Inefficiencies at Australia’s ports that are costing the economy about $600m a year could be improved by opening them up to more competition, according to a report.
The Productivity Commission’s report Lifting Productivity at Australia’s container ports found that high charges at ports were having a knock-on effect on supply chains.
The investigation found considerable variation between the best-performing ports, such as Brisbane, and the worst – while adding that data gaps prevented a more thorough analysis.
Overall findings indicated that higher productivity was possible and could deliver significant benefits to the economy.
“If the productivity of Australian port operations improved such that the ports were able to achieve global average ship turnaround times… then savings in the order of about $600m a year are possible,” said the report.
The government asked the commission to investigate performance issues in December 2021 after a May 2021 World Bank report ranked the efficiency of most of Australia’s container ports in the bottom 20% of 351 international ports.
The Australian Competition and Consumer Commission has also identified significant performance issues at container ports.
The commission said opening up ports to greater competition was a more useful approach than government investment.
“Australia’s major container ports rank poorly in work that just looks at ship turnaround times,” said the report.
“But the international ports with the fastest turnaround times have considerably more capital than they need to efficiently handle current throughput.”
It said more capital would reduce ship turnaround times but raise costs and also lead to greater inefficiency. Measures to improve port infrastructure were already underway, the report said, cautioning against further big-spending initiatives.
It said investment was already taking place to allow ports to accommodate bigger ships, and rail infrastructure was being developed to improve port links.
“All state governments have freight and transport strategies that cover future port infrastructure needs. Evidence does not suggest that more plans are required or existing plans will not be implemented,” said the report.
However it also noted that workplace arrangements lower productivity and called for changes to labour to reduce industrial action that harms consumers, importers and exporters.
And it urged the government to give transport operators more choice about which terminal they use when picking up or dropping off a container, rather than being forced to pay the given price a terminal operator sets.
The report also called for detention fees charged by shipping carriers for the late return of containers to be included within the scope of the Australian consumer law.
The Australian Chamber of Commerce and Industry (ACCI) welcomed the release of the report.
David Alexander, ACCI chief of policy and advocacy, said: “The Australian economy depends on trade, so we need to ensure products are imported and exported through our port systems efficiently and competitively.
“We urge the government to act without delay and implement the Productivity Commission’s recommendations to lift productivity on our container ports.”
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