INDUSTRIAL relations, terminal access charges and landside efficiency have emerged as some of the main talking points of the Productivity Commission’s report on Australia’s maritime logistics system.

The Productivity Commission on Monday this week published the finalised version of Lifting productivity at Australia’s container ports: between water, wharf and warehouse.

It found inefficiencies at Australia’s major container ports directly cost the Australian economy about $600 million each year, but increased productivity is within reach.

The report is the outcome of an inquiry into trends at Australia’s container ports, informed by industry submissions.

While the maritime and logistics community works through the 501-page document, many are focusing on differences between the latest version and the initial draft report, published in September.

The consensus so far is that this is a very big report, and that it will take some time to process.

However, organisations and interested readers are already coming forward with their views on which parts of the report hit – or missed – the mark.

Some initial thoughts

Maritime logistics expert Peter van Duyn told DCN he was pleased to see the Productivity Commission recognising that increased ship productivity and faster turnaround comes at a cost.

“Our individual crane rate is comparable with world’s best practice as well as our use of automated technology,” he said.

“When they compare Melbourne with Yokohama they forget to mention the fact that Yokohama is publicly owned and, whilst having a similar throughput as Melbourne has more than twice the amount of cranes and quay length than Melbourne, resulting in less waiting time for vessels and increased crane intensity once alongside, so hardly a fair comparison in my view.

“Obviously sweating the assets is not an issue in Yokohama. And [as] I have written before, Australian container terminals perform well on the landside when compared with overseas ports, but this is not measured in the reports referenced by the PC.”

Patrick Terminals observed amendments to the report reflect industry’s feedback on matters of landside fees and measuring productivity at container ports.

Paul Damkjaer, CEO of the International Forwarders and Customs Brokers Association of Australia, told DCN the Productivity Commission’s report reflected some important submissions from industry.

“IFCBAA was delighted that many of the recommendations in the report were directly associated with our submission,” he said.

Port of Newcastle acting CEO Simon Byrnes also welcomed the final report.

“The Productivity Commission’s final inquiry report on Australia’s Maritime Logistics System reaffirms that a container terminal in Newcastle would drive competition and productivity for the benefit of businesses and customers in New South Wales as detailed in the report,” he told DCN.

“Port of Newcastle looks forward to the valuation process commencing as outlined in the Port of Newcastle (Extinguishment of Liability) Act and in making good on our commitment to build a world-class container terminal.”

And Ports Australia CEO Mike Gallacher told DCN the organisation is still working through the “very comprehensive” report.

“We thank the productivity commission for opportunity to provide input on behalf of the sector,” he said.

Workplace arrangements and industrial relations

In its report, the Productivity Commission argued workplace arrangements are lowering productivity.

It noted the Fair Work Act has been amended to limit intractable bargaining, but it believes more effective remedies are needed to reduce industrial action.

Patrick Terminals observed the Productivity Commission largely maintained recommendations on workplace reform.

The terminal operator noted a majority of the workplace recommendations in the report are unaffected by recent changes to the Fair Work Act and remain at the core of securing the long-term productivity of the nation’s maritime logistics system. 

Paul Zalai, director of the Freight Trade Alliance and secretariat of the Australian Peak Shippers Association, said the workplace recommendation aligns with the alliance’s position to allow a wider range of third parties to apply to terminate protected industrial action in container ports.

“This outcome would protect individual members of representative bodies from the associated exposure in making an application as well as allowing a broader representation of views and evidence to be provided to the Fair Work Commission,” he said.

The Maritime Union of Australia did not comment further on the report, standing by an earlier statement describing the inquiry as an attack on the union.

However, the MUA pointed to an Australian Institute report published in December last year (commissioned by the union) which challenged the methodology and conclusions of the inquiry.

Terminal access charges

The Productivity Commission explored a perceived lack of competition in some parts of the maritime logistics system and the impacts of recent “rapid” increases in terminal access charges.

It said the TAC increases have flowed through to cargo owners, and that voluntary protocols to address terminal operators’ “abuse of market power” should be strengthened.

Mr van Duyn observed the Productivity Commission has moved away from an earlier recommendation in its draft report to incorporate the TACs with the lift charge and charge the shipping lines.

