Proposed rent increases at Port of Melbourne criticized

Mr John Mullen, head of Asciano, has declared that if the rent increases announced by the Port of Melbourne Corporation are to go ahead, Asciano will seek to “shrink our port footprint and move all of our non-container terminal activity inland”. He was speaking at the recent Australian Logistics Council Forum in Melbourne.

Mr Mullen then went on to criticise the rationale used by state governments for what he regards as “artificiall ramping up value” of ports to the detriment of the local economy. “The frenetic race by governments to realise short-term financial gain by selling critical assets like their ports, irrespective of the harm that artificially ramping-up value may cause to the state and the nation over the long term, is one of the key current issues facing Australia’s supply chain,” said Mr Mullen. “While higher rents, longer committed lease periods and entrenched monopoly positions for port authorities help generate maximum value from port asset sales, the resulting flow through to costs becomes an additional tax on a state’s importers and exporters to compete.”

He added that, while he supports privatisation, the currently proposed “egregious” port rent increases need to be addressed to “minimize impact on the Victorian economy. Elsewhere in the world, if a port puts up its rental prices by 20% let alone 800%, it would go bankrupt,” Mr Mullen asserted. And Mr Mullen argued that migration of volume from one port to another will become a real possibility on a significant scale, stating that 50,000 teu of freight volume from western NSW that currently ships via Melbourne can instead transit via Sydney. Sydney has the potential to develop as a deepwater hub where 500,000 to 600,000 teu per year can enter Australia and then be carried, via rail, to the city of Melbourne.

The Australian Logistics Council (ALC), the peak industry body for freight logistics industry, has also expressed concern at the publicised rental increases at the Port of Melbourne. “If Melbourne is to maintain its claim of being Australia’s freight and logistics capital, then the focus needs to be on the efficiency of the entire supply chain”, said Michael Kilgariff, ALC Managing Director.

“Any proposed rental increase, particularly of this magnitude must be visible and transparent, and we are concerned that proposed new rents at the Port of Melbourne appear to be linked to rents allegedly paid by new entrants to the stevedore market.”

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