Container port inefficiencies cost Australian economy $600 million a year

Port inefficiencies cost the Australian economy around $600 million (US$414 million) annually, and consumers will pay more for imported goods.

following a year Inquiry The Productivity Commission found wide variations in the performance of ports across Australia, with significant economic implications.

Australia currently relies heavily on port activity, with exports representing 20% ​​of the country’s GDP and imports representing 16%.

In the 2018-2019 financial year, the port handled 1.7 billion tonnes of cargo and handled approximately $573 billion worth of cargo.

The Commission predicted that by 2050, the volume of container cargo passing through the Port of Brisbane will more than triple, with the ports of Melbourne and Sydney seeing increases of around 300% and 50% respectively.

Despite the port’s importance to the economy, its performance was in the bottom 20% of 351 international ports, as revealed in the 2021 World Bank report.

poor port performance

The Productivity Commission found that compared to international peers, Australian ports take longer to load and unload ships, even after factoring in the size of ships and port calls.

Additionally, Australian ports underperformed as ships increased in size.

For example, turning a vessel carrying between 1,501 and 5,000 containers takes an average of 27.3 hours in the Port of Melbourne and 29.7 hours in the Port of Sydney, compared to the international average of 24.7 hours.

For vessels with 5,001 to 8,500 containers, the average turnaround times for Melbourne and Sydney ports are 33.6 hours and 45.2 hours respectively, compared to the international average of 26 hours.

Upon investigation, the Commission found that the main reason for the slow turnaround time was the low number of quayside cranes used to handle the containers.

Epoch Times photo
Workers prepare to load containers onto a cargo ship at Port Botany, Sydney, Australia, December 2, 2020. (Saeed Khan/AFP via Getty Images)

The Commission acknowledged the poor performance of Australian ports, while noting that better-performing ports in other countries tended to enjoy greater capital investment.

“International ports with the fastest turnaround times have significantly more capital than they need to efficiently handle current throughput.” the report said.

“Using more capital in Australia will reduce ship turnaround times, but will increase costs. The result is not always efficient. Faster turnaround times are good, but There is never a price.”

monopolies and industrial action

One of the major problems for Australian ports outlined in the report is the lack of competition in parts of the ocean logistics system.

The Commission found that container ports across the country have some exclusive characteristics due to the small number of natural ports suitable for large vessels and the significant initial infrastructure costs of building ports. bottom.

As a result, port authorities can exercise certain powers over carriers, often at high costs.

“Carriers cannot choose which terminal they use to load and unload their containers, so they have to pay a fee set by the terminal operator.” the report said.

“The recent sharp rise in terminal access charges has flowed to cargo owners and consumers.”

In another example, carriers and cargo owners have to pay for late return of containers, even if there is a shortage of parking spaces for empty containers causing delays.

Meanwhile, the Commission has found that recent industrial action during negotiations between port authorities and workers has imposed considerable costs on companies that rely on maritime transport.

The government has amended the law to limit the impact of workplace disputes, but the commission says more effective remedies are needed to mitigate industrial action that harms consumers, importers and exporters. said.

Recommendations for Addressing Port Inefficiencies

The Commission noted that Australian ports could improve throughput by using capital inputs more efficiently at the quays, as demonstrated in the Commission’s portfolio of best practices for ports. bottom.

For example, ports can improve productivity by reducing crane rate variability and achieving more stable and higher crane rates.

Additionally, the commission called on the government to introduce a set of mandatory codes to prevent terminal operators from charging unreasonable fees.

On the issue of industrial action, the Commission noted that the government should amend current legislation to limit the number of non-regular workers and to address major causes of workplace disputes, such as limits on the number of non-regular workers and merit-based hiring, promotion and training in container terminal operations. said it could be mitigated.

At the same time, governments should raise the maximum penalties for unlawful strikes because of their grave negative impact on communities and economies.

The commission also called for changes to the rules to allow more foreign ships to compete on domestic routes, which would promote more cost-effective shipping.

Alfred Bui

Alfred Bui is an Australian reporter based in Melbourne, focusing on local and business news. He is a former small business owner and holds his two master’s degrees in business and business law. Please contact [email protected]