Benchmarking of Port Prices in Australia
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Benchmarking of Port Prices in Australia Final report prepared for Essential Services Commission of South Australia, April 2007 Benchmarking of Port Prices in Australia For information on this document, please contact: Copyright This work is copyright © 2007 Meyrick Consulting Group Pty Ltd Steve Meyrick The Copyright Act 1968 permits fair dealing for study, research, news reporting, criticism or review. Managing Director Selected passages, tables or diagrams may be reproduced for such purposes provided acknowledgment of Level 2, 63A Market Street, Wollongong NSW 2500 Australia the source is included. More extensive reproduction permission must be obtained from the consultant TEL +61 2 4227 1484 FAX +61 2 4227 1515 whose contact details are shown below. 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NEW SOUTH WALES VICTORIA AUSTRALIAN CAPITAL TERRITORY Benchmarking of Port Prices in Australia Table of Contents 4.4 Liquid Bulk .................................................................................................. 30 4.5 Motor Vehicles ............................................................................................ 32 4.6 Containers................................................................................................... 34 EXECUTIVE SUMMARY I 4.7 Livestock ..................................................................................................... 36 1. INTRODUCTION 1 5. SYNOPTIC RESULTS 38 1.1 Background ...................................................................................................1 5.1 Overall price comparison ............................................................................ 38 1.2 Purpose.........................................................................................................1 5.1.1 Assembling and using trade data 38 2. METHODOLOGY 3 5.1.2 Computing representative costs for each commodity group 38 2.1 Challenges in port price benchmarking.........................................................3 Producing a single measure of relative prices 44 2.2 Approach adopted.........................................................................................3 5.2 Changes since privatisation ........................................................................ 46 2.2.1 Stage 1: benchmarking of charges for particular commodity 5.3 Differences between commodity groups..................................................... 47 types 6 6. SUMMARY AND CONCLUSION 49 2.2.2 Stage 2: benchmarking of overall price levels 6 6.1 Overall prices levels.................................................................................... 49 2.2.3 Stage 3: Further analysis based on composite indexes 9 6.2 Changes in prices over time........................................................................ 52 2.2.4 Stage 4: Interpretation of results 10 6.3 Price differentials for different cargo groups ............................................... 52 3. DATA AND INPUTS 11 A. APPENDIX 54 3.1 Commodities ...............................................................................................11 3.2 Ports included in the comparisons ..............................................................11 B. BIBLIOGRAPHY 55 3.2.1 South Australian ports 11 3.2.2 Non-South Australian ports 11 C. LIST OF DATA SOURCES USED IN THE MODELS AND ANALYSIS 56 3.3 Data collection process ...............................................................................15 3.3.1 Direct approaches to port authorities and service providers 15 3.3.2 Public domain sources 15 3.3.3 Internal databases 15 3.3.4 South Australian Ports 16 3.4 Charges included ........................................................................................16 3.4.1 Essential maritime service charges (EMS charges) 16 3.4.2 Other included maritime services (non-EMS charges) 18 3.5 Vessel specifications...................................................................................18 3.6 Assumptions and limitations........................................................................20 4. SHIP VISIT SUMMARY 22 4.1 Grain............................................................................................................22 4.1.1 Handymax Vessels 22 4.1.2 Panamax Vessels 24 4.2 Dry Bulk - General.......................................................................................26 4.3 Dry Bulk - Concession.................................................................................28 iii Benchmarking of Port Prices in Australia EXECUTIVE SUMMARY Only some of the services regulated under the MSA Act (those classified as essential maritime services) are subject to price regulation. The primary Purpose and scope focus of this report is on the prices charged for these services. However, to This benchmarking study compares the prices charged in South Australian provide a more complete picture of the charges incurred in shipping ports with those charged in a cross-section of other Australian ports. through the ports, the charges for the major unregulated services — pilotage and towage — have been included in the analysis. No conclusions Under the Maritime Services (Access) Act 2000 (SA) — the MSA Act — are intended to be drawn from trends in pilotage and towage charges the Essential Services Commission of South Australia (ESCOSA) is discussed in this report. responsible for the economic regulation of certain South Australian ports. The Act covers the common-user terminals at Port Adelaide, Port Giles, Approach Port Pirie, Port Lincoln, Wallaroo, Thevenard and Ardrossan. These ports, The approach taken in the benchmarking study is broadly similar to that with the exception of Ardrossan, which is managed by Ausbulk Ltd undertaken by ESCOSA in its monitoring reports. However, both the range (ESCOSA 2004), are privately operated by Flinders Ports Pty Ltd. of ports and the range of commodities included in the analysis have been Section 9 of the MSA Act, requires the Commission to keep maritime greatly extended. A consolidated index has also been constructed as a services under review to determine whether regulation should continue, single indicator of how the overall level of prices in SA ports compares and if so whether current forms of regulation are appropriate. The current with the overall level of prices in interstate ports. Using this index, changes Ports Price Determination expires on 30 October 2007, and the in SA port charges over time have been tracked and compared with Commission intends to undertake a Port Pricing and Access Review before changes in prices at interstate ports. Finally, separate indicators have been that date. constructed to compare (a) the level of prices in South Australia and The Commission is seeking to improve its understanding of the pricing interstate ports for the cargoes generally considered to be ‘captive’ (grain behaviour of the managers of regulated ports under the current price and bulk minerals) and (b) the level of prices in South Australia and regulation regime. The particular concern of the Commission is whether interstate ports for other cargoes. the prices charged for essential maritime services in the regulated ports suggest that a change in regulatory strategy is warranted. This study is intended to provide information that will assist the Commission in formulating its views on this matter. i Benchmarking of Port Prices in Australia FIGURE E- 1: AVERAGE EMS CHARGES PER TONNE OF CARGO LOADED/DISCHARGED: VARIOUS MODEL SHIPS $/revenue tonne $16 $14 SA-Wtd Average Non SA-Wtd Average $12 $10 $8 $6 $4 $2 $- Grain- Grain- Dry Bulk- Dry Bulk - Liquid bulk Motor Container Livestock Handymax Panamax general concession vehicle Model Ship ii Benchmarking of Port Prices in Australia FIGURE E- 2: COMPARISON OF WEIGHTED AVERAGE CHARGES – INDIVIDUAL PORTS ($/REVENUE TONNE) $/revenue tonne $25 SA-Wtd Average Non SA-Wtd Average $20 $15 $10 $5 $- Grain- Grain- Dry Bulk- Dry Bulk - Liquid bulk Motor Container Livestock Handymax Panamax general concession vehicle Model Ship iii Benchmarking of Port Prices in Australia Comparison of price levels for particular commodities There are diseconomies associated with this. While operating several small ports under a single ownership eliminates some of the disadvantages of The analysis undertaken in this study indicates that there is considerable small scale, it cannot eliminate them all. In particular, it cannot eliminate variability in relative port prices between commodity groups. South low physical asset utilisation rates at remote sites. In addition, there are Australian charges are low relative to those in other ports from grain and costs as well as benefits associated with sharing resources over several certain dry bulk cargoes that enjoy low commodity-specific rates; but they remote sites. are relatively high for the general run of dry bulk cargo, for liquid