ACCC counts cost to nation of terminal access charges

Competition watchdog warns recent waterfront competitive gains risk being lost

ACCC counts cost to nation of terminal access charges
Part of the report’s cover


Governments of states with major container ports have ensured their consumers and exporters are effectively at least $256 million poorer in 2019-20, the Australian Competition and Consumer Commission’s (ACCC’s) latest Container stevedoring monitoring report shows.

That is just the value of container terminal access charges (TACs) on import and export shipping containers and is not inclusive of the cost of Australian container haulage firms administering the charges.  

These unregulated costs have risen from $103 million since 2017-18, when TACs were weaponised to recoup monies lost to fewer and more powerful containership operator consortiums and privatised port operators.

As a result, stevedores’ revenues and profit margins "increased overall in the last financial year despite the global pandemic causing the largest contraction in container volumes in a decade", the ACCC notes.

"Overall revenues grew in 2019-20, largely as a result of stevedores increasing terminal access charges."

Revenue from these charges, previously called infrastructure charges, rose by 51.9 per cent in aggregate for monitored ports compared to 2018-19.

Meanwhile, revenues and costs in total have risen to $1.43 billion, after having spent the seven years to 2016-17 between $1.2 billion and $1.3 billion.

"While there may be justification for landside charges, excessive terminal access charges will nullify the benefits of greater competition between stevedores in providing services to shipping lines," ACCC chair Rod Sims says.

"However, any regulation of these charges is a matter for state and territory governments.  

"Shipping lines contract with a single stevedore for cargo and that means there is no direct competition in the provision of landside services.

"This makes these fees to some extent a ‘take it or leave it’ proposition for importers or exporters that have no direct choice of stevedore."

The report shows stevedores’ total operating profit margins increased for the first time in a decade, from 5.8 per cent in 2018-19 to 9.9 per cent in 2019-20.

While profitability varies significantly between stevedores, this is the highest overall margin recorded since 2016-17.

The report shows that revenues and profits increased, even though total container lifts through monitored ports fell by 4.4 per cent largely due to the impact of Covid-19 in the second half of the 2019-20 monitoring period.

Many of the points raised were highlighted last year. Read about them here

The report notes stevedores’ main argument for TACs, which include:

  • Falling prices being charged to shipping lines because of both greater competition between stevedores and a stronger bargaining position of shipping lines as a result of industry consolidation 
  • Sustained and significant increases in their property-related costs 
  • The need to maintain adequate returns required to recover past investments and justify future investments in quayside and landside terminal facilities.

However, it points to over-reach on stevedores’ part, saying "the use of TACs means that stevedores are earning a growing proportion of their revenues from customers that are limited in being able to respond to those charges, in contrast to the more directly competitive market in which stevedores provide services to shipping lines.

"In this scenario, there is a risk that the stevedores will continue to increase their charges, and importers and exporters may pay even higher charges to receive or ship their goods.

"The ACCC notes that any regulation of such landside charges would be a matter for state and territory governments.

"Not only have charges increased each year, but higher landside revenues are now more than offsetting any fall in quayside revenues collected from shipping lines."

Truck turnarounds

It may be argued that mitigating against one of the purported reasoning for TACs, investment in more efficient truck handling at terminals, is the 6.5 per cent worsening of truck turnaround times (TTT) to 31.2 minutes.

The weighted average load factor of 20-foot equivalent units of containers (TEU) also decreased by 13.6 per cent to 2.13 TEU per truck.

"While TTT is an important measure, seeking to improve landside productivity levels by minimising TTT alone could have adverse effects," the report says.

"Stevedores have advised that seeking to lower TTT may encourage less containers to be loaded per given truck.

"The effect of this could be an increase in the number of trucks queueing at the terminals and increased landside congestion at the port precinct. Increasing average truck loads, while potentially leading to poorer TTT, would have the benefit of improving landside congestion at the port precinct by reducing the number of trucks."

However, while the stevedores’ argument is presented uncritically, report writers may have made up for that with a subtle dig in the ‘Management of truck demand’ section, on Vehicle Booking System (VBS) and Truck Appointment System (TAS) operations.

There they observe that "properly managed and scheduled landside operations benefits both truck operators (through shorter TTT) and the terminal (more efficient use of resources)".

That said, the report also says "the stevedores are generally apportioning more than sufficient VBS/TAS slots relative to demand by trucking operators at all periods".

Congestion charges

It not all troubling news at the waterside, with capital investment in some areas in 2019-20, such as the Port of Melbourne committed $125 million to the Port Rail Transformation Project and Patrick invested $150 million across all of its terminals.

The ACCC says is aware of a range of issues affecting container ports recently, including industrial action and issues with capacity at empty container parks, particularly in Sydney.

Some shipping lines are imposing new congestion charges of up to US$350 ($493) per standard container at Port Botany in Sydney.

Some shipping lines are even delivering cargo to other ports such as Brisbane or Melbourne and charging importers to have them trucked to Sydney.

"Congestion charges should be temporary and only imposed if justified and reasonable," Sims says.

"We would be very concerned if they became embedded costs at our ports."

The full report can be found here.


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