On 16 December Port of Newcastle stunned Shipping Australia’s members with an announcement of 33 per cent increase in coal ship navigation service charges from 01 January 2020. This new fee would apply unless the port user signed a 10 year deed which waives the right to object to matters detailed in the deed such as:
- The initial NSC rate of $0.8121 per GT
- The initial wharfage rate of $.0802 per RT
- The annual increase of 4% on both of the above, and
- An unknown additional amount attributable to PoN capital investment.
Shipping Australia objected strongly as this timeline was not achievable; ship owners and agents did not have time to properly consider the deed and implement its conditions and we questioned whether this was financial blackmail.
We are pleased that Port of Newcastle has agreed to extend the deadline for ship owners and agents to consider and sign the long term deed until 31 March. For these port users the fee increase to apply from 1 January is that which would apply if they had signed the deed.
But this does not waive all our concerns:
- It is unclear how a ship owner or time charterer can commit to a long term deed when their normal business may revolve around spot charters;
- While Port of Newcastle did win the last round of legal action preventing their channels from being declared and charges being regulated, these decisions are currently being appealed. It seems that Port of Newcastle is trying to lock in the benefits of the current legal outcome to nullify the potential impact of a future decision going against them. This seems to circumvent the intent of the legal process, and finally
- The inclusion of an unknown capital investment charge component in the deed seems akin to being forced to sign a blank cheque. We don’t think this is right.
There is frustration in the shipping industry at the size of these navigation service fee increases.
And there is much confusion surrounding both intent and content of the deed.
It seems to have been intended for coal producers who have no real connection with the navigation service charge. On the face of it the deed is not applicable to ships’ agents, and ship owners and time charterers are unlikely to be able to commit to such a long term arrangement.
A busy three months ahead.
Happy New Year
