ACCC shines spotlight on stevedoring charges

In recent years there has been a heightened sensitivity of price rises involving land-side access to Australian container terminals.

In 2017, the ACCC publicly indicated that it had received complaints about escalating stevedoring infrastructure charges and that it would investigate them in the context of its annual price monitoring report.

The stevedores claim the increasing infrastructure are associated with a ‘rebalancing’ of their charges and reflect increases in property-related costs together with the significant investments being made in improving landside terminal facilities.  Evidence that the overall profit margins for stevedores have not been increasing appears to support these claims.

In its 2017-18 container stevedoring monitoring report, the ACCC concluded that the increasing levies did not represent a breach of the Competition and Consumer Act 2010.[1]  However, the ACCC considered that the potential for infrastructure charges to rise without constraint was a significant concern.  The ACCC also indicated that it was limited in its ability to address these concerns other than through continued scrutiny through its monitoring program. It did however note that the economic regulation of stevedores and ports more generally rests with state governments, and if warranted, may require a regulatory response.

ACCC container stevedoring monitoring report 2018-19

In its latest annual report for 2018-19, the ACCC continued to scrutinise these charges, noting that its views on the impact of the infrastructure charges remained the same as those reported in its earlier report.  The latest ACCC report commented that:

• While the continued increases in infrastructure charges are of concern and worthy of consideration by policy makers, the ACCC does not have the power to determine stevedores’ charges and many of the key issues are beyond the scope of the ACCC’s monitoring mandate;
• It is understandable that stevedores seek to recover some costs of upgrading port facilities from transport operators because they, like the shipping lines, benefit from the investment;
• The infrastructure charges currently do not appear to substantially lessen competition in a market;
• The economic regulation of stevedores and ports more generally rests with state governments.

Where to from here?

There are sound economic arguments as to why regulation is not warranted in relation to these charges.  In particular:

• as acknowledged by the ACCC, stevedores operate in a competitive environment, particularly in the east coast ports. In this context, it cannot be said that stevedores hold market power;
• ultimately it is the shipper and not the transport operators that pays the cost, no matter who gets the bill in the first instance, and shippers will select their shipping line having regard to all costs (including landside transport levies);
• terminal charges comprise only a very small proportion of the total supply chain costs faced by shippers, and total supply chain costs have generally fallen significantly over the period since infrastructure charges have been introduced; and
• regulatory intervention is not cost free. The two most important consequences are:
  • the potential for a chilling effect on investment; and
  • encouraging inappropriate trade-offs between price and service quality.

However, on the same day that the ACCC released its stevedoring report, DP World announced further price increases its infrastructure levies in Fremantle, Melbourne, Sydney and Brisbane, and Hutchison Ports increased its levy in Sydney.  This is likely to further intensify calls by transport operators for regulatory intervention.

In this context, the Victorian Government’s current assessment of options for the future role of Government in regulating pricing/charges, and access to and from the Port of Melbourne is important.  This is the first instance where a Government has sought to directly address the competing concerns of stevedores and land transport operators.  The outcome of the Review is yet to be released.

Download the report from the ACCC website

[1]     ACCC (2018), Container stevedoring monitoring report 2017-18, p.24-25