Paul Zalai

Qube train. Photo: Qube

Scale of Qube’s supply chain a concern in Asciano bid

COMMENT: The ACCC must preserve fair access to key port facilities while considering the potential sale of Asciano, Paul Zalai, director of industry representative Freight Trade Alliance writes.

The joint venture between ACFS Port Logistics and Asciano subsidiary Patrick Logistics will stay intact while the company’s intermodal and stevedoring operations are shaping up to be a separate package, now being hotly contested by both Qube and Brookfield.

The Australian Competition and Consumer Commission (ACCC) is currently examining a bid from a consortium led by Qube Holdings, which includes partners Global Infrastructure Management, LLC and the Canada Pension Plan Investment Board.

Freight & Trade Alliance (FTA) provided a formal submission to the review and last week presented to a panel of ACCC representatives with concerns centred on Qube’s vertical integration.

As part of our advocacy we noted that all logistics providers require access to public facilities at our ports and terminals.

These concerns were not specific to Qube, they were consistent with our submission for the Patrick and ACFS merger. Equally, they also extend to DP World and their new plans to integrate with Toll and the development of new intermodal facilities.

During October 2015, the ACCC released its 17th annual container stevedoring monitoring report. Whilst the monitoring report provides an informative insight into stevedoring activities, it does little to influence industry’s needs in terms of landside logistics reform. From an FTA perspective, we would like to see the regulator step up its focus on this area.

Our primary concern is that if Qube is successful in the acquisition of Asciano, it will significantly increase the scale of Qube’s end-to-end supply chain posing a significant threat to competing sectors of commerce such as transport operators, freight forwarders and depot operators who are dependent on fair and equitable access to stevedore and intermodal facilities.

Aside from access to facilities, the other issue is the cost to access those facilities.

According to the latest ACCC stevedoring monitoring report, vehicle booking system (VBS) revenue has grown significantly from $1.7M to $21.4M in real terms since 2001/02.

It would be interesting to know whether stevedore affiliated logistics parties are contributing to this cost. If so, big deal as it is simply a transfer of funds from one part of their vertically integrated operation to another.

A way of addressing this would be to eliminate all VBS charges and force stevedores to either absorb or pass on their operating costs to their contracted client, the shipping line. Shipping lines in turn can then negotiate commercial terms with their clients.

Meanwhile, we understand that Brookfield has provided the ACCC with undisclosed undertakings to address concerns over the vertical integration that would result from combining its rail tracks with Asciano’s rail haulage business.

The role for the ACCC is to now assess whether the Qube and Brookfield bids are likely to have the effect of substantially lessening competition in the market. If they give the green light to both, it will then come down to a commercial decision for Asciano shareholders to determine the best result.

A possible outcome is that the ACCC intervenes on both bids meaning that we would have status quo on the Australian waterfront.

The encouraging news is that the ACCC mergers team have indicated that they want to maintain close engagement with FTA during their ongoing investigations.

To contribute to this review, we urge readers to share views via this blog or if preferable, direct to me in-confidence at pzalai@FTAlliance.com.au

Paul Zalai is founder and director of the Freight Trade Alliance. This column originally appeared on Rail Express affiliate Lloyd’s List Australia.

Melbourne. Photo: Port of Melbourne Corporation

Bring on Melbourne privatisation, release funding and let’s get rail happening!

COMMENT: Victorian minister for ports Luke Donnellan recently outlined details of the Port of Melbourne privatisation.

In the mix of issues raised, the minister supported the need for rail shuttles to inland ports with a caveat that the government is not going to achieve this themselves; they need the private sector to drive it.

Both the state and federal government have allocated funds for the Melbourne port-rail interface, and we have private developers with intermodal terminals ready to go. So what is the delay?

The minister suggested that it is a simple matter of industry sorting out the detail … Really, Minister?

Perhaps there is a role for government to take the lead, facilitate reforms and release the funds.

Maurice James, managing director Qube Holdings Limited, suggested otherwise.

