Rail volumes continue to struggle at Australian ports, with road still considered the cheaper option for the majority of operators, a new report from the Australian Competition and Consumer Commission (ACCC) has said.
The ACCC’s latest report into the container stevedoring sector shows the share of containers carried via rail has dipped over the last 12 months in Sydney and Brisbane, and stayed the same in Melbourne and Adelaide.
The only major port where rail received a significant increase in modal share was Fremantle, where 18 percent of containers are now carried by rail, the highest rate in the country.
The ACCC said the growth in Fremantle was likely due to the State Government recently increasing the subsidy for containers via rail from $30 to $50 per TEU.
But across the board, rail’s share of container movements to and from Australian ports dipped slightly over the last 12 months, to just 11.4 percent.
“The relatively low volumes of containers transported by rail in the monitored ports is due to the high cost of rail operations relative to road transport, especially over short distances, and issues on the reliability of service provision,” the ACCC said.
The Commission is hopeful rail’s share of container movements will grow in the future, however.
“Most port authorities recognise the importance of expanding the number of containers being transported by rail,” the ACCC said.
“Moving more containers by rail eases congestion in arterial roads servicing ports and relieves noise and air pollution in urban areas near ports.”
The ACCC welcomed recent investment by the Commonwealth Government to duplicate 2.9 kilometres of freight railway in Sydney to boost operations in and out of Port Botany. And Victoria’s recently-released freight plan, which focuses on the establishment of port rail shuttles, was also welcomed.
Profit margins dipping, fees rising
Overall, the ACCC’s annual report showed a record 5.1 million containers were lifted at the major ports last financial year, and stevedores’ ‘infrastructure charges’ have increased.
Despite this, profit margins in the container stevedoring industry suffered, dropping to a low of just 4.5 percent.
The ACCC says stevedores are increasing the landside charges because growing competition has allowed shipping lines to negotiate cheaper rates, resulting in an 8.5 percent drop in quayside revenue per lift for stevedores.
“The use of infrastructure charges means that stevedores can earn a greater proportion of their revenues in a market in which their market power is stronger relative to the more competitive market in which they provide services to shipping lines,” ACCC chair Rod Sims said.
“We are concerned about the potential impact of these charges.
“If stevedores to not face a competitive constraint on their prices, it will leave consumers paying higher charges for goods and make exporters less competitive.”
The ACCC doesn’t currently have the power to determine stevedoring charges, as they are not a regulated asset.
“State governments, which regulate stevedores and ports, may need to conduct further detailed examination and, if warranted, use their regulatory powers,” Sims said.