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Three container stevedore companies have amended their contracts with land transport businesses after the ACCC raised concerns that certain terms in each of these agreements may be unfair contract terms.
DP World Australia, Hutchison Ports Australia and Victoria International Container Terminal (VICT) agreed, after the ACCC’s intervention, to remove or amend terms in their standard form contracts that the ACCC considered were likely to be considered ‘unfair’ within the meaning of the Australian Consumer Law.
DP World and Hutchison had contract terms that allowed a stevedore to unilaterally vary terms in the agreements without notice, including fees paid by the land transport operators.
DP World and Hutchison also had terms that limited their liability for loss or damage suffered by the transport businesses, while not offering the transport businesses the same protections. VICT’s contract had a term requiring transport businesses to indemnify VICT for loss or damage, with no reciprocal obligation on VICT.
DP World’s standard agreement also required the transport businesses to pay the stevedore’s legal costs and expenses, in circumstances where such payments would normally be determined by court order.
The three stevedores cooperated with the ACCC’s investigation and agreed to remove or amend the terms. Hutchison has made its commitments in a court enforceable undertaking and will also place a corrective notice on its website and put in place a compliance program.
Those contract terms which previously allowed the stevedore to amend the contract without notice have either been removed, or now require the stevedore to give 30 days’ notice of any changes, including for any price rises.
“Thousands of transport businesses, which have standard form agreements with DP World, Hutchison and VICT, stand to benefit from these changes,” ACCC Commissioner Sarah Court said.
“The handling of containers has a direct bearing on the cost of goods in Australia and the competitiveness of Australian exports, so it is crucial for businesses and consumers that the supply chain operates fairly and efficiently.”
The ACCC launched its investigation in early 2018 following concerns being raised about alleged unfair terms in contracts between container stevedores and land transport operators, such as rail and trucking businesses.
The ACCC’s 2018 Container Stevedore Monitoring Report noted the ACCC was assessing unfair contract terms within the industry. The ACCC has now concluded that assessment.
The court enforceable undertaking given by Hutchison can be found at Hutchison Ports Australia Pty Limited.
Trucks awaiting entry to one of Port Botany’s container yards. ABC photo.
Peak body Road Freight NSW (RFNSW) says it is unfair that truck operators already reeling from mounting port access fees have now been slugged with new charges for pick-ups and drop-offs at Sydney container parks.
From February 1, if a truck arrives at DP World Logistics more than 60 minutes prior to the start of the nominated ‘Notification Window’, the carrier will be forced to pay an ‘Off Window Surcharge’ of $25.50 per booking. If a truck arrives more than 60 minutes after the end of the nominated slot, the carrier will also incur the same $25.50 ‘Off Window Surcharge’. If a truck arrives within its ‘Notification Window’, the charge will be $16.50.
RFNSW chief executive Simon O’Hara said its members are asking why the new surcharges are being imposed on carriers given that the operation of empty container parks appear to be “inefficient, unproductive and haphazard”.
“It’s a new year and another new surcharge for truck operators,” Mr O’Hara said. “Our members are angry and frustrated they’ve been hit with further fees which are making their daily operations unsustainable.
“Notification windows for truck arrivals aren’t always available at short notice and it’s unfair that the length of time drivers may sit waiting in the rank waiting to be processed isn’t taken in to account when these surcharges are being applied.
“That’s why our members believe the penalties are unwarranted and yet another cost impost, on top of the new DP World infrastructure fee of $63.80 per container at the Port Botany terminal, which came in to effect on January 1.
“The quantum of these charges is impacting carriers and making it harder and harder for them to run their businesses.”
Mr O’Hara said RFNSW will be meeting with DP World Logistics today in order to raise its concerns on behalf of its members.
DP World Australia (DPWA) has proceeded with its higher landside infrastructure charges from 1 January 2019 despite significant opposition from the landside container logistics sector.
Also, DPWA’s Vehicle Booking System (VBS) fees have been jacked up over 80% from $6.89 per container slot to $12.95 per slot. An unprecedented increase, with no corresponding significant improvement in the functionality of the 1-Stop VBS platform.
“It’s worth repeating that since April 2017, DP World Australia has imposed Infrastructure Charge increases levied on container transport operators of over 1000% in Melbourne, 247% in Sydney and 86% in Brisbane, with no negotiation, no transparency, and no ability for transport operators to resist, least their terminal access may be denied,” said CTAA director Neil Chambers.
In late October last year before the Victorian State Election, CTAA, in collaboration with Freight & Trade Alliance (FTA) and the Australian Peak Shippers Association (APSA), welcomed the Victorian Labor Government’s commitment to conduct a review into regulating pricing and charges, as well as access to and from the Port of Melbourne, following the announced increases in stevedore infrastructure charges.
“We have urged the incoming Victorian Minister for Ports, Melissa Horne, and Freight Victoria (within Transport for Victoria), to proceed with this review as a matter of urgency.”
