The draft report of the Productivity Commission’s Australian Maritime Logistics System is long, so we will be analysing it today, and later publishing selected items in our newsletter and on our website.
From the ocean shipping industry’s viewpoint, the draft report is somewhat of a curate’s egg (mostly good, partly adverse), but, pleasingly, the vast majority of the draft report aligns with the views of our industry.
In short, Shipping Australia welcomes the publication of the draft report and agrees with much of its content. On a brief analysis this morning, we noted that there are about 12-14 key points, of which Shipping Australia wholeheartedly agrees with 10-12.
Port performance
Most of these key points relate to port performance. We are pleased that the Productivity Commission has found that Australian container ports could achieve much higher productivity, which would benefit the Australian economy as a whole. We are also pleased to note that the report has comprehensively squashed arguments that internationally produced analysis of worldwide container port performance somehow does not show that the performance of Australian ports is below global standards. Australian port performance is substantially less than global competitors and that should now be regarded as a fact by everyone in the sector.
We do, however, disagree with the Productivity Commission, in the matter of port regulation. Container ports are so central to Australia’s economic well-being, and they are regional monopolies, so it is vital that there is independent, disinterested, third-party oversight and governance.
Coastal shipping (also called cabotage)
We note and agree with the comments that coastal trading regulation is not delivering competitive shipping services for Australian consumers. As the Productivity Commission notes, “numerous reports and inquiries over the past ten years have noted that the current system is uncompetitive and requires reform”. We support the recommendation that Australia’s coastal trading regulation ought to be amended to allow increased competition between Australian vessels and international vessels.
National fleet is not necessary
Shipping Australia has long opposed the concept of a national fleet. We note and agree with the Productivity Commission that an Australian national fleet would have a limited ability to mitigate the supply chain issues of recent years, and that a national fleet would find it difficult to compete on a commercial basis. We also support the comments that neither a cabotage regime nor a national fleet is necessary to meet the requirements to develop a maritime fleet. We also further note that a previous Productivity Commission report, the inquiry into Vulnerable Supply Chains, also criticised the concept of a national fleet.
Workplace relations
We support the comments that there needs to be reform to the Fair Work Act and that remedies are needed to limit unreasonably protracted bargaining. Shipping Australia has previously made many comments on workplace reforms, which we repeat here:
- Notice of industrial action on the waterfront must be greatly increased from a mere three days; while we approve of an increase from three to seven, we would prefer a greater notice period of at least one calendar month as this is relevant to the vast majority of container trades to / from Australia
- Enterprise bargaining should not occur on an industry / sector-wide basis as has been suggested in the media of late
- Enterprise bargaining on the waterfront should be staggered across different ports, terminals and key marine service providers so that the nation cannot be held hostage
- It follows that if enterprise bargaining should be staggered, then it needs to take place on a timetable. If the timetable is breached, then the parties should be sent to immediate and compulsory binding arbitration
- There needs to be a ban on industrial action being taken against third parties – sometimes industrial action is taken against related but separate companies that are part of the same corporate group
- The practice of banning the loading and unloading of sub-contracted ships from a different terminal should not be allowed – that simply puts unfair and undue pressure on companies that are not even part of an industrial dispute
- Matters that are subject to enterprise bargaining should be limited; there should not be, for instance, any clauses restricting who can be employed or to what use terminal assets can be used
- The right of waterfront-related employers to apply to the Fair Work Commission for termination of an enterprise agreement in case of protracted bargaining should not be abrogated
We have published extensive material on the waterfront and industrial relations on our website. One recent article can be found here.
Trucking-related matters (access and ongoing hire fees for containers)
There are elements with which we disagree, such as the draft recommendation that shipping lines should be forced to pay the bills of trucking companies. We can see no justifiable reason, nor is there any rationale expressed in the Productivity Commission’s report, explaining why it is appropriate for costs to be shifted from one party to the other. The comment that “shipping lines choose the terminal operator” demonstrates a lack of understanding of industrial reality and, in any case, does not justify why shipping lines should be required to subsidise the revenues and profits of transport operators who are, after all, in business for their own commercial benefits.
We also take issue with the comments relating to the ongoing hire of ocean shipping containers. Shipping companies invest substantial capital in the creation, repair, upgrading, logistics and management of ocean shipping containers. This investment needs to be recovered via commercial operations. Accordingly, it is reasonably necessary for shipping lines to require payment from customers for the ongoing hire of ocean shipping containers.
Australian competition law
Shipping Australia notes the comments in the draft report about Part X and the exemption that ocean going shipping lines have from general competition law that enables companies to collaborate on operational matters. It has been policy of Shipping Australia members, for several years now, to support a repeal of Part X provided that a satisfactory block exemption be implemented instead. Further commentary can be found here and here.
Shipping Australia will be examining the draft report in detail in conjunction with our members and we envisage making a further submission to the inquiry in due course.
