Port prices a ‘concern’ – Australian Financial Review

Jenny Wiggins

[States] generally have arrangements where they can step in if price increases are excessive.

Rod Sims, ACCC

Competition watchdog chairman Rod Sims has called on state governments to keep a “close eye” on newly privatised container ports amid concerns price rises will be passed on to consumers.

“There have been very high multiplespaidforsomeoftheseportsandthe worry is that the buyers may only recoup their outlays if they push up prices quite a bit more than otherwise would have happened,” Mr Sims told TheAustralianFinancialReview.

Although productivity at container ports has reached its highest levels since the Australian Competition and Consumer Commission began monitoring stevedoring in the late 1990s, the watchdog is concerned about the lack of regulatory control over ports followingtherecentwaveofprivatisations.

Sydney’s Port Botany, the Port of BrisbaneandthePortofAdelaideareall now run by private owners, while the Victorian government is pushing ahead with the privatisation of the Port of Melbourne. State governments are responsible for monitoring price increases, with each state having differentmonitoringsystems.

“[States] generally have arrangements where they can step in if price increases are excessive,”M rSims said.

But he urged states to watch privatised ports “very closely” for signs that owners were pushing up stevedores’ rents, which they subsequently pass on to consumers. “Even if you had a price increase of just a couple of per cent above the rate of inflation – which may not sound much – but if you keep doingthatover10years,yourcostshave gone up a lot more than what they otherwisewouldhave,”MrSimssaid.

Stevedores and logistics companies that move goods through ports have already raised concerns about the impactofprivatisation.

John Mullen, the chief executive of Asciano,whichownsPatrickPorts,has warned that private owners focus on extracting “maximum returns” at container terminals leading to “massive”priceincreases.

Meanwhile Maurice James, managing director of logistics group Qube Holdings, has forecast a ”significant increase” in rentals at the Port of Melbourneonceitisprivatised.

Mr Sims said state governments should also enforce access arrangements under Part IIIA of the Competition and Consumer Act to make sure port owners did not give preference to one stevedore.

In its annual container stevedoring monitoring report released on Thursday, the Australian Competition and Consumer Commission found that greater competition following the entrance of Hong Kong’s Hutchison Port Holdings into the Australian markethadhelpedboostproductivity.

The average net crane rate for Australia’s five major ports is now running at 30.8 containers an hour, compared with 19.6 containers an hour inthelate1990s.

“It’sagoodexampleofthebenefitsof reformandagoodexampleofthebenefitsofcompetition,”MrSimssaid.

Stevedores negotiating new enterprise bargaining agreements needed to include “meaningful performance benchmarks” to make sure productivity gains continued ,the ACCC said.

Patrick’s total margin rose 7.6 per cent nationally in 2013-14 but competitor DPWorld’s total margin fell 37.5 percent over the same period.