• Trevor Wetmore

Fresh calls for regulatory intervention after infrastructure fee hikes

Sourced from DCN - September 27, 2018

ANOTHER round of infrastructure fee hikes from stevedore DPWA has prompted fresh calls by industry groups for regulatory action.

The fee hikes, announced by DPWA this week, take effect from 1 January 2019.

In a statement, DPWA said the fee increases at Sydney, Melbourne and Brisbane were necessary in the face of a “dynamic and evolving market”, along with “major investment in infrastructure, increasing costs and declining tariffs”.

But Road Freight New South Wales chief executive Simon O’Hara called the move a “cash grab” and said it was time for action from state and federal governments, Transport for NSW and the ACCC.

At Port Botany, the charge is rising to $63.80 per container, up from $37.65 (implemented on 1 January, 2018) and previously $21.16 (implemented on 14 April, 2017).

The VBS administration fee is rising from $6.89 to $12.95 per slot.

“Yet again, with little justification and certainly no consultation with industry, DPWA is planning for another blatant cash grab. It is simply unconscionable,” said RFNSW chief executive Simon O’Hara.

“We are extremely concerned that this unilateral price increase will have catastrophic effects on carriers running small businesses.”

Mr O’Hara urged other stevedores to avoid following DPWA in imposing additional port fees.

In a statement, the Customs Brokers and Forwarders Council said the charges were being increased “at will” without any regard to their effects on other industry stakeholders.

The CBFCA has pledged to use its national conference in early November to take up the matter with the ACCC and further elevate the issue with state ministers.

Container Transport Alliance Australia director Neil Chambers criticised the stevedore for varying fees and charges without negotiation.

“CTAA has asked the ACCC previously why this isn’t deemed to be ‘unfair contract terms’ under the provisions of Australia’s competition laws?  Following this latest fee increase bombshell, we’ll be asking the question again,” Mr Chambers said.

“Transport operators have no say in setting these fees and charges; no say in their quantum; and no say in how the revenue is spent.  How is this fair or sustainable?”

Mr Chambers said he encouraged federal infrastructure and transport minister Michael McCormack to act swiftly following publication of the next ACCC Container Stevedoring Monitoring Report due in October.

DPWA response

In response to the above criticisms, DPWA issued the following response.

Unfortunately, the responses from the CTAA and RFNSW overlook several important facts. These charges should not impact transport operators as they can be passed through the supply chain. This is, in fact, what happened in 2017. The increase in the Infrastructure Access Charge to be applied at West Swanson from 1 January 2019 would, for example, add just one-tenth of a cent to the delivered cost of an iPhone. It would add just a quarter of a cent to the delivered cost of school shoes, ten cents to the delivered cost of a microwave oven and fifteen cents to the delivered cost of a flat screen TV.

Doom and gloom predictions about the impact of previous increases have been unfounded. In fact, growth numbers following previous increases in access charges show that increases can be passed through without dampening demand.

We understand that stevedoring is a closely monitored and scrutinised industry and that, for some, this presents an easy target. The ACCC will be able to comment on this round of charges in its next report, if it so chooses. We expect the report will show that stevedores are not producing increased profits, as a result of access charges. In fact, industry returns have been declining, on the back of falling unit revenues which are now at record lows.

DP World Australia understands that business people are working harder for less because we are too. As is good practise, we constantly look for ways to better meet the needs of our customers and, therefore, our business. The fact is that charges like the Infrastructure Access Charge help fuel the recent investments we’ve made in our business. We have, for example, made unprecedented investment in equipment to better serve road and rail operators along with Australia’s biggest ever investment in new quay cranes which enable larger vessels to call at our terminals. This increases capacity across the nation’s ports and contributes to the healthiest industry growth rates we’ve seen for decades. DP World Australia has seen growth of more than 8% in the past 12 months, four times CPI, which has been good for landside stakeholders and increased employment throughout our supply chain. Such a growth rate would be welcomed by most industries.

We are continuing the journey to a rebalanced revenue recovery from waterside to landside. A more equitable revenue recovery makes it more attractive than ever for shipping lines to call our terminals and to continue to fuel the extremely healthy growth rates to transport operators, which CTAA and RFNSW continue to fail to acknowledge. This strategy also helps ensure we remain sustainable into the future in an increasingly competitive market.

A financially healthy stevedoring industry is vital for the long term economic well-being of Australia.

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