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DP World facing huge rent hike

MELBOURNE: DP World, which reported handling 60 million TEUs in 2014 – an 8.9 percent year-on-year increase – is facing a 750 percent rent hike for its stevedoring services at the port of Melbourne's West Swanson container facility.

According to reports, the Port of Melbourne Corporation informed DP World of the rent rise in December 2014 as a precursor to eventual port privatization by the Victoria state government for an estimated US$4.3 billion.

Port of MelburneDP World Australia CEO Paul Scurrah said in a statement: "This will directly threaten jobs at the port and indirