News / Australian shipper raps hiked port fees for containers and eyes bulk transport

12/11/2019

One of Australia’s largest agricultural shippers has lashed out at “rapid increases” to port infrastructure fees levied by the country’s terminal operators.

Last week, a report by the Australian Competition and Consumer Commission (ACCC) revealed how the country’s stevedores are using the controversial charges to offset declining volumes and quayside revenue.

As a group, DP World Australia (DPWA), Patrick, Victoria International Container Terminal (VICT) and Hutchison Ports, increased average revenue per box for the first time in seven years during 2018-19, with the total revenue generated from infrastructure charges jumping 63% to A$167m (US$144m).

According to Roger Fletcher, chief executive of New South Wales-based grain and meat trader Fletcher International Exports (FIE), the charges are eroding margins and damaging the competitiveness of Australian famers.

In a letter to the Freight & Trade Alliance (FTA), he said: “The recently introduced infrastructure levies are a direct charge to terminal users for every loaded container inbound or outbound from the port. Users must pay or lose the ability to deliver and pick up from each terminal.”

Located in Dubbo, around 400km north-west of Sydney, FIE ships over 23,000 full containers every year from Port Botany. Mr Fletcher said the port’s likely average infrastructure charge from January would be more than A$77.20 per laden box – from just A$21.16 when the charge was first introduced in April 2017 by DPWA.

According to local media, FIE owns three rail locomotives and 62 wagons to transport grain to the port in containers. However, with the surcharges now amounting to $3.15/mt of grain per container, Mr Fletcher said FIE was “at a significant disadvantage to bulk vessels, forcing the business to consider bulk alternatives.”

“This reduction in margin is inevitably passed back down the supply chain to the farmer through lower paddock prices for their grain,” he added.

“For FIE’s NSW business alone, the infrastructure levy equates to a whopping A$1,775,600, paid annually, ultimately creating the equivalent void back within regional farming communities.”

The terminal operators argue the charges are necessary due to rising costs and to recoup investments made in vital upgrades to port equipment and infrastructure.

“Initially the infrastructure fee was introduced and announced as being caused by rising rents — NSW Ports has confirmed rents have actually decreased,” countered Mr Fletcher.

Furthermore, he claimed the port’s performance had not improved since the fees were introduced and increased multiple times.

He noted the additional terminal competition in Sydney, with the arrival of Hutchison, caused the stevedores to lower vessel handling rates to maintain shipping line volumes.

“The cut throat pricing on vessel servicing fees has been captured by shipping lines, but not passed back to importers or exporters at all. It has been absorbed as shipping line revenue,” Mr Fletcher said.

The increased competition, he said, meant the stevedores signed breakeven deals with shipping lines which they now have to honour.

“Since there is no regulation, there is no telling where this new revenue stream for the stevedores will end…Certain stevedore parties are now using the fee as a business growth strategy.

“It is critical we remain competitive across the world and back to farmers, taking control of our costs to market, and not be taken advantage of by large shipping lines or stevedoring companies,” said Mr Fletcher.