Paul Zalai says in a message to members.
“The VPPM will mean that stevedores will continue to receive revenue from the transport sector rather than their commercial client (shipping line) with the net result of simply adding another level of bureaucracy.
“You do not have to be Nostradamus to see that empty container parks will also continue ratcheting up their charges on transport operators too – and why not?
“Stevedores have highlighted that it is a very effective model to collect revenue from parties other than your commercial client. An approach now apparently accepted by the Victorian government.
“As for transport operators, yes there are significant cash flow issues.
“Most also add a margin (understandably as it is probably necessary to survive) resulting in further cascading costs through the supply chain ultimately leading to inflated costs to shippers.
“FTA / APSA has overnight and again this morning sought more detail from the Victorian government on this development and will provide further comment once detail comes to hand.”
Meanwhile, Zalai’s organisations are seeking more traction federally.
He tells members a Status Report – Container Stevedore Imposition of Terminal Access Charges has been presented to Land Transport and Maritime Industry forum chaired by federal infrastructure and transport minister Michael McCormack yesterday.
The Status Report “highlights the fact that all businesses face a dilemma of how to deal with unavoidable costs such as rent, infrastructure, labour and power.
“Those same businesses are then forced to either absorb costs or pass them on to their commercial clients.
“Similarly, stevedores should be forced to either absorb operating costs or pass these on to their commercial client (shipping lines).
“Shipping lines then have the choice to absorb costs or pass these onto shippers (exporters, importers and freight forwarders) through negotiated freight rates and associated charges.”
The Status Report, which “clearly articulates that a statutory monitoring process to oversee further price increases is not the answer” and argues that “incremental increases on an already high base would continue the devastating impacts on Australian jobs”, makes two recommendations:
- regulation to protect transport operators and shippers by forcing stevedores to cease the practice of administering a Terminal Access Charge
- stevedores should be given appropriate notice to adjust commercial modelling allowing negotiations of charges back to shipping lines.