Lloyds List Australia - Patrick follows the DP World lead on surcharges – will no regulator intervene?

Source: https://www.lloydslistaustralia.com.au/lla/blogs/paul-zalai/INDUSTRY-OPINION-Patrick-follows-the-DP-World-lead-on-surcharges-%E2%80%93-will-no-regulator-intervene-557610.html

Photo: Freight & Trade Alliance

INDUSTRY OPINION:

PERHAPS saying that our regulators have no desire to support the sector is too harsh. Preliminary indications are that regulators simply do not have the power to intervene. If that turns out to be the case, then laws must be introduced to protect our important sector of commerce.

Following the recent introduction of a similar surcharge by DP World, this charging regime by Patrick comes as no surprise. While there is absolutely no suggestion of collusion between the stevedores, it is another case of "follow the leader".

Cargo owners cannot exercise market power as some interested parties would have you think. Exporters, importers and freight forwarders, have limited power in deciding which stevedore a vessel calls at, particularly given that some shipping lines have entered into mid-term agreements with stevedores.

Introducing surcharges on transport operators is clearly unfair as there are no means of negotiation or parallel service agreements. Furthermore, transport operators are understandably now introducing a surcharge to administer the stevedore surcharge. The net result is that cascading costs are being passed down the supply chain.

The Australian Peak Shippers Association (APSA), Freight & Trade Alliance (FTA) and the Container Transport Alliance of Australia (CTAA) have led the case to the Australian Competition and Consumer Commission (ACCC) requesting a formal investigation of the DP World charging regime. We will now give the ACCC the latest on Patrick to add to their deliberations.

We also note and commend the action by Road Freight New South Wales in bringing the matter to the attention of the NSW state government. We trust that other trade bodies will also use their influence to address the unfair charging regime rather giving tacit support to the stevedores.  

The position from APSA and FTA remains that stevedores should either absorb operating costs or pass these onto their commercial client, being the shipping line. Should the shipping line then opt to pass on this cost, then that that can be negotiated on a commercial basis between themselves and their client importer, exporter or freight forwarder.

Perhaps the best and simplest outcome would be for the regulators to somehow enforce this model. If this could be achieved, then they could leave the rest to market forces to sort out pricing.

HAVE YOUR SAY

The DP World charging regime, and the anticipated position that Patrick would follow, was also referred last week to government representatives as a part of APSA giving evidence to the "Federal Inquiry into Freight and Supply Chain Priorities".

Please note that a similar opportunity exists for FTA members to participate in this process this coming Thursday, 16 June 2017 (2.30pm to 3.30pm) – we encourage members and Lloyds List Australia readers to register for our free interactive webinar by clicking HERE.

While we await outcomes from the Inquiry and the ACCC, APSA and FTA will now also escalate concerns to the relevant ministers, the opposition and media.

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