Victoria International Container Terminal has increased their infrastructure surcharge following an increase by DP World in May and Hutchinson in Brisbane who have increased fees by almost 100 per cent.
In a notice to customers, Victoria International Container Terminal (VICT) justified their latest increase in their Infrastructure surcharge as a mechanism to provide income to cover a lease increase imposed by the privatised Port of Melbourne.
Freight & Trade Alliance (FTA) and the Australian Peaks Shippers Association (APSA), representing over 400 export, import and logistics businesses, have launched a series of formal submissions to the Federal Government advocating for elimination of stevedore-imposed Infrastructure Surcharges.
This week the alliance provided a formal submission to the Standing Committee on Foreign Affairs, Defence and Trade Inquiry into the implications of the COVID-19 pandemic for Australia’s foreign affairs, defence and trade.
Paul Zalai, Director and Co-founder, FTA warns that incremental increases on an already high base would continue the devastating impacts on the Australian economy.
He said the current economic crisis has not slowed this trend with DP World adjusting their East Coast fees during May 2020; Hutchison (Brisbane) increasing fees by a staggering amount ($50 to $94.78 per container effective 27 July); and Victoria International Container Terminal extending their lead with the most expensive national charge ($131.03 per container effective 1 August 2020).
“Stevedores should be forced to either absorb operating costs or pass these on to their commercial client (shipping lines). Shipping lines then have the choice to absorb or pass this onto shippers (exporters, importers and freight forwarders) through negotiated freight rates and associated charges,” he said.
With Australian jobs being lost in record numbers, the submissions note that an estimated $300M+ in costs imposed by stevedores across all major sea freight container ports are compounding the economic impacts of drought, bushfires and COVID-19.
The result is having particularly devastating impacts on the Australian trade sector and directly impacting retailers, manufacturers, farmers and regional communities.
“In contrast, transport operators (road and rail) are held at ransom, forced to pay an Infrastructure Surcharge to collect and deliver containers with no ability to negotiate price or service,” Paul said.
He said that many transport operators have included administration fees to manage cash flow associated with these charges resulting in cascading costs flowing through the supply chain. Ultimately, Australian exporters and importers pay further inflated prices.
With repeated warnings by state governments being ignored, particularly during the current COVID-19 pandemic, Paul responded to the proposed solution by the Victorian government of a Voluntary Port of Melbourne Performance Model (VPPM) as being a futile and flawed concept.
“If the VICT response is any indication, stevedores will continue forging ahead by using Infrastructure Surcharges as their ‘money tap’, a convenient means of recovering operating costs and returning profits,” he said.
“Our regulators need to protect shippers by forcing stevedores to cease this practice. Stevedores should be given appropriate notice to allow negotiations of charges with shipping lines,
“This outcome would allow market forces to take effect. An open and competitive environment will determine appropriate price for services without the need for further government monitoring or intervention.”