Shipping costs ‘threaten exports’

17 May 2018 Kingspan Insulation Australia
Scott Gibson (resized)

Shipping charges at the port of Melbourne are the most expensive in Australia and amongst the highest in the world, prompting calls for state government intervention to prevent more damage to export-reliant manufacturers.

Victorian Ports Minister Luke Donnellan said last night the government was concerned about the recent increases in charges.

Australian Competition & Consumer Commission chairman Rod Sims last month targeted stevedores for levying significantly higher charges on transport companies, warning the waterfront employers could face a backlash from the states over excessive price rises.

The stevedores impose a charge per full container dropped off at a terminal or picked up. Figures released by the ACCC show DP World and Patrick have significantly increased charges at their Sydney, Melbourne and Brisbane terminals.

Victoria International Container Terminal in Melbourne has also introduced a new rate of $52.80 per container, similar to rates charged by Patrick and DP World.

Kingspan Insulation managing director Scott Gibson said yesterday his company, which opened a $40 million production centre in Melbourne last year, could not complete against oversea rivals unless charges were cut.

Kingspan conducted an international benchmarking survey across ports it used, including in England, Dubai, Hong Kong and South Korea. It found that Melbourne was the most expensive and one of the most expensive ports in the world for terminal handling and port service charges.

“We have sent around 100 containers to Korea in the past six months with charges of approximately $250 each for sea freight and more than twice that amount in charges just to get it through the port,” Mr Gibson said.

“With a third of our products exported this is becoming a massive burden and making us uncompetitive against competing manufacturing points in the UK and Europe.”

He said the Port of Melbourne has been the nation’s largest and most modern port, but now ranked last in Australian terms of terminal handling and service charge competitiveness.

“… Many exporters are reportedly bypassing Melbourne in favour of the cheaper Port Botany port in Sydney, which can’t be good for Victoria,” he said.

The survey fund the $705 in terminal handling and port service charges for a container in Melbourne was almost three times higher than comparative port in Britain, while the cost in South Korea was just $210. Hong Kong port charged were half of Melbourne’s and charges for the same size container would be just more than $500 in Dubai. With overseas sales comprising a third of Kingspan’s Somerton production, Mr Gibson said its plans to expand the factory were dependent on exports.

A spokesman for Mr Donnellan said last night the government was “Concerned about recent increases to infrastructure charges”.
“While these charges are a matter for the stevedores and their individual customers, it is reasonable for industry to expect better services in return,” he said.

“We’ll work with industry to explore options to address this issue”.

Reference: The Australian, 04 May 0218

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