Over the holiday break, I had a chance to digest the Australian Competition and Consumer Commission (ACCC) Container stevedoring monitoring report 2023-24, released toward the end of December. These annual reports used to be released in early November but recently have been released closer to the Christmas break, when a lot of industry stakeholders are already on leave or are busy finalising things and have less opportunity to comment. I’m not sure of the rationale for releasing the report so late in the year. Do they have something to hide?

The report more-or-less follows the trend of the last few years where it clearly stands out that the container stevedoring industry margins are very healthy. This has been achieved by shifting the onus on revenue from the shipside lifting charges, paid for by the shipping lines, to the landside charges, paid for by the cargo owner, via their transport operator, and which is seen as an easy way out. The stevedores, who seem to act in unison, argue that the cost of doing business is increasing as well as citing large capital expenditure. I’m not sure whether investing in another $15-million quay crane does much to assist in improving landside operations and whether the replacement of container handling equipment at the end of its life should be counted as additional capital expenditure!

ECP charges

In this report the ACCC has included additional commentary on the increased charges of the Empty Container Parks (ECPs), as well as on the introduction of so-called “weight discrepancy charges” by the stevedores.

One report graph of the rise in charges at ECPs shows a dramatic increase over the last few years. Again, most ECPs seems to increase their charges in unison. ECPs require nowhere near as much capital as container stevedoring operations, so you would have to ask, are these charges justified or are the ECPs (some closely associated with stevedore owners) just following the leaders? I would argue that again the burden of charges levied by the ECPs has been shifted from shipping lines, their customers, to the cargo owners and transport operators.

Weight discrepancy charges

The weight discrepancy charges are a recent phenomenon, started by one stevedore in one port, but they have seen a rapid introduction by other stevedores and in more ports. It is seen as an easy revenue raiser with some commentary from the stevedores in the ACCC report suggesting these charges are seen as “a significant revenue opportunity” for them.

The weight discrepancy charges are hailed as a safety measure highlighting the issue of mis-declared container weights. The charges are levied on the cargo owner via the transport operator, and on the shipping lines. In the case of export containers, I believe the levy should be charged to the export packer as the exporter has the obligation under the “verified gross mass regulation” (VGM) to declare the correct gross weight of the container. The VGM declaration for containers was introduced globally in 2016 and in Australia it is part of Marine Order 42 (Carriage, stowage and securing of cargoes and containers) and is overseen by the Australian Maritime Safety Authority.

On the import side, I believe the shipping line should be charged as they, through their stevedoring contractor in the export port, have an obligation to ensure that the correct weight of the container is declared when loaded onto the ship in order not to jeopardise the safety of the vessel. Charges for the weight discrepancies vary from $289 to $206; once again the “follow the leader principle” was applied by the stevedores. It’s not clear how those were calculated as the required effort (yard moves and some administration) does not seem to warrant the cost. Especially in the case of the Victorian International Container Terminal, who charges “only” $206 even though there are no additional yard moves involved. The ACCC noted that none of the stevedores seemed to have undertaken any specific modelling to estimate the additional costs. No doubt the ACCC will continue to monitor these charges.

Government oversight

Both the ACCC and the Productivity Commission, in its report Lifting productivity at Australia’s container ports: between water, wharf and warehouse, have argued for government increased oversight of the landside charges and that they should be charged to the shipping lines rather than the cargo owners. Both have also warned of lack of competition and apparent market failure. The increased government oversight is unlikely to be very high on the federal government’s agenda, especially in an election year!