Any legal action by the ACCC to reverse the anti-competitive Port of Newcastle container fee could take years, now that it has started looking into it.
That would further damage the NSW economy.
But a solution exists.
Replace all Port Botany container trucks with Newcastle container trains. With imagination and cooperation, the lessees of Botany and Newcastle can combine their resources to transfer Botany operations to Newcastle and build a rail freight bypass of Sydney – from Newcastle to Port Kembla, via Eastern Creek.
Trains become the means of transporting containers between port and intermodal terminals throughout the entire state, possibly including Victoria and southern Queensland.
Trains would replace trucks for general freight entering Sydney from regional areas and interstate.
One million container trucks a year use Port Botany. By 2040, there will be an estimated six million container trucks. If the Moorebank intermodal terminal proceeds, Port Botany container trucks will still number 4.9 million a year by 2040. Moorebank intermodal will require all of Sydney’s available rail freight capacity. This capacity, obviously, is insufficient.
It is unlikely that a container terminal will be built at Port Kembla because of the reliance on container trucks at Port Botany. Port Kembla needs to have a rail connection to the main southern line, which is accomplished by building the much awaited Maldon-Dombarton link. A rail freight bypass of Sydney from Newcastle will justify building this line. The South Coast will be connected to container ports at both Port Kembla and Port of Newcastle. The ports would operate interchangeably.
Construction would start immediately on building the section of the bypass line between Glenfield, Badgery’s Creek and Eastern Creek. This will enable existing rail freight capacity to service new intermodal terminals, but not Moorebank. The best use of Sydney’s existing rail freight capacity is increased passenger services. The Moorebank intermodal would be discontinued.
It will take around ten years to complete construction of the entire line linking Newcastle and Port Kembla.
Upon line completion, containers railed between Newcastle and intermodal terminals in outer western Sydney would be de-consolidated at the intermodal terminals and the goods transported to their end destinations in Sydney.
Export goods manufactured in Sydney would be consolidated into containers at the intermodal terminals and the containers then railed to Newcastle for export.
Empty containers would be railed from Sydney to all regional areas of NSW to be filled with export goods and the containers then railed to Newcastle for export. Currently, empty containers are NSW’s main non-bulk export.
The proposed rail freight bypass will generate investment in manufacturing for export by providing cost-effective access to a container port for the first time. Investment is not occurring at present because of the impediments to getting goods to market.
With the bypass, there would be no need to build stages 2 and 3 of the Northern Sydney Freight Corridor to provide the equivalent of a dedicated rail freight line between Newcastle and Strathfield. The cost saving is $5 billion.
There would be no need to build the Western Sydney Freight Line, between Chullora and Eastern Creek, to enable containers to be railed between Port Botany and outer western Sydney. The cost saving is $1 billion.
Freight would be removed from the Wollongong-Sydney rail line.
All of Sydney’s current rail freight capacity would be used for passenger services to provide a higher economic return than freight.
The Southern Sydney Freight Line would be used for express passenger services from southwestern Sydney growth areas, including Badgery’s Creek Airport.
All of the current rail capacity between Newcastle and Sydney would be used for passengers.
A second rail bridge would be built over the Hawkesbury River as part of the rail freight bypass.
The short parallel runway at Sydney airport could be extended from 2600 metres to 4000 metres by terminating container operations at Port Botany.
A rail freight bypass would enable Sydney firms to relocate to regional areas. In western Sydney, 5,000 hectares of land is used for industrial purposes. Many of these firms could profitably relocate to regional areas if they were able to use rail to freight goods to Sydney and ship containers through the Port of Newcastle.
It is appropriate and necessary to examine the implications to NSW of building a rail freight bypass of Sydney.
Greg Cameron is a former executive of BHP Steel and is an active proponent of the Newcastle container port.
The policy of shipping lines directing empty containers to be de-hired to wharf terminals and at-wharf receival facilities continues to increase. These policies will deliver significant cost savings to all shipping lines utilising these practices, however, their application has resulted in additional costs for container transport operators that should be recovered in the commercial marketplace.
Major foreign container shipping lines are now regularly dictating direct empty return to terminals across Australia include OOCL, ANL (CMA-CGM), Hamburg Süd and COSCO. Practices of the shipping lines and their container terminal stevedores differs in each Australian capital city port, but nonetheless create additional business costs for container transporters.
“While the cost drivers may vary slightly from shipping line to shipping line, port to port, and even stevedore to stevedore, the impact to container transporters is the same: a hit to an expense line in their P/L. That is not sustainable for any business,” observed CTAA director Neil Chambers.
