As shipping prices surge, the ACCC has launched investigations into port operations and container costs

As shipping prices surge, the ACCC has launched investigations into port operations and container costs
  • The Australian Competition & Commission is investigating if there has been a breach of competition laws regarding shipping containers in Australia.
  • At the same time, the watchdog is looking into the broader shipping industry, which has seen container prices spike.
  • COVID-19 disruptions and massive consumer demand for retail goods have strained the global shipping industry.
  • Visit Business Insider Australia’s homepage for more stories.

Australia’s consumer watchdog has confirmed two parallel investigations into local port operations and the broader shipping industry, as local importers strain under high container prices and ongoing port congestion.

Speaking to ABC’s “The Business” Monday night, Australian Competition & Consumer Commission (ACCC) chair Rod Sims said it is looking into the operations of local port operators, also known as stevedores.

The investigation comes after freight companies alleged that Australian port operators have dramatically increased the fees charged for loading an unloading cargo from container ships over the year, eating away at trucking company profits.

The ACCC last year found stevedore revenues and profit margins grew over 2019-2020, despite the coronavirus crisis causing container shipping volumes to shrink dramatically.

This was largely due to increases in “landside” charges, the ACCC said, which some port operators maintain are necessary to ensure efficient operations.

“We have a narrowly focused investigation as to whether there is a breach of competition laws in relation to containers in Australia,” Sims said.

“‘Is there a breach, is there not a breach?’ We’ll get to the bottom of that,” he added.

Onshore issues backdropped by extreme shipping costs

The issue of stevedore fees has only become more prominent in recent months, with global shipping prices not only recovering, but far surpassing standard levels.

Sky-high consumer demand for imported retail goods has collided with COVID-19 disruptions at some of the world’s busiest ports, putting a premium on shipping costs.

As of 9 September, the Drewry composite World Container Index, a go-to collation of popular shipping route pricing, put the cost of a standard 40 foot container at US$10,083.84 (AU$13,698.54) per 40ft container — up 309 per cent from the same week in 2020.

Averaged over the year so far, the Index sits at US$6,695 (AU$9,097.52) per 40ft container, compared to the five-year average of US$2,327 (AU$3,162.39).

via Drewry

The China Containerized Freight index, which tallies popular global routes including Shanghai-Melbourne, shows similar growth over the year.

via Shanghai Shipping Exchange

Speaking to the ABC, Sims said the ACCC is looking into the “much, much bigger issue” of shipping price hikes for its November monitoring report.

It is likely that research will look into how rising shipping costs are being passed on to Australian consumers, who may be asked to make up for it at the checkout.

“We will look at, ‘To what extent is this a structural problem?’ due to the fact that you have got concentration in shipping which has occurred a lot, or, ‘To what extent is it a short-term issue due to the spikes in demand as people consume more goods and less services?’ as COVID-19 interrupts the supply chain,” Sims said.

Given the heightened demand, delays, and port congestion, domestic retailers and couriers have already started to warn Australian shoppers to plan ahead for the Christmas rush.