Freight Rail, Safety, Standards & Regulation

Stevedore considers competition ruling in Melbourne rent stoush

Photo: DP World

One of Melbourne’s biggest container stevedores, DP World, has told Rail Express affiliate Lloyd’s List Australia it’s considering filing an application to the National Competition Council for services provided by the port to be declared under the National Access Regime.

If the port infrastructure is established as officially vital to national infrastructure, access to it could be mediated or regulated by the government.

This potential application follows the proposal of a 767% rental increase at the stevedores’ Melbourne terminal.

Under the Port of Melbourne’s proposal, rent at DPWA Melbourne’s West Swanson Terminal would rise from $15 per square metre to $120 per square metre.

“We have started down that path, but [the application] is all very much in speculation-land at the moment,” a spokesperson for the stevedore told Lloyd’s List Australia, adding that the stevedore was “considering all options, including asking for regulated access at the port of Melbourne.”

Lloyd’s List Australia understands from one well-informed executive that, contrary to speculation in the general media, a National Access Regime declaration would not “sink” the privatisation of the port on a 40-year lease.

But any potential future lessee of the port would be subject to greater restrictions than previously anticipated.

Such uncertainty would impact the level of market interest and may impact the price paid.

The Department of Treasury and Finance, which represents the port’s owner – the state of Victoria, said that the Port of Melbourne is “rigorously regulated” by the Essential Services Commission.

“Preparations for the lease transaction will continue with policy settings designed to maximise the overall economic outcome for all Victorians,” the department’s spokesperson said.

A spokesperson for Victorian ports minister Luke Donnellan said these issues are part of normal business lease negotiations between the PoMC and its users, over which disagreements around market-based rent are not unexpected.

“This is why there are provisions in the lease to appoint an independent third-party valuer to assess what the market based rent should be,” the ministerial spokesperson said.

Shipping Australia chief Rod Nairn argued that access to essential infrastructure and services under the National Access Regime needs to be considered generally, owing to pricing issues.

“This is something that needs to be considered because prices seem to be getting out of hand in a number of areas, and maybe it is not limited to Melbourne,” Nairn said.

Andrew Hudson, a partner at law firm Gadens, thinks the suggestion that Melbourne’s port infrastructure may fall within the scope of the National Access Regime will give potential bidders for the privatisation/lease reason to even more carefully consider their bidding.

And that is because a declaration could, ultimately, put some conditions on how the port can be operated.

“Basically, it comes down to the ACCC to prescribe how they charge things. It will still be in the hands of the buyer to run the regime, to run the port and the like,” Hudson said.

“But how the buyer will charge things and how it will operate the place will be subject to a competition regime, which is probably more prescriptive than they anticipated.

“So it will be a more limiting and restrictive operation. The declaration hasn’t been used very much, but it certainly could be of concern.”

Port of Melbourne Corporation declined to comment.

This is an edited version of an article which originally appeared on Lloyd’s List Australia. Additional reportage by Jim Wilson.

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