CTAA companies have identified a number of situations where the significant additional operational costs are incurred, including:
- Empty container staging via yard: de-hiring directions to wharf facilities invariably require transport operators to ‘stage’ empty containers via their transport yard so that they can line up available time slots with their vehicles undertaking wharf work. The container lifts and administration involved in this staging activity is a significant cost burden for transporters as is the additional cartage leg required.
- Inability to backload: in some ports, stevedores work closely with transport operators to align import delivery slots with empty container de-hiring direct to wharf. However, in other ports and at some at-wharf return facilities that are separate from the container terminals, there is no ability to align the return of empty containers with import delivery slots. This results in an inefficient cost structure for transporters where backloads cannot be performed and therefore they must run trucks empty one way.
- Lack of flexibility in de-hiring location: in many instances when an alternative de-hiring location is requested for operational reasons, this is not forthcoming from shipping lines despite recent public announcements to the contrary.
Many empty container Pparks (ECP) that handle containers for nominated shipping lines are instructed not to receive containers that have been directed for wharf de-hiring. This lack of flexibility in de-hiring location adds to truck kilometres travelled and restricts the ability to achieve truck utilisation efficiencies.
- Empty container redirections with little notice: at the discretion of shipping lines and/or container stevedore terminal operators, empty containers destined for wharf de-hiring are redirected to other return locations. These sudden operational changes cause planning difficulties for transport operators who must readjust their fleet and job allocations at short notice, resulting in additional administrative costs, additional truck kilometres travelled, and potential de-hiring delays.
- Financial penalties imposed by stevedores: empty containers de-hired directly to the terminals are not booked using Containerchain but rather are booked through 1-Stop. As such, the current stevedore charging regimes mean that transporters run the risk of being penalised for no-show or wrong time-zone penalties imposed by stevedores, even related to the direct de-hiring of empty containers. These penalty regimes do not exist to the same extent at traditional ECP.
- Container detention delays: the added timing delays that can be caused by the need to de-hire empty containers to wharf may mean that the container detention time restrictions imposed by shipping lines may be breached.”
A new shipping line initiative to designed reduce their costs is, what the industry has dubbed, ‘empty return to ship’.
Mr Chambers explained: “As an example, Maersk is requiring some empty containers to be treated as export containers that must be delivered to terminals for designated ships and discharge ports. This involves the corresponding need for the transport operator to compete with full exports to book an export slot, and for transporters or their import / forwarder clients to complete an export Pre-Receival Advice (PRA) through 1-Stop Connections.”
“CTAA believes that the additional costs associated with this shipping line direction, including the costs of the completion and lodgement of the PRA, should be recovered by transporters in the commercial marketplace.”
CTAA has advised container transport operators to continue to ensure their true additional costs are clearly articulated to shippers (importers / freight forwarders).
CTAA believes it is up to shippers to seek corresponding reductions in the terminal handling charges (THC) levied by Shipping Lines to balance any cost shifting from the lines to the landside operators.
Shipping lines in Melbourne have begun demanding that importers return empty containers direct to stevedore terminals rather than empty container parks.
The additional costs associated with the return of empty containers direct to stevedore terminals are being scrutinised by container transport operators in Melbourne with a view implementing measures to recover these costs in the marketplace.
The policies of many major shipping lines dictating direct empty container de-hire to stevedore terminals in Australia rather than to designated empty container parks (ECP), and some stevedore empty container truck receival and processing practices, are causing these additional logistics costs.
Major foreign container shipping lines are now regularly dictating direct empty return to terminals across Australia include OOCL, ANL (CMA-CGM), Hamburg Süd and COSCO. The largest container Shipping Line serving Australia, Maersk Line, has also commenced its container terminal return policy.
Maersk has even had its traditional empty container park providers issue statements to transport operators that de-hire instructions will be “strictly enforced” and that trucks will be “rejected” if operators attempt to de-hire at alternative locations.
“These strict instructions remove operational flexibility in the landside logistics sector and trigger a range of additional operational costs. It’s yet another example of foreign-owned shipping lines improving their bottom line at the expense of the Australian container supply chain,” observed CTAA director Neil Chambers.
“In comparison with other Australian ports, in the Port of Melbourne some stevedore practices involved in receiving direct empty de-hires are not efficient from the point of view of the landside operators.”
In the Port of Melbourne, the additional costs are caused when there is:
- A lack of available container slots for the return of the empties to the designated stevedore terminal (day shift & night shift).
- The need to stage empty containers through transport yards due to the lack of available terminal slots, including the costs of additional container lifts and yard storage.
- Additional truck kilometres travelled.
- No ability to backload full import containers (i.e. not being able to achieve two-way truck running by returning empties in conjunction with import container pick-ups) due to the operational practices and vehicle booking system restrictions of the stevedore.
