This brings into question whether exporters and importers are paying duplicate landside stevedoring fees; once via sustained high Terminal Handling Charges (THCs) administered by many shipping lines; and twice via Terminal Access Charges and vehicle booking system fees administered by shipping line contracted parties.
The bottom line is that vulnerable Australian supply chain participants are currently paying an additional $500M+ per year direct to stevedores and empty container parks. These rapidly increasing costs are having particularly devastating impacts on exporters and importers with downstream crippling financial impacts on manufacturers, farmers and regional communities.
NAVIGATING BETWEEN THE STATES AND FEDERAL GOVERNMENT
FTA/APSA note that the onus is on state governments to act as outlined in the ACCC Container stevedoring monitoring report 2019-20 (released on 4 November 2020) and in the Deputy Prime Minister's response to our formal submission from 27 May 2020 titled Status report - Container Stevedore Imposition of Terminal Access Charges.
Following this advice, FTA / APSA again wrote to state ministers last year reiterating a position that stevedores and empty container parks should be forced to either absorb operating costs or pass these on to their commercial client (shipping lines). This outcome would give shipping lines the choice to absorb costs or pass these onto shippers (exporters, importers and freight forwarders) through negotiated freight rates and associated charges.
As determined by the Ministers at the Infrastructure and Transport Ministers meeting held on Friday 20 November 2020, the National Transport Commission (NTC) was tasked to lead reform and the development of 'voluntary national guidelines' to apply to stevedore infrastructure and access charges (both their introduction and increase) at Australia's container ports.
VOLUNTARY ARRANGEMENTS
Nearly a year later and we are still awaiting a formal position from the NTC, with recent events fuelling our scepticism as to whether a 'voluntary' arrangement will adequately protect the interest of the international trade sector, adding resolve to our advocacy that regulation is required to wind back and eradicate Terminal Access Charges, leaving market forces to determine price and service between commercially contracted entities.
In the interim and to the credit of the Victorian government, they have at least put their toe in the water by introducing their Voluntary Port Performance Model (VPPM). Last year, when the VPPM concept was in its infancy, FTA / APSA received formal correspondence from the Hon Melissa Horne - (Victorian) Minister for Ports stating:
"In January 2020, when I released the summary of our Port Pricing and Access Review to stakeholders, I advised stakeholders that the Victorian Government was not intending to move towards heavy-handed regulation, but would instead work towards establishing a new Voluntary Port Performance Model for the Port of Melbourne in partnership with all port users. I also said that if voluntary standards didn't improve pricing transparency, it was open to the Victorian Government to consider mandatory standards. "
TESTING THE PROCESS
During the course of this year, stevedores have increased their Terminal Access Charges nationally (including increases at their Port of Melbourne operations) . In each case, FTA / APSA sought prescriptive detail as to whether this is a measure to offset a further reduction in quayside rates to stevedore commercial client shipping lines and / or necessitated by other specific operational factors.
In the absence of any commercial ability to influence the quantum of the Terminal Access Charge (being a 'take it or leave it' proposition as referenced by the ACCC) and in line with the intent of the VPPM, FTA / APSA also requested a further detailed explanation for the increases including disclosure, supporting information and data justifying the full cost structure of the total increased fees.
While constructive meetings were subsequently held with stevedore executives, follow up correspondence did not provide the specific data requested, instead provided a general commentary with a broad reference to activities and capital expenses. FTA / APSA has met with and provided formal correspondence to Victorian government representatives in term of the VPPM experience, noting the futile nature of a voluntary approach and urging the Minister (ideally in partnership with other state ministers), to move towards regulation to force stevedores (and empty container parks) to cost recover directly against their commercial client (shipping line).
FTA / APSA look forward to further upcoming engagement with Minister Horne and executive from Freight Victoria.
LATEST ANNOUNCEMENT OF AN INCREASE IN TERMINAL ACCESS CHARGES
Yesterday, FTA/APSA were briefed by DP World executive in terms of a further increase in Terminal Access Charges and associated fees, effective 1 January 2022 – formal announcement released today and available HERE (Refer 'Public Tariff Schedule)
In line with emerging protocols, DPWA has given notice in line with prescribed time frames in what we now expect will be a once per annum adjustment in their tariff.
FTA/APSA RESPONSE
Genius Albert Einstein is acclaimed as providing a definition of insanity as doing the same thing over and over again and expecting a different result.
FTA/APSA will not be taking what would be insane action to again challenge this Terminal Access Charge increase via the VPPM. Based on experience it is a complete waste of time and an example of absolutely disastrous government administration.
IT'S TIME FOR REGULATION
FTA/ APSA will continue its close engagement with the ACCC in the lead up to the release of their next Stevedore Monitoring Report (scheduled to be released in November 2021) and will maintain our stance highlighting the flaws of a voluntary pricing regime.
The VPPM or any similar voluntary monitoring process will mean that stevedores will continue to receive revenue from the transport sector with the minor inconvenience in the form of another level of bureaucracy before implementing each increase. Continuation of such voluntary performance arrangements also poses the significant risk of giving tacit approval to this unwarranted cost recovery method on third parties.
You do not have to be Nostradamus (or Einstein) to see that empty container parks will also continue ratcheting up their charges on transport operators too – and why not? Stevedores have highlighted that it is a very effective model to collect revenue from vehicle booking systems rather than negotiating increases with commercial clients.
FTA/APSA will continue advocacy for genuine reform – refer our submission HERE
Paul Zalai - Director FTA | Secretariat APSA | Director GSF
|