STEVEDORES’ operating profits per twenty-foot equivalent unit (TEU) have risen by 25.7 per cent in 2016/17, according to the Australian Competition and Consumer Commission’s (ACCC) annual Container Stevedoring Monitoring Report.

The report said further growth was likely to be tempered by increased competition levels because three stevedoring companies were now operating at Australia’s three largest container ports.

“Competition has significantly increased in recent years with the introduction of a third stevedore in Sydney and Brisbane, and now we can add Melbourne to that list,” ACCC chairman, Rod Sims, said.

“As such, we expect to see greater levels of price competition as new entrants and incumbents compete for market share.

“Stevedores will need to work harder to win or retain their customers, with benefits flowing through to shipping lines, importers, and exporters.”

Major players

The report stated DP World’s container volume at 3.22 million TEUs was Australia’s largest in 2016/17, despite a 0.3pc drop over the period.

Patrick at 3.15m TEUs, up 0.9pc, was a close second.

Hutchison’s volume at 420,000 TEUs was up 116.2pc from the 2015/16 period, while Flinders Adelaide at 400,000 TEUs rose 2.9pc over the year.

Hutchison Ports Australia is a subsidiary of the Hong Kong-based Hutchison Port Holdings, the world’s largest port operator by container volumes handled.

The report said Hutchison was yet to become an effective competitor to incumbent terminal operators in Sydney and Brisbane, with its volumes in 2016/17 accounting for 12.3pc and 9.7pc respectively of total containers handled at those ports.

Mr Sims said the industry had entered a critical period for competition.

“For sustainable competition to develop, these new entrants will need to win a commercially viable share of the market.”

Charge hike questioned

According to ACCC, DP World and Patrick recently either introduced or substantially increased “infrastructure charges” at a number of ports for transport companies collecting or dropping off containers.

Stevedores have justified this move by pointing to rising property costs and the need to fund new investment, but the ACCC said their overall costs had remained stable.

“While it is true that the stevedores are facing higher property costs, the ACCC will be interested to see whether these infrastructure charges are used to improve land-side facilities beyond business-as-usual levels.

“It is concerning that truck and rail operators face these higher charges but are limited in their ability to take their business elsewhere.”

Some organisations approached the ACCC with allegations that the new infrastructure charges may have been in contravention of provisions of the Competition and Consumer Act 2010.

Most of the concerns were that the price increases were excessive, but the Act contains no provisions to deal with excessive pricing.

Shipping lines benefit

Stevedoring revenue fell 4.5 per cent to $138.8 per TEU in 2016/17 to continue a consistent trend which has reduced unit stevedoring revenue in real terms by about one quarter in less than 10 years.

The report said shipping lines have benefited from this fall in unit revenues.

Record volume

The volume of containers passing through Australia’s ports in 2016/17 was the highest ever recorded at 7.2 million TEUs, up 3.7pc from 2015/16.

The report also found quayside productivity remained close to record levels.

However, both capital and labour productivity fell slightly.

“The stevedoring industry is not reporting the same level of productivity improvements that we have seen in previous years. With the new stevedores now in place along the east coast ports, we will be looking for this productivity growth to return in future.”

The ACCC’s report is available at Container stevedoring monitoring report 2016-17.

Source: ACCC