Australian shippers in port fees fight after levies surge

Australian shippers in port fees fight after levies surge

Shippers in Australia are being asked to submit evidence about the impact of higher terminal infrastructure charges on exporters, manufacturers, and farmers. Photo credit:

Australian shippers are ramping up their campaign against soaring stevedoring fees as they press for state and federal government regulations to cap infrastructure charges levied by terminal operators. It comes as Australia’s competition watchdog on Wednesday said infrastructure charges had surged more than 60 percent in the past year.

The Freight & Trade Alliance (FTA) highlighted one major importer in Melbourne that saw infrastructure charges, also called port access fees, surge to more than A$3.4 million (US$2.3 million) a year compared with less than A$700,000 five years ago. The FTA, which represents more than 100 major shippers including Alibaba and Costco Wholesale Australia, said uncertainty about future hikes had scared off one grain shipper from making further investment in their Victoria operation.

FTA director Paul Zalai said the alliance, together with the Australian Peak Shippers Association (APSA) and Container Transport Alliance Australia (CTAA), are asking shippers to submit evidence about the impact of the infrastructure charges on exporters, manufacturers, and farmers.

“We need this evidence ... to present compelling cases to government for regulation,” he told shippers in an email Wednesday.

That followed the release of a report by the Australian Competition and Consumer Commission (ACCC) on Wednesday that showed higher infrastructure charges helped stevedores post growth in unit revenues for the first time since 2011-12.

“The industry generated A$167 million in revenue from infrastructure charges in 2018-19, an increase of 63 percent from 2017-18,” the ACCC’s 2018-19 container stevedoring monitoring report said.

DP World and Hong Kong’s Hutchison Port Holdings declined to comment to on the ACCC report. Others, including International Container Terminal Services, Inc. (ICTSI) did not immediately respond to requests for comment.

The commission said terminal operators saw revenue from landside and other sources surge by 12.9 percent in 2018-19 to A$78.10 per container, mainly due to increases in infrastructure charges which are levied on full containers carried by rail and trucking operators.

That compared with an 8.1 percent drop in quayside revenue to A$190.40 per lift in 2018-19 from 2017-18.

“This decline reflects the continued growth in shipping lines’ bargaining power with stevedores, as well as the relatively high proportion of empty containers,” the ACCC report said.

“It is understandable for stevedores to seek to recover some costs from landside transport operators given that these operators benefit from the investment that the stevedores undertake in their facilities,” it added.

But the commission said importers and exporters may pay higher charges to ship their goods than they otherwise would as a result.

“The use of infrastructure charges means stevedores are earning a growing proportion of their revenues from customers that are limited in being able to respond to those charges, in contrast to the competitive market in which stevedores provide services to shipping lines,” the report added.

The ACCC pointed out that both Patrick and Victoria International Container Terminal increased charges at their terminals last March after DP World decided in January to raise charges in Melbourne from about A$49 to A$85.

“Patrick now has the highest charges in Sydney (A$77.50) and Brisbane (A$71.50),” the ACCC said.

Terminals face increased competition

While shippers are campaigning against the higher infrastructure charges, the ACCC said terminal operators are also being challenged with increased competition and a weakening economy that is dampening demand for stevedoring services in 2018-2019.

“Stevedores reported 5.11 million lifts in 2018-19, down 0.5 percent from the previous year. Lifts of full containers fell by 4.9 percent while empty containers increased by 14.6 percent,” the ACCC report said.

Patrick saw a 4.5 percent rise to 2.2 million lifts of international cargo, while DP World saw international cargo lifts drop 12.3 percent to 2 million in 2018-19.

“Industry volumes were slightly better when measured on a TEU basis, as cargo owners continued to increasingly adopt forty-foot containers instead of twenty-foot containers. The container terminals reported handling a combined 7.88 million TEU in 2018-19. This represented growth of 0.2 percent, the second lowest rate over the past ten years,” the report said.

But while volumes are under pressure, productivity at Australia’s five main ports has increased significantly, with crane moves rising 5.3 percent to about 31 containers an hour year-on-year. The ACCC said productivity was on par with international ports of similar size, with Melbourne the best performer.

Melbourne was Australia’s biggest gateway, handling 34.3 percent of the country’s international box traffic, followed by Sydney with 33.7 percent and Brisbane 16.6 percent.

Contact Keith Wallis at