The NSW Nationals leader’s public support for a container terminal at the Port of Newcastle, as reported by the Sydney Morning Herald on October 23, is welcome news.
Under current arrangements, two container ships a week visiting the Port of Newcastle until 2063 would cost the NSW Government more than $6 billion.
The government is contractually committed until 2063 to paying the lessee of Port Botany and Port Kembla, NSW Ports, for containers shipped through the Port of Newcastle. Payment starts when more than three container ships a year visit Newcastle, assuming an average of 10,000 import/export containers a visit. Payment is based on the average price charged by NSW Ports for a container shipped through Port Botany, currently $150.
The government secretly decided to require the developer of a container terminal at the Port of Newcastle to pay the government for any cost the government incurred to a future Port Botany/Port Kembla lessee, due to container shipments handled by the developer. The government concealed its decision when parliament debated the bill authorising the ports to be leased. The “Ports Assets (Authorised Transactions) Act 2012”, which was assented to on 26 November 2012, did not authorise the government to pay the Port Botany/Port Kembla lessee from consolidated revenue.
Should the ACCC find that the decision to charge a Port of Newcastle container terminal developer is likely to be illegal under the “Commonwealth Competition and Consumer Act 2010” (Competition Act), the government will need to pass special legislation to pay NSW Ports. More likely, the government will assert that the leasing arrangements are legal and will defend its position, in the event that the ACCC sought a court determination. The legal process could take years.
The previous Labor Government started negotiating with the preferred developer of a container terminal at the Port of Newcastle, Newcastle Stevedores Consortium (Consortium), in 2010. Labor contractually required a container terminal with capacity of at least one million containers a year – the equivalent of two ships a week.
Port Botany and Port Kembla were leased to NSW Ports on May 30 2013. The government contractually required the consortium to pay the government for any cost the government incurred to NSW Ports, for container shipments handled by the consortium.
The ACCC claims that the government decided from at least July 27 2012 not to develop a container terminal at the Port of Newcastle. The ACCC based its claim on the government’s policy announcement that Port Kembla would be the location of the state’s next container terminal. The ACCC claims that the Competition Act stopped applying to the government in respect of a container terminal at the Port of Newcastle, due to the policy announced on July 27 2012.
The government announced on 28 October 2013 that no decision had been made to lease the Port of Newcastle. The government said “the scoping study for the proposed port transaction remains on track, with the NSW Government expecting to make a decision by the end of the year”. But on 5 November 2013, the government announced its decision to lease the port. Around that time, the government ceased negotiating with the consortium, without concluding a development agreement. The ACCC took no enforcement action under the Competition Act because the negotiation “did not result in any contract, arrangement or understanding”. The ACCC informed the Commonwealth Treasurer that “there does not appear to have been a contract, arrangement or understanding in place during the relevant period which had the purpose, effect or likely effect of substantially lessening competition”.
The ACCC refuses to acknowledge that the government contractually required the consortium to pay the government, for any cost the government incurred to NSW Ports, due to container shipments handled by the consortium. However, it was impossible for the government to conclude a contract that breached the Competition Act. If the government’s contract with the consortium breached the Competition Act, the same contract with the Port of Newcastle lessee breaches the Competition Act.
Hutchison Ports Sydney is the latest container terminal in Australia to announce the impost of a new Infrastructure Surcharge of $10.45 per full import or export container handled at the terminal by road or rail from 25 June.
Hutchison Ports Sydney took just one paragraph, posted through its online Customer Portal on 21 May, to justify the surcharge impost, without any consultation with those who must pay: container transport operators (road and rail), and ultimately importers and exporters.
CTAA director Neil Chambers observed: “It shows a particular mindset when Hutchison Ports clearly believes that the only explanation they need to offer to the landside logistics sector is a one-liner describing the surcharge as necessary ‘because of the high cost of additional equipment and infrastructure procured in recent years and used to provide and maintain an efficient terminal landside operation’.
“Hutchison Ports Australia, and its parent company headquarters in Hong Kong, have watched while the other incumbent container stevedoring companies in Australia hiked up their own landside infrastructure surcharges with impunity. They have now decided to get a piece of that unregulated action as well.
“CTAA has engaged with federal and state government ministers, departments and regulators, urging an investigation into how costs and service pricing are being allocated in the international container logistics chain. This seems yet another example of large scale cost shifting occurring without any regulatory balance… at what cost to Australia’s trade competitiveness?
“CTAA maintains that this is not about the recovery of rising business costs at all. All of the recent massive infrastructure surcharge increases, including this latest one by Hutchison Ports Australia in Sydney, are about the stevedore companies trying to maintain their viability in what seems like a stevedore services ‘price war’ playing out as shipping line contracts become due for renegotiation.
