Wednesday 12th Dec, 2018

Port fee pain

Photo: Kingspan Insulation managing director, Scott Gibson. Photo: Kingspan Insulation
Photo: Kingspan Insulation managing director, Scott Gibson. Photo: Kingspan Insulation

RISING fees at the Port of Melbourne are damaging Victoria’s and Australia’s ability to compete in the export market, one export business says.

Kingspan Insulation says it was lured to Melbourne with state and federal government backing.

Overseas sales are said to comprise a third of its business and it has a production facility at Somerton in the northern suburbs.

But now it says port fees are making it hard to compete and managing director Scott Gibson has called on the state government to intervene.

“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 said.

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

Kingspan has done an international benchmarking survey across ports it uses, including in England, Dubai, Hong Kong and South Korea. It found Melbourne was the most expensive and among the most expensive ports in the world for terminal handling and port service charges.

“It is ranked last globally against Kingspan’s major trading ports and now many exporters are reportedly bypassing Melbourne in favour of the cheaper Port Botany port in Sydney which can’t be good for Victoria,” Mr Gibson said.

“Port of Melbourne needs to become globally competitive to enable Victorian exporters to be successful in growing their markets and creating more employment opportunities,” he said.

The survey found the $705 terminal handling and port service charges for an FEU in Melbourne were almost three times more expensive than the comparative port in the UK, Felixstowe, while the cost in Korea was just $210.

Kingspan reports Hong Kong port charges were half of Melbourne’s and charges for the same size container would be just over $500 in Dubai.

Kingspan has also noted the three container stevedore companies, DPWA, Patrick and Victorian International Container Terminal had significantly increased their charges this year.

Minister for Ports Luke Donnellan conceded port charges were a concern.

“We’re concerned about recent increases to infrastructure charges,” Mr Donnellan said.

“While these charges are a matter for the stevedores and their individual customers, it is reasonable for industry to expect better services in return,” he said.

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

Container Transport Alliance Australia director Neil Chambers said the Kingspan concerns illustrated the competitive cost pressures the unregulated, stevedore-imposed infrastructure surcharges were applying to Victorian and Australian exporters.

“CTAA has expressed views to all levels of government that this isn’t a debate about whether Melbourne, or Sydney, or Brisbane, or any other capital city container port in Australia is the cheapest relative to the others,” Mr Chambers said.

“Australian exporters need to be competitive against exporters in other countries,” Mr Chambers said. “Australian exporters already need to overcome the ‘tyranny of distance’ to overseas export markets.  This is made a lot harder when landside logistics costs have risen exponentially, and worst still, aren’t being regulated appropriately, so further unchecked increases are highly likely.”

Mr Chambers said they had asked for a government or regulator, be that the ACCC or state governments in consortia with one other, to run an inquiry into the landside interface costs for containerised trades.

“There has been rampant increases in self-imposed infrastructure surcharges by the stevedores, yet terminal handling fees imposed on shippers by the foreign container shipping lines have not reduced accordingly,” he said.

“The question remains, ‘who’s getting ripped off here?’”

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