The ACCC is required by the Federal Government to monitor prices, costs and profits of the container stevedores at all Australian container ports.
The ACCC Report provides information about the operating performance of the container stevedores, as well as the level of competition, investment and productivity in the industry.
It also explores issues affecting the broader supply chain, including road and rail connections to container terminals.
Notable Observations:
On average across the stevedores, total revenue per TEU fell by 2%, due to increased stevedoring competition on the east coast; the increasing use of 40′ containers rather than 20′ containers; and greater bargaining power of consolidated shipping lines.
However, the combined operating profit margin (EBITA/revenue) of the stevedores rose 4% in 2016-17 to 17.1% (with the profitability of DP World, Patrick and Flinders Adelaide being significantly higher than Hutchison).
Unit stevedoring revenue fell by 4.5% to $138.8 per TEU. This decline was offset by a 2% increase in non-stevedoring revenue which now accounts for some 18% of overall revenue.
Non-stevedoring revenue has become an increasingly important source of income for the stevedores – increasing by 14.9% per TEU in the past ten years, in contrast to a 25.2% decline in unit stevedoring revenue over the same period.
VBS revenue increased by 12.2% in 2016-17 / Storage revenue rose 16.9% in 2016-17.
Revenue from non-stevedoring activities is likely to rise dramatically with the implementation of new and increased Infrastructure Charges by DP World and Patrick in Melbourne, Sydney, Brisbane & Fremantle.
It is estimated that the new Infrastructure Charges will gross DP World and Patrick some $70 million per annum, which is equivalent to a 5% to 6% increase in unit revenues.
While a justification by the stevedores for the implementation / increase in Infrastructure Charges was increasing costs, the ACCC has noted that overall unit costs for DP World and Patrick are stable. The ACCC has noted however that the stevedores have faced, or are anticipated to face, higher property prices, government taxes and rates.
The ACCC has noted that it would appear that the stevedores are restructuring their revenues away from the shipping lines and towards to transport sector.
The ACCC has expressed concern that transport operators are “limited in being able to switch stevedores in response to higher prices.”
Shipping lines may now be receiving subsidised stevedoring services as a result of the Infrastructure Charges, with the ACCC noting that “it is possible that the revenues being collected from the transport operators are simply replacing revenues that used to be collected from shipping lines.”
The ACCC has indicated that it will fully examine the impact of the Infrastructure Charges in future monitoring Reports, and will be interested to see whether the stevedores will be able to demonstrate clear infrastructure improvements for transport operators above and beyond business-as-usual capital works.
The lion’s share of identified future terminal investment by DP World and Patrick in 2017-18 are for quay cranes, which will benefit the waterside, rather than landside operations.
Reference: Container Transport Alliance Australia, http://mailchi.mp/6a132b95d9ea/accc-container-stevedoring-monitoring-report-2016-17-ctaa-observations
