The Australian Competition and Consumer Commission’s 2015-16 Container Stevedoring Monitoring Report has found that increased competition in container stevedoring has pushed prices to their lowest level in seventeen years.
“Australia’s container stevedoring industry is experiencing a period of increased competition and investment in infrastructure,” ACCC Chairman Rod Sims said.
“Increased competition has pushed average stevedoring prices to their lowest levels since monitoring commenced in 1998-99. Increasing competition between stevedores should deliver cheaper imports and lower costs for exporters and will see benefits flow through the whole economy.”
New entrant Hutchison Ports Australia has established new terminals in Brisbane and Sydney while the incumbent stevedores (Patrick and DP World) have been upgrading and expanding the capacity of terminals as well as investing in automation and cranes.
Competition will also be further enhanced at the Port of Melbourne when Victoria International Container Terminal (VICT) launches Australia’s first fully automated terminal in late 2016. VICT also has the potential to service larger container ships which could substantially increase the capacity of the Port of Melbourne.
In 2015-16 average stevedoring prices for the industry fell in real terms and are now at the lowest level since monitoring commenced in 1998-99. This reflects increasing competition between stevedores as they attempt to retain and/or win new shipping line customers.
Industry margins and rate of return on assets are also at the lowest level recorded by the monitoring program. Productivity on the wharves has remained largely unchanged at close to record levels.
“However, there continue to be challenges for new entrants. Hutchison has been operational since 2013 but is yet to attract adequate market share to match its investment in the industry. It is also possible that VICT may face some issues in establishing itself when it commences operations at the Port of Melbourne at the end of 2016,” Mr Sims said.
The report notes that as a result of substantial investments by new entrants there is now infrastructure in place to support a third stevedore in each of the three largest container ports in Australia. This infrastructure will provide additional choice to shipping lines now and in the future.
The report also notes that productivity levels at Australia’s container ports remained strong.
“In 2015-16 labour productivity reached a record level while capital productivity declined slightly from its peak last year.” Mr Sims said
The ACCC’s report is available at Container stevedoring monitoring report 2015-16.
Background
The ACCC has monitored the container stevedoring industry since 1998-99 under a direction from the Australian Government. Container stevedoring involves lifting containers on and off ships. The ACCC currently monitor the prices, costs and profits of container stevedores at five Australian container ports. Patrick and DP World operate at the four largest ports—Brisbane, Fremantle, Melbourne and Sydney. Hutchison operates in Brisbane and Sydney.
The ACCC also monitors Flinders Adelaide Container Terminal Pty Ltd as the sole operator at the Port of Adelaide.
New operator VICT is scheduled to commence operation in Melbourne by the end of 2016.
