The Australian Competition and Consumer Commission (ACCC) has claimed that increased competition in container stevedoring lead to the lowest prices in at least 17 years.
In its 2015-16 Container Stevedoring Monitoring Report, the ACCC reported that the average stevedoring prices in 2015-2016 hit their lowest point since monitoring started in 1998-1999.
According to ACCC, this reflects the increase in competition between stevedores “as they attempt to retain and/or win new shipping line customers”.
The report also showed that industry margins and rate of return on assets hit the lowest level ever recorded by the monitoring program, while productivity on the quays remained mostly stable at a close to record point.
ACCC’s chairman Rod Sims said: “Australia’s container stevedoring industry is experiencing a period of increased competition and investment in infrastructure.
“Increasing competition between stevedores should deliver cheaper imports and lower costs for exporters and will see benefits flow through the whole economy.”
The ACCC currently monitors prices, costs and profits of container terminal operators at five container ports in Australia, namely Brisbane, Fremantle, Melbourne, Sydney and Adelaide, where Flinders Adelaide Container Terminal Pty Ltd is the only operator.
Veterans Patrick and DP World operate at Brisbane, Fremantle, Melbourne, Sydney, while the new entrant Hutchison operates only in Brisbane and Sydney.
Competition in Australia has been increasing due to new developments as well as the expansion of existing terminals.
Hutchison Ports Australia developed new terminals in Brisbane and Sydney, while Patrick and DP World upgraded and expanded their facilities’ capacity and invested in cranes and automation.
Additionally, in Melbourne Victoria International Container Terminal (VICT) will launch the country’s first fully automated terminal in late 2016. According to the ACCC, being the new facility able to operate service larger container vessels, the capacity of the port could substantially increase.
According to the paper, “as a result of substantial investments by new entrants there is now infrastructure in place to support a third stevedore in each of the three largest container ports in Australia”.
“This infrastructure will provide additional choice to shipping lines now and in the future”, an ACCC’s statement read.
However, Sims said that new entrants continue to face challenges, claiming that Hutchison, which has been operational since 2013, is still struggling to attract enough market share to match its investment.
“It is also possible that VICT may face some issues in establishing itself when it commences operations at the Port of Melbourne at the end of 2016,” Sims added.
The ACCC reported that productivity levels at the country’s container ports remained strong in 2015-2016, with labour productivity reaching a record level but capital productivity falling slightly from its peak the year before.