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The introduction of private operators to some ports in NSW and Queensland and stepped-up competition among stevedores has to date failed to bring much downward pressure on port charges.
In fact, shipping lines say high levels of bureaucracy, high wages and monopoly port structures help make Australia one of the most expensive placesintheworldtomovecargo.
Rod Nairn , chief executive of industry group Shipping Australia, says state governments are adding to the costs by bringing in port access and infrastructure levies on cargomovements.
Australia’s major ports apply complex and multi-charge pricing structures. “It’s a very complicated web of fees for different services,” Nairn says. “Some of them are government-driven, some of them are private-port-driven and then there are stevedoring and infrastructurecharges.”
Nairn says the Port of Melbourne charges container customers a “channel deepening” charge on top of standardwharfagefees.
“You have to add that on top. Every port charges differently: they are hard to compare and there is no real competition.”
He says there is little competition between Australia’s ports because they are geographically separated by great distances.
The major capital city ports are 700 or more kilometres apart from each other. By contrast, in southeast England, there are five container ports within 160 kilometres of one another. These ports, including Southampton, London and Tilbury, have to drive down their charges and become more efficientortheylosebusiness.
Nicolaj Noes ,the managingdirector, Australia and Papua New Guinea for Maersk Line, says Australian ports operate out of monopoly structures, regardless of whether they are privately managed or run by a government owned corporation.
“There is only one viable port in Victoria, there is one viable port in New South Wales and one in Queensland, so there is no competition on the port infrastructure side of things,”he says.
“That is clearly reflected in the prices. And it is reflected in the fact that for the last 20 years the cost you pay to the port for using their assets has only gone up.
“While there have been deflationary pressures on almost all other elements of the logistics chain – whether it is the ocean freight that we provide or the terminal cost – the port expenses go up every year.It seems to beimpossible for the port operator to deliver any kind of productivity improvement.”
Noes says this is a unique situation. Australian port operators manage assets that have almost guaranteed growth every single year, he says, but they cannot deliver productivity gains on a unit cost basis at any point in time.
Analyst group IBISWorld says 947.9 million tonnes of cargo were exported by sea from Australia in 2012-13, up from 664.7 million tonnes five years ago.
Much of this growth was due to the mining boom, driven by new production in Western Australia which, according to a recent IBIS World report, is now responsible for 52 percent of volume. In 2011-12, New South Wales, Queensland and Western Australia were responsible for 93 per cent of exports by mass.
“Containerised exports have seen little growth since 2007-08, increasing from 30.3 to 33.6 million tonnes,” the report notes.
“Australia’s high wages have caused a decline in the manufacturing sector which is responsible for the weak growth seen in containerised exports.”
Denmark-based Maersk Line transports containers all over the globe and has a fleet of more than 550 ships.
Noes says Australia is one of the top three most expensive locations to export from, in terms of port and stevedoring charges.
“It goes into the price that an exporter has to pay, and it is impacting on their competitiveness compared to their counterparts in South Africa or South America.
“On the other hand, [port charges] arestilljustoneelementoftheprocess.”
He says although macro-economic factors, such as falling currency exchange rates, do impact on exporter demand for shipping services, weather events have an even bigger impact.
“The weather impact on a lot of the key commodities that we export from Australia is overriding the macro elements,”hesays.
“At the moment we are seeing strong growth in meat shipments because there is a drought in northern Queensland that is pushing more cattle totheabattoirs.”
“We are also having a better grain harvest this year compared to last year… You can look at macro elements but often it’s the weather that is the biggestdeterminantofcargodemand.”
IBISWorld expects the mass of exports that leave Australia by sea to increase by 5.9 per cent in 2013-14 to 1004.0milliontonnes.
Investments made in new mining infrastructure over previous years will be responsible for the vast majority of this growth, but containerised exports are expected to continue to grow in line withGDPgrowthrates.
According to Nairn, automation is the biggest driver of lower stevedoringcosts.
He says stevedores have become more efficient and price-competitive in thelastfewyears.
“Their box lift rates have gone up,” Nairn explains. “They can probably go up further with the introduction of more automation – the three-stevedore competition in Brisbane and the Port of Botany is bound to be good for pricecompetitiveness.
“But I know that the stevedores are prettysqueezedbecausetheyinvesteda lotintoautomation.”
The decision by major car makers to stop making vehicles in Australia is set to hit exports by local car manufacturingcomponentmakers.
“Whilst the component makers had a local market to feed into, they could still have enough volume to be pricecompetitiveoverseas,”Nairnsays.
“If they lose their local market, they may not have enough volume to export overseasatacompetitiveprice.”