COMMENT: In March 2017, DP World Australia (DPWA) was the first to introduce a steep increase in the infrastructure charge levied at their container terminals in Australia, writes the International Cargo Handling Coordination Association’s (ICHCA) Peter van Duyn.
The charges for the delivery and receipt of full containers at the DPWA container terminals in Melbourne and Sydney were increased from A$3.50 to A$32.50 (Melbourne) and from A$0 to A$21.16 (Sydney).
These charges are paid by the transport companies that pick up import containers or deliver export containers at the terminals and on-charged (while adding an administration fee) to their clients, the importers, exporters and freight forwarders.
The rationale from DPWA was that they had incurred increased costs for the provision of utility services and invested additional capital in equipment to service the landside operation of their terminals. However, the main reason was that port owners had substantially increased the rent on leaseholds for operators within the port area, thus eroding their margin. Interestingly, the increase in rent occurred after the recent privatisation of many ports in capital cities in Australia.
In July 2017, the other major stevedore in Australia, Patrick Terminals, followed suit and increased their infrastructure charges along similar lines to DPWA.
Importers, exporters and industry associations representing transport companies all protested as they bore the brunt of the increased charges and tried to recoup the costs from their clients.
In November 2017, DPWA advised that the charges would increase to A$49.20 in Melbourne, A$38.75 in Brisbane and A$37.65 in Sydney as from January 1, 2018. Patrick Terminals again followed suit with similar new charges from March 1, 2018 in Melbourne, Brisbane and Sydney and A$7.50 charge per container in Fremantle. It is interesting to note that the lowest charge (in Fremantle) is the only capital city port - serving as Perth’s port - in Australia still in government hands.
The other three (smaller) operators, Victoria International Container Terminal Limited (VICT) Hutchinson Ports Australia (HPA) and Flinders Adelaide Container Terminal (FACT) had initially remained silent, but they have now also introduced charges for their terminals. The importers and exporters have now asked the Australian Competition and Consumer Commission to look into the legality of unilaterally introducing these charges.
There are now murmurs in Europe, where terminal operators have also seen an erosion of their margins, to follow suit and introduce similar charges.
Time will tell if competitive forces will make importers and exporters shift their business elsewhere; however, in Australia, this is unlikely as there are no real alternatives.
Peter van Duyn is director of ICHCA Australia.
