Lloyds List Australia - DP World blames rents, council rates for port access fee hikes

Photo: Shutterstock and Jim Wilson                                               

STEVEDORING giant DP World Australia has announced substantial hikes in port access fees at its Sydney and Melbourne terminals.

At Sydney, the surcharge is to be $21.16 per container, up from zero and apply to all full containers received or delivered via road or rail.

In Melbourne the Infrastructure Surcharge has increased to $32.50 from $3.45 per container. The new charges take effect from April 3 but are already the subject of challenge by industry bodies including the Freight and Trade Alliance and the Australian Peak Shippers.

According to a statement to customers from DPWA chief commercial officer Brian Gillespie, property costs at Sydney have risen considerably in recent years and the industry had been through an unprecedented amount of change with the introduction of competition, privatisation and shipping industry consolidation.

"Since 2013, DPWA has incurred material increases in the costs of occupancy of more than 30%, including the cost of council rates, land tax, rent and terminal infrastructure maintenance," he wrote.

DPWA had avoided passing costs onto the supply chain, by changing the way Sydney Terminal operated and delivering a 35% improvement in road efficiency for carriers and 37% improvement in rail productivity.

The stevedore, he said, had incurred material increases in occupancy costs at Melbourne of more than 60% since 2016.

"Despite DPWA's continue efforts to offset higher fixed costs through efficiency improvements, these material step changes in costs cannot be offset," Mr Gillespie wrote.

"It is important to note that a substantial part of our Melbourne terminal, including our dedicated truck marshalling area, is devoted to servicing road transport, and that the cost of providing this specialist infrastructure has, like Melbourne terminal as a whole, been subject to the cost increases."

Shipping Australia chief executive Rod Nairn said every increase in charges impacting the logistics chain reduced the competitiveness of Australian exports and increased the costs of imports.

"In the end the charges are born by the importer or exporter.  But the result is to reduce the viability of trade and therefore reduce shipping volumes – everybody loses," Mr Nairn said.  

"The container stevedoring industry in Australia is very competitive, and its performance is monitored by the ACCC."

Mr Nairn said the ACCC had been vocal in warning privatisation of monopoly ports, without sufficient regulation, would lead to unconstrained increases in costs.

"Shipping Australia supports this view and clearly the ACCC were right," Mr Nairn said. 

"We are very disappointed to see such large increases passed on to users.  If the infrastructure investment it to improve performance, and I accept that we have seen productivity increases in recent years, then DP World will recover their investment through increased productivity going forward.  But they shouldn't be charging customers now for something they haven't yet delivered."

The fee hikes have prompted much comment from other sectors with Container Transport Alliance Australia director Neil Chambers arguing it was the shipping lines who should be asked to pay more.

"They (DPWA) are running a business and their customers are the shipping lines," Mr Chambers said.

The FTA and APSA, meanwhile, are among entities seeking to challenge the charges saying they plan on "raising the matter" with NSW Ports, the Port of Melbourne and government stakeholders.

"Surcharges such as these significantly add to the cost of international trade and directly affect the competitiveness of our commodity exports," FTA/APSA secretary Travis Brooks-Garrett wrote.

"APSA and FTA maintain the position that costs should be absorbed by the stevedore or passed on to their commercial client being the shipping line. Shipping lines can then negotiate with shippers and freight forwarders as they see fit."

Victorian Transport Association chief executive Peter Anderson said the increase to the Infrastructure Surcharge was yet another example of how transport operators were under massive pressure to maintain and protect razor-thin margins.

"Coming off the back of the up to 125% increase to tolls announced by CityLink operator Transurban, this increase will put additional pressure on operators to remain competitive," he said.

"Operators will have no choice but to pass on the increase to their customers."

Fellow stevedore Patrick has an infrastructure charge of $3.50 per container in Melbourne and zero in Sydney and a charge of $32 in Brisbane.

While Patrick has a rent deal locked in at Sydney into the next decade, a deal at Melbourne is overdue and one in Brisbane is due this year.