News

Melbourne Port increases rent 750 per cent

One of the world’s biggest stevedoring companies has been hit
with a massive rent increase which will make the Port of Melbourne the most
expensive port in the world.

DP World managing director Paul Scurrah said the rent
increase was around 750 per cent.

“I thought there was a decimal point missing when I saw
the rent increase for the first time, and there needs to be common sense
prevailing around any increase in rental,” he said.

“We have had rental increases before and there is
provision in the contract to negotiate rental fees every two years, but an
increase of this size will cause job losses and may see shipping companies
avoid using the Port.

The rental increases at the Port of Melbourne have caused
concerns to be raised by The Australian Logistics Council (ALC), the peak
industry body for freight logistics industry.

Managing director Michael Kilgariff said ALC was generally
supportive of the Port’s long term lease as a way of unlocking much needed
funds for logistics infrastructure in Victoria, but that rental increases would
undermine supply chain efficiency by affecting the ability of industry to make
long-term commercial decisions about their operations at the port.

“Any proposed rental increase, particularly of this
magnitude must be visible and transparent, and we are concerned that proposed
new rents at the Port of Melbourne appear to be linked to rents allegedly paid
by new entrants to the stevedore market,” he said.

“The reported price paid by Melbourne’s third stevedore to
secure port space should not directly impact on the price asked of legacy stevedores
to operate at the port.

“This issue has been raised repeatedly by senior members of
the logistics industry.

“This matter highlights the need for the
logistics industry to be engaged in all consultations with government on the
future lease of the Port of Melbourne, including arrangements for pricing,
lease structure and proposed regulatory frameworks.

“Too often in the past when these processes have commenced,
the logistics industry has been locked out of discussions on the grounds of
‘probity’.

“The Victorian
Government has committed to involving the logistics industry in this process
and this matter reinforces how important it is for that to occur.”

Kilgariff said the focus needs to be on the efficiency of
the entire supply chain for Melbourne to maintain its claim of being
Australia’s freight and logistics capital.

“As ALC said in its submission to the Senate Inquiry into
asset recycling, the need for a published business case in relation to proposed
infrastructure projects is paramount to building community support for them,”
he said.

Kilgariff said the issue would feature at the upcoming ALC
Forum 2015 on March 11, when senior logistics executives will discuss
regulatory and investment issues relating to the port, rail and intermodal
sectors of the industry.   

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