World Grain - December 2011 - 64

FEATURE: PORT ACCESS A DIVISIVE ISSUE IN AUSTRALIA

Storage cells at CBH’s Metro Grain Center in Perth, Australia. Photos courtesy of CBH.

which is operated by the Australian Bulk Alliance, a wholly owned subsidiary of Sumitomo Corporation. The main sticking point between the bulk handling companies and their accredited exporter customers is that the companies are also accredited bulk exporters in their own right. Some believe this creates a conﬂict of interest. Not only are they competing with their customers but, because of their control of infrastructure and information, they are able to do so with an unfair advantage, irrespective of fair competition law limitations. This competition, claim rivals, has seen bulk handling companies limit access to port facilities for third-party exporters, and unfairly allocate shipping stems and risk involving demurrage and dispatch. With most shippers forced to use the bulk handling companies and port closest to them, this has led to the criticism of Viterra, GrainCorp and CBH for establishing what many users claim are regional monopolies. The bulk handling companies, by contrast, claim they conduct operations within the legal parameters set by competition law and WEMA. Indeed, they believe they are discriminated against because they must bear the cost of regulatory and port access audits, as well as invest in infrastructure which is then
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opened up to third parties. Indeed, in general terms they believe the competitiveness of Australia’s wheat industry in global market is currently being undermined by over-regulation of a system that would work equally well without such interference. Richard Codling, CBH Group General Counsel, said the current port access regime was efﬁcient, fair and allowed the market, not bulk handling companies, to decide who exports and who does not. “Given the circumstances of Australian infrastructure owners, it is in their interests to maximize volume through wheat export terminals,” he explained. PORT ACCESS AGREEMENT The main means of oversight for port access established in the liberalization reforms was via the Australian Competition and Consumer Commission (ACCC), which draws its powers from the Competition and Consumer Act. The ACCC was charged with ensuring fair competition by imposing access undertakings on the bulk handling companies to ensure their terminals are made available under fair terms to third-party exporters. Access undertakings require these companies to post shipping stems and clearly deﬁne port terminal rules. WEMA also obliges bulk handling companies to post a shipping stem of

vessels scheduled to call at its ports, a process reviewed by Wheat Exports Australia (WEA), another of the regulatory bodies established under WEMA, which also manages the export accreditation procedure. In September, a number of port access undertakings were signed with the ACCC by operators which will set the parameters for exports for the next few years. Viterra agreed in September to replace its existing “ﬁrst-come, ﬁrstserved” (FCFS) system because, apart from Viterra, only one other exporter had been able to access terminals at Port Lincoln and Adelaide Outer Harbour during peak months. From May 2012, FCFS will be replaced with an auction system. ACCC and Viterra also agreed to access arrangements designed to increase transparency of available capacity, pricing and stock-at-port information. The accepted undertaking applies from October 2011 to September 2014. “Auctioning capacity will increase competition among wheat exporters and improve the efﬁcient use of Viterra’s port terminal services,” said ACCC chairman Rod Sims. “These arrangements will beneﬁt all parties involved in the South Australian bulk wheat export market, including Australian farmers.” The ACCC also accepted an access undertaking from CBH, which already had an auction system in operation, for its ports at Kwinana, Geraldton, Albany and Esperance. This included non-discriminatory access, clear and transparent port loading protocols to manage demand for port terminal services, and an agreement that CBH would “negotiate in good faith with eligible wheat exporters for access to port terminal services.” The ACCC said CBH’s existing system had encouraged competition, and CBH agreed to drop plans to introduce a twotiered capacity allocation scheme after the ACCC raised concerns. An agreement with the Australian Bulk Alliance over Melbourne Port Terminal was also agreed until September

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World Grain - December 2011

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