ACCC Report Shows Productivity At Record Levels

Published: 3 Nov 2014

The Maritime Union of Australia has welcomed the release of today’s Container Stevedoring Monitoring Report by the Australian Competition and Consumer Commission (ACCC) but questions the political motives underlying some of the commentary in the report.

The report found that current improvements are building on long-term gain and that “benefits from greater competition and capacity in the industry are building on an already markedly improved industry since the waterfront reforms of 1998”.

In real terms since 1998–99:

· Volumes handled have more than doubled from 2.9 million 20-foot equivalent units (TEUs) to 6.9 million TEUs.

· Real unit costs have fallen by 42.1 per cent, assisted by economies of scale.

· Real unit revenues have fallen by 38.4 per cent, indicating that the benefits of lower costs have been shared with users through lower prices.

· Productivity has improved. Capital productivity has risen from 19.6 to 30.8 containers per hour. Labour productivity has more than doubled, from 22.4 to 45.6 containers per hour.

· Substantial investment in capacity and productivity has occurred, with the value of the stevedores’ asset base (excluding the effect of changes in corporate ownership) increasing substantially since 1998–99.
“The MUA is committed to continuous improvement at our ports,” MUA National Secretary Paddy Crumlin said.

“The ACCC report shows that capital and labour productivity are at their highest levels ever.”

The report highlighted what it described as risks to future stevedoring performance:

· Impact of labour outcomes ‑ Enterprise bargaining agreements (EBAs) between the stevedores and their workforces are being renegotiated. The ACCC considers that EBAs provide valuable opportunities to provide incentives for further productivity gains in Australian stevedoring. It is important that the gains from enhanced competition and increased capacity in Australian stevedoring are not limited by such agreements.

· Impact of port privatisations – The sales of leases to operate ports provide a timely reminder to governments of the principles for privatisations set out in national competition policy. Importantly, the structure of such sales should have regard to promoting competition, and governments should consider the need for economic regulation of monopoly assets. There is significant concern that the sales of ports, if not properly managed, could lead to greater costs for container stevedores and other port users, and ultimately for consumers and exporters.

“We are pleased that the ACCC has identified some of the key challenges facing port operators, importers and exporters such as the privatisation of ports and their corresponding increases in port fees,” Mr Crumlin said.

“There are also concerns around some of the deals done by governments with respect to competition when it comes to selling off state-owned ports.”

The report also deals with automation. It says: “According to the stevedores, automated technologies can drive a range of improvements in stevedoring performance.

“As container volumes grow, stevedores may consider the business case for further automating terminal facilities and whether it can drive service improvements to increase their competitiveness.”

Mr Crumlin said the data in the report shows that productivity has decreased at the Port of Brisbane, where automated terminals have been implemented by all three operators. (figure 2.7)

It also shows that productivity has increased at other major ports, which are all manually operated.

There are currently no automated terminals in Australia outside of Brisbane.

“The global experience is that automation of medium-sized terminals doesn’t make sense as it requires over-capitalisation on assets,” said Mr Crumlin, who is also International Transport Workers’ Federation (ITF) President.

“You need far greater volumes if capital productivity in automation is to become a reasonable business case for shareholders and by any definition Australia doesn’t meet that threshold.

“The ACCC report is in danger of being dismissed as irrelevant to future productivity outcomes through its lack of in-depth analysis and real-life experience in these areas.

“The MUA strongly cautions that port productivity should not return to being a political football if the enormous improvements over the last decade are to be sustained.”


Authorised by P Crumlin, Maritime Union of Australia, Sydney