Port bottlenecks cost economy $600m a year

Prices of some goods for Australian consumers could be lower and the economy boosted, if the port system is made more efficient.

That is the conclusion of a Productivity Commission report released on Monday, after a year-long inquiry into container ports.

Australia’s ports handle about 1.7 billion tonnes of freight a year, moving $573 billion in cargo.

By 2050, it is expected container freight handled through the Port of Brisbane will more than triple, nearly triple through Melbourne and rise by two and a half times through Sydney’s Port Botany.

But a report by the World Bank released in mid-2021 found Australia’s container ports were in the bottom 20 per cent of 351 international ports.

The commission uncovered patchy performance across ports, concluding higher productivity could be achieved with changes in technology, workplace arrangements and greater competition.

“Inefficiencies at Australia’s major container ports directly cost the Australian economy about $600 million a year,” the report said.

“Ports also have large indirect impacts on Australian businesses and consumers, so that any sustained disruptions to imports or exports magnify these costs across the economy.”

The problems flowed through to prices paid by consumers, the report said.

“Transport operators have no choice about which terminal they use when picking up or dropping off a container, so must pay whatever price a terminal operator sets.

“Recent rapid increases in terminal access charges have flowed through to cargo owners and consumers. Voluntary protocols to address terminal operators’ abuse of market power should be strengthened.”

The report found transport operators and cargo owners were paying fees to shipping lines for the late return of containers, even where the delay is because parking for empty containers is full.

“The exemption for shipping contracts, which means that these fees fall outside the scope of the Australian consumer law, should be removed.”

The commission called for a mandatory container terminal operator code, overseen by the Australian Competition and Consumer Commission, to ensure fees were reasonable.

As well, workplace laws should be changed to ease constraints on casual worker numbers and merit-based hiring, promotion and training.

Maximum penalties for unlawful industrial action should be increased, reflecting the high cost of port strikes on the community and economy.

And rule changes should be made to allow greater competition from foreign vessels on domestic sea routes, allowing more cost-effective shipping, the commission found.

With news from AAP.