Port logistics probe terms of reference released

Farmers federation welcomes productivity and efficiency focus

Port logistics probe terms of reference released
Tony Mahar


The Productivity Commission has released terms of reference for the review into Australia’s maritime logistics system sought by the federal government.

Initiated by the federal treasurer Josh Frydenberg and the trade minister Dan Tehan, it was announced by prime minister Scott Morrison on December 3.

"While the Australian Competition and Consumer Commission found global factors were a significant contributor to rising shipping costs and delays, through this review the government will ensure that domestic issues are not compounding the problems caused by supply chain disruptions under surging global demand for goods since the start of the Covid‑19 pandemic," Frydenberg and Tehan announced at the weekend.

"The Productivity Commission’s review will examine any long-term domestic trends, focussing on operational cost drivers, including industrial relations, infrastructure constraints and technology uptake in Australia’s ports and related transport networks in order to assess the overall competitiveness of Australia’s ports.

"The inquiry complements earlier work by the Productivity Commission on supply chain vulnerabilities and risks as part the Government’s commitment to ensuring the Australian economy is prepared for any possible supply chain disruptions."

The PC will begin consultation in January and provide a final report in August.

The development comes as one of the few nations with a similar economy and geography, Canada, announce it will hold a supply chain summit early next year.

"The National Summit will play a critical role in helping to ensure Canadians throughout the country have better access to essential goods without adding an increased burden of cost," Canadian transport minister Omar Alghabra said.

"Through collaboration with industry partners, we have an opportunity to address constraints in our supply chains that will ensure greater reliability and efficiency."

The PC review aims to examine the structural issues affecting the productivity of Australia's maritime logistics system.

"Long‑term trends in system performance will be analysed, and industrial relations, infrastructure constraints and technology uptake will be among the inquiry’s areas of focus," it said.

Read how the port logistics probe was announced, here

The National Farmers Federation (NFF) backed the review's focus.

"We welcome any review that can work through structural issues with our international freight supply chains, noting that Australia’s port and stevedoring services have been rated as some of the most unproductive in the world, with all but one port in the bottom quartile for productivity globally," NFF CEO Tony Mahar said.

"It costs the same to ship a container of grain from South Australia to Indonesia as it does from Canada, despite being some 10,000km closer, this is simply unacceptable."

The NFF noted that this would be a holistic review of all aspects of the maritime logistics system, including the operating model of ports and stevedoring, infrastructure and planning impediments, and workforce and industrial relations issues.

"Whereas previous reviews have focused on one part of the problem, whether it is shipping or stevedoring, this review will provide a comprehensive overview of all aspects that have led to cost blow outs in our international freight supply chains," Mahar said.

The farming sector has a significant stake in the establishment of a productive and efficient maritime logistics system, with the NFF underlining that up to 50% of the final market price of agricultural commodities goes towards freight and logistics.

"The NFF welcomes this review, and urges the government to implement any recommendations as a matter of national priority," Mahar said.

"Our farmers’ ability to compete in international markets depends on it."

The seven-point terms of reference are:

  • Examine the long-term trends, structural changes, and impediments that impact the efficiency and dependability of the maritime logistics system, including developing a framework of performance measures to determine port performance and benchmarking Australian ports internationally.
  • Determine the broader economic impact of the maritime logistics sector, and assess the sectors’ operating model and any structural impediments, on consumers, business, and industry. This should include examining costs of curfews imposed at some ports, impacts of urban encroachment on ports and connections to ports, and adequacy of development planning and land protection. It should also look at the economic impact of delays; uncertainty and the capacity for logistics chains to respond; and increased freight costs (including fees and charges in the sector) and cancellations of sailings, including on importers, exporters, and supply chains.
  • Examine workforce issues, including industrial relations, labour supply and skills, and any structural shifts in the nature and type of work in the maritime logistics sector.
  • Assess infrastructure needs and constraints, including options to enhance the efficiencyof ports and connected landside supply chains and the interactions between decisions ofdifferent levels of government. This should include reviewing rail access at containerports; any imbalance between the types of containers for imports versus exports; the suitability of container storage facilities; and costs and benefits of investing in new port and shipping infrastructure or enhancements to existing infrastructure to enable the use of larger ships. This should also identify the role of Governments and the private sector in meeting current and future infrastructure challenges in the sector.
  • Research mechanisms to help improve the sector’s resilience and efficiency. This should include examination of technology uptake, innovation, data capture and sharing across international freight networks compared to Australia; examples of areas where Australia does well; identification of technologies that offer the greatest productivity gains in the Australian circumstances; and identification of any barriers to greater uptake of technology and innovation.
  • Have regard to the interlinkages and dependencies between the maritime logistics sector and other logistics systems, such as air freight and landside supply chains. For example, the impact of the resumption of air freight on ports, the preparedness of ports for disruptions in these supply chains and the role of ports for landside supply chains.
  • Have regard to the ACCC’s container stevedoring monitoring report; the Productivity Commission study into vulnerable supply chains; the National Freight and Supply Chain Strategy agreed by Commonwealth, state and territory governments; and the Government’s in-principle acceptance of the Harper Review’s recommendation to repeal Part X of the Competition and Consumer Act 2010.

More information can be found here.


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