As a part of our ongoing advocacy for a Federal Government commissioned review of international shipping, Freight & Trade Alliance (FTA) and the Australian Peak Shippers Association (APSA) have been working collaboratively amongst a group of thirty (30) industry bodies representing businesses adversely impacted by the worsening shipping crisis.
The collective group wrote to The Hon. Josh Frydenberg MP Treasurer yesterday (27 October 2021) providing a suggested 'Terms of Reference' as a part of a request for the commissioning of a formal review of both air and maritime logistics systems.
In parallel, a representative group of FTA/APSA members also met yesterday with Treasury officials.
While extensive reference was made to the ongoing waterfront industrial relations matters and our direct engagement with the Attorney-General and departmental representatives, the primary focus of the meeting centred on the following reforms that should be led by the Federal Government as an essential element in driving Australia's economic recovery.
COMPETITION REFORM - FTA/APSA does not see a role in the 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, FTA/APSA appreciate the need for ongoing vessel sharing arrangements as larger vessels are deployed to provide economies of scale and potential cost efficiencies.
- FTA/APSA do however note the 2015 Australian Competition Policy Review (Harper Inquiry) that found that Part X is outdated and unnecessary – the inquiry suggested the Australian Competition and Consumer Commission (ACCC) introduce a narrower 'class exemption' as a first step to its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
- FTA/APSA 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 the FTA/APSA 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.
- FTA/APSA 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.
- FT/APSA 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.
FTA/APSA will keep members up to date on pertinent developments as we continue our relentless advocacy campaign for shipping reform via ongoing submissions, engagement with industry peers, government liaison and our high profile coverage in mainstream media.
Paul Zalai - Director FTA | Secretariat APSA | Director GSF |