“The other major concern of CTAA’s container transport operator alliance companies is that the surcharges are being imposed through Terminal Carrier Access Agreements, which we believe breach the ‘unfair contract terms’ provisions of Australia’s competition laws,” Mr Chambers said.
The published Hutchison Ports Australia (HPA) Terminal Carrier Access Agreement states that they may vary the terms & conditions “… at any time by placing a notice on the HPA Portal advising that the terms and conditions have changed.”
Container transport operators are then deemed to have accepted and agreed to the revised terms & conditions if they continue to use any login or the Truck Appointment System (TAS) after the revised terms & conditions have been posted on the HPA online portal.
“No ifs or buts … use the Truck Appointment System to arrange to come to the terminal, and automatically agree to any charge or levy they’d like to impose … no chance to negotiate.”
While the HPA Terminal Carrier Access Terms & Conditions aren’t reissued each year, transport operators pay an annual subscription in July each year. CTAA therefore believes that the terms & conditions are set each calendar year.
“In March this year, AWB Harvest Finance Pools Pty Ltd (AWB) amended its standard form grain pool contracts after the ACCC raised concerns that some terms in the contracts were unfair,” Mr Chambers observed.
AWB’s grain pool contracts originally included terms giving it the power to (inter alia):
- Unilaterally increase fees to growers after the contract had been accepted by a grower; and
- Introduce new fees from time to time after the contract was signed.
“The question CTAA has raised with the ACCC is ‘what’s the difference between the AWB unfair contract concerns and the unfair actions of Australia’s stevedoring companies who have each imposed infrastructure surcharges without consultation during the term of their access “contracts” with transport operators?’
“We note that ACCC chairman Rod Sims has indicated that a priority for the competition regulator in 2018 is to follow up on unfair contract terms where the terms are substantially and unfairly weighted to the benefit of one party and cannot be negotiated.
“CTAA is again bringing to the attention of the ACCC our belief that the infrastructure surcharges imposed by the stevedores on container transport operators breach the unfair contract terms provisions of Australia’s competition laws and involve substantial small business detriment,” Mr Chambers said.
Flinders Adelaide Container Terminal (FACT) has appointed David Sleath, the Terminal’s former Operations Manager, to the role of General Manager.
Sleath officially took the position in February 2018, replacing Steve Cox, who departed the role in late 2017.
According to FACT, Sleath has a vast knowledge of the operational requirements of the container terminal, acquired over seven years as the Terminal’s Operations Manager. He has extensive experience in the daily workings of the terminal and working with FACT’s clients and stakeholders.
He is also a ‘Master Mariner’ and holds science, maritime supply chain, leadership and business management qualifications.
“We are pleased to have appointed David into the General Manager’s role,” said Stewart Lammin, CEO, Flinders Port Holdings. “David is highly experienced and knowledgeable professional who is well known and respected in the industry. During his time at FACT, he has constantly demonstrated his commitment to industry best practice with respect to workplace safety, efficiency and customer service.”
FACT has operated since July 2012, when Flinders Port Holdings gained 100 per cent ownership of the Adelaide Container Terminal from DP World South Australia In 2017, the Terminal handled approximately 320,000 containers, and stevedored 429 container ships.
In what the CTAA calls a further ‘cash grab’ directed at the landside container logistics sector, Victoria International Container Terminal (VICT) at Webb Dock in the Port of Melbourne has followed the larger stevedore companies Patrick Terminals and DP World Australia in announcing the introduction of an Infrastructure Surcharge of $48.00 per full import or export container commencing from 27 March 2018.
Citing “a review of market conditions”, VICT lists its commitment to landside efficiency as a reason of implementing the Infrastructure Surcharge. However, landside logistics operators would ask: “what’s changed since the terminal was built?”
“If we cut though the BS, the real reason for the announcement is that VICT needs to prepare itself to offer lower stevedoring rates to foreign shipping lines to stay competitive in bid processes against the other stevedores. And in what is now considered a ‘free-for-all’ in an unregulated market, all they need to do is collect their lost revenue projections from the transport operators (and ultimately importers and exporters) on a ‘take it or leave it basis’,” observed CTAA director Neil Chambers.
“This gives the term ‘Me Too’ a whole new meaning!”
In 2014, VICT won a competitive bid process to build and operate the new container terminal at Webb Dock. VICT built the facility in the full knowledge of the costs involved, the landside capacity of the terminal and the technology they have implemented.
“To now claim that they need to be rewarded for landside efficiencies and good truck turnaround times is laughable,” Neil Chambers said.
“The fact is that while VICT does have consistent truck turnaround times, they still cause inefficiencies in landside logistics operations due to their limited truck entry operating hours.
“The larger container transport operators would prefer VICT to open during night shift when a large bulk of container movements to/from container terminals occurs in the Port of Melbourne.”
