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Australia's Maritime Logistics System

Draft report

This draft report was released on 9 September 2022. It examines the performance of Australia's maritime logistics system. Long-term trends in system performance are analysed, and competition, industrial relations, infrastructure constraints and technology uptake are among the inquiry's areas of focus.

You are invited to examine the draft report and to make written submissions by Friday 14 October 2022.

Make a submission Make a brief comment

The final report is expected to be handed to the Australian Government by end December 2022.

Download the overview

Download the draft report

Download the technical paper

  • Key points
  • Media release
  • Contents
  • Higher productivity at Australia’s container ports is achievable and would deliver significant benefits.
    • Considerable variation in performance both within and across Australia’s container terminal operators points to potential productivity gains from more consistent (high) performance.
    • Inefficiencies at Australia’s major container ports directly cost the Australian economy an estimated $605 million a year. Ports also have large indirect impacts on Australian businesses and consumers, so that any sustained disruptions to imports or exports magnify these costs across the economy.
    • Australia’s major container ports rank poorly in international work that looks at ship turnaround times. Slower turnaround times in Australia mainly reflect the use of fewer cranes to handle containers. Using more cranes would raise costs with unclear effects on efficiency. Faster turnaround times are good, but not at any cost.
  • Lack of competition in some parts of the maritime logistics system means consumers pay too much.
    • Transport operators have no choice about which terminal they use when picking up or dropping off a container, so must pay whatever price a terminal operator sets. Recent rapid increases in terminal access charges (TACs) have flowed through to cargo owners (and consumers). Terminal operators should only be able to levy fixed charges, like TACs, on shipping lines, who can choose which terminal to use.
    • Transport operators and cargo owners are paying fees to shipping lines for the late return of containers even where the delay is because empty container parks are full. The exemption for shipping contracts, which means that these fees fall outside the scope of the Australian consumer law, should be removed.
  • Workplace arrangements lower productivity — incremental changes to the Fair Work Act are needed.
    • Disruptions during recent enterprise bargaining imposed large costs on businesses dependent on maritime freight. More effective remedies are needed to limit unreasonably protracted bargaining and industrial action.
    • Limits should be placed on clauses in container terminal operators’ enterprise agreements that are highly restrictive and constrain the ways that workers and equipment can be deployed.
  • Infrastructure needs in the maritime logistics system are being addressed.
    • Container port operators and other parts of the maritime logistics system are investing to accommodate bigger ships. There is no need for government intervention to encourage the use of bigger ships.
    • Plans are in place to increase the share of freight moving to and from most major container ports by rail over the coming decades. Any further government investment needs clear cost–benefit analysis.
    • All state governments have freight and transport strategies that cover future port infrastructure needs. Evidence does not suggest that more plans are required or existing plans will not be implemented.
  • The adoption of technology at Australia’s container ports is broadly in line with international practice.
  • Concerns about domestic shipping capacity and training may be better resolved by means other than a strategic fleet.
    • Capacity could be acquired as needed from the international market without the costs involved in supporting a national strategic fleet.
    • Australian‑flagged vessels are not a prerequisite to meeting maritime skill requirements. Cadetships and skilled migration appear to be working well in meeting needs for blue‑water experience.

Media requests

Leonora Nicol, Media Director – 0417 665 443 / 02 6240 3239 / media@pc.gov.au

Container port underperformance costs all Australians

Lifting productivity at our container ports could save business and consumers $605 million each year. Reform could achieve consistent, high performance, according to a draft report released by the Productivity Commission today.

Importers, exporters and trucking companies are having to pay unfair charges because container terminal operators do not compete for trucking companies’ business.

The report finds that workplace arrangements in our container ports lower productivity. Earlier intervention by the umpire – the Fair Work Commission – could help resolve protracted disputes about workplace arrangements.

"Australia's major container ports underperform their 'best practice' peers overseas", said Commissioner Stephen King. "Underperformance on Australia's ports directly costs business and consumers. Any sustained disruptions to imports or exports magnify these costs across the economy because of the critical role of ports to trade and commerce".

According to the draft report, poor container port performance is reflected in a number of factors. "For example, terminal operators' performance in handling containers is highly variable", said Commissioner King. "Simply achieving world average ship turnaround times would deliver significant benefits".

"Use of market power is a problem", noted Commissioner King. "Truck drivers have to pay whatever price the terminal operator demands to pick up or drop off a container. The shipping lines choose the terminals so they should pay these charges".

"Transport operators and cargo owners have to pay fees to shipping lines when they return containers late because empty container parks, which they are directed to, are full. This doesn’t seem like fair conduct", said Commissioner Julie Abramson. "Australian consumer law exempts these contracts and this should be remedied".