Mr Zalai highlighted a recommendation in the initial draft report: that charges be negotiated on a commercial in-confidence basis between the stevedore and their contracted client (shipping lines), negating the need to impose charges on third parties who have no ability to influence service or price.

He said stevedores and empty container parks should be forced to either absorb operating costs or pass them onto their commercial client.

Mr Zalai also believes the Productivity Commission has deviated from its original position, now recommending a mandatory industry code with the ACCC to act as a pricing watchdog.

According to the report, the Australian Treasury would be responsible for developing the code and the code would be administered and enforced by the ACCC.

The Productivity Commission said it preferred response because “it would ensure regulatory consistency for container terminal operators that operate in multiple jurisdictions; the state governments individually are not in a position to implement or enforce a national code; and the ACCC already monitors container ports through a direction from the Treasurer and has developed knowledge and understanding of the maritime logistics system.”

Responding to the recommendation, Mr Damkjaer of IFCBAA noted the recommended (landside) fee baseline date of 1 December 2022 as the recent increases and new proposed fees from stevedores would come under direct scrutiny from the ACCC.

Mr Zalai also shared his thoughts.

“The proposed mandatory code will undoubtedly be an improvement to the current regime but will be less effective than simply allowing market forces to take effect,” he said.

Mr Zalai said if the federal government implements the industry code recommendation, it should do so fully.

“Any watering down of this recommendation will be disastrous, leaving our essential containerised trade sector exposed to ongoing and uncontrolled spiralling costs.”

Container detention fees

Container Transport Alliance Australia director Neil Chambers told DCN he is eager for the federal government to act in response to the container detention fee aspect of the Productivity Commission’s report and the ACCC’s Container Stevedore Monitoring Report 2021-22, published in December.

“One the first things that the Productivity Commission said, which aligns with the ACCC’s view as well, that is Part X of the Competition and Consumer Act should be repealed,” Mr Chambers said.

“The second part of that is … we think that a regulatory body like the ACCC should be tasked by the federal government to come up with a set of guidelines on container detention policies, and then potentially also have some regulation that helps to have a low-cost arbitration ability for importers and transport operators to query the reasonableness of container detention policies and invoicing from the shipping lines.”

Mr Zalai said there is consensus across shipping and trade representative bodies for the repeal of Part X of the Competition and Consumer Act, but there is a difference of opinion in what should replace it.

“With less quayside revenue, stevedores and empty container parks have resorted to a ransom model, forcing transport operators to pay designated fees or be denied access to container collection/dispatch facilities,” he said.

“It is not sustainable for our exporters and importers to absorb this additional impost of hundreds of millions of dollars annually whereby they cannot influence service or price.”

Investing in landside efficiency

Mr Chambers said the CTAA has been hoping to see more transparency from stevedores about how stevedores were using landside fees to invest in initiatives to improve landside the interface with terminals.

He highlighted and commended Patrick Terminals’ recent introduction of two new landside efficiency initiatives: the voluntary publication of landside performance metrics for its container terminals, and the establishment of landside efficiency groups.

“That’s fantastic, because then you can start to see where we can make some improvements, things like two-way loading of trucks and truck turnaround times,” Mr Chambers said.

Patrick Terminals, also responding to the Productivity Commission’s report, said the terminal operator has demonstrated its commitment to the National Voluntary Guidelines and reasonable enhancements over time.

“Whilst Patrick considers that the voluntary regime recently endorsed by States and Federal transport and infrastructure ministers should be given reasonable and appropriate time to demonstrate its effectiveness before further review, I note that key elements of a potential industry code are broadly consistent with the voluntary approach and Patrick’s recent industry notification on landside fees,” Patrick Terminals CEO Michael Jovicic said.

The strategic fleet

The Productivity Commission also suggested “concerns about domestic shipping capacity and training can be met through modest measures”.

It said Australian‑flagged vessels are not a prerequisite to meeting maritime skill requirements, a view Mr Duyn disagrees with.

The Productivity Commission said potential skills shortages would best be addressed by cadetships and skilled migration.

“Yes, it will be complex, but might lead to [an] increase in Australian flagged vessels that, together with changes in legislation to make flying an Australian flag less onerous and costly, will be good for the development of the necessary maritime skills that we, as an island continent, need rather than importing these skills form other countries.”

This article has been amended to reflect further industry comments regarding outcomes of the mandatory industry code recommended by the Productivity Commission.