“By only operating mostly during daylight hours, transport operators are forced to use additional trucks to meet the import/export task. That’s more trucks on the road during the day, including peak hours, than there needs to be, at added costs for transport operators.
“Also, while CTAA advocated strongly for, and welcome from VICT, the increase in their payment terms to 30 days (from the date of the invoice), there is still a considerable lag between when transport operators need to pay these exorbitant Infrastructure Surcharges (or face a ban from the terminal is they don’t) and the time taken to collect those fees from their customers – importers & exporters.
“The cash-flow implications for transport operators have yet again been stretched.
“As we did when DP World increased its infrastructure surcharges and Patrick Terminals followed suit recently, we again call on the Federal Government to investigate whether there is now sufficient ‘market failure’ in container logistics pricing through Australian ports to warrant regulatory intervention.
“All shipping lines charge shippers (importers and exporters) a terminal handling charge (THC), traditionally covering the cost of handling containers at the container terminal, including to/from the stack and landside movements.
“We haven’t seen evidence of shipping lines decreasing their THC in line with lower negotiated stevedore rates. So the question has to be asked whether shippers (importers / exporters) are paying twice for the same service?
“The situation now exists where overseas owned and controlled shipping lines are profiting from this cost shifting, at the expense of Australia’s import & export competitiveness.
“We now have a new Federal Transport & Infrastructure Minister – the third in so many months. We’d hope that Mr McCormack takes action to investigate the impact of the current unregulated nature of container logistics landside infrastructure pricing, as well as the quantum of the terminal handling charges levied by the shipping lines.”
The notice from VICT is reproduced beow in full:
Victoria International Container Terminal (VICT) – Notice to Customers – 27 February 2018
Following a review of our terminal charges and market conditions, VICT has decided to implement an Infrastructure Surcharge of $48.00. Customers are advised that the charge will commence as of 27th March 2018.
Following a review of market conditions, we consider that it is appropriate to introduce an Infrastructure Surcharge. The Infrastructure Surcharge allows VICT to remain competitive in the market as a viable alternative container terminal.
Since commencing operations in 2017, VICT has committed to having landside efficiency at the forefront of our innovation, which we have done and continue to do. This has optimised our Truck Turnaround Times, increased utilisation of trucks and improved safety conditions. VICT remains dedicated to continuous improvement in providing leading landside services.
The Infrastructure Surcharge will be applied to all standard import and export full containers (R&D via road). Road transport operators will be invoiced electronically through existing weekly invoices. The $10 Chain Of Responsibility charge per container will no longer be an additional charge, and will instead be absorbed into the Infrastructure Surcharge from 27th March 2018.
We are aware of customer feedback regarding the introduction of infrastructure surcharges more generally in the market. Having listened to customer feedback on cash flow concerns around additional charges, we will extend our payment terms from 7 to 30 days from invoice issue date and we are also looking to implement EFTPOS payment facilities soon. We will make further announcements on this shortly.
VICT carrier access agreement will be updated accordingly and facility access will be conditional on payment of these charges as per our terms and conditions from 27th March onwards. Please contact VICT’s Landside Team on 03 8547 9700 if you require any further clarification with regard to this surcharge.
Logistics infrastructure company Linx Cargo Care Group has successfully bid to operate the Enfield Intermodal Terminal in Western Sydney, which is currently operated by Aurizon.
Linx will lease and operate the NSW Ports–owned, 15.1-hectare intermodal terminal located 18km from Port Botany, west of Sydney.
Linx will operate a port shuttle service between Enfield and Port Botany to reduce traffic congestion in Sydney, ahead of a forecasted increase of 400 per cent in truck traffic in the Port Botany area by 2030.
“Given the forecast for such a significant increase in road and rail congestion across Sydney over the next decade or so, Linx is committed to working closely with the New South Wales state government to develop an effective and achievable solution that will reduce the impact of increased freight movements across the city,” said Anthony Jones, CEO, Linx Cargo Care Group. “Linx has been building its rail capabilities for the past year in readiness for an opportunity like this.”
He added that part of the solution could include the duplication of the freight rail line between Port Botany and the interstate corridor mainline.
The Enfield Intermodal Logistics Centre includes the intermodal terminal, warehousing, and buildings with vacant land for the development of rail-related warehousing, freight forwarding, IMEX (Import and Export), transport and distribution facilities.
“Linx is currently working closely with NSW Ports to support the development of a freight hub on the land surrounding the Enfield Intermodal Terminal,” added Jones.
Marika Calfas, CEO, NSW Ports, said one of NSW Ports’ key objectives is increasing the number of containers moved by rail to and from Port Botany.
“Linx are well placed to expand the intermodal and rail services at the Enfield ILC and grow the rail mode share to and from Australia’s premier port,” she said.
