CONTRARY to widespread industry speculation Svitzer and Smit Lamnalco have extended their agreement to share towage assets in Brisbane, Newcastle, Port Botany and Melbourne.
While there has been no local announcement by either side SL MD Australia & PNG David Fethers has confirmed the extended arrangement, which was first revealed in Svitzer A/S’s quarterly results announcement in Copenhagen late last week (see separate story). Comment was sought from Svitzer.
Mr Fethers said rumours SL was preparing to ‘go it alone’ in major ports ignored the reality of costly assets and operations, with volumes generally insufficient to support two fully-equipped towage providers.
In August 2015 the two companies entered an agreement that saw Svitzer provide service delivery on behalf of SL in the ports of Melbourne, Botany and Newcastle. Both parties maintained their own commercial activities and continued to compete in those ports. The agreement commenced in August 2015 and was due to expire mid-2018.
In November 2017, Svitzer and SL renewed the existing arrangement in the three ports by an additional two years until September 2020 and extended the arrangement to the Port of Brisbane before, in July 2020, again
extending by four years for the four ports until 31 August 2024. Under the extended agreement, Svitzer continued to charter six vessels from SL.
The latest agreement prolongs the co-operation until August 2028 but Mr Fethers stressed that at its core remains capacity-sharing, with SL continuing to compete aggressively for clients. He described the only change as Svitzer and SL operating “back-to-back” now in Port Botany and shortly Brisbane.
“In these ports Svitzer offers 4 tugs and SL two, and there’s no justification for SL adding more. Volume just doesn’t support that,” he said. “We’re well geared up with a reasonable fleet, so we have no plans for replacements,” he said.
The rolled agreement does not signal a backward step for SL, Mr Fethers said. “We’ll go our own way but keep a foot in both camps, if you like.”
However, he hit out at “port authorities”’ licencing arrangements, claiming the regimes in Port Jackson and Melbourne had effectively pushed up prices. In particular he cited Melbourne where Ports Victoria’s latest towage determination (DCN 4 March) requires an increase of available tugs from 4 to 5 to 6 (SL has one there under the sharing agreement).
“Svitzer has the non-exclusive licence but, if we were to seek a second licence, we too would have to provide six tugs! That’s plainly ridiculous and we raised it at the time of consultation over the proposed determination but without effect,” he said.
“They want competition but then they make it hard.”
