Port operators accused of price-gouging, ACCC boss Rod Sims unhappy with them
Competition regulator Rod Sims has taken aim at Australia’s stevedoring industry by launching an investigation into alleged price gouging by port operators as the global supply chain crunch worsens.
The Australian Competition and Consumer Commission chairman told The Business program that the regulator is investigating if anti-competitive conduct by port operators has led to price rises in the container transport industry.
“We have a narrowly focused investigation as to whether there is a breach of competition laws in relation to containers,” Mr Sims said.
“Is there a breach? Is there not a breach? And we’ll get to the bottom of that.”
Mr Sims said the wider issue of shipping and freight costs would be looked at in more detail in the ACCC’s annual stevedoring monitoring report, which will be released in November.
“We’re going to look at to what extent this is a structural problem — due to the fact that you’ve got concentration in shipping, which has occurred a lot — or to what extent is it a short-term issue, due to the spikes in demand as people consume more goods and less services as COVID-19 interrupts the supply chain,” he told The Business.
A handful of companies run the nation’s ports, including Patrick Terminals (50 per cent owned by logistics giant Qube), DP World Australia, Hutchinson Ports, Flinders Adelaide and Victoria International Container Terminal.
The Container Transport Alliance says the average fee to unload an import container at a port in New South Wales has jumped by fivefold over the past four years, from nearly $25 per container in 2017 to $125 this year.
However, the port operators have long denied they are price-gouging.
The higher stevedore charges add to the dramatic surge in global shipping costs, to the highest on record.
Shipping fees have jumped amid a global supply chain squeeze caused by a rebound in demand for products after COVID-19 shutdowns, and pandemic outbreaks that have crippled the world’s ports.
Record shipping costs
The cost of hiring a shipping container to transport imports and exports is also the highest on record.
Last week, the spot price for a 40-foot import container from Shanghai in China to Rotterdam in The Netherlands, the world’s most expensive shipping route, soared to $US14,287 ($19,405) per container according to the Drewry World Container Index.
That’s a rise of 564 per cent over the past year.
Some retailers say they have been forced to pass on price rises to customers.
The Australian Retailers Association’s chief executive, Paul Zahra, told the ABC the high cost of shipping products added to the challenges faced by retailers.
“Shipping costs have quadrupled in the last year, during the course of the pandemic, and most Australian retailers who are doing their best not to pass these costs on to consumers in the short term are seeing their margins heavily squeezed,” Mr Zahra said.
“This is happening at a time when most retailers have already been decimated by the lockdowns and additional COVID-safe cost imposts. This is clearly not sustainable and something needs to change.”
Paul Zalai runs the Freight and Trade Alliance which represents importers and exporters.
He welcomed the ACCC investigation and said the Alliance had been working with the regulator on shipping competition reforms.
“We look forward to hearing further details of the scope of the review but it’s a very good signal.”
“The stevedore charges are impacting importers and exporters by hundreds of millions of dollars a year,” he said.
He said stevedore charges had gone up by around one fifth over the past year on “already high fees” and fees charged by the shipping companies were triple what importers had traditionally paid.
The ACCC’s last Container Stevedoring Monitoring report found revenue and profit margins rose over 2019–20 for port operators, despite the global pandemic causing the largest contraction in container volumes in a decade, mainly because stevedores increased their port access charges.
Overall revenue for the stevedoring industry rose to $1.4 billion, the highest in 10 years.
Revenue from fees charged to transport firms rose by half, compared to 2018–19.
The transport industry — including the Transport Workers Union — has called for port access fees to be regulated and for a Senate inquiry into what the TWU secretary Michael Kaine has called “supply chain bullying”.
The National Transport Commission is developing voluntary national guidelines for port access charges.