Wednesday 21st Nov, 2018

INDUSTRY OPINION: Transport operator surcharges – will temporary relief become a permanent blight?

Photo: Shutterstock
Photo: Shutterstock

IT COMES as no surprise that during the last week transport operators introduced a new fee for dehire of empty containers direct to the stevedore.

In a Freight & Trade Alliance (FTA) commentary published by DCN on 5 February 2018, Solutions not surcharges needed in the empties dehire debate, concerns were expressed that the Container Transport Alliance of Australia (CTAA) were openly advocating for transport operators to introduce a surcharge to cover operating costs out of the Port of Melbourne.

This was followed by the Victorian Transport Association (VTA) distributing a member notice suggesting that individual carriers calculate their own cost, dependent on individual operating criteria and strongly advising that some level of cost recovery should be implemented.

It appears as though the actions of these representative bodies has had the desired effect, with several prominent transport operators introducing surcharges for the dehire practice in Melbourne and others introducing a tariff across all ports.

As the word spreads, we anticipate that other transport operators will follow in coming weeks.

FTA has spoken to both the CTAA and the VTA and, in response to our previous commentaries, also received direct contact from transport operators explaining operational difficulties and the need to pass on costs. DP World has subsequently provided FTA with extensive detail about plans to improve performance at their West Swanson operation and explained their intent to also engage with the transport sector to generate further operational efficiencies.

In response, FTA has given a commitment to all of the above stakeholders for support on any genuine pursuit to address the root cause of problems. FTA will continue to carefully monitor the outcomes and will be reporting developments to members.

That leads us to the next question. If indeed logistics efficiencies can be achieved with two-way container running and the like, will transport operators scrap the new surcharge and perhaps even on pass on savings?

The answer is most likely “no”.

The reality is that industry-wide surcharges have reduced the need to adjust professional services fees and are increasingly becoming a new mechanism for supply chain entities to remain commercially viable and profitable.

You only have to look back to 2017 to recall that both major stevedores introduced their infamous “infrastructure surcharge” and then several LCL unpack depots followed this lead with a surcharge of their own. Now we are seeing transport operators doing the same.

Further to our recent meeting with the chairman of the Australian Competition and Consumer Commission (ACCC), we are well aware that a close watch is being maintained on the international trade and logistics sectors.

To that end, the commentary from Nathan Cecil titled Port surcharges – be careful how you respond as published in DCN on 16 February 2018 is very timely, providing a warning to industry and outlining potential consequences from the competition regulator.

“Even if all industry operators end up getting to the same place, it is important that you do so on your own and not in concert with others.”

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

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