When an importer’s landed costings keep increasing, there are only two choices: pass the increases on to your end customer by imposing price hikes, or try to absorb them and allow these costs to erode your profits. Last year, stevedoring profits rose for the fifth year in a row, reaching historical highs across most metrics measured by the Australian Competition and Consumer Commission (ACCC).
Stevedore Access Charges are fees paid by land transport operators (trucking companies) to stevedores (port operators) for the right to pick up or drop off containers at terminals. A few large stevedores—including Patrick, DP World, and VICT—control the market, leading to limited competition and pricing power.
The ACCC released its annual Container Stevedoring Monitoring Report last month, showing that Australia’s stevedores are charging record high prices and making historic profits, despite having significant spare capacity in ports and with their costs and productivity remaining relatively stable in recent years.
Stevedores are now charging a higher total price per container, in real terms, than at any time since the ACCC began monitoring the container stevedoring industry 27 years ago. The report concludes that a Government policy or regulatory response is likely required to address apparent market failures and improve Australia’s container freight supply chain to the benefit of households and businesses.
Container stevedoring involves lifting containers on and off ships. The ACCC currently monitors the prices, costs and profits of container stevedores at five Australian container ports: Adelaide, Brisbane, Fremantle, Melbourne and Sydney.
Stevedores levy fixed charges, including Terminal Access Charges and Vehicle Booking fees, on transport operators for every laden container that transport operators collect from, or drop off at, stevedores’ terminals. Stevedores also levy a range of incentive-based and ancillary charges on transport operators.
These fixed and incentive-based charges are collectively known as Landside Services, which cover the loading and unloading of containers on and off trucks and rail wagons at container parks. They are separate—and additional to– Quayside Services, which cover the actual loading and unloading of a vessel.
The report also compares the profitability of the stevedoring industry with other companies in the transportation and industrials sectors. It shows the stevedoring industry’s profitability last year was higher than the transportation sector across all metrics the ACCC used, and higher than the industrials sector across most metrics.
“These are very high short run returns for an industry with significant spare capacity at ports, stable costs and stable productivity,” ACCC Commissioner Anna Brakey said. “The stevedoring industry began to significantly increase terminal access charges in 2017 and since then they’ve collected over $3 billion in Terminal Access Charges.”
Targeted reform is likely needed to ensure there are effective competitive constraints on stevedores to support the supply chain. Without it, Australian businesses and households will ultimately pay the price through higher costs.
The ACCC report sums up the Impact: These rising landside charges add significant, often non-negotiable costs to the supply chain, hurting Australian businesses and households.
At Colless Young, we are always looking for ways to help you minimise your shipping costs. Talk to us for a detailed analysis of your landed costings, and we will work with you to find ways to make the system work in your favour and improve your margins. For complete information, call us any time – ask for Andrew on +61 7 3890 0800 or email enq@collessyoung.com.au .
