The ACCC is closely monitoring profit margins of Australian container stevedoring companies after a profit surge during pandemic supply chain disruptions. “The ACCC believes that the regulation of Australia’s monopoly container ports is ineffective,” it said. "Australia’s privatised container ports (Brisbane, Sydney, Melbourne, Adelaide) should be subject to greater regulatory oversight."
(photo: ACCC)
“The operating profit margin of Australia’s container stevedoring industry has increased by 14 percentage points since the start of the COVID-19 pandemic to the highest level observed since the Patrick and DP World duopoly ended about a decade ago,” according to the ACCC’s new Container Stevedoring Monitoring Report 2021-22.
The report examines the prices, costs, and profits of stevedores at Australia’s international container ports, but also looks more broadly at the state of the container freight supply chain following the pandemic disruption of recent years.
The ACCC has not yet formed a conclusive view on the drivers behind the recent increases in stevedores’ operating profits. Severely constrained global shipping capacity throughout the pandemic made it harder for importers and exporters to change to a different shipping service, and by implication a different stevedore, which may have weakened price competition between stevedores, it said. 
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"We’d expect their profits |
“If stevedores’ higher profits are due to the recent shocks to the global container freight supply chain, we’d expect their profits to decline over time as shipping and terminal congestion eases,” said ACCC Commissioner Anna Brakey.
“We’ll be closely scrutinising the stevedores’ charges and financial performance in the coming years to see if there are any structural or behavioural factors sustaining higher profits, and whether any further policy or regulatory responses are warranted.”
State of container freight supply chain
The report said COVID-19 continued to cause significant congestion and delays in the container freight supply chain in the 2021-22 financial year, although global shipping schedule reliability has improved in the second half of this year.
A stevedore told the ACCC that as few as 10 per cent of ships arrived within two hours of their designated berthing window in 2021-22, but that figure had improved to between 30-40 per cent in recent months.
“Ongoing congestion in global supply chains means it’s still harder to move containers than it was pre-pandemic, but the situation has improved considerably this year,” Brakey said.
The ACCC has also heard that unreliable shipping schedules have caused ‘vessel bunching’ at Australian ports, resulting in large peaks and troughs for stevedores’ container handling.
“Less reliable shipping schedules, an increase in the size of ships visiting our container ports, and labour shortages across the whole supply chain have all impacted the efficiency of stevedores’ operations,” Brakey said.
Freight rates fall
The recent slowdown in global trade has put downward pressure on global freight spot rates, which in November this year fell below US$2,000 per 40-foot container according to the Platts Container Index produced by S&P Global Commodity Insights. However, this is still roughly double the average rate in 2019.
Global freight spot rates peaked in September 2021 at nearly US$8,000 but fell to about US$5,000 by the end of June 2022.
Elevated freight rates and generally higher costs for importers to use the supply chain have contributed to higher prices for Australian consumers and have put upward pressure on inflation.
“There is currently a high degree of economic uncertainty globally, but if there’s a reduction in global trade next year as industry analysts are predicting, it should ease pressure on supply chains and freight rates even further,” said Brakey.
Reforms are needed
The ACCC believes that the regulation of Australia’s monopoly container ports is ineffective, and the threat of further regulation in most states is not sufficiently credible. There is currently the potential for the exercise of market power to exist undetected due to the inadequate level of regulatory scrutiny.
The report says that, at a minimum, Australia’s privatised container ports (Brisbane, Sydney, Melbourne, Adelaide) should be subject to greater regulatory oversight.
“Container shipping is critical to a trade-exposed economy like Australia. A well-functioning and more efficient supply chain would benefit all Australian businesses and consumers,” Brakey added.
Container stevedoring involves lifting containers on and off ships. The ACCC currently monitors the prices, costs and profits of container stevedores at five Australian container ports: Adelaide, Brisbane, Fremantle, Melbourne and Sydney.
