Cargo fees are hurting grain farmers and exporters

The competition watchdog says reform may be needed to address ‘market failures’ at Australian ports that are damaging grain farmers and exporters.

The competition watchdog says reform may be needed to address “market failures” at Australian ports that are damaging grain farmers and exporters. Picture: Getty Images

Farmers and exporters have warned that steeply increasing fees charged by cargo handlers at the nation’s ports threaten to wipe out profitability in the country’s grain industry.

Landside fees charged by stevedoring companies at Australian ports rose by 25 per cent in 2023 and 2024, considerably undermining margins for exporters who claim “inflated stevedore costs” have damaged their ability to compete in international markets.

Stakeholders from across the grain supply chain have raised the issue with the Australian Competition and Consumer Commission in its inquiry into the shipping sector.

The ACCC found reform may be needed “to address apparent market failures relating to landside charges levied by stevedores”.

“If fees keep going up for another three years, they might wipe out the profitability of the grain industry here,” one exporter said.

The ACCC said the issue had been frequently raised by the agricultural sector over the past year, with complaints suggesting stevedores have fundamentally altered their business model by focusing on drawing revenue from landside charges, paid for by cargo owners, rather than shipside lifting charges, paid for by shipping lines.

“Multiple agriculture sector stakeholders have expressed concerns that rising stevedore fees will impact negatively on the sector’s ability to compete in international markets,” the ACCC report said. “One exporter said inflated stevedore prices put them at a competitive disadvantage as they are unable to pass on cost increases to overseas consumers.”

Stevedores have defended their increased fees, saying it was in response to higher costs and rents being charged by ports where they operate.

Pat O’Shannassy, the chief executive officer of Grain Trade Australia, which advocates on behalf of the grain supply chain, said the issue had been ongoing for several years.

“The ACCC have done more work and are starting to see the issues,” he said.

“These fees have just been going up and there is no ability for exporters to negotiate them because the stevedores have a contract with the shipping line.”

Mr O’Shannassy said exporters would have been more accepting of fee increases if they had been accompanied by higher productivity or improved service. “What we’ve been saying is it’s hard to see why some of the fees have been going up or where the productivity benefit is,” he said. “How is it making operations any better?”

Grain producers generally have three options when selling grain: the domestic market, bulk shipping or container shipping.

Nationally about 10-12 per cent is exported by container, but the practice is stronger in eastern states, with the practice accounting for 38 per cent of grain in Victoria, 31 per cent in NSW and 22 per cent in Queensland.

Eliminating container exporters as a buyer of grain would reduce market opportunities for farmers, Mr O’Shannassy said.

The ACCC report said many market participants had complained about the “large and repeated increases” in stevedores’ landside charges.

Importers have also raised concerns, saying the higher fees had added significant costs to importing, which were ultimately passed on to consumers.

In what they described as a “market failure”, some market participants told ACCC that if one terminal operator raised their prices, the others would follow. In some cases, stevedores’ landslide charges are more expensive than shipping a container to China.