SHIPPING COMPETITION
To balance views, the ABC also interviewed Shipping Australia who argued that regulation of their members was not required as there are multiple entities openly competing. Shipping Australia did however concede that port congestion needed to be 'looked at very carefully'.
The position of Shipping Australia comes as no surprise defending the performance of foreign owned shipping lines, many who are reporting multi-billion dollar profits achieved during the pandemic.
The reality is that in recent years we have less shipping lines servicing Australia, primarily as a result of mergers and in extreme cases, bankruptcy to major entities. Those surviving are prospering, primarily using larger vessels to achieve economies of scale and entering into alliances through vessel sharing arrangements.
CURRENT PROTECTIONS TO SHIPPING LINES
Shipping lines currently servicing Australia have access to a wide suite of exemptions from our competition law as set out in Part X of the Competition and Consumer Act 2010 .
APSA is the peak body as designated by the Federal Minister of Infrastructure and Transport to protect the interests of Australia's cargo owners and shippers in respect to shipping and international logistics services. Since 1 January 2017, FTA has been contracted to APSA to provide secretariat support, advocacy and member services. Reporting to the APSA Committee of Management, FTA also administers the Part X compliance on behalf of APSA.
FAILINGS OF CURRENT PROTECTIONS
During this secretariat period, it has become evident that Part X offers minimal protection for exporters, importers and freight forwarders as can be seen in an environment of restricted access to market, record high freight rates, a spate of surcharges, port omissions / additional relocation transport costs, lack of suitable export containers, empty container park congestion, container detention penalties, significant delays at transhipment ports and rapidly esclatating terminal access charges administered by shipping line contracted stevedores and empty container parks.
Rubbing salt into the wounds is that many of these associated costs are imposed without notice, particularly impacting on the commercial viability of exporters and importers carrying high volume, low value commodities.
A NEED FOR REGULATORY REFORM
We saw a glimmer of hope with the Australian Competition and Consumer Commission (ACCC) recognising a need for reform with the 3 December 2019 release of a discussion paper titled Proposed Class Exemption for Ocean Liner Shipping. In response, FTA / APSA provided a detailed submission recommending repeal of Part X and accepting a need for a replacement class (block) exemption regime with terms to be drawn as narrowly as possible to permit the desired activities to be operationalised.
FTA / APSA also took this opportunity to first raise the concept of a Federal Maritime Regulator to oversee shipping practices.
A class exemption is a way for the ACCC to grant businesses an exemption from competition law for certain 'classes of conduct' that may otherwise carry a risk of breaching competition laws, but do not substantially lessen competition, and/or are likely to result in overall public benefits. In other words, a class exemption would provide a 'safe harbour' for eligible businesses to coordinate without breaching the competition law. It would operate alongside the ACCC's existing 'authorisation' and 'notification' processes, in which a business that falls outside the class exemption could still use to seek legal protection on a case-by-case basis.
STATUS OF THE REVIEW
FTA / APSA representatives met with the ACCC again yesterday (9 June 2021) and received advice that their work on a potential liner shipping class exemption has been affected by issues relating to the ACCC's earlier collective bargaining class exemption. The legislative instrument to establish that class exemption was introduced late last year, and a liner shipping class exemption would ultimately follow the same process. However, the collective bargaining class exemption has, until last month, been subject to a 'motion to disallow' issued by the Senate Standing Committee for the Scrutiny of Delegated Legislation. The minutes for the meeting withdrawing the motion to disallow are here (see item 5) – FTA / APSA have made separate contact with the Senate Committee for further detail.
As we understand it from the ACCC's explanation, the Senate Committee's concerns were not specific to that instrument but are matters of principle and would likely apply to other ACCC class exemptions. Accordingly, the Committee's views are highly relevant to the ACCC's proposed Liner Shipping Class Exemption and whether it proceeds. The ACCC is exploring whether a possible liner shipping class exemption, on the terms they are considering, would also be likely to result in a motion to disallow and will provide an update once that issue has been explored.
A NEED FOR FEDERAL GOVERNMENT INTERVENTION
In parallel to this activity, an FTA / APSA contingent met in Canberra last week with the Trade Minister, The Hon. Dan Tehan, and senior advisors in terms of matters raised in our submission to the Productivity Commission's Inquiry to Vulnerable Supply Chains. During our discussions we continued our call for the introduction of a Federal Maritime Regulator in an environment of limited shipping capacity, operational disruption, restricted access to market and rapidly increasing costs – media release available HERE |