POMC fees move welcomed but rent worries remain

ALC takes aim at impact of any huge rent hike as Pallas talks of DP World's port privatisation concern

POMC fees move welcomed but rent worries remain
DP World cranes at Swanson Dock in Melbourne. Picture: Rob McKay


Uncertainty seem to remain the order of the day with developments surrounding Port of Melbourne issues.

After months of negative public comment from shipping lines, the Tasmanian Government and stevedoring firms, particularly DP World, on proposed 767 per cent hike of its rent, the Port of Melbourne Corporation (POMC) has announced frozen or consumer price index-linked rises in container fees for shipowners.

The fees move gained Australian Logistics Council (ALC) backing but the peak transport and logistics body found cause to keep the rent issue on the front burner.

"We welcome the fact that the Victorian Government has listened to the concerns expressed by the logistics industry around port fees and charges, in particular, its decision to freeze export fees next financial year, with an intention to reduce them over the following four years," ALC managing director Michael Kilgariff says.

"However, the excessive rents proposed remains an ongoing issue, and if not resolved sensibly, will have a detrimental impact across the supply chain.

"Significant increases to port rents will push up the price for users of the port, costs will be passed on to consumers and make it harderfor local manufacturers to compete."

Earlier, the POMC 2015-16 Reference Tariff Schedule (RTS) showed what it described as "modest pricing adjustments" aimed to "encourage supply chain efficiency, particularly international containerised exports".

The move "recognises the industry feedback PoMC received from its customers who highlighted supply chain cost pressures".

PoMC will absorb the forecast under-recovery of the Port Licence Fee (PLF) of around $1 million which will not flow through to the new tariff charges.

While there is no change to loaded international container export wharfage, the overall tariff increase of 2.75 per cent matches the CPI forecast announced in the 2015-16 Victorian State Budget and comes on the back of last year’s RTS adjustment of less than 1 per cent.

 "After seeking the views of our customers, we’ve backed up last year’s minimal price adjustment with a freeze on prices for international exporters and a moderate increase on other tariffs in line with CPI," POMC CEO Nick Easy says.

"This prudent pricing decision will enhance the port’s competitive position in Australia and our customer offering.

"In practical terms, wharfage charges have been frozen at last year’s rate for loaded international exports while loaded imports increase by a CPI increment of $1.78 for a loaded TEU to $66.68 (plus GST). Wharfage on empty containers increases 44 cents to $16.54 (plus GST).

"Notwithstanding the significant costs of ongoing infrastructure delivery, including the major redevelopment of Webb Dock to accommodate future trade demands, we have delivered a prudent outcome which reflects a cost competitive port and our role in Australia’s freight and logistics capital."

Wharfage on motor vehicles increases in line with CPI by $1.04 per vehicle on average. Similarly, the Channel Deepening Project infrastructure fee will increase in line with CPI.

Channel fee discounts for multi-sailing vessels such as Bass Strait operators have been retained but at a marginally lower rate.

Bass Strait operators also remain exempt from the Channel Deepening Infrastructure fee for movements between Tasmania and the Port of Melbourne.

The discount on full channel fees for cruise vessels will reduce from 20 per cent to 15 per cent.

Meanwhile, state treasurer Tim Pallas was quoted as speculating DP World feared negotiations with a private leaseholder of the port in 12 months’ time and was keen to get a deal with government-owned POMC.

DP World and others have accused state governments of injecting extra costs into the supply chain by accepting inflated and unsustainable lease pricing for port terminals and using them as an artificial base price for land rent increases.

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