Productivity Commission Reports on the Waterfront

1.00AM, TUESDAY, 28 APRIL 1998

The Productivity Commission has today released two important research reports on Australia’s waterfront. The first of these reports, International Benchmarking of the Australian Waterfront, is a comprehensive follow up to previous benchmarking studies on Australia’s waterfront performance published in 1993 and 1995. The second report, Work Arrangements in Container Stevedoring, was commissioned by the Government in response to the Commission’s 1996 report, Labour Market Benchmarking.

These two Productivity Commission research reports provide a balanced and careful analysis of Australia’s waterfront performance and structure, and will prove a useful and objective reference source as consideration is given to reform options. The reports reinforce the Government’s view that significant reform is urgently required to lift productivity in this important interface with Australia’s trading partners.

The Commission benchmarked Australian ports against comparable overseas ports and found that Australia’s performance on the waterfront remains well below that in overseas ports:

• container stevedoring charges were higher at all Australian container terminals than at any of the overseas terminals surveyed with the exception of Nagoya in Japan;
• net container crane handlings rates are generally well below those at overseas ports for the same ships;
• average container lifts per terminal employee are significantly lower in Australia;
• the quality of service provided at Australian container terminals is lower than overseas;
• about one-fifth of container ships surveyed experienced a delay of more than 4 hours at Australian ports;
• road transport operators experience delays in delivering and receiving containers, resulting in truck queues;
• stevedoring charges for break-bulk cargo (eg timber, motor vehicles, newsprint, steel) were up to 2 times higher than overseas;
• of the ports surveyed, the cost of baggage handling is the highest in Sydney (five times more expensive than Auckland) and the cost of provedoring is also high (four times higher than at Miami and twice that of Los Angeles);
• charges for stevedoring bulk fertiliser in New Zealand were 20 to 25 per cent lower than Australia; and
• timeliness and reliability are adversely affected by land-side activities through documentation delays, lack of logistical planning and coordination, quarantine hours, and award inflexibilities.

The average cost for grain handling is significantly lower in Australia. However, most of the 64 per cent reduction since 1989 in the cost of stevedoring grain occurred after the Australian Wheat Board assumed responsibility for its own stevedoring.

The Government is committed to pursuing reform in key infrastructure services to improve overall economic efficiency, enhance productivity, and increase the long run growth potential of the economy. This report by the Productivity Commission indicates that there remains significant scope for improvement in Australia’s waterfront infrastructure, and the benefits from reform are substantial. For example, the Commission calculates that the gains to shippers from improved performance could amount to a 25 per cent reduction in container terminal charges, with consequent real benefits for Australian exporters and importers. Australian exporters are already disadvantaged by their remoteness from overseas markets. Poor performance on the Australian waterfront disadvantages Australia further.

The serious concerns raised by this report will need to be addressed between all levels of government, the industry and employees.

The Productivity Commission reports that demand for stevedoring services and labour requirements is highly variable. It is therefore critical, for improved waterfront performance, that there is flexibility in the allocation and use of stevedoring labour. However, the Commission found that the container stevedoring industry is characterised by a system of complex, inflexible and prescriptive work arrangements which constrain workplace performance. These work practices reduce and distort incentives to improve productivity, reduce timeliness and reliability, and increase labour costs for a given level of output.

The impact of work arrangements on stevedore performance was found to be wider than in the stevedoring industry alone. The Commission reports that increased costs and reduced service quality can lower output and employment in other industries that rely on the efficient distribution of their products. This ultimately impacts on national economic performance and standards of living.

The Commission reports that there are several impediments to improved work arrangements including a workplace characterised by a high level of disputation, substantial union bargaining power, limited competition in the labour market for operational stevedoring employees, and constraints in competition within the industry.

CANBERRA

27 April 1998