The report notes that stevedoring operating profits per TEU grew by 25 per cent and container volumes handled by stevedores at Australia's container ports rose by 3.7 per cent to 7.2 million TEU in 2016-7.
While DP World and Patrick - Australia's two largest stevedores that operate at Brisbane, Fremantle, Melbourne and Sydney - continue to dominate the market, the spike in competition triggered by the new east coast ports have led to them recording their lowest ever combined shares of containers handled, reported Sydney's FoodProcessing.
"Competition has significantly increased in recent years with the introduction of a third stevedore in Sydney and Brisbane, and now we can add Melbourne to that list. As such, we expect to see greater levels of price competition as new entrants and incumbents compete for market share," ACCC chairman Rod Sims was quoted as saying.
"This remains a critical period for competition. For sustainable competition to develop, these new entrants will need to win a commercially viable share of the market," said Mr Sims.
The report suggests that the sustainable competition mentioned by Mr Sims will only be achievable if new entrants Hutchison and VICT go further than merely causing a short-term reduction in prices for Patrick and DP World.
Located at the mouth of the Yarra River, VICT can accommodate larger-sized ships, which may give it a competitive advantage in the future. An investment of AUD550 million (US$422.29 million) from VICT in its new terminal at Melbourne's Webb Dock also aims to help them during this competitive time. Automation is a key feature at the terminal, helping deliver consistent operations and avoid labour disputes.
DP World and Patrick have introduced or significantly increased 'infrastructure charges' at several ports for transport companies collecting or dropping off containers. Although the higher charges are supposedly necessary due to rising property costs and the need to fund new investment, the report argues their overall costs remain stable. This increase could earn the stevedores a combined AUD70 million in revenues, which is a five to six per cent increase in unit revenue.
Many have said the charges are not justified and are concerned they will not be able to switch stevedores, claiming the charges breach the provisions of the Competition and Consumer Act 2010. However, the Act does not address excessive pricing.
Those benefitting from the increased competition include shipping lines who can capitalise on the fact that revenues have been consistently decreasing over the past 10 years, declining 4.5 per cent to AUD138.8 per TEU over the last year.
Responding to the financial difficulties by restructuring, consolidating and merging with others also means that the larger shipping lines now have stronger bargaining power to negotiate better rates with stevedores.