Freight & Trade Alliance (FTA) and the Australian Peak Shippers Association (APSA) have expressed concern to the Port of Melbourne and Freight Victoria regarding a $15 per TEU increase to wharfage on full imports intended to fund rail transformation at the Port. The proposal is currently before Freight Victoria and the Hon. Melissa Horne MP for approval, after which time it will be considered by cabinet. The fee will remain for the remainder of the lease period.

At this stage exports are excluded from the cost recovery proposal.

The proposal comes after significant consultation from industry in 2018, where there was a clear call for on-dock rail and open access arrangements.

The proposed model

Under the proposed model, the Port of Melbourne will take back leased land from the stevedores and terminal operators, giving it back to them for free under a licence agreement. The thinking is that the stevedores and rail terminal operators will then pass on those savings to rail users, making rail more competitive. The Port will re-capture lost rent revenue via this new charge levied to shippers and port users through the proposed increase in wharfage fees.

To learn more about the proposed model, the full Port of Melbourne presentation is available HERE.

FTA / APSA's concern with this new model

FTA / APSA support rail and the need for a port rail solution but we also need to take comfort that any cost imposed on the supply chain is accompanied by real benefits across the supply chain.

FTA / APSA would like to ensure that:

stevedores or terminal operators are compelled to pass on the rental savings and lower rail operating costs to users.
there is transparency on the investment and recovery by Port of Melbourne under the existing regulatory framework to ensure there is no over-recovery (while the reported cost is $300M, $15 x laden TEU across the remaining 47 years of the lease would deliver a much higher figure).
cost savings from larger ship calling at the port of Melbourne are passed through to cargo owners

Some members have also expressed concern that, once again, empty containers, under the custody of the shipping lines, are exempt from the cost recovery process.

This proposal for a port solution also needs to be considered in the context of the broader rail network. Melbourne does not yet have metropolitan rail hubs in operation servicing the key import catchments including the South East, Truganina and Somerton. So, while all importers will be funding the works, few will be direct beneficiaries until there is access to metropolitan port-rail services.

Until this happens, with the upcoming Biosecurity Levy and infrastructure charges continuing to increase, this is another example of rising international supply chain costs.

FTA / APSA will continue to work with the Port of Melbourne and Freight Victoria on the details of the proposal.

While we fully support rail investment and appreciate the significance of rail utilisation as a city port, the cost recovery plan needs to be fair and transparent.

We will provide members with further updates as we receive them.

If you have any thoughts in the meantime, please do not hesitate to email me directly at tbrooks-garrett@ftalliance.com.au

Proposed rail developments at Swanson Dock, Port of Melbourne. Note the rail connection to Webb Dock, which will not be covered under the $15 TEU fee.

Current rail mode share by Port (source: ACCC Container Stevedoring Monitoring Report 2017/2018)

Travis Brooks-Garrett - FTA / APSA

Port of Melbourne proposes new fee