Thursday 20th Sep, 2018

INDUSTRY OPINION: Port costs risk export success

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

REVELATIONS an Australian exporter is paying almost three times as much in local port charges as it costs to ship a container overseas only serve to reinforce the Australian Peak Shippers Association’s campaign for regulatory and government intervention.

Manufacturer Kingspan Insulation benchmarked Melbourne against ports in England, Dubai, Hong Kong and South Korea and found terminal handling charges and port service charges were among the most expensive in the world.

Managing director Scott Gibson was quoted in The Australian and Daily Cargo News that Kingspan’s $40m new factory could not compete against overseas rivals when it was paying $705 in terminal handling charges and port shipping charges to ship containers through Melbourne – containers that cost only $250 in freight rates all the way to South Korea.

“We have sent around 100 containers to Korea in the past six months with charges of approximately $250 each for sea freight and more than twice that amount in charges just to get it through the port,” Mr Gibson was quoted as saying.

“With a third of our products exported, this is becoming a massive burden and making us uncompetitive against competing manu¬facturing points in the UK and Europe.”

Mr Gibson said Melbourne had been the nation’s largest and most modern port, but now ranked last in Australia in terms of terminal handling and service charge competitiveness.

“ … Many exporters are reportedly bypassing Melbourne in favour of the cheaper Port Botany port in Sydney, which can’t be good for Victoria,” he said.

Since stevedores DP World Australia, Patrick and more recently VICT introduced and increased landside infrastructure charges – payable on every loaded container entering or leaving port terminals – APSA has been warning rising costs will put exporters in an uncompetitive position.

Kingspan’s experience graphically underlines this.

As we have said many times before, APSA believes this situation is completely unacceptable, especially as shippers have no direct or contractual relationship with the stevedores and no ability to influence the charges.

It’s now been over 12 months since DPWA imposed a 900% increase in its Melbourne terminal access fee and Patrick followed suit in July 2017, albeit at a lower level. Then DPWA went to the well again in January this year for another increase, and further reviews are flagged for the new financial year.

And just to remind: up until April 3, 2017, DPWA’s Melbourne infrastructure charge was just $3 per container, now it’s $49.20.

Meanwhile, VICT has jumped on board and introduced its own charge, at $52.80 per container.

When the new charges were originally announced APSA and other industry bodies made immediate representation to the ACCC and other authorities, foreshadowing the impact on shippers, transport operators and others. Our concerns were ‘noted’ but little else happened, and it’s hard not to believe that stevedores took the benign reaction as tacit encouragement to continue on their course, complete with feeble justification.

Now, at least, the ACCC is thoroughly scrutinising the charges, and we are pleased to see Victorian ports minister Luke Donnellan expressing the state government’s concern.

“While these charges are a matter for the stevedores and their individual customers, it is reasonable for industry to expect better services in return,’’ the minister’s spokesperson was quoted as saying.

“We’ll work with industry to explore options to address this issue.”

Of course it’s not just Victorian exporters that are bearing these out-of-control charges. DPWA and Patrick are doing the same thing in Brisbane, Port Botany and Fremantle.

The WA Government announced on Friday that is going to the market to seek new leases for Fremantle’s two container terminals, where DPWA’s and Patrick’s current agreements expire in June next year.

This would be an excellent opportunity for the state government to include conditions of lease that forbid profiteering through unfair charges such as access/infrastructure fees.

APSA members constantly tell us a year of these imposts is having a disturbing cumulative effect that can only become worse if they’re not reined in.

Exporters need action now, before markets are lost.

* Travis Brooks-Garrett is secretariat at Australian Peak Shippers Association





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