With all the costs associated with shipping, it can be hard to understand what your fees cover, whether you can reduce them or not, and to understand why you are being charged each amount. Undoubtedly, one of the underlying costs that all importers and exporters have to bear are infrastructure fees at the port. Read on to understand what these infrastructure fees are and why they are charged.
What are Terminal Infrastructure Fees?
Infrastructure fees are levied by stevedores in Australian ports. Stevedores are essentially the workers responsible for loading and unloading ships. The fees are payable to firms carrying containers to and from terminals (terminal operators).
These access fees are a means for terminal operators to recover scaling costs, like port rents, taxes and council rates, maintenance fees, labour rates and electricity bills.
Why They Are Charged
These infrastructure access and usage charges provide ongoing investment in infrastructure that will increase efficiency and allow ports to receive even bigger vessels. As well as this, the funds obtained will sustain structural changes to some terminal operators’ revenue models. More recently, some terminal operators take the view that infrastructure fees are an appropriate and necessary method to restructure the way stevedores earn their revenue.
The Hikes To Fees
Over the last few years, the transport and logistics landscape has been highly impacted by the way these infrastructure fees have been levied. The charges have been increasingly controversial with numerous parties ranging from port operators to cargo owners making complaints to the national competition regulator. There has been an ongoing rise in fees by the leading industry operators, pushing other key players to follow the lead. The latest ACCC stevedore monitoring report states that the industry generated $166.6 million from infrastructure charges in 2018-19. This was an increase of 63 per cent from the previous financial year.
The controversy has recently led several State Governments to intervene. In mid-2019, the Victorian Government launched an investigation into infrastructure charges at the Port of Melbourne, commissioning Deloitte to undertake a Port Pricing and Access Review. A draft review has confirmed that costs are rising, and are having flow on effects throughout Victoria’s economy. Furthermore, in December 2019, NSW Transport Minister Andrew Constance ordered stevedores at Port Botany to stop fee fee hikes planned for early 2020. It announced that the Productivity Commission would began an investigation into the rapid rise in charges.
One Last Thought
As the political clash evolves and an upshot of the ongoing spiking fees is unlikely to happen soon, it is inevitable that these fees will flow down the supply chain and ultimately be borne by importers.
As to what importers and exporters can do at this stage, it is recommended to be aware of the most recent industry updates and extended notices of upcoming fees given by terminal operators in order to anticipate costs and plan your budgeting accordingly.
Should you need any assistance with shipping fees, charges or recent industry changes, the experienced team at ICE are always on hand for help and advice on 1300 CARGO1.