- Longer Truck Turnaround Times (TTT) at the stevedore terminal in comparison to ECP.
- No-show & wrong time zone penalties imposed by the stevedore on transport operators for empty returns when no such penalty regime applies at traditional ECP.
- Additional administration costs, including in some instances the costs of administering the production of a Pre-Receival Advice (PRA) message for container receipt into the terminal.
- The greater chance of container detention charges being levied by shipping lines for the late return of the empty containers due to the operational delays.
“Consequently, container transport operators in Melbourne can no longer commercially absorb the additional costs. CTAA strongly believes that there is a need for genuine cost recovery to ensure business viability through the adoption of a transparent “Direct De-hire to Terminal” surcharge levied on cargo interests (transport customers),” Mr Chambers said.
“We would stress that not all of these inefficiencies apply to all stevedore terminals in Melbourne, and we thank those terminals that do work closely with transport operators to ensure timely empty container de-hire slot availability, the ability to backload (i.e. take in empties when the truck is manifested to pick up import containers), and have acceptable truck turnaround times.”
Mr Chambers also noted: “CTAA Alliance companies have not identified the same level of inefficiencies in Port Botany or Brisbane.
“Transport operators need to ensure that the true additional costs of the direct wharf de-hire policies of the shipping lines, and the operational practices of their stevedore providers that can exacerbate the additional costs, are transparent to shippers (importers / freight forwarders).
“Ultimately, shippers will need to have commercial conversations with shipping lines and choose shipping line services that minimise these additional landside logistics costs.”
WARTA executive officer Cam Dumesny (left) with RFNSW general manager Simon O”Hara.
Road Freight NSW (RFNSW) has joined forces with its interstate counterpart the Western Australian Road Transport Association (WARTA) in a renewed fight against what they believe are unjustified landside surcharges imposed by stevedores at ports across the country.
RFNSW general manager Simon O’Hara met with WARTA Executive Officer Cam Dumesny, observing freight movements and out of the Port Botany terminals and getting feedback from carriers about the impact the new levies were having on their day to day operations.
“In NSW and WA, truck operators, particularly those smaller, family-run businesses, are hurting,” Mr O’Hara said.
“RFNSW and WARTA have now decided to use our collective strength in bringing the stevedores to account, for the sake of our members.
“Again, we make the point that at ports across the country, stevedores have imposed these taxes on hardworking truck operators without any regulatory scrutiny.
“We are concerned about the dangerous domino effect this has had on industry. Since stevedores started imposing these charges, other operators with significant supply chain power have also begun slugging transport operators.
“RFNSW and WARTA believe we need an independent body, ultimately the ACCC, to be called-in to put the brakes on the stevedores and start regulating landside port charges.
“We believe the recent Federal Court finding, which allows the ACCC to monitor and regulate pricing at the Port of Newcastle, means the ACCC should be in a position to review the situation at Australia’s ports,” he said.
“Accordingly, RFNSW and WARTA will make a joint submission to the ACCC, again calling for an investigation and independent umpire to review any financial charges.”
In view of the escalating costs experienced on the waterfront, Container Transport Alliance Australia (CTAA) has submitted container transport logistics-specific views to the Inquiry into National Freight and Supply Chain Priorities.
The CTAA Submission has highlighted to the inquiry:
- The changing nature of the cost-base in the container logistics chain, with the implementation of broader and higher infrastructure surcharges levied by stevedores, competitive stevedoring rates for shipping lines through greater container terminal competition, yet no corresponding reduction in terminal handling charges (THC) levied by shipping lines on beneficial cargo owners. CTAA has recommended that the ‘disconnect’ between these various charges be investigated by the Productivity Commission.
- The changing nature of the geographical location of container transport logistics activity, the mismatch of operating hours across the chain (and other aspects that impact on efficiencies and productivity); and the impact of urban encroachment and inner-city urban renewal leading to resident community / freight conflicts.
- The impact of toll road fees in container freight costs that aren’t always matched with commensurate productivity savings.
- A call for the National Strategy to recommend regulation to mandate the provision of EDI information by shipping lines to all parties in the chain, including to empty container parks.
- The establishment of objective, independent monitoring of productivity measurements at key interfaces in the container transport logistics chain, including the stevedore and empty container park interfaces.
- Road and rail productivity, connectivity and technology – increased access for higher productivity freight vehicles (HPFV); policies that promote synergies between road, rail and intermodal operations, not a ‘road vs. rail’ mentality; and the embracement of inventiveness within industry.
- Road and rail access pricing structures that are fair and equitable.
A copy of the CTAA Submission can be downloaded here.
