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中文Stevedore DP World hit with 800 per cent rent increase as Port of Melbourne sale looms
05 Mar 2015 - 4C Realty
Stevedores at the nation's busiest container terminal face massive rent increases of up to 800 per cent as the Victorian government readies the Port of Melbourne for sale.
Fairfax Media has confirmed that the Victorian government has notified DP World Australia, one of two stevedores at the port, that it wants to massively increase rent at the terminal, prompting warnings of job losses and economic damage to the state.
It is understood that DP World has previously paid about $16 per square metre and the increase will take it to $120 per square metre.
The port takes in about $40 million a year in rent from DP World and Asciano, which owns Patrick ports. Asciano's rent is due to be reviewed next year.
If the government were to achieve the increases, then the port could be in for a windfall boost to its revenue worth about $320 million a year. The port's total revenue last financial year was $368 million.
The revenue on offer will be a key driver of the price the government achieves in the privatisation process under way.
Consortiums are forming to bid for the Port of Melbourne, which is expected to fetch as much as $5 billion when it is sold this year.
DP World has reacted strongly to the proposal, telling Fairfax Media it would challenge the rent move in court.
"We are extremely concerned about the long-term viability of the Port of Melbourne and the related supply chain," DP World chief executive Paul Scurrah said.
"This will directly threaten jobs at the port and indirectly threaten jobs in the supply chain.
"We are disappointed with what's being proposed; we will challenge it, not just for ourselves, but to minimise the impact on importers and exporters in Victoria, and we remain concerned that a short-term focus may create a long-term negative impact on the Victorian economy, and we are calling on the Victorian government to review the approach taken by the Port of Melbourne corporation."
Asciano chief executive John Mullen said the proposed rent increase would make the Port of Melbourne uncompetitive.
"If we got an increase of that level, we would fight it quite vigorously," Mr Mullen said. "It would make the Port of Melbourne overwhelmingly the most expensive port in Australia and completely uncompetitive by global standards."
The Victorian government needed to decide on the purpose of the port, Mr Mullen said.
"Is it to sell and maximise the return of the state government and the investment banks or is it to be a competitive gateway for trade in and out of the state?
"We pass these costs on with infrastructure charges, and in the end the person who pays for it is the poor person trying to export product out of country Victoria. Is that really what a government wants?"
The Australian Competition and Consumer Commission does not directly regulate rents at ports but can advocate for appropriate price increases.
"The ACCC's only formal role at this stage is the direction from the minister to monitor and provide an annual report on the container stevedoring industry," a spokesman for the regulator said.
ACCC chairman Rod Sims has signalled concerns over allowing monopoly infrastructure providers to significantly increase prices just before or after privatisation, warning that it could erode support for privatisations.
Industry sources are divided on the influence of the privatisation process on the rental increase.
Some argue that the establishment of a third stevedore at Webb Dock, International Container Terminal Services, under the former government has rebased the market for the rent assessment because the stevedore paid a much higher price for its lease than DP World or Asciano.
"It's fattening the pig for privatisation," one source said.
The source, who is familiar with Sydney's port operations, said that was far above the rates charged at Port Botany, which could mean ships head to Sydney instead of Melbourne.
The source said that could mean thousands of jobs would be lost in the logistics supply chain in Melbourne.
Logistics groups that transport goods to and from the port say they are worried the port will also increase freight-handling charges to pay for a redevelopment designed to increase its import and export capacity.
"The Port of Melbourne Corporation has yet to tell industry participants how they intend to recoup the $900 million being allocated for the redevelopment of the port," said Maurice James, chief executive of logistics company Qube Holdings. "That we expect will be the next charge."
Qube last year re-routed a train that transports containers of paper, grain and rice six days a week from NSW's Riverina region from the Port of Melbourne to Port Botany because the Sydney port's charges are lower.
But others suggest that the rent paid by the stevedores' existing arrangements were well below the market rent and the increase represented a fairer cost for the use of a public asset.
They also stressed the review was a regularly scheduled reassessment of the rent under DP World's lease.
Ports Minister Luke Donnellan said the rent was reviewed every two years by an independent valuer as prescribed in the terms of the lease.
"It is a matter for the Port of Melbourne Corporation and it will be managed as part of normal business," he said.
Above is an extract from:
4C Realty
Caroline He