Lloyds List Australia - ACCC investigation sought from industry to prevent cascading supply chain costs

Source: https://www.lloydslistaustralia.com.au/lla/blogs/paul-zalai/INDUSTRY-OPINION-ACCC-investigation-sought-from-industry-to-prevent-cascading-supply-chain-costs-552020.html

Photo: Jim Wilson

INDUSTRY OPINION:

AS OUTLINED in the latest DP World Australia (DPWA) customer notices released on March 16, 2017, a two-week postponement has been given to industry meaning the new "infrastructure surcharges" will now take effect on April 17.

While this outcome was welcomed to allow industry further time to adjust to the new surcharge arrangements (increase in Melbourne from $3.45 to $32.50 and Sydney from $0 to $21.16 for all laden import and export containers), the longer term outcome remains with charges likely to cascade down the supply chain, resulting in significantly increased costs being borne by Australian exporters, importers and domestic consumers.

The Australian Peak Shippers Association (APSA) and the Freight & Trade Alliance (FTA) have raised the following concerns direct with DPWA:

• In response to why empty containers are exempt from paying the surcharge, APSA and FTA have been advised by DPWA that they are recovering an infrastructure levy on empty containers through separate commercial agreements with shipping lines and that all new empty container handling agreements will include an infrastructure levy recovery.
• While APSA and FTA appreciate DPWA has experienced a substantial rise in operating costs through the port rent increase and the need for enhanced stevedoring equipment, no transparency has been provided on costs being recovered DPWA.
• APSA and FTA maintain the position that operating costs should be absorbed by the stevedore or passed on to their contracted client, being the shipping line. Shipping lines can then negotiate with shippers and freight forwarders on a normal commercial basis.  Shippers and freight forwarders do not have direct contractual relationships with the stevedores and therefore have no bargaining power to negotiate service or price.
• DPWA have justified the cost recovery against the Vehicle Booking Systems and rail operators stating the landside operators will be the beneficiaries of landside efficiencies. Transport operators will now be forced to pay for access to receive and deliver containers yet are denied a corresponding service level agreement.

While a commitment has been given to work with DPWA to explore ongoing operational and commercial reforms, APSA and FTA have engaged with the Australian Competition and Consumer Commission (ACCC) and have submitted a joint formal submission requesting a formal investigation.

There is no doubt, competing stevedores are watching this unfold with interest. Unless the competition regulator takes appropriate action, it is likely that others will follow the leader.

Paul Zalai is an advocate for the Australian Freight and Trade sectors
www.FTAlliance.com.au