Stevedores told to think twice about price hike

Who does this notice affect?

Exporters, importers, freight forwarders, customs brokers and transport operators 

 

Stevedores told to think twice about price hike

 

On August 12 Freight & Trade Alliance (FTA) had a very open and frank meeting with the Hon. Andrew Constance (Minister for Transport and Roads) on the issue of Infrastructure Fees.  The Minister shared our concerns and the impact these fees are having on not only the wider community but also in particular the agriculture exporters.

These issues were again raised with Peter Achterstraat AM (NSW Productivity Commissioner) and his senior advisors  when David Scott (FTA Member Representative Sea Freight / Commercial Freight & Logistics) and Paul Zalai (Director and Co Founder, FTA) met on November 5

Hopefully the media statement issued by Minister Constance is a sign that the message is finally getting through to the various state governments and that a complete review of these fees, as to their structure and how (as well as to who) they are applied needs to be addressed.

The Minister noted 
“Key stakeholders have raised concerns about the impact of increasing port charges in NSW that have potential to drive up the cost of everyday goods, as well as impacting the state’s economy and competitiveness of our exports. 

 
“They have also raised concerns around the frequency and lack of justification for these increased charges passed on by stevedores.” 
 
We look forward to our further discussions with the NSW Productivity Commissioner, as well as the respective Ministers in other states to ensure a national solution is found to these matters.

For background on our work so far please refer below commentary 

 

 

John Park - Head of Business Operations - FTA / APSA

 

 

BACKGROUND

 

Sydney – David Scott (FTA Member Representative Sea Freight / Commercial Freight & Logistics) and I met 5 November 2019 with Peter Achterstraat AM (NSW Productivity Commissioner) and his senior advisors - we thank the Hon. Andrew Constance (Minister for Transport and Roads and Member for Bega) for setting up this engagement following our meeting with him on 12 August 2019.

Freight & Trade Alliance (FTA), the Australian Peak Shippers Association (APSA) and Container Transport Alliance Australia (CTAA) [the Alliance] will be supporting the NSW Productivity Commissioner on agreed action items including collation of commercial impacts generated by Infrastructure Surcharges.

Case study - Fletcher International Exports (FIE), based in Dubbo, move in excess of 23,000 full containers of agricultural products annually through Port Botany – Infrastructure Surcharges are generating a significant reduction in margins which are passed down the supply chain to the farmer through lower paddock prices for their grain "For FIE's NSW business alone the infrastructure levy equates to a whopping $1,775,600.00 paid annually, ultimately creating the equivalent void back with regional farming communities"  - refer HERE – for further detail contact pzalai@FTAlliance.com.au

Melbourne - the Victorian government commissioned a Port Pricing and Access Review led by Deloitte Access – a summary of the formal submission prepared by Freight & Trade Alliance (FTA) and the Australian Peak Shippers Association (APSA) is available HERE.

The Alliance have reached out to Deloitte, Freight Victoria and the Minister for Ports and Freight for an update on the release of recommendations and the Victorian government responses - refer HERE.

I met with Roma Britnell MP (Shadow Minister for Ports and Freight and Member for Warrnambool) in Melbourne on 12 November 2019 to elaborate on matters raised in the FTA / APSA submission.
  
Fremantle – FTA / APSA provided a submission to Fremantle Ports on 27 Sept 2019 warning of the escalating threat of Infrastructure Surcharge increases to Western Australian operations and seeking intervention via the Ports' stevedoring leasing renewal arrangements - refer HERE. As outlined in Monday's notice from DP World Australia, these concerns have clearly come to reality with their Infrastructure Surcharge (now referred to as "Terminal Access Charge") scheduled to increase from $8.22 (excl GST) to $45 (excl GST) per container effective 1 January 2019 - refer HERE

We are delighted to see the strong and immediate response from the Fremantle Ports CEO, Chris Leatt-Hayter 

"DP World's action is disappointing, given the substantial effort both parties have made to reach agreement on the new lease arrangements over the past months. It also confirms Fremantle Ports' concerns about the level of future infrastructure surcharges that may eventuate if no agreed approach is in place under the new lease. Fremantle Ports is currently considering its position with regard to longer-term lease arrangements at Fremantle. It will continue to strive for fair and reasonable commercial arrangements that are in the interests of all port stakeholders."

The full statement from the Fremantle Ports' CEO titled INFRASTRUCTURE SURCHARGES - DP WORLD FREMANTLE CONTAINER TERMINAL is available HERE . John Park (Head of Business Operations, FTA / APSA) met with Chris last week and will keep members up to date with developments
 
Radio commentary from the WA Ports Minister, Hon. Alannah MacTiernan available HERE

National - in March 2019, FTA / APSA presented to the Senate Committee on Rural and Regional Affairs and made a formal submission to the "inquiry into Policy, Regulatory Taxation, Administrative and Funding Priorities for Australian Shipping recommending:

"That the Government takes urgent action to address unregulated and spiralling infrastructure charges. While shipping lines have been the beneficiaries of increased competition in stevedoring, Australian shippers have not seen any of those benefits and now are paying twice for container terminal services. It is an unsustainable situation, it is damaging to our economy, and it will only worsen if there is no intervention" - full submission is available HERE.

The alliance has maintained our engagement with the Australian Competition and Consumer Commission (ACCC) and delighted that they have met their commitment to support for our advocacy activity on this matter. 

The Container stevedoring monitoring report 2018-19 released 6 November 2019 reported higher Infrastructure Surcharges imposed on trucks and rail operators at ports helped the container stevedoring industry increase average revenue per container lift for the first time in seven years.

One of the biggest threats to logistics providers is in the event that stevedores expand “vertical integration” and leverage Infrastructure Surcharges for commercial advantage – we were delighted to see the ACCC state a firm warning for the stevedores not to favour their own vertically affiliated land transport or intermediary logistics businesses by waiving or reducing fees.
 
"While multiple stevedores are vertically integrated, there is currently no evidence to suggest that this conduct is occurring. However, the ACCC could take enforcement action should such conduct be detected and it occurs with the purpose or effect of substantially lessening competition in a market,"

The full report is available HERE and the accompanying ACCC Media Release titled Stevedore's revenue up due to higher infrastructure charges is available HERE

 

 
 

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