OPINION: Port pricing and the mystery of higher landside costs

THE RECENT proposed takeover of Qube Logistics by Macquarie Asset Management and the release of the ACCC’s Container Stevedoring Monitoring Report 2024-25 has started the usual commentary about port pricing and stevedoring charges.

What most people forget is that the increase in terminal access and infrastructure charges was set off by privatising several of our capital city ports. Flinders Ports in South Australia was privatised in 2001 without much fanfare. The privatisation of the Port of Brisbane in 2010 was quickly followed by the Port Botany (Sydney) in 2013, which included Port Kembla and a clause that stifled the development of a container terminal in the Port of Newcastle, and finally the Port of Melbourne in 2016, with only the Port of Fremantle still under state government control.

Much has been said about the unabated and unregulated increase of terminal access charges (TACs) charged by the stevedores, as well as a steep increase in notification fees at empty container parks (ECPs). The Australian Consumer and Competition Commission (ACCC) has had its say about these charges in more detail. I would like to highlight, however, the infrastructure charges levied by the port operators.

The new owners of the Port of Brisbane were quick to introduce a port access charge (PAC), currently about $11.00 per full TEU, which is ‘designed to recover the cost of significant capital projects which facilitate growth and improve access at the port’.

NSW Ports, the leaseholder of Port Botany and Port Kembla introduced a $3.08 increase in wharfage per full TEU in 2019 to co-fund investment in the development of the rail siding at the Patrick container terminal. In July this year the wharfage was increased to $4.28 per full TEU to fund stage two of the expansion of on-dock rail capacity at the DP World container terminal. NSW Ports stated that the levy would be discontinued once their investment was recouped.

In June 2020, the Port of Melbourne introduced a $9.45 levy per full import TEU to co-fund rail terminal development at Patrick’s East Swanson terminal as part of the Port Rail Transformation Project. No end date has been set for this levy. The port is now also asking the Victorian Department of Finance, in conjunction with the Essential Services Commission which regulates port pricing and only allows annual indexation, for an upfront price increase to allow cost recovery of the Port Capacity Enhancement Program. A multibillion-dollar project that intends to add increased container capacity at the port by relocating the Bass Strait shipping services upriver to create space at Webb Dock to build another container terminal.

While some charges are justified to fund developments already completed, it is interesting to note that some are levied well before the proposed development occurs and once completed, are not discontinued. We should not forget that port authorities already levy several charges such as wharfage and in some cases channel fees as well as ancillary charges. In the meantime, government-owned Fremantle Ports, which has substantially lower charges than the privatised ports, is undertaking a WA government-funded multimillion-dollar development project at Kwinana to replace container capacity at Fremantle. The government also subsidises containers that are transported from the port to intermodal terminals, which is something that the Port of Melbourne now seems to be considering. They have recently put out a ‘call for registrations of interest for the potential start-up incentive for importers considering contracting rail volumes to the intermodal terminal at Somerton’. The proposed subsidy is $100 for an import TEU and $200 for an FEU. It will be interesting to see if they get any takers and no doubt the other intermodal terminal operators will be following these developments with interest.

The ACCC stevedoring reports have provided more detail on the TACs and ECP charges and stevedoring profitability, but we should not forget that while these additional infrastructure charges levied by port authorities are only relatively small, it’s the importers and exporters who again pay the price.