Australian stevedore DP World Australia (DPWA) will take delivery of four new ZPMC quayside container cranes next month, for its Brisbane, Sydney and Melbourne terminals.
The cranes departed China on 11 February, loaded on the Zhen Hua 21 vessel.
DPWA’s Brisbane and Sydney terminals are both set to receive one crane each, and two cranes will be delivered to the Melbourne Terminal.
According to DPWA, the cranes, which were built in Shanghai, have the latest in electrical technology, efficient operating systems and improved ergonomics for operator comfort.
The delivery is the first part of an order for a total of nine cranes for DPWA, an additional five cranes are to be delivered to DPWA’s Sydney, Melbourne and Fremantle terminals in mid-2018.
The Port of Melbourne risks becoming an “international laughing stock” if industrial action that has disrupted stevedore Victoria International Container Terminal (VICT) is permitted to continue, according to the Victorian Transport Association (VTA).
The VTA’s warning is in response to VICT’s revelation that the person the Maritime Union of Australia (MUA) is pressuring the stevedore to employ is ineligible to work on docks under Australian law because he failed to obtain a Maritime Security Identification Card.
“It is an affront to every Port of Melbourne stevedore and freight operator working in and around the port that the Victorian economy is continuing to be held to ransom by the MUA over what we now understand is a legal reason for this individual being ineligible for employment at the docks,” said VTA CEO, Peter Anderson.
“The effects of this ongoing action at our busiest time of the year are being felt right throughout the economy when you consider that the more than 1000 containers and their contents sitting idle at Webb Dock cannot be brought to market and sold to consumers during our peak retail trading period.
“Not only are VICT and the hundreds of freight operators that cannot move containers in and out of the terminal being impacted by this recalcitrant industrial action, so too are hundreds of small business operators and their families that are being denied access to goods demanded by Victorian consumers.”
Anderson said it was a potential sovereign risk to the broader Victorian economy and the Port of Melbourne’s position as the nation’s largest port if the action is allowed to continue.
“VICT is already losing business to other Port of Melbourne stevedores through this action, but if foreign exporters determine Melbourne is an unreliable destination for freight forwarders they will send their business to ports in other states, at a massive cost to our economy,” said Anderson.
“So, while this action may be confined to VICT for now, the real risk as we see it is the long-term reputational and economic damage the action will create for Victoria as a place to do business.”
Anderson implored all stakeholders involved in the action to put the interests of the Victorian economy first and work constructively to bring an end to industrial action that is undermining the state’s hard-fought reputation as a reliable place to do business.
“This is not the time for our leaders to run and hide but rather confront the real issue of adverse union action that is brutal and selfish, and has a negative effect on the livelihoods all Victorians,” he said.
The Victorian Transport Association (VTA) has issued advice to its members on dealing with the fee hikes introduced in recent months by Australia’s major stevedores.
“These increased charges have been introduced with the carrier not being able to negotiate and there is obliged to pass them on directly to the customer,” VTA CEO Peter Anderson said in the message.
The VTA recommended informing customers how the additional charge will be invoiced and forwarding any formal correspondence from stevedores to further explain the fee.
“Given that both direct and indirect terminal access costs are increasing and significantly different across the three terminals, it is important that the carrier industry is able to accurately quantify and incorporate these costs into their charges,” Anderson added.
Predicting further fee hikes in the future, Anderson announced that the VTA will establish a terminal access cost model for wharf-based operations– for release in early 2018, and will make recommendations to assist the container industry in better communicating with customers “in an effort to recompense many cost increases out of the carriers’ control.”
Shipping company Wallenius Wilhelmsen Logistics ASA (WWL) will sell its inland transportation and technical service business in Australia to Australian vehicle storage and transportation company Prixcar, in exchange for a 20 per cent ownership share in Prixcar.
WWL will remain an active participant in the market through board representation and close cooperation with Prixcar.
Prixcar provides finished vehicle logistic services in Australia with a nationwide footprint. Its primary focus is inland transportation and technical services for the auto segment, complementing WWL’s focus on the heavy truck, rolling equipment and machinery segment. The joint business is expected to have an annual turnover in excess of $250 million and a team of over 1,000.
“This transaction and our new partnership with the Prixcar Group will increase the scale and geographic reach of our Landbased activities in Australia, providing our customers with an enhanced product,” said Craig Jasienski, President and CEO, WWL ASA.
Alan Miles, Chairman, Prixcar Services, added, “The joining of these two companies – both sharing similar values with a strong focus on safety, people, innovation, environment, and our customers – will assist in enabling the group to further expand its ability in creating value for its employees, customers and business partners, offering an expanded range of both services and locations.”
The transaction is subject to regulatory approvals in Australia, and expected to close in Q1 2018.
The transaction does not include WWL’s Terminal business, for example the Melbourne International Ro-Ro Automotive Terminal (MIRRAT).