Discussions also continue with the NSW Minister for Roads, Maritime and Freight, Melinda Pavey, and with Transport for NSW, about similar investigations.
These actions align with statements made by the Australian Competition and Consumer Commission (ACCC) in its 2018 Container Stevedoring Monitoring Report, that the recent significant increases in infrastructure charges may require a more detailed examination by state governments, and, if warranted, a regulatory response.
CTAA is urging stevedore infrastructure charge restraint during investigations.
“Prior to these government investigations proceeding, CTAA urges the other Australian container stevedore companies to show restraint at this time and not impose similar infrastructure charge hikes as those imposed by DPWA,” said Mr Chambers.
“For instance, the cycle for Patrick Terminals to consider and announce its level of infrastructure charges across its Australian container terminals has been in March each year.”
“We’d urge Patrick Terminals, and also Hutchison Ports Australia and Victoria International Container Terminal (VICT), and most recently Australian Amalgamated Terminals (AAT) in the Port of Brisbane that introduced a new Infrastructure Charge of $38,70 per full container in October 2018, not to act unilaterally in this way, but to collaborate with the promised review(s).”
The full picture on container terminal charges
CTAA has been consistent and clear that the investigations into these unregulated charges should consider the broader picture of the port fees and infrastructure charges levied for landside stevedoring services, which are ultimately borne by Australia’s importers and exporters.
It is understood that there is a cost in providing adequate landside container stevedoring infrastructure. Indeed, the ACCC 2018 Container Stevedoring Monitoring Report confirms that stevedoring revenues have declined as foreign international container shipping lines have enjoyed much more competitive stevedoring rates as a result of stevedoring services competition.
Yet, stevedores need to continue to invest to provide adequate service levels, and to address their own rising costs in a market dictated by declining quayside revenues.
However, anecdotally, Australia’s importers and exporters have not enjoyed corresponding reductions in terminal handling charges (THC), which have traditionally recovered the costs of Australian container stevedoring services levied directly by the international shipping lines.
“A core question then for the impending government investigations is whether or not importers and exporters are actually paying twice for the same stevedoring services?”
“Ultimately, they are now paying exorbitantly higher stevedoring infrastructure charges passed through the chain by road and rail transport operators, yet they haven’t received a corresponding reduction in THC levied directly by foreign shipping lines.”
“You really have to ask who’s creaming this situation? Who are the winners and the losers?”
“You don’t have to be Einstein to have a guess. The broader spectrum of charges levied for what purpose is very worthy of government investigation and possible regulation,” Mr Chambers concluded.
There has been no correspondence received from DP World on the subject.
Landside transport operators across Australia are appalled by the latest announcement by DP World Australia of further massive increases in vehicle booking fees and Infrastructure Access Charges from 1 January 2019.
“If these exorbitant fee increases are allowed to proceed, then since April 2017, DP World Australia will have imposed Infrastructure Charge increases levied on transport operators of 1024% in Melbourne, 247% in Sydney and 86% in Brisbane, with no negotiation, no transparency, and no ability for transport operators to resist, least their terminal access may be denied,” said CTAA director Neil Chambers.
In addition, Vehicle Booking System (VBS) fees will be jacked up 88% from $6.89 per container slot to $12.95, again with no consultation or discussion with transport operators about what the additional revenue will be used for to improve the truck interface at DP World terminals around Australia.
Unfair contract terms
The CTAA has raised with the ACCC previously, and with the federal and state governments, that DP World imposes these fee increases through unfair contract terms.
At the beginning of each financial year, DP World requires container road transport operators to accept the terms of its National Carrier Access Agreement. If they do not sign, transport operators may be denied terminal access, and in any event, as soon as they use the 1-Stop VBS from 1 July each year, they are deemed to have accepted the terms of the agreement.
The DP World Public Tariff Schedules for each terminal, linked to the Access Agreement, are also published for the financial year.
“The National Carrier Access Agreement forms a ‘contract’ between DP World and transport operators, albeit transport operators have little ability to negotiate fair terms within the contract,” observed Mr Chambers.
“Yet, half-way through the contract, DP World can vary its fees and charges massively, again with no negotiation.
“CTAA has asked the ACCC previously why this isn’t deemed to be ‘unfair contract terms’ under the provisions of Australia’s competition laws? Following this latest fee increase bombshell, we’ll be asking the question again.
“Transport operators have no say in setting these fees and charges, no say in their quantum, and no say in how the revenue is spent. How is this fair or sustainable?”
Federal & state government actions
The current Federal Minister for Infrastructure, Transport & Regional Development, Michael McCormack has stated publicly that he will wait for the next ACCC Container Stevedoring Monitoring Report due in October before considering action on stevedore fees and charges now being directed to the landside sector.
“We’ll be encouraging the Minister to act swiftly once the Monitoring Report is released.”
