Tuesday 17th Jul, 2018

INDUSTRY OPINION: Industry needs government intervention with the ACCC leaving industry stranded

Image: Jim Wilson and Shutterstock
Image: Jim Wilson and Shutterstock

A RECENT Federal Court decision relating to substantial price increases at the Port of Newcastle means that the Australian Competition and Consumer Commission (ACCC) now has the power to monitor and regulate pricing at ports. While it is encouraging to know that appropriate pricing and competition safeguards are in place, what is incredibly disappointing is that ACCC Chairman Rod Sims indicated last week via trade media that stevedore infrastructure surcharges are not illegal and that ACCC intervention is unlikely.

While Mr Sims is happy to take the media spotlight, his administrative team are yet to formally respond to concerns raised by peak industry bodies.

So assuming that the ACCC will eventually respond in line with its chairman’s view, where to from here with the Infrastructure Charges adding significant costs to Australia’s international trade sector?

While there is absolutely no suggestion of collusion between the stevedores, it is another case of “follow the leader” with Patrick implementing an infrastructure charge on July 10, 2017 shortly after DP World Australia broke the news to industry with a similar charge in April.

Cargo owners cannot exercise market power as some interested parties would have you think. Exporters, importers and freight forwarders, have limited power in deciding which stevedore a vessel calls at, particularly given that some shipping lines have entered into mid-term agreements with stevedores.

Introducing surcharges on transport operators is clearly unfair as there are no means of negotiation or parallel service agreements. Furthermore, transport operators are understandably now introducing a surcharge to administer the stevedore surcharge. The net result is that cascading costs are being passed down the supply chain.

The position from Australian Peak Shippers Association (APSA) and Freight & Trade Alliance (FTA) remains that stevedores should either absorb operating costs or pass these on to their commercial client, being the shipping line. Should the shipping line then opt to pass on this cost, then that that can be negotiated on a commercial basis between themselves and their client freight forwarder, importer or exporter.

Perhaps the best and simplest outcome would be for the regulators to somehow enforce this model. If this could be achieved, then they could leave the rest to market forces to sort out pricing.

This issue is at the centre of the evidence given by APSA and FTA to the “Federal Inquiry into Freight and Supply Chain Priorities”. We look forward to working with the federal government in safeguarding against spiralling costs on the international trade sector.

Paul Zalai is director at Freight & Trade Alliance (FTA) and an advocate of the freight and trade sectors.


Send this to friend