FREIGHT & Trade Alliance (FTA) and the Australian Peak Shippers Association (APSA) have received views from major exporters, importers and freight forwarders that the continuing vertical integration of the stevedores is a threat to Australia’s international supply chain.
A fear exists that the control of terminal access, coupled with that of port-rail facilities, will give stevedores an unfair ability over competing entities to grow their own transport and complementary logistics operations.
The 2017 introduction and subsequent increases of “infrastructure charges” by the two dominant stevedores have amplified these concerns.
FTA / APSA maintains the position that the vertical integration of stevedores can deliver efficiencies and cost savings to supply chain owners, if open access principles and fair pricing principles are observed.
In a formal submission to the Australian Competition and Consumer Commission (ACCC) review of the Maritime Container Services (MCS) acquisition by Qube Holdings, FTA / APSA highlighted the importance of monitored open access arrangements for port-rail services. This is essential in an environment where the barriers to entry are high, where the number of port-rail facilities is limited, and where some rural export supply chains are wholly dependent on affordable and unimpeded access to these facilities as essential national infrastructure assets.
FTA / APSA does not consider Qube’s acquisition of MCS as a lessening of competition for empty container parks as member feedback suggests that there is sufficient competition in that relevant market.
However, there may be a lessening of competition in port-rail services, where MCS is the only independent port-rail terminal operator in Sydney with no direct or indirect ownership interest by a stevedore.
Shippers have provided evidence to FTA / APSA that they can identify only two current alternatives for port-rail services in Sydney: Enfield (owned by NSW Ports with an operator to be announced in the coming months) and DP World Logistics Australia. It is important to note that while other competitors may be planning on entering the relevant markets in the future, barriers to entry are incredibly high and these are the only viable competitors identified at the time the review is taking place.
The lack of an independent port-rail operation in Sydney may be a concern if there is inadequate oversight of the stevedore-landside logistics relationship.
There is no doubt that MCS is a key port-rail facility for Port Botany, even more so as an independent operator.
If the acquisition is to proceed, FTA / APSA recommend that a formal open access and monitoring regime is established to address any possible access and competition concerns.
We now wait with keen interest to see the ruling from our competition regulator.
To view the full FTA / APSA submission, please refer to http://www.ftalliance.com.au/reports-and-submissions
Paul Zalai is director at Freight & Trade Alliance (FTA) and an advocate of the freight and trade sectors.