Higher infrastructure charges 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, according to the ACCC’s container stevedoring monitoring report.
Revenues generated by the infrastructure charges rose by 63 per cent in 2018-19 on the previous year, the report shows. These revenues helped to offset an 8.1 per cent decline in average quayside revenue because of competition between stevedores and increasing bargaining power of the shipping lines.
Average revenue per lift across both the quayside and landside increased by 1.8 per cent to $268 per lift.
“It is understandable that stevedores seek to recover some costs of upgrading port facilities from transport operators because they, like the shipping lines, benefit from the investment,” ACCC Chair Rod Sims said.
“But because port users have limited ability to move their business in response to a stevedore raising its infrastructure charge, the stevedores face less competitive pressure to keep the charges down. While the infrastructure charges only represent 12 per cent of the stevedores’ revenues today, the outcome of this may be that importers and exporters end up paying more to ship goods.”
Port users will continue to be subject to increasing infrastructure charges, with Hutchison increasing its charges in Sydney in November 2019 and DP World increasing charges at all its terminals from January 2020.
Profitability across the industry remains low with return on tangible assets falling from a high of 27.8 per cent in 2011-12 to 3.8 per cent in 2018-19, though it varied widely between stevedores. The drop in returns is partly due to the growth in the industry’s asset base after investment in new container terminals in the east coast ports.
The stevedores significantly improved their productivity on the quayside last financial year, with two key productivity measures, labour rate and ship rate, now at record levels.
“We found that the productivity of Australian container ports was generally on par with ports of a similar size overseas, with Melbourne the best performer,” Mr Sims said.
“It is possible that our ports are not more productive because the distance between ports means competition between them is not very strong.”
Competition within ports led to further shifts in the market share of stevedores with DP World’s share of national lifts falling from 44.4 per cent to 39.1 per cent. Patrick picked up new business and its share of national lifts increased to 43.5 per cent.
New entrant Victorian International Container Terminal (VICT) has established itself as an effective competitor in Melbourne by more than doubling its share of lifts to around 15 per cent.
The ACCC has monitored the container stevedoring industry since 1998-99 under a direction from the Australian Government.
Container stevedoring involves lifting containers on and off ships. The ACCC currently monitors the prices, costs and profits of container stevedores at five Australian container ports.
The container stevedores are a key part of the Australian economy, transporting billions of dollars of goods through the ports on their way to households and businesses. When the supply chain works efficiently, it brings goods to Australian businesses and consumers at the lowest possible cost and helps to ensure the competitiveness of our exports.
Patrick and DP World operate at the four largest ports-Brisbane, Fremantle, Melbourne and Sydney. Hutchison operates in Brisbane and Sydney, while VICT commenced operations in Melbourne in early 2017. Flinders Adelaide is the sole terminal operator at Port Adelaide.