ACCC should play role of port pricing regulator, say freight handlers

The state government's Voluntary Port Performance Model (VPPM) is intended to increase the transparency of the prices charged by stevedores.

Under the model, stevedores agree to a set of performance indicators that are "consistent, measurable, and meaningful".

But the Freight and Trade Alliance has called on Victorian Ports Minister Melissa Horne to support a mandatory pricing code.

It comes as the country's competition watchdog reveals a 25 per cent increase in revenues last financial year.

The 2022-23 Australian Competition and Consumer Commission Container Stevedoring Monitoring Report found the operating profit margin for the industry jumped to 24.9 per cent last financial year.

The margin was as low as 5.8pc in 2018-19.

FTA director Paul Zalai said that came on the back of the recent DP World announcement it would be increasing its Terminal Access Charge (TAC) by a staggering 52.52 per cent for full exports and 21.22pc for full imports.

Mr Zalai said concerns remained over "rapidly increasing landside charges imposed by contracted parties to foreign owned shipping lines, including container stevedores and empty container parks."

He said the FTA and Australian Peak Shippers Association (APSA) continued to have serious concerns the government's Port of Melbourne Voluntary Port Performance Model (VPPM), provided stevedores with "tacit approval" to escalate landside charges.

"While introducing regulation at a state level has merit, a broader strategy to address the matter nationally as recommended by the Productivity Commission would be preferable," Mr Zalai said in a letter to government.

He said between 2017-18 and 2022-23, total revenues per lift - from landside Terminal Access Charges (TAC) - had increased by 463.64 per cent and by 226.35pc from other landside revenues.

TAC's are levied by a container terminal operator on land-based shipping customers, for access to the port.

Mr Zalai said the government had promised if a voluntary approach didn't improve pricing transparency, it would be open to consider mandating standards.

"FTA / APSA note that the Productivity Commission recommend a mandatory code with the ACCC to act as the pricing regulator with special provisions to keep stevedores highly accountable for any charges imposed on the landside logistics sector." said in the letter to Ms Horne.

"We seek your support in engaging with the federal government on the need for national regulation of landside charges," he said.

The ACCC report said while industry profits had rapidly increased in the past few years, it believed it was too soon to know whether the current profit margins were likely to be sustained.

"While we have not formed a conclusive view on the stevedores' profit margins, we are concerned by emerging evidence that the two new entrants of the last decade, Hutchison and VICT, are not constraining the incumbent multi-port stevedores as effectively as we had hoped," ACCC Commissioner Anna Brakey said.

"Due to their focus on efficiency and cost minimisation, at least some shipping lines appear to be preferencing the same stevedore across multiple ports, which advantages Patrick and DP World."

Patrick and DP World operate at Melbourne, Sydney, Brisbane and Fremantle ports.

Hutchison (Sydney and Brisbane) and Victoria International Container Terminal (Melbourne) may be less attractive to shipping lines as they did not have a national presence, the report explained.

"Australia is a trade-exposed country and many of the goods that we rely on in our everyday lives come through our container ports," Ms Brakey said.

Victorian Farmers Federation president Emma Germano said it was essential there was greater protection for importers and exporters, when it came to unreasonable port fees.

"It makes it incredibly hard for Victorian farmers contain costs under these conditions and balance market competitiveness," Ms Germano said.

"High costs inevitably get passed down the supply chain to the consumer and it's time we looked at the central cause of this."

GrainGrowers acting Policy and Advocacy general manager Sean Cole said the jump in revenues highlighted the need for port reform, to ensure sufficient competition to protect Australia's overall productivity.

While the report noted stevedoring was a capital intensive and high-risk business, requiring long-term investments, it shows a significant 15-year average operating profit margin of 17.9pc.

"As suggested by the ACCC, further analysis is required of the stevedores high profit margins of recent years," he said.

Mr Cole said stevedoring industry profits came at the expense of export reliant industries like grains, and adversely impacted global competitiveness.

He said a well-functioning maritime logistics system was critical for an export-oriented industry like grains.

"The simple fact is that we rely heavily on Australia's ports and shipping networks to transport grain to international markets," he said.

"Urgent government action is long overdue.

"Steps must be taken before high costs, and delays at ports, inflict long-term damage to our vital export industries."

The state government has been contacted for comment.