The Australian Competition and Consumer Commission today issued its seventh report* covering prices, costs and profitability of container terminal operations in Australia's major ports.
The report shows a change in the trend of unit revenues, costs and productivity growth from previous periods. Following a pattern of declining real unit revenue and costs and increasing productivity since the mid-eighties, unit revenues and costs are now increasing and productivity growth is flattening out.
As with 2003-04, higher revenues were mostly derived from ancillary services, in particular container storage. Over the past three years, average storage revenues have increased significantly. Slightly higher rates in the core businesses of stevedoring - the loading and unloading containers from vessels - have also contributed to higher revenues.
Higher unit costs were mainly a result of higher labour and equipment costs.
"Results for 2004-05 appear to confirm the break in the previously established trend of falling average revenues and costs", ACCC Chairman, Mr Graeme Samuel, said today.
"Also for the first time since the ACCC began monitoring, productivity growth appeared to slow down in 2004-05"
Information provided by stevedores indicates that in 2004-05 the industry is investing in new assets.
The report shows that profitability in 2004-05 remained at historically high levels. Average rate of return on assets in 2004-05 was almost 26 per cent. This compares with an average rate of return** on assets for the top 200 companies on the Australian Stock Exchange of around 9 per cent. The stevedores have reported an average rate of return on assets in the past five years of almost 23 per cent per annum.
"If competition in Australian container stevedoring were effective, then such rates of return would be unlikely to persist. The report poses several questions about the competitive environment at Australia's major container ports".
The ACCC report notes also that while a number of parties had expressed interest in establishing a third stevedoring operation, entry into the industry remains difficult.
"It is important that institutional arrangements facilitate the most efficient industry outcome possible and not inhibit efficient entry or protect stevedores from competition. These issues need to be assessed more closely".
*The Container Stevedoring Monitoring Report No. 7 can be obtained from the ACCC's Melbourne or Canberra offices on (03) 9290 1800 or (02) 6243 1143. Alternatively the report is linked below.
** Measured by earnings before interest and tax.