Patrick Terminals has released 60-day Notices of Intention to increase its Landside & Ancillary Charges at its four container terminals in Melbourne, Sydney, Brisbane and Fremantle from 4 March 2024.
A copy of the Patrick Terminals' Notice of Intention can be downloaded: HERE
You can also download the proposed landside Tariffs for each terminal and other notices from the Patrick e-Link website at: https://patrick.com.au/customer-info/
In summary, Patrick the proposed fee increases include percentage and dollar (+GST) increases of:
Landside Charge (TAC) for Full Imports - MELB: up 20% to $204.60; SYD: 22.52% to $190.15; BRIS: 25% to $186.30; FREO: 41.68% to $87.19.
Landside Charge (TAC) for Full Exports - MELB: up 7.51% to $146.65; SYD: 7.53% to $133.55; BRIS: 7.51% to $128.20; FREO: 41.68% to $43.58.
VBS Booking Fee (Electronic) per slot - MELB, SYD, BRIS: up 15.06% to $44.70 and FREO: up 14.98% to $52.95.
Most other VBS-related and Ancillary charges have increased by 7.50% with the exception of the Side Loader Fee in each terminal which will rise by 9.55% to $77.40.
Out-of-Gauge (OOG) Container Storage - Patrick proposes a higher rate per day for storage of OOG containers beyond the three days' free time. The new rate will be $470.30 per day, which is double the storage rate proposed for normal containers of $235.15 per day.
When queried about the quantum of this increase, Patrick has responded that "the adjustment … is necessary to support the separate OOG processes required to handle OOG cargo and seeks to incentivise shippers to collect OOG cargo as soon as possible to support terminal efficiency. Patrick Terminals remains committed to providing its separate service for OOG cargo."
CargoLink VBS Charges are also proposed to rise by approx. 7.50% in MELB, SYD, BRIS & FREO - see the proposed CargoLink VBS Tariffs: HERE
CTAA Commentary:
Unlike its major national container stevedore competitor, DP World Australia (DPWA), Patrick is adopting a deliberate strategy to maintain a differential between its Landside Charges for full exports compared to full imports (being a "concession" of approx. 30% between the two rates).
Clearly by adopting this pricing differentiation strategy, Patrick is hoping to receive the support of major exporters to choose to book export consignments with shipping lines whose vessels call at Patrick Terminals as opposed to their competitor stevedores.
This signals the implementation of a degree of competitive tension between the two major container stevedore companies that we have not witnessed since landside fees began to increase markedly in 2017.
Around that time, greater container stevedore competition emerged (with the introduction of Hutchison's terminals in SYD & BRIS, and VICT in MELB), driving down the rates charged to the foreign shipping lines for stevedoring services.
Stevedores then looked to "re-balance" their revenue collection from landside stakeholders (i.e. to make up for the lost "quayside" revenue from lower charges to shipping lines). They do this by imposing the landside fees under the terms of their standard-form contracts with road and rail transport operators for access to their terminals.
Up until now, there has been a "follow the leader" outcome with landside fee increases being relatively similar between all of the container stevedoring companies, and on a similar upwards trajectory.
Having observed the above, the increases in the Landside Charge for full imports proposed by Patrick of between 20% to 25% in its east coast terminals are high in anyone's language. They are also comparable with DPWA's landside Terminal Access Charge (TAC) increases of 24% on average on the east coast.
The difference lies in the much more modest proposed increases in Patrick's landside charges for full exports of around 7.50% on the east coast, compared to DPWA's increases of 37.50% in BRIS; 38.80% in SYD; and a whopping 52.52% in MELB.
In Fremantle, where the ability of the stevedores to set their landside fees are regulated via their terminal leases negotiated with Fremantle Ports (the Government-owned port authority), Patrick's Landside Fees (TACs) are half that of its east coast terminals. However, the VBS Booking Fee in Fremantle is proposed to rise by almost 15% to $52.95 (compared to $44.70 at Patrick's east coast terminals).
Significantly, Patrick has also flagged its agreement with Fremantle Ports to contain the proposed March 2025 increases at its Fremantle Terminal to $91.55 per full import container and $45.76 per full export container. Patrick says it is flagging this in advance "to support WA shippers making more informed business decisions related to landside fees."
The ACCC's Container Stevedoring Monitoring Report for 2022/23 shows that landside revenues now make up 44% of the overall revenues collected by container stevedores (up 5% on the previous year), while revenues from shipping lines was 56% of overall revenues (down 2.7% on the previous year).
This demonstrates that shipping lines continue to contribute less and less to container stevedore revenues for terminal services rendered, while landside fees contribute more and more.
Depending on whether the contract rates between container stevedores and shipping lines in 2023/24 and 2024/25 have (or will) increase (note: which is unlikely given recent trends), the landside fee increases proposed by Patrick Terminals (as well as DPWA's 2024 increases) will mean that this ratio of revenue sourcing will narrow further.
It could be argued that the ratio of 44% landside and 56% quayside revenue collection is already out of kilter compared with the terminal investments made and proposed in the near future by Patrick, DPWA and the other stevedore companies.
Patrick's justification for the landside fee increases includes a significant investment program, with in excess of $280 million invested across the past four years and a further $70 million committed in the year ahead ($350 million in total).
CTAA accepts that Patrick's recent investments have given their terminals a level of operational resilience and surge capacity which otherwise would have resulted in more landside logistics delays and inefficiencies as trade volumes increased (as well as the vessel sub-contracting capacity being utilised at present due to DPWA's ongoing industrial dispute).
CTAA also applauds Patrick's continued commitment to publish its landside performance metrics for each terminal on a voluntary and transparent basis, and to facilitate representative landside groups, in which CTAA and our Alliance transport companies have been direct participants.
The purpose of the landside efficiency groups is to develop solutions which support landside performance and efficient terminal operations, and to provide information about Patrick's landside investment program.
These groups commenced meeting in December 2022 at each Patrick terminal twice a year, and have proven their worth in improving direct dialogue between container transport operators and Patrick's terminal and corporate management staff.
National Voluntary Guidelines on Container Stevedoring Charges:
Patrick has committed to the voluntary pricing protocols set out in the NTC National Guidelines on Container Stevedore Charges and is accepting comments and views on the proposed landside fee increases by 26 January 2024, prior to the release of the Final 30-Day Notice on 2 February 2024. Comments should be submitted by email to: Landside24@patrick.com.au.
Significantly, Patrick has flagged a willingness to engage with Governments (Federal & State) to further enhance the National Guidelines to include an industry-wide alignment of fee review dates, and an announcement of rolling two-year indicative landside fees, "on the basis that these enhancements could support shippers to make more informed business decisions."
CTAA, together with other representative groups such as Freight & Trade Alliance (FTA) and the Australian Peak Shippers Association (APSA), believe that Federal & State Governments should instead adopt the recommendations of the recent Productivity Commission report into Australia's maritime logistics system and task the Australian Competition and Consumer Commission (ACCC) to act as the pricing regulator to develop a mandatory code with special provisions to keep stevedores highly accountable for charges imposed on the landside logistics sector.