Melbourne fee freeze only part of the solution

27 May 2015
Fees at the Port of Melbourne will remain at 2014-15 levels

Fees at the Port of Melbourne will remain at 2014-15 levels

A fee freeze has been imposed by the Victorian government for the Port of Melbourne, but the Australian Logistics Council (ALC) says the outstanding issue of proposed rents to be charged at the port still needs to be resolved.

Following a ruling by the Victorian government, fees at the Port of Melbourne will remain at 2014-15 levels or increase only by CPI. But, ACL says from a logistics industry perspective, proposed rental increases is the big issue that will impact on the future competitiveness of the Port of Melbourne.

This comes after the port announced a 750% rental increase for DP World’s Melbourne terminal. Rental costs were set to rise from $15 per sq metre to $120 per sq metre. Following this, DP World lodged Freedom of Information applications with the Victorian Government seeking access to documents relating to the proposal.

“The excessive rents proposed remains an ongoing issue, and if not resolved sensibly, will have a detrimental impact across the supply chain,” said Michael Kilgariff, managing director, ALC. “Significant increases to port rents will push up the price for users of the port, costs will be passed on to consumers and make it harder for local manufacturers to compete.”

DPWA has expressed concerns in the past that higher rents could have significant impacts on the Victorian and Tasmanian economies as the cost of moving a container through Melbourne would significantly increase.

But, Port of Melbourne Corporation (PoMC) says these "modest pricing adjustments" will encourage supply chain efficiency, particularly international containerised exports, and recognises the industry feedback it received from its customers who highlighted supply chain cost pressures. 

“Notwithstanding the significant costs of ongoing infrastructure delivery, including the major redevelopment of Webb Dock to accommodate future trade demands, we have delivered a prudent outcome which reflects a cost competitive port and our role in Australia’s freight and logistics capital," concluded Nick Easy, CEO, PoMC.

In relation to the legislation tabled in Parliament, Mr Kilgariff added that ALC supports asset recycling where it is in the community’s long term economic interests.

“ALC supports the long term lease of the Port of Melbourne, including the Government’s plans to offer a 50-year lease for the port as well as its proposal for the Victorian Essential Services Commission to provide regulatory oversight - both of which are sensible policy propositions.” 

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