"Workplace arrangements at container terminals are holding back productivity", said Commissioner Abramson. "Highly restrictive clauses in terminal operators' enterprise agreements limit the ways that workers and equipment can be deployed".

"Changes to the Fair Work Act and operation of the Fair Work Commission are recommended to tackle protracted enterprise bargaining in container ports and the disruptive industrial action that comes with it", said Commissioner Abramson.

Commissioner King noted that "planning to make sure that Australia's ports can handle bigger ships and growing container freight volumes in coming decades is well underway. And Australia's container ports are broadly in line with international practice when it comes to technology adoption".

The draft report, Lifting productivity at Australia's container ports: between water, wharf and warehouse, is being released for comments and further submissions from interested stakeholders. The report can be found at www.pc.gov.au

Media requests

Leonora Nicol, Media Director – 0417 665 443 / 02 6240 3239 / media@pc.gov.au

  • Preliminaries: Cover, Copyright, Opportunity for comment, Terms of reference, Disclosure of interests, Acknowledgements and Contents
  • Overview - including key points
  • Recommendations and findings
  • 1. About this inquiry
    • 1.1 Context for the inquiry
    • 1.2 The Commission's task
    • 1.3 The Commission's approach
    • 1.4 Conduct of the inquiry
  • 2. Australia's maritime logistics system
    • 2.1 What is the maritime logistics system?
    • 2.2 Container trade handled by the maritime system?
    • 2.3 What are the main parts of the system?
  • 3. Container port performance
    • 3.1 What the Commission has been asked to do
    • 3.2 Motivating concerns about port performance
    • 3.3 Why port performance matters
    • 3.4 Measuring port performance
    • 3.5 A framework for assessing port performance
    • 3.6 How productive are Australian container ports?
    • 3.7 How do Australian ports compare internationally?
    • 3.8 What are the potential economy-wide gains from improving Australian container port productivity?
  • 4. Framework for analysing competition
    • 4.1 Why market power matters
    • 4.2 A framework for analysing market power
    • 4.3 When should government intervene in a market?
  • 5. Market power of port operators
    • 5.1 Port ownership models vary
    • 5.2 A port is in a market for freight movement
    • 5.3 Are Australia's container ports natural monopolies?
    • 5.4 Assessing constraints on market power for container ports
    • 5.5 Should there be extra regulation to stop port operators from exercising their market power?
    • 5.6 Market power issues have been raised with tugs
  • 6. Market power in other markets
    • 6.1 Shipping lines operate in a market for container freight
    • 6.2 Shipping lines and container terminal operators
    • 6.3 Container terminal operators and transport operators
    • 6.4 Use of contract terms in the maritime logistics system as a form of market power
  • 7. Container port capacity and landside infrastructure
    • 7.1 Port capacity and the use of bigger container ships
    • 7.2 Road and rail connections to ports
    • 7.3 Empty container imbalance and storage
    • 7.4 Planning and coordination
  • 8. Workforce arrangements: background and framework
    • 8.1 A snapshot of the ports workforce
    • 8.2 An overview of Australia's workplace relations system
    • 8.3 Bargaining power in labour markets
    • 8.4 Effect of workplace relations on productivity and efficiency
    • 8.5 The Commission's approach to assessing potential reforms
  • 9. Workforce arrangements: issues
    • 9.1 The content of enterprise agreements unduly restricts the allocation of labour and capital in container terminals
    • 9.2 Improving bargaining practices in the ports
    • 9.3 Addressing the harmful impacts of industrial disputation
  • 10. Skills and labour supply
    • 10.1 Skills and training in Australia's ports
    • 10.2 Labour supply and mobility
    • 10.3 Is the skills system equipped to deliver future skills needs for the ports?
  • 11. Technology, information and innovation
    • 11.1 Why technology, information and innovation matter
    • 11.2 Inquiry participants focused on three key technology, information and innovation issues
    • 11.3 Automation and related technologies
    • 11.4 Data sharing technologies and trends
    • 11.5 Coordination technologies used to exchange documents and clear cargo
    • 11.6 International comparisons
  • 12. Australia's national shipping concerns
    • 12.1 Coastal trading faces ongoing challenges
    • 12.2 Concerns about capacity and training may be better resolved by means other than a strategic fleet
  • A Public consultation
  • B Restrictive content in container terminal enterprise agreements
  • Abbreviations
  • Glossary
  • References

Printed copies

Printed copies of this report can be purchased from Canprint Communications.

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