James commended NSW Ports and the NSW government for driving reforms. When questioned about a way forward for Victoria, James suggested that there may be benefit for the Port of Melbourne to be privatised as soon as possible to allow for the private operator to commence long term planning and avoid indecisiveness that tends to occur as a result of the political cycle.

Whilst NSW is clearly leading the way with existing intermodals and many more in the planning stage, Duncan Gay, NSW minister for roads, maritime and freight, put things into perspective, acknowledging that much still needs to be done.

The minister credited the work of the previous Labor government and port administrators in initiating the Port Botany Landside Improvement Strategy which has achieved significant efficiencies in the road interface.

The minister highlighted that it is now time for the next frontier with a comprehensive strategy for rail.

He also made two formal announcements:

  • an independent review examining strategic locations for rural intermodals; and
  • a high level working group focusing on rail interface issues at Port Botany.

Whilst Victoria appears to be fumbling through the port privatisation process with uncertainty on how to make rail a reality, NSW continues to lead the way.

Is all OK in Melbourne, or will Port Botany soon be crowned as Australia’s undisputed premier port?

Paul Zalai is the head of the Freight & Trade Alliance – www.FTAlliance.com.au

This article originally appeared on Rail Express affiliate Lloyd’s List Australia.

Melbourne. Photo: Port of Melbourne Corporation

Finish the Job: Industry rallies to Port of Melbourne rail link

COMMENT: Melbourne’s lack of rail shuttle services from the port is a critical infrastructure and national supply chain issue that needs to be thoroughly examined within the context of the Port of Melbourne privatisation, Freight & Trade Alliance’s Travis Brooks-Garrett writes.

Last week Phillip Hopkins of The Age suggested that Melbourne’s lack of rail will contribute to Botany overtaking Melbourne in container volumes. That may be true, but the issue is far bigger than elbow-your-mate tribalism.

In 2007 the Victorian Government announced the Metropolitan Freight Terminal Network (MFTN) concept. That same year funds were allocated to the project, originally $100M. The project was later rebranded by the coalition as the Port Rail Shuttle (PRS) project but the Government’s enthusiasm was unabated, industry was supportive and research fully endorsed it’s viability including reports produced by Deloitte, the Victorian Freight & Logistics Council (VFLC) and the Port of Melbourne Corporation.

So what happened?

In 2014, the Department of Planning, Transport and Local Infrastructure (DPTLI) released an Expression of Interest for the building of the inland port network but the process was abandoned due to the Port of Melbourne sale with no stated way forward.

From a Freight & Trade Alliance (FTA) perspective they are not separate issues. We cannot talk about port privatisation without demanding consideration to landside integration.

Currently our sources have predicted that there are over 5,500 trucks entering the port per day. At 3.5% growth year-on-year this will equal more than 30,000 trucks per day by the end of the initial lease term.

With the Port of Hastings proposal stuck in political suspended animation, how can we assure industry that the Port of Melbourne will be developed to cater for the growth in volumes?

The Port Management Act 1995 requires a Port Development Strategy to be produced every four years. The last Port Development Strategy was produced in 2009.

With the Port of Melbourne Transaction Bill Inquiry currently accepting submissions and the legislative requirement for a Port Development Strategy overdue, industry would like to see attention from Government. No, industry would like to see some action from Government.

In many respects Melbourne is lucky. Most containers are distributed into the three industrial hubs in Melbourne’s north, Melbourne’s west and according to some reports almost 30% of containers have an origin or destination in the South East/Dandenong corridor. The shelved $6.8 billion East-West Link will not be the congestion-buster it was supposed to be, but a modal shift might do the job.

Practically, we understand that Webb Dock will not have rail access, so our attention is firmly on stevedores Patrick (which has an off-dock rail facility at Appleton Park Rail Terminal) and DP World. There are talks of Coode Road, the public road that bisects the DP World terminal, finally being closed to the public. Time will tell but many in industry would applaud that development and it could pave the way for rail development opportunities.

