The Australian Competition and Consumer Commission has released the 14th annual container stevedoring monitoring report.
“Australian stevedoring has dramatically lifted its performance since the 1990’s. Now, increased competition can provide the spur for even higher levels of efficiency and service,” ACCC Chairman Rod Sims said.
Reforms to the Australian stevedoring industry in the late 1990’s mean that the industry has been well placed to meet the strong growth in container throughput at Australia’s ports. Both the equipment and the workforce have become more productive, which has led to a fall in the average cost of handling containers. As a result, shipping lines now receive a better service and face lower real stevedoring charges.
Since 1998, the stevedores have increased the efficiency of their operations, and as a result real unit costs have fallen by 45 per cent. Much of this cost saving has been passed on to shipping lines, with unit revenues (a proxy for stevedoring prices) falling by 38 per cent over the same period.
The stevedores’ productivity has also improved over the last 14 years, with cranes moving 30.1 containers per hour in June 2012 compared to 18.7 in June 1998.
Similarly, the productivity of the stevedores’ work-forces has improved considerably over the last decade. However, in 2011-12, industrial disputes, including strike action and reported ‘go-slow’ strategies, disrupted stevedoring performance. If this sort of disruption were to continue, it could undermine expected future gains from greater capacity and competition. Negotiation of new enterprise agreements across several terminals during 2011-12 also coincided with significantly higher labour costs, which increased by 7.5 per cent, the highest annual percentage rise (in nominal terms) in the history of the ACCC’s monitoring program.
Persistently high returns (23 per cent on average over the last decade) have previously led the ACCC to question the intensity of competition in the industry. The addition of capacity at most ports and the entry of a new stevedore, Hutchison Port Holdings, in Brisbane and Sydney next year are both important developments for promoting heightened competition.
“The arrival of a new stevedore in 2013 heralds the next wave of reform in Australian stevedoring, one in which greater competition can drive investment and service levels,” Mr Sims said.
In the lead up to new entry, the ACCC reminds the stevedores of their responsibilities under the Competition and Consumer Act 2010.
“Existing stevedores should be careful not to use their position to unfairly hinder a new entrant from establishing itself. Where there is any evidence of this occurring, the ACCC will use its powers to investigate and, if necessary, take enforcement action through the courts,” Mr Sims said.
The ACCC has monitored stevedoring services at six Australian container ports since 1999. Container stevedoring involves lifting containers on and off ships. Patrick and DP World operate at four of the monitored ports, Brisbane, Fremantle, Melbourne and Sydney. Flinders Ports is the sole operator at the Port of Adelaide. At the remaining monitored Port of Burnie, no container stevedoring services are currently provided (Patrick exited its operations in May 2011).