Stevedore charges cost per NSW worker calculated

By: Rob McKay


Fletcher International Exports looks to state productivity commissioner’s report

Stevedore charges cost per NSW worker calculated
Rural exporters are particularly exposed to stevedore access charges

 

A regional New South Wales exporter calculates unilateral stevedoring terminal access charges costs each working person in the state nearly $30 a year, after being passed on by container road and rail haulage operators and trade services companies and others subject to them.

Family-owned Fletcher International Exports (FIE), which trades in high- and low-value grain and livestock products and runs its own rail operation to Port Botany, is moved to write an open letter to Freight Trade Alliance (FTA) on the charges’ effects.

Director Roger Fletcher’s letter follows meetings with NSW government officials in August and the Australian Competition and Consumer Commission’s (ACCC’s) Container stevedoring monitoring Report 2018-19, which addressed the issue, released this month.

"Typically, FIE moves in excess of 23,000 full containers through Port Botany, Sydney, annually," Fletcher says.

"With the current outlook, Port Botany’s average infrastructure levy from Jan 2020 will be over $77.20 per laden box, without further rises from Patrick’s port factored in.

"This equates to $3.15/mt of grain packed by FIE in a container, putting FIE at a significant disadvantage to bulk vessels, forcing the business to consider bulk alternatives.

"The reduction in margin is inevitably passed back down the supply chain to the farmer through lower paddock prices for their grain.

"For FIE’s NSW business alone, the infrastructure ley equates to a whopping $1,775,600.00, paid annually, ultimately creating the equivalent void back within regional farming communities.

"To extrapolate these costs across Port Botany entirely, there are approximately 1,800,000 full container moves through the port annually [which equals] $138,960,000.00 in infrastructure levies paid by importers/exporters in Sydney, NSW, alone.

"The levy ultimately increases the cost of living for consumers and reduces the incomes for export supply driven families.

"With the estimated population of the working aged people 66 per cent in NSW being approximately 4.95 million people, this equates to a negative result of $28 per person in NSW annually."


Read how the NSW productivity commissioner’s report has become a focus, here


In other key points surrounding this issue, Fletcher notes:

  • we are led to believe that the additional stevedore built in Sydney [Hutchison Ports Australia] created additional quayline competition which caused stevedores to lower their vessel servicing rates in order to maintain shipping line volumes. The cutthroat pricing on vessel servicing fees has been captured by shipping lines, but not passed back to importers or exporters at all. It has been absorbed as shipping line revenue. Meanwhile the stevedores have cut breakeven deals with shipping lines which they now have to honour. The stevedores being private businesses need to make a decent return and thus the infrastructure levy was introduced. Since there is no regulation, there is no telling where this new revenue stream for the stevedores will end
  • initially the infrastructure fee was introduced and announced as being caused by rising rents  – NSW Ports as confirmed rents have actually decreased
  • the fee is being passed through the system indirectly, ie through road and rail operators and not direct to importers/exporters, so (a) cost is actually higher and (b) we as exporters do not have any type of formal agreement in place with the stevedore parties for these charges to be incurred
  • the performance  has not changed since the fee was introduced and escalated since
  • there is no deterrent in place to cap this cost and will no doubt continues to escalate. Certain stevedore parties are now using the fee as a business growth strategy.

"Fletcher International Exports sits in a very sensitive position, dealing in low value agricultural commodities, which are most highly affected by this levy," he continues.

"FIE is very concerned around the lack of negotiating power exporters have and the lack of government regulation supporting the import/export sector.

"FIE is very keen to hear of feedback from [NSW Productivity Commissioner Peter Achterstraat’s] review of this issue. Every day we as exporters are disadvantaged by higher costs to market, compared to our competing supply nations is a day our economy goes backwards.

"It is critical we remain competitive across the world and back to famers, taking control of our costs to marker and not being taken advantage of by large shipping lines or stevedoring companies."

FTA notes transport firms pass on such stevedoring charges down the supply chain, "usually with an additional administrative fee causing a further cascading effect of costs onto exporters and importers.

"Again, this adds weight to our argument that fees should be negotiated and paid via contracted parties and not imposed on transport operators."

It takes national container stevedore DP World Australia to task for its reduction of lead-in times for the extra charges from 90 days to 60 days in its recent announcement of a rise in access and other charges.

FTA points out ancillary charges are rising hard and fast, with the administration fee of the electronic 1-Stop Vehicle Booking Service (VBS) rising to $18.45 per slot from 1 January 1, when in December 2018 they were only $6.95 per slot.

"This equates to another 265 per cent increase in just over a year, surprising for a system that uses an ‘electronic’ user interface," it says.

It adds that: "The DPWA Fremantle Notice justified an increase in fees by stating initiatives have delivered a 20 per cent improvement in road efficiency for carriers and contributed to an increase in rail utilisation.

"This statement is at variance to the recently released ACCC Container Stevedoring Monitoring Report 2018-19 report that clearly shows that truck turnaround times (TTT) in Fremantle worsened by 1.6 per cent to an average of 22.4 minutes and truck utilisation went down 1 per cent to 2.41 TEU per truck."

 

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