Saturday 17th Nov, 2018

Port of Newcastle disappointed by Federal Court ruling

Photo: Southern Cross Maritime
Photo: Southern Cross Maritime

PORT of Newcastle has expressed disappointment at a Federal Court ruling warning of “unintended consequences” for other infrastructure providers.

The Federal Court this week rejected a Port of Newcastle appeal against an earlier ACCC decision to make its operations a ‘declared service’.

The case was brought by coal exporter Glencore after port services prices increased steeply following privatisation.

In a statement, the Port indicated the decision could introduce new layers of “costly regulation”.

“This is a disappointing outcome, not just for Port of Newcastle but potentially for many other major infrastructure providers across Australia. It could have wide-ranging implications for the profitability and value of nationally significant assets,” chief executive Geoff Crowe said.

Port of Newcastle also says it is reviewing and assessing the implications of the decision and will “continue to engage proactively with its customers and the ACCC on this matter”.

“Port of Newcastle has a commercial imperative to maximise trade volumes through the port and to ensure continued access for customers. Its business depends on its customers’ success. Port of Newcastle pricing remains competitive with other Australian ports,” the statement read.

According to the port:

  • In the twenty years prior to privatisation the Port of Newcastle’s port usage charge for coal ships increased by just 1.2% – during the same period the CPI rose 70%;
  • The new private owners changed this subsidy and aligned the port usage charge with those of competitors such as Port Kembla.

Industry body the Australian Logistics Council has released a statement saying the Federal Court ruling could have significant implications across the freight and logistics industry.

“There are many specialist and complex issues at work with the operation of supply chains and logistics infrastructure,” said ALC managing director, Michael Kilgariff.

“It is not an industry that can be easily correlated with energy or communications regulation, but one that requires a bespoke regulatory approach.”

Mr Kilgariff said the Federal Court decision seemed to point to increasing ACCC involvement in port pricing and access issues.

“If that is going to be the case, then it is imperative that the ACCC ensures it is properly resourced with personnel who have had exposure to and experience in dealing with the complex and unique nature of these infrastructure assets,” he said.

“Any regulatory role played by the ACCC in the freight logistics sector must be fit-for-purpose.”

“Pursuing a ‘template’ approach to regulation by merely imposing regulatory frameworks designed for other industries will do nothing to enhance supply chain efficiency. Indeed, it could well lead to inappropriate cost structures that have serious consequences for supply chains and the profitability of significant freight infrastructure.”

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