In recent years, the global shipping industry has experienced unprecedented changes, leading to significant increases in shipping rates.
These increases have had a profound impact on Australian businesses and consumers, who are now facing rapidly increasing costs for imported goods.
The increase on costs from the international shipping lines that service Australia falls directly on their ability to be protected under an exemption from competition laws.
As the CEO of the Victorian Transport Association (VTA), I am renewing our calls for the repeal of Part X of the Competition and Consumer Act 2010 to address these unfair and anticompetitive practices in the shipping industry.
Part X of the Competition and Consumer Act 2010 was originally designed to regulate international liner shipping services to and from Australia. It aimed to ensure that exporters and importers had access to reliable and competitive shipping services.
However, the current global shipping landscape has changed dramatically, and Part X is no longer fit-for-purpose. Instead of promoting competition, it has allowed shipping lines to engage in anticompetitive practices, leading to skyrocketing shipping rates and reduced service quality.
The COVID pandemic exacerbated these issues, with shipping lines taking advantage of the crisis to manipulate capacity and drive-up rates.
Shipping lines have reported record profits, validating calls for changes to competition laws. The current regulatory framework under Part X has failed to protect Australian businesses and consumers from these exploitative practices.
One of the main issues with Part X is that it provides shipping lines with exemptions from certain competition laws, allowing them to engage in cartel-like behaviour. This has led to a lack of competition in the market, with a few major players dominating the industry.
As a result, shipping rates have become increasingly volatile, with businesses struggling to absorb the unvalidated additional costs.
This has had a ripple effect on the entire supply chain, ultimately impacting consumers who are forced to pay higher prices for goods.
The Australian Competition and Consumer Commission (ACCC) and Productivity Commission have also raised concerns about the anticompetitive behaviour of shipping lines. In a recent investigation, the ACCC found evidence of collusion and price-fixing among major shipping companies.
These practices have not only harmed Australian businesses but have also undermined the principles of fair competition that are essential for a healthy economy.
To address these issues, it is crucial that we repeal Part X of the Competition and Consumer Act 2010.
By doing so, we can remove the exemptions that allow shipping lines to engage in anticompetitive practices and restore competition to the market. This will help to stabilise shipping rates and ensure that Australian businesses and consumers are not subjected to unfair price increases.
The potential consequences of repealing Part X are significant. Higher shipping costs will inevitably be passed onto road and rail freight operators, who will then pass these costs onto consumers.
This will put upward pressure on the cost of living and lead to higher prices throughout supply chains. The impact will be felt across various sectors, from retail to manufacturing, ultimately affecting the affordability of everyday goods and services. I
n addition to repealing Part X, we must also implement stronger regulatory measures to oversee the shipping industry.
This includes increasing the powers of the ACCC to investigate and act against anticompetitive behaviour. We should also consider introducing measures to promote transparency in the industry, such as requiring shipping lines to disclose their pricing structures and capacity management practices.
It is essential that we support Australian businesses in navigating the challenges posed by the current shipping environment. This includes providing financial assistance to help businesses absorb the increased costs and investing in infrastructure to improve the efficiency of our ports and supply chains.
By doing so, we can help to mitigate the impact of high shipping rates and ensure that our economy remains resilient in the face of global disruptions.
Repealing Part X of the Competition and Consumer Act 2010 is necessary to address the unfair and anticompetitive practices in domestic and global shipping.
By removing the exemptions that allow shipping lines to engage in cartel-like behaviour, we can restore competition to the market and protect Australian businesses and consumers from exploitative price increases.
It is time for the government to act and ensure that our competition laws are fit-for-purpose in the modern global economy.
Peter Anderson
CEO, VTA
.jpg)
