Grand trucking association coalition demands port reform


Alliance backs ACCC chair’s call for new control over monopoly pricing

Grand trucking association coalition demands port reform
Simon O'Hara and his colleagues say port logistics is broken

 

In a national first, the leaders of state and federal trucking and logistics associations have united behind the country’s competition watchdog, to call for port policy reform.

The trigger is Australian Competition and Consumer Commission (ACCC) chair Rod Sims’ National Press Club speech decrying the privatisation of monopolies, particularly ports.

But this crescendo is the culmination of growing concern at state and federal policy neglect for safeguards that have led ultimately to significant negative financial outcomes for container transport and trade, particularly in the form of stevedores imposing unilateral unregulated and unconstrained ‘container access charges’ and other operational imposts.

The coalition of concerned groups highlight particularly Sims’ statement that "… there is currently no or little regulation of monopoly privately-owned ports.

"When these were government-owned, political pressure on Ministers kept prices reasonable. But the ports were sold, usually with no control over their pricing in order to maximise the proceeds of sale.

"The resulting unfettered market power of some ports is costing our nation dearly. In my view, we need a new ‘Part IIIB’ monopoly regulation regime that would see owners of significant infrastructure with market power subject to some form of price regulation."

The group – comprising Road Freight NSW (RFNSW), the Australian Trucking Association (ATA), the Queensland Trucking Association (QTA), the Victorian Trucking Association (VTA), International Forwarders and Customs Brokers Association (IFCBAA), Australian Furniture Removers Association (AFRA), Western Roads Federation (WRF), South Australian Road Transport Association (SARTA), Australian International Movers Association (AIMA) – says port Infrastructure and access surcharges and empty yard fees, as a percentage of total operating costs, had risen exorbitantly over the past three years, but had failed to deliver productivity gains.

And there is a recognition that container logistics chain reform needs to extend to container shipping lines and their consortia that have fallen in number and increased in market power but retain competition competition-rules exemption.


Read about Rod Sims’ address on the risk of privatised monopolies, here


The leaders of each organisation emphasise their points:

  • RFNSW – chief executive Simon O’Hara says: "The recent industrial action at Port Botany showed that the port isn’t functioning. What’s apparent is that the monopolistic behaviour of the stevedores and the NSW government’s unwillingness to impose much-needed regulations, has led to the current systems failures, which are impacting the whole supply chain. All the industrial action did was rip off the band aid."
  • ATA – acting chief executive Bill McKinley says: "The ACCC has confirmed, again, that we need effective price regulation for ports and monopoly infrastructure assets. Without effective price regulation governments are allowing large, mostly foreign-owned corporations to extract market power and price gouge small and family businesses. Governments need to regulate now."
  • VTA – CEO Peter Anderson says: "What our operators are looking for at the Port of Melbourne is fairness and transparency in how increases to costs are calculated. We would endorse a move to create Part IIIB monopoly regulation power proposed by the ACCC commissioner in conjunction with a review of Part X of the Competition law that deals with shipping line behaviour. We aren’t against costs, but they have to have fairness of application."
  • QTA – CEO Gary Mahon says: "The QTA endorses the comments made by Rod Sims at the National Press Club. The nation is paying dearly for unregulated monopoly privately owned ports and we endorse his proposal of a new part IIIB Monopoly Regulation that would see owners of significant infrastructure with unchecked market power being subject to some form of price regulation."
  •  IFCBAA – CEO Paul Damkjaer  says: "If we stop for a second, have a think about everything around you, the clothes you wear, the car you’re driving, and the TV that you watch, nine  times out of 10 it’s been imported from overseas. As we know aircraft are not operating to their normal capacity so the majority of items we import are coming by sea. 42.5 per cent of all goods in New South Wales households come through Port Botany and the figure would be similar across Australia. How can the stevedores substantiate such increases in a time that all Australian companies are feeling the pain of Covid-19?" 
  • AFRA and Australia International Movers Association – executive director Joe Lopino says: "Port charges are adding unwarranted costs to the movement of goods across our borders. Without urgent policy reforms, there are no constraints on stevedores from continuing to impose crippling cost increases on vulnerable transport operators, without any productivity gains."
  • WRF – CEO Cam Dumesny says: "As the nation embarks upon its COVID-19 recovery strategy, it’s imperative that Governments impose a moratorium on all increases at ports around the country, to ensure stevedores promote economic efficiency and productivity."
  • SARTA – executive officer Steve Shearer says: "The lack of regulation of monopoly privately owned ports has seen increases for operators across Australia and through the supply chain. SARTA endorses Rod Sims’ proposal … and we need new price regulation to deal with the increased costs for our truckies to deliver fairer outcomes particularly given the pressures of Covid mean that the industry can’t afford unjustified price increases without productivity outcomes."

Unfair contract terms

Meanwhile, Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell takes up another point from Sims’ speech that has gained trucking industry attention in the past – unfair contract terms.

In response, Carnell calls on the federal government to make Unfair Contract Terms between big and small businesses illegal and subject to harsh penalties. 

"It’s hard to believe that in 2020 it is still not illegal for a big business to impose unfair contract terms on a small business," Carnell says.

"Small businesses have been waiting for changes to level the playing field for too long.

"In November 2016, Treasury legislation amendment (Small Business and Unfair Contract Terms) Act 2015 took effect, that legislation was reviewed in 2018 and here we are, another two years on and small businesses continue to be adversely impacted by big businesses with legal impunity. It’s clear that change is long overdue.   

 "I wholeheartedly agree with Mr Sims’ statement that if we want unfair contract terms to stop hurting Australian small businesses, they need to be illegal and the penalties should be large enough to act as an effective deterrent.

"My office has been advocating for unfair contract terms legislation to be strengthened for a considerable time now - most recently in our COVID-19 Recovery Plan and our comprehensive submission to Treasury’s Review of Unfair Contract Term Protections for Small Business, in March this year."

So far, ASBFEO has recommended:

  • Unfair contract terms be made illegal
  • Significant penalties and infringement notices to apply to breaches
  • Enforcement capabilities of regulators enhanced to determine if terms are unfair
  • Legislation extended to cover all contracts valued up to $5 million
  • Definition of a small business be changed to those with less than $10 million turnover.

"Currently where a standard form contract contains an unfair contract term, the only way for a small business to take action is through the court system. And even if the term is proven to be unfair, there is no penalty to the big business," Carnell says.

"Phase I of our Access to Justice Inquiry found small businesses are unlikely to take action when faced with an unfair contract term in their standard form contract.

"Understandably, they are reluctant to damage commercial relationships, and lack the resources and time to pursue litigation.

"By making unfair contract terms illegal, the Australian Competition and Consumer Commission would be able to penalise big businesses.

"The sooner unfair contract terms between big businesses and small businesses is made both illegal and subject to big stick penalties, the better."

 

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