Freight & Trade Alliance (FTA) and Australian Peak Shippers Association (APSA) representatives joined industry colleagues yesterday Tuesday 7 September 2021 in a virtual 'roundtable' meeting with The Hon. Dan Tehan, Minister for Trade, Tourism and Investment.

Following a global trade outlook commentary from Michael Byrne, International Freight Coordinator General, Australian Trade and Investment Commission (Austrade), each invited attendee was given two minutes to raise their key issues and challenges relating to international shipping and logistics - importantly this time allowed representatives to put forward solutions to address those issues in the short to medium term (copy of FTA/APSA briefing below).

The Minister concluded the meeting noting industry's concerns stating matters raised warrant dialogue with parliamentary colleagues and further investigation.

In parallel, the Minister is undertaking further consultations with ports and shipping lines; maintaining a watching brief on two current hearings involving the United States Federal Maritime Commission; and awaiting analysis by the Australian Competition and Consumer Commission (ACCC) to examine whether shipping lines should continue to receive broad exemptions from the Competition and Consumer Act.

While this outcome is clearly an encouraging development, we now look forward to the commissioning and terms of reference of the formal review.

In the interim, FTA/APSA will continue its advocacy momentum to highlight the adverse economic impacts of the shipping crisis through further case studies and ongoing media coverage.

Paul Zalai - Director FTA | Secretariat APSA | Director GSF

Dear Minister – thank you for the opportunity to deliver a brief presentation.

Freight & Trade Alliance (FTA) represents 433 businesses including major importers, customs brokers, freight forwarders and logistics service providers. Since 1 January 2017 FTA has performed a contracted Secretariat role to the Australian Peak Shippers Association (APSA) supporting industry associations such as the Australian Meat Industry Council and Australian Council for Wool Exporters and Processors (who will be presenting today) and major exporting businesses (you will also be hearing from Olga Harriton as the APSA Chair and Global Logistics Manager for the Manildra Group).

As you would be aware, APSA is the designated peak shipper body granted status by the Federal Minister for Infrastructure and Transport under Part X of the Consumer & Competition Act to represent the interests of Australian shippers generally in relation to liner cargo shipping services.

Further to our meeting with you on 2 June 2021 and correspondence on 2 August 2021, the impacts of international shipping line costs and capacity constraints has further significantly deteriorated with dire results for the Australian trade sector. We note your subsequent commissioning and sharing of the economic note from the Office of the Chief Economist and the report from the Boston Consulting Group. Both paint an optimistic picture of potential long term relief with a projected balance between supply and demand in international shipping services to take effect in the years ahead. We certainly hope this is the case.

We also greatly appreciate your call for today's meeting to gain views on associated reforms to support our economic recovery with a focus on viable solutions.

Fundamental longer term reviews need to focus on port efficiencies including waterside worker IR reform – FTA/APSA promoted this view in correspondence to the Attorney-General on 16 July 2021 – we await a response and engagement on these matters

From an FTA / APSA perspective, the following short to medium terms solutions should be considered in a Federal Government-led review:

COMPETITION REFORM

We are not suggesting regulation of pricing as we need foreign owned international shipping lines to continue servicing Australia and to avoid the risk of vessel re-deployment to more lucrative markets.
Equally, we appreciate the need for ongoing vessel sharing arrangements as larger vessels are deployed to provide economies of scale and potential cost efficiencies.
We do however note the 2015 Australian Competition Policy Review (Harper Inquiry) that found that Part X is outdated and unnecessary – the inquiry suggested the Australian Competition and Consumer Commission (ACCC) introduce a narrower 'class exemption' as a first step to its repeal.
FTA / APSA see merit in this approach as outlined in a detailed submission in response to the ACCC's December 2019 discussion paper 'Proposed Class exemption for Ocean Liner Shipping' – furthermore, a focus is also required on exclusive dealings to ensure that shipping line end-to-end logistics services do not lessen competition.

In very simple terms, FTA/APSA is of the view shipping lines should compete in line with normal competition law faced by others in Australian commerce. If the government determines a need for special ongoing protections to shipping lines, it is recommended this be overseen by a federal maritime regulator with a mandate to ensure minimum shipping services are provided ensuring essential export access to market.

NOTIFICATION

As per the US, FTA/APSA recommend shipping lines should be forced to provide a minimum 30 day notice period on any freight or surcharge variation – this provides importers and exporters the opportunity to factor in costs and make commercial viability assessments
We also see merit in implementing measures similar to the current US Federal Maritime Commission review, to ensure fair and reasonable container detention practices are administered by shipping lines for the dehire (return) and handling of empty containers.

TERMINAL ACCESS CHARGES

All businesses face a dilemma of how to deal with unavoidable costs such as rent, infrastructure, labour and power. Those same businesses are then forced to either absorb costs or pass them on to their commercial clients. Similarly, stevedores and empty container parks should be forced to either absorb operating costs or pass these on to their commercial client (shipping lines). Shipping lines then have the choice to absorb costs or pass these onto shippers (exporters, importers and freight forwarders) through negotiated freight rates and associated charges.
Instead, stevedores and empty container parks are reducing fees to shipping lines and holding transport companies at ransom to pay Terminal Access Charges with no option to pay or are denied access to container collection / dispatch facilities.
As outlined in our submission to the Deputy Prime Minister in May 2020, 2019 data revealed in excess of $300 million per annum was paid in stevedore-imposed Terminal Access Charges. Taking into account substantial increases in these charges since this time, and the similar model adopted by empty container parks, shippers are conservatively paying in excess of $500 million per annum.
We have been privy to the draft National voluntary guidelines for landside stevedore charges, prepared by the National Transport Commission (NTC)
These guidelines appear to be largely modelled on the Victorian government's Voluntary Port of Melbourne Performance Model (VPPM) – to date, the Victorian experience has shown to be futile, allowing stevedores to continue rapid increases in Terminal Access Charges and in effect, giving tacit approval for this charging regime.
We see a need for a revised scope of the NTC review to consider some form of regulation to force stevedores and empty container parks to negotiate rates direct with their commercial client (shipping lines) - no further regulation on pricing would be required as shipping lines could recover this cost in commercial dealings with contracted importers, exporters and freight forwarders.

We look forward to ongoing engagement with the Federal Government and industry colleagues in progressing these important reforms.

FEDERAL GOVERNMENT SHIPPING REVIEW