Similarly, both the Victorian and NSW governments have recently released updated strategic freight plans with clear directions to support the efficiency and viability of the container logistics freight sector.
In the case of the Victorian Freight Plan, there is a specific initiative to investigate options for the future role of government in regulating pricing/charges, and access to and from the Port of Melbourne.
“CTAA is encouraging Victorian Minister Luke Donnellan, NSW Minister Melinda Pavey, and indeed the Palaszczuk Queensland Government and the McGowan WA Government, to conduct these investigations as a matter of urgency, jointly or severally.”
The CTAA believes these government regulatory reviews need to address:
- The relationship between stevedore rates to shipping lines, terminal handling charges (THC) applied by shipping lines to shippers, and the implementation and quantum of the infrastructure surcharges levied by the stevedores on transport operators.
- An investigation of the ‘unfair’ structure of DP World’s National Carrier Access Agreement, and the benefits that would be derived by negotiated, individual service level agreements (SLA) between transport operators and stevedore companies.
- The establishment of independent monitoring of key stevedore performance indicators, similar to the analyses conducted in NSW under its Mandatory Standards regime by the NSW Cargo Movement Coordination Centre, including accurate Truck Turnaround Time (TTT) & Container Turn Time (CTT) measurement in all ports; VBS slot capacities per time zone; truck utilisation rates, stevedore practices that limit ‘two-way running’ opportunities; and stevedore infrastructure expenditure that improves landside logistics interface performance.
Pictured left to right: Philippe Herve, operations department manager (CMA CGM), Simon Moore, SVP Commercial (DP World Global), Noel Dent, general manager operations & logistics (ANL Container Line), Farid Salem, executive director (CMA CGM Group), Paul Scurrah, managing director & CEO (DP World Australia), Franck Magarian, vice president procurement terminals and ports (CMA CGM Group), Eric Mari, deputy vice president procurement terminals and ports (CMA CGM Group), Ben Moke, general manager commercial (DP World Australia), Xavier McDonald, legal manager contracts (CMA CGM), Maarten Voetelink, senior manager operations (CMA CGM).
DP World Australia has signed a long-term partnership extension over the servicing of CMA CGM Group vessels by DP World Australia at its terminals in Brisbane, Sydney, Melbourne and Fremantle.
This partnership extension brings the two big players in the Australian port logistics sector closer together. CMA CGM Group’s shipping services, which include ANL and APL, will leverage DP World Australia’s container terminal and intermodal footprint.
DP World Australia’s CEO and managing director Paul Scurrah said the partnership extension provides the two organisations with a strong platform for future growth in the Australian market.
“We are delighted to be selected by the CMA CGM Group as its major stevedoring provider in Australia. In an exceedingly competitive market, locally and globally, securing the partnership with CMA CGM Group reinforces our position within our industry as a leading and responsive trade enabler.”
ANL’s incoming managing director Xavier Eiglier said: “This contract extension is strategically important for the CMA CGM Group and ANL, its major operator in Australia, as it gives us certainty of access to quality stevedoring operations around Australia.
“Shipping is a very competitive environment, our customers count on us for timely shipment and arrival of their goods, so we in turn rely heavily on the performance of our chosen stevedores. We look forward to working closely with DP World Australia to continuously improve performance so as to maintain the quality of our customers’ supply chains.”
DP World Australia claims to be Australia’s biggest port and supply chain operator providing stevedoring and port supply chain services.
CMA CGM Group, comprising of CMA CGM, ANL, APL and ANL Sofrana, is said to be the largest shipping group in Australia providing international and coastal shipping, container logistics and container hire and sales services.
DP World Australia’s Melbourne terminal, located at West Swanson Dock, saw the arrival of two new ZPMC quay cranes recently.
The cranes, standing over 70 metres high above the deck of vessel Zhen Hua 21, were specially designed to allow passage under the Westgate Bridge.
Weighing 1,200 tonnes each, the cranes can lift 75 tonne – the equivalent weight of a Boeing 737.
DP World Australia’s chief officer operations terminals Max Kruse said: “The new ZPMC cranes are at the leading edge of port equipment and technology, and can service large vessels carrying up to 10,000 containers.
“Each crane is worth $14 million and is a key part of the investment in our Melbourne terminal. The new cranes and our continued investment in our terminals will ensure we can efficiently meet our customer’s future requirements.”
DP World Australia has recently spent AUD $180 million on port equipment nationally, $70 million of which was for the Melbourne Terminal.
By the end of March 2018, Melbourne terminal’s straddle carrier fleet will have received 21 replacement machines, and an additional ZPMC quay crane is due be delivered and commissioned by October 2018.
- Rated capacity under spreader 65 tonnes and 75 tonne under heavy lift beam.
- Outreach of 51 metres, with a rail gauge of 25.3 metres.
- Hoist height above rail is 38 metres.
- Hoist speed 90 metres/minute loaded and 180 metres/minute unloaded.
- Cross-travel speed 240 metres/minute.
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.