Sydney Ports Corporation Scraps Peak Pricing Plan – N.S.W. Government To Introduce New Regulations To Force Participants To Meet Performance Benchmarks

In May, 2010, the Sydney Ports Corporation presented industry with an overview of its plan for improving the throughput of containers at Port Botany.  A copy of the overview document can be found on our “Resources & Documents” page.

Sydney Ports Corporation has scrapped their earlier announced plan to introduce a Peak Pricing charge, and instead the ongoing costs of the Port Botany Landside Improvement Strategy (“PBLIS”) solution will be funded by a AU$10.00 per container increase in the wharfage charge levied on FULL import and export containers.

The NSW Government intends to introduce new regulations to force the stevedores and transport operators to cooperate with the introduction of the planned reforms.  Sydney Ports Corporation had hoped the major players and stakeholders would be able to sort out there problems without the need for regulation, however, they have conceded that regulation seems to be the only way there will be any reform.

The regulations are planned for introduction during the third quarter of 2010, and it is anticipated the PBLIS reform process will be in full swing by the fourth quarter of 2010.  One of the major points of the new system will involve a new Operational Performance Management (“OPM”) between stevedores and transport carriers that will include performance benchmarks for BOTH stevedores and truck carriers.  There will be a penalty system in place for both the stevedores and the truck carriers where they do not meet the specified benchmarks.

While this is a good thing overall, as the stevedores are finally on notice that lack of performance will cost them financially, the regulations will create issues in other areas.  For example, at the moment the stevedores have the option of not penalising a truck carrier where a truck doesn’t arrive for its scheduled time slot (such as delays caused by Sydney’s notoriously bad peak hour traffic which gets worse as each year passes – look at what happened when the M5 tunnel was suddenly closed to morning peak hour traffic recently by an accident, which is an all too common scenario), the stevedores will not have that same ability under the regulations currently proposed.  It is to be hoped the NSW Government will build in some sort of flexibility to allow for late arrivals due to circumstances beyond the control of the truck operators, and similarly for circumstances beyond the control of the stevedores if they are found to have fallen short of a specified benchmark.

As one reporter has said “The current PBLIS strategy has already made a major concession to transporters, by putting the peak period pricing regime on the back burner.  With clear, measurable and enforceable operational performance management standards, the current plan gives as much certainty to both parties as is humanly possible under the circumstances.

As for the M5 tunnel, allow an extra three hours and take a good book – something of “War and Peace” proportions.”

© Lighthouse Agencies Pty Ltd.  All rights reserved.

Sydney Ports Corporation Wants To Add A Surcharge For Truck Container Movements During Peak Periods

Following on from the IPART review of the operations on Sydney’s wharves, the Sydney Ports Corporation have been granted the authority to implement procedures for reform on the waterfront. These procedures are currently underway and we believe that the reforms will take the form of 3 or 4 KPI’s (Key Performance Indicators) that will need to be achieved by the wharf stevedoring companies.

We will attempt to keep you informed as and when these KPI’s are advised to us.

Unfortunately we have discovered an issue that we feel is totally detrimental to all importers where the Sydney Ports Corporation, in consultation with the Federal Government, are looking at introducing a Port Peak Pricing charge. This charge will basically be imposed against the importer if they wish to collect their containers during the perceived daily peak period. At this stage the cost of the fee and the exact peak time is still unknown however we believe the fee to be around $100.00 to $120.00 per container and the period to range from 5.00am to 1.00pm.

We cannot see any benefit at all to this charge apart from forcing importers to change their warehouse times and their work practices or else face additional charges. For example, if your warehouse is similar to the 95% of other warehouses in Australia then they generally operate from 7.00 am to say 3.30 pm. Unless you pay the peak period charge you will not be able to receive your container within normal daily operations. Maybe if you are lucky enough to obtain a 1.00 pm or 2.00 pm time slot you might be able to receive the container in time to unpack that day, provided there are no delays loading trucks out at the wharf. Imagine if every importer attempts to get these slots to keep warehousing operation costs down? It will only mean that the port is quiet all day and the peak has been moved to 1.00 to 2.00pm. With only limited slots between this new peak period obviously not everyone can obtain a time slot.

The only other alternative will be to request the carriers to collect the containers during off-peak or shoulder periods and take them back to their yard for delivery during the importer’s normal warehouse hours. This, of course, will have a cost of roughly $250.00 for a 20’ and $350.00 for a 40’ when you allow for cartage to store, lifts, fuel surcharge and storage, making the peak period charge look the cheaper option at first glance.

Although the negotiations have progressed to an advanced stage, it still has not been ratified and can hopefully still be quashed. We know that the Transport Industry are strongly opposing this charge and have been actively seeking its demise through discussions with the Sydney Ports Corporation and the Minister, Joe Tripodi. The transport companies want what the importers want, and that is simply for the individual stevedores to implement procedures to work landside operations much more efficiently and be accountable for any delays instead of the Government to simply laying the congestion blame with importers and force them to change their operations or pay a premium.

Below is an extract from one carrier and I believe that this highlights the frustration that the Transport Industry are feeling and also it highlights the need for all of us to act now before it is too late. There is also a copy of a flyer detailing an important meeting set down for the 2nd of April, 2009, at the Stamford Plaza, Mascot, which will have up to date details of this issue as well as the platform for questions and answers.

“Hi Guys, this is very important that you attend and be very vocal from the floor as they will impose onto industry PEAK PRICING and that cost will have to be charged to the importer / exporter and they won’t be happy. The government is not listening to the transport associations solution for the problems at the port and we think it can be easy fixed.

1. The stevedores be penalised if they don’t turn the trucks around in the one hour time slot (they pay the detention)

2 .Empty container depots that are owned by stevedores open 24/5 like they expect transport companies.

3. They say it’s not about money, but they should put a $20 levy on all containers coming through the port.

4. All movements at the port be electronic for quicker turnaround.

Transport companies have changed their operations around and work 24/5 and in peak times 24/6.The only reason we get congestion and big ranks at the port is due to lack of equipment loading the landside transport. Companies are penalised by the stevedores when late or incur no shows so it is only fair they also be accountable for lack of performance.”

We will continue to chase our representative body to fight this charge and will also continue to support the transport companies in an effort to have this overturned, however we feel that maybe some input from the importers would be of assistance. If you feel strongly enough on this issue please send an email to the minister, Joe Tripodi at . You may also like to voice your concerns with the Chamber of Commerce. There will be a symposium held at the Stamford Hotel in Mascot on 3rd of June, 2009, where this issue will be open for discussion. It is anticipated that Joe Tripodi will be in attendance to field questions.

The Sydney Ports Corporation is currently operating a test of operations on both DP World and Patrick’s wharves and are looking at truck arrival times, slot bookings based on each hour of operation and the individual ports performance. All this data will be used to assess the final decision. Below is a link to the Sydney Ports Corporation website where you can see the daily results of this test.

We will continue to monitor this situation and will let you know details of any developments as they come to hand.

© Lighthouse Agencies Pty Ltd. All rights reserved.