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A REPORT prepared by consultancy farrierswier has backed the use of landside surcharges by stevedores in the Australian market.

The expert report on charging issues for container stevedoring was commissioned and paid for by DPWA via legal advisers Gilbert + Tobin.

The report noted the disruptive nature of the market.

“Over the last three to four years, the global container shipping market and associated supply chain has undergone significant disruption,” the authors noted.

“Competition has increased due to rapid consolidation of shipping lines, consortia and services, and pressures from a reduction in demand growth.

“Further, in Australia, competitive pressures have increased due to introduction of a third stevedore in most major ports.”

The authors noted the infrastructure fees implemented by stevedores had been controversial.

“We view rebalancing of stevedore charges of the kind being undertaken by stevedores (as between landside transport operators and shipping lines) as consistent with what an economist would expect in a workably competitive market,” the report stated.

The report notes some current features of the Australian market:

  • Consolidation in the global shipping industry increasing the bargaining power of shipping lines;
  • Entry of new stevedore firms and increased stevedore capacity;
  • Operating margins and return on assets for the stevedoring industry have trended downwards over the past ten years;
  • Shipping lines’ demand for stevedore services is responsive to the level of stevedore charges they pay, whereas land transport operators demand for stevedore service is not responsive to the level of stevedore charges they pay;
  • Given competition between stevedores, then there will be competitive pressure for all stevedores to rebalance their charges away from shipping lines and towards land transport operators.

“Given the evidence of stevedore costs and revenues published by the ACCC, it does not appear that stevedores are engaging in excessive pricing,” the report noted.

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The report argued against regulatory intervention.

“To the contrary, policy intervention in these circumstances risks introducing rigidity into the commercial arrangements within port supply chains that could reduce the ability of the supply chain to flexibly and efficiently adapt to recent market disruption,” the authors wrote.

“It may also impact upon and distort incentives of participants to invest in capital expansion of facilities to handle larger ships and improve landside access.”

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