DP World questions ACCC report

Don't compare Australian terminals to ASX 200 or overseas companies, DP World tells ACCC

DP World questions ACCC report
DP World questions ACCC report

By Anna Game-Lopata | November 6, 2012

Dubai based
stevedore DP World
says the profitability of Australian terminals should not be compared to ASX 200 or overseas companies.

DP World, which operates four terminals in Australia was responding the
Australian Competition and Consumer Commission’s (ACCC) annual report
on the stevedoring industry, released last Thursday.

"We remain concerned with the ACCC’s approach on measuring industry profitability," DP World Australia Managing Director Ganesh Raj tells SupplyChain Review.
"We do not believe the comparison with ASX 200 companies and overseas container operators is on a like for like basis."

The ACCC’s 14th annual Container Stevedoring Monitoring report warns sustained high profits and increasing labour costs suggest the need for further industry reform

The report confirms Australian container stevedoring has strongly improved its game since 1998, but despite improvements in profitability, revenues and capital investment, unit costs continue to rise and productivity fell in the 2011-12 financial year.

The report argues the industry is currently in a state of transition, facing key challenges including the commencement of a new entrant, ongoing industrial relations disputes and complex issues around landside connections to the terminals.

In 2011–12, labour productivity deteriorated from long-term trends, falling from 41.4 containers per hour in 2010–11 to 39.6 coinciding with a period of prolonged industrial
conflict between the stevedores and their workforces.

"Industrial disputes, if they were to become more frequent and widespread, could undermine past and future gains from investment in a more productive service" the report says.

The report adds two recent studies
comparing Australia’s container stevedoring performance with international examples indicate our productivity levels are broadly in line with overseas ports.

"This is despite other information which indicates the existence of higher industry profits and stevedoring wage levels in Australia compared with overseas," the report says.

However Ganesh Raj says DP World Australia has taken significant steps to ensure productivity gains across its network of Australian container terminals.

"DP World Australia has invested more than $300 million over the past few years in new equipment and technology, delivering better work practices as part of a concerted effort to boost productivity at our container terminals," he says.

"These are investments that are already delivering greater efficiencies and improvements.

"In addition, we have more than $300 million in capacity expansion projects, new equipment and technology investments currently underway across our terminals which will deliver increased capacity and higher productivity.

In terms of industrial relations, Raj says DP World Australia has been working with the Maritime Union of Australia (MUA) in relation to productivity incentives and stevedore remuneration.

"DP World Australia’s operations are showing real productivity gains, as part of our three year Enterprise Agreement with the MUA," Raj says.

"DP World Australia will continue to focus on improving productivity and delivering cost efficient service levels to our shipping line customers and stakeholders."

Raj says the ACCC report confirms that Australian stevedoring has performed strongly since waterfront reforms in 1998.

"The report also confirms that while container throughput has more than doubled, productivity has improved with net crane rate increasing from 18.8 to 30.1 containers per hour supported by substantial investment in capacity expansion by the stevedores," he says.

"These benefits have been shared with terminal users with unit revenues in real terms falling by 38 per cent."

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