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Stevedoring costs for carriers fall, yet haulage prices rise: Canberra

STEVEDORING costs for international shipping lines are declining, yet local port haulage companies are burdened with additional unavoidable costs, according to the Australian Competition and Consumer Commission's (ACCC) annual Container Stevedoring Monitoring Report.

The report states that stevedores reported unit revenues in 2016-17 decreased, however, their operating profits per TEU increased 25 per cent over the same period, reported Brisbane's Australasian Transport News.

"Revenue per TEU, a proxy for price, continued to fall across the industry in 2016-17. Total revenue fell two per cent to A$170 (US$130) per TEU, while stevedoring revenue fell 4.5 per cent to A$138.8 per TEU," said the ACCC report.

"This has continued a very consistent trend as unit stevedoring revenue is about a quarter less than a decade ago in real terms." This was partly due to competition and the accompanying expansion in capacity at some ports, the report notes.

"However, this also reflects newly merged shipping lines wielding greater bargaining power, the increasing use of the larger 40-foot containers, and falling unit costs over time due to higher productivity."

The stevedoring industry's profit margins, as measured by earnings before interest, tax and amortisation (EBITA) over total revenue, rose by four percentage points to 17.1 per cent in 2016-17 owing to a 6.3 per cent decline in overall costs.

Reductions in costs were mainly attributed to higher economies of scale and lower overhead expenses by stevedores, particularly Hutchison Ports Australia (HPA).

As for DP World and Patrick, they have either introduced or substantially increased "infrastructure charges" at a number of container terminals this year. The charges apply to truck or rail operators dropping off or collecting laden containers.

"It is estimated that they could earn, DP World and Patrick, a combined A$70 million in revenues, which would be equivalent to a five to six per cent increase in unit revenues," the ACCC said.

"There is merit to the stevedores?claims that property costs are increasing. However, overall unit costs for both stevedores remain stable.

"The ACCC will be interested to see what benefits will flow to truck and rail operators as a result of the associated investment."

The ACCC sees a key reason for the charges is for the stevedores to restructure their revenues away from their shipping line customers, and towards the transport sector.

"It remains to be seen how this may impact transport operators, although it is concerning that the nature of the port supply chain means they are limited in being able to switch stevedores in response to higher prices," the report observed.

However, stevedore DP World Australia's (DPWA) take on the situation varies significantly from the competition watchdog's view. For DPWA, the report only partially explains the cost pressures in the industry and the nature of the highly competitive market the company operates in.