New challenges in stevedoring industry: ACCC

15 November 2004

Users of stevedoring services are facing new challenges as the stevedoring industry seeks to consolidate the benefits of reforms implemented since the mid 1990s, according to the Australian Competition and Consumer Commission's sixth Container Stevedoring Monitoring Report.

"The report confirms that the industry is still reaping the benefits of reforms as productivity continues to improve”, ACCC Chairman, Mr Graeme Samuel, said. “However, for the first time since the ACCC commenced monitoring, unit costs increased in 2003-04 as emerging capacity constraints may be limiting the benefits that shippers are deriving from reforms.

"Contrary to general trends in the past (of falling average revenues and costs), in the latest monitoring report the ACCC found that average revenues and costs rose in 2003-04. Higher average revenues mean that users are facing higher charges for stevedoring services".

The rise in unit costs in 2003-04 was driven mainly by higher labour costs.

“Higher unit costs appear to be linked with an increasing incidence of congestion at Australia’s terminals following a number of years of strong growth in throughput”.

The report notes that in 2003-04 the rise in revenue was partly attributable to slightly higher rates in the core business of stevedoring; loading and unloading containers, but mostly to higher revenue derived from other activities, in particular container storage. Over the past two years, average storage revenues have increased significantly.

“Higher storage charges may also be indicative of increasing congestion”.

As a result of unit revenue increasing at a slightly higher rate than unit costs, unit margins continued to rise during 2003-04, with margins rising slightly to $39.74 per TEU this year.

"Margins in the stevedoring industry have risen in each of the six years since the ACCC commenced monitoring", Mr Samuel said. “If the industry is beginning to experience capacity constraints, then it is important from a competition perspective to see new investment attracted to the industry’s rising margins. This would expand capacity, alleviate congestion and ensure maintenance of service levels”.

The ACCC report notes that a number of port authorities are in various stages of considering/implementing options for expansion of stevedoring capacity at ports, including the introduction of a third stevedore.

The ACCC monitors stevedoring revenues, costs and margins to provide the Australian Government and the community with information on the progress of waterfront reforms at Australia’s major container terminals. The ACCC was directed to monitor stevedoring charges when a levy was imposed on stevedores to fund redundancy payments.

The Container Stevedoring Monitoring Report No. 6 can be obtained from the ACCC's Melbourne or Canberra offices on (03) 9290 1800 or (02) 6243 1143. Alternatively the report will be available on the ACCC website.

*productivity levels are measured in terms of average crane, ship and elapsed labour rates.

**average costs and revenues are expressed per twenty foot equivalent unit (TEU). The ACCC uses unit revenue as an indicator of stevedoring charges.

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MR 253/04
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