One of Sydney’s most geographically central and strategically connected logistics areas is set to be developed into a new industrial estate.
NSW Ports and industrial property company Goodman Group will develop NSW Ports’ industrial estate at Enfield Intermodal Logistics Centre (Enfield ILC).
Enfield ILC is set on 60 hectares of industrial zoned land located at Mainline Road, Strathfield South. The site includes the active Enfield Intermodal Terminal, currently operated by Aurizon, empty container storage areas, and 30 hectares of serviced industrial land, ready for development.
Strategically located only 15km west of the Sydney CBD, the site benefits from direct access to the M4 and M5 motorways and dedicated freight rail infrastructure.
NSW Ports CEO Marika Calfas said: “Our 30 year Master Plan for the Enfield site is focussed on increasing the number of containers moved by rail to and from Port Botany. In order to make this a reality, we need to ensure the site includes high quality warehouse and logistics operations for our customers.”
Goodman’s general manager for Australia Jason Little said: “The key differentiator of this site to other warehouse and logistics facilities in Sydney is its proximity to the onsite intermodal facility and the dedicated freight rail line, providing direct access to and from Port Botany, and rail connections to regional NSW and interstate locations.
“In addition to rail access, being located so close to the Sydney CBD means that Enfield ILC is ideal for facilitating ‘Last mile delivery’, ensuring customers are close to their end consumers,” he concluded.
With 24/7 access and General Industrial (IN1) zoning, the site is suitable for a range of customers in the logistics, freight forwarding, pack-unpack, import-export, transport, and warehousing sectors.
The facilities will be built to Goodman’s standards and will integrate ecologically sustainable designed principles. Goodman is marketing the site for pre-lease development ranging from 2,000 square metres, capable of delivery in 2018.
Peak body Road Freight NSW (RFNSW) has expressed concerns that truck operators were only given two days to review and renew an agreement allowing them to access the DP World Australia terminal at Port Botany. Meanwhile, Container Transport Alliance Australia (CTAA) is warning that many container transport operators are facing cashflow problems, owing to the new and increased ‘infrastructure surcharges’ DP World and Patrick have implemented / are about to implement.
Take it or leave it
RFNSW says DP World Australia sent carriers a copy of the National Carrier Access Agreement on Wednesday 28 June – just two days before the commencement date of 1 July.
RFNSW general manager Simon O’Hara said: “Previously, our members have had 30 days or even 14 days to renew their agreement, but this year it’s a matter of only days.
“Frankly, this timeframe is unreasonable and unfair to our members, who spend most of their time on the road.
“This is a legal agreement that our members need to carefully consider and if necessary, seek appropriate legal advice on, to ensure their ongoing access to the terminal is commercially fair and balanced and not disadvantaging them in any way.
“This simply cannot be done in a matter of days which is what our members are being asked to do.
“You wouldn’t expect people to sign a mortgage document, or a business contract or stevedores to sign with shipping lines on matters that could impact their livelihood, in just a few days. It shouldn’t be any different for our members being asked to sign their National Carrier Access Agreement,” Mr O’Hara said.
In a message to carriers, DP World Australia said “it is critical that the renewal is completed as soon as possible to ensure continued access to slot-booking facilities” at its terminals.
Mr O’Hara added: “The real question is, what happens to carriers if they cannot return a signed agreement in the timeframe. Will they be stopped from operating? What effect will this have on the NSW economy?”
That plus the money: truckers are at their limits
Container transport operators have long been concerned with the ‘take it or leave it’ nature of this agreement, with the stevedore having the power to suspend an operator’s account if they don’t agree to the non-negotiable terms.
In light of the DP World Infrastructure Surcharges, and the higher VBS-related fees contained in the new agreement, CTAA wrote to DPWA seeking a change to their payment terms to 30 days. CTAA also encouraged container transport operators Australia-wide to do likewise individually.
DPWA has apologised for the short lead-time in issuing the Carrier Access Agreement, and has extended the period of time for container transport operators to accept the terms in writing to 14 July.
Disappointingly however, DPWA has issued a blanket rejection via email of the respectful request from CTAA and numerous individual companies seeking an extension of payment terms to 30 days.
CTAA, with shipper and freight forwarder groups, continues to oppose the implementation of the infrastructure surcharges imposed on landside operators by Patrick and DP World.
Along with APSA / FTA and other organisations, CTAA has briefed Ministers’ offices in various states, government officials, the ACCC, and the Small Business Ombudsman, on the impact of the surcharges.
The DP World Surcharges are already causing financial stress for container transport operators due to the cashflow implications. This stress will be compounded by the implementation of the Patrick Surcharges from Monday, 10 July.