Partial funding has already been allocated to upgrade the Port’s intermodal network in the 2015/2016 budget, but it still needs concerted political pressure to happen. Industry is rallying behind rail so you never know, maybe Melbourne can maintain its status as the #1 Port by volume in Australia.

If you have thoughts on this issue or would like to contribute to the (Port of Melbourne Lease Transaction) 2015 Bill Inquiry please let us know at tbrooks-garrett@ftalliance.com.au.


Travis Brooks-Garrett is an advocate for the Australian freight & trade sectors. The Freight & Trade Alliance is an advocacy group representing freight logistics and trade entities.

This piece originally appeared in Rail Express affiliate Lloyd’s List Australia. Read the original here.

Opinion: Patrick and ACFS joint venture approved by the ACCC

The new entity will be a powerful force in Australian logistics covering container transport, empty container parks, licenced depots, warehousing and distribution centres.

The Freight & Trade Alliance (FTA) submission to the Australian Competition and Consumer Commission (ACCC) acknowledged the immediate benefits of increased coverage in metropolitan Sydney, Melbourne, Brisbane and Fremantle by providing:

– Shipping lines with another option of having a provider of empty container park services that has national coverage; and

– A genuine alternative to Qube as a provider of integrated logistics services to importers, exporters and freight forwarders handling significant volumes of containerised freight.

Correspondence received from the ACCC stated that the joint venture was unlikely to lead to a substantial lessening of competition in any market as they would continue to face strong competition from a number of alternative providers (including Qube, Toll Extra, Swift, Chalmers and others).

Our submission also highlighted risks associated with a stevedore operator potentially providing preferential treatment to affiliated logistics providers.

The ACCC determined that the joint venture was unlikely to increase Patrick Terminals’ incentive to favour the joint venture to the detriment of rival wharf cartage providers.

We will continue our advocacy highlighting the need for transparency in the stevedore container receipt and delivery process where all can confidently operate in a fair and openly-competitive operating environment.

We look forward to some form of acknowledgement and action towards this outcome in the next ACCC stevedoring monitoring report.

The bottom line is that there will now be a new super power in the logistics market … one with vertical integration and support from the competition regulator.

Please share your views.

Paul Zalai is an advocate for the Australian freight & trade sectors. Click here to visit Freight & Trade Alliance

Freight rail track - stock - credit Shutterstock (8)

Shipping lines should incentivise use of rail

COMMENT: Major issues need to be resolved if importers and exporters are to put more containers on rail, Freight & Trade Alliance chief executive Paul Zalai writes.

In response to our ongoing advocacy on container detention reform, Freight & Trade Alliance (FTA) has received feedback from Sydney-based logistics providers who have recently paid tens of thousands of dollars in fees.

This was the direct result of delayed rail deliveries at Port Botany between August 2014 and March 2015.

Operational stakeholders have made a series of public statements pointing at each other as the cause of the problem.

The associated container detention issues are extremely complex and without complete transparency and a thorough understanding of the situation, I am not going to attempt to adjudicate who is to blame.

The bottom line, which nobody disputes, is that there are clearly major issues to be resolved.

We have highlighted the situation to port authorities and have received what seems to be a genuine commitment to facilitate solutions.

We are also involved in ongoing engagement with the ACCC and understand that the issue will be referred to in the next official Container Stevedoring Report.

While this provides a level of comfort that the regulators will examine the issues, it does little in the short to medium term to restore confidence in the use of rail.

This is where the shipping lines must step up by extending container detention periods for import containers leaving the port by rail – at least until the major operational issues have been rectified and a consistently reliable service is provided.

While this is by no means the complete solution, it would be a good starting point to improve rail uptake and fits in with formal submissions that the lines see rail as a vital part of the end-to-end supply chain.

Unless there are some commercial incentives, the import sector will avoid the use of rail which could leave the New South Wales’ intermodal terminals as “white elephants”.

Paul Zalai is an advocate for the Australian freight & trade sectors. This column originally appeared in our sister publication Lloyd’s List Australia.