According to the Freight & Trade Alliance (FTA), owners and shareholders of container stevedore operations have been handed a licence to print money with the National Transport Commission (NTC).
The FTA says the owners and shareholders can now hold third party transport operators to ransom over service and price.
The representative for the international supply chain sector notes Hutchison Ports has taken Terminal Access Charges (TAC) – otherwise known as an Infrastructure Surcharge – to a new national high with this week’s announcement of a $162.10 fee payable by transport operators for all containers received or delivered via their Brisbane terminal.
Paul Zalai, Director of the FTA and Secretariat of the Australian Peak Shippers Association (APSA) says the approach is the result of stevedores reducing their quayside revenue intake from their commercial client shipping lines.
He says they are instead recovering costs from transport operators that have no influence on service or price.
“Foreign-owned shipping lines servicing our container trade are in such a dominant position,” Paul says.
“Not only are they cashing in on importers and exporters with high freight rates, a spate of surcharges and unfair container detention penalties, they are also putting to squeeze on their contracted stevedores who have resorted to Terminal Access Charges to remain commercially viable,” he adds.
The FTA says the Australian Competition and Consumer Commission (ACCC) highlighted in its 2019-2020 Container Stevedoring report – which was released on November 4, 2020 – that aggregated stevedore “landside and other” revenue is significantly increasing although this quantum is largely being offset by a correlating reduction in “quayside” revenue.
“This brings into question whether exporters and importers are paying duplicate landside stevedoring fees,” Paul says.
“Once via sustained high Terminal Handling Charges administered by many shipping lines and twice via Terminal Access Charges and vehicle booking systems administered by shipping line contracted parties,” he adds.
“The bottom line is that Australian supply chain participants are currently paying an additional $500 million per year direct to stevedores and empty container parks with these rapidly increasing costs having devastating impacts on exporters and importers with downstream crippling financial impacts on manufacturers, farmers, and regional communities.”
The FTA along with the APSA say they wrote to state ministers in 2020 that stevedores and empty container parks should be forced to either absorb operating costs or pass these on to their commercial clients (shipping lines).
They note this outcome would give shipping lines the choice to absorb costs or pass these onto shippers, including exporters, importers, and freight forwarders through negotiated freight rates and associated charges.
They say minsters at the Infrastructure and Transport Ministers meeting held on November 20, 2020, the NTC was tasked to lead reform and develop “voluntary national guidelines” to apply to stevedore infrastructure and access changes (both their introduction and increase) at Australia’s container ports.
According to the associations, the Victorian government has set up its own reform program over the past two years to address this and other port-related operational matters by establishing the Voluntary Port Performance Model (VPPM).
As a part of this model, stevedores are restricted to one annual TAC increase with prescribed notice periods giving industry an opportunity to question and challenge any variation.
They say they have also requested a further detailed explanation for the increases including disclosure, supporting information and data justifying the full cost structure of the total fees.
“The VPPM is a joke,” Paul says.
“We suggested as much when the idea was first mooted at a ministerial roundtable briefing and have regularly reiterated this with extensive evidence supplied to the Victorian ports minister,” he adds.
“Stevedores were never going to give us the transparency requested and why should they? All we really want is for them to absorb operational costs or pass these on to their commercial client through negotiated contractual agreements.”
The FTA and APSA say they had constructive meetings with stevedore executives, but follow-up correspondence did not provide the specific data requested, instead it provided a general commentary with a broad reference to activities and capital expenses.
They note on March 31 this year, the NTC announced that the national voluntary guidelines for applying landside stevedore infrastructure and access charges at Australia’s container ports would become the national standard.
“Escalation of such voluntary performance arrangements also poses the significant risk of giving tacit approval to this unwarranted cost recovery method on third parties,” Paul says.
“This matter is not confined to stevedores,” he adds.
“Empty container parks (and now LCL Depots) are also continuing to significantly increase their charges on transport operators who in turn are understandably adding administration fees that are cascading down the supply chain.”
Paul says despite witnessing the failings of the VPPM, the NTC and Australia’s transport, infrastructure ministers have embraced the “hopelessly flawed model” adopted by the Victorian government.
“On top of this, we have severe capacity constraints, record-high freight rates, container detention penalties, depot congestion and shipping line surcharges.
“Meanwhile, our government representatives are left scratching their heads unable to answer why supply chain costs continue to spiral out of control fuelling inflationary pressures across our economy.”
On April 1, the FTA and APSA say that further to the testimonials and extensive evidence raised in its formal submission to the review of the Australian Maritime Logistics System, the peak industry alliance will escalate its call on the Productivity Commission to lead a way for regulation to end the scourge of Terminal Access Charges.
For more information on the Freight & Trade Alliance (FTA), click here.