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.
Headlines “Scale of Qube’s supply chain a concern in Asciano bid” or should that read “Sale” not “Scale”.
Steven – While both headlines would have been worked, we did intend to write “scale” in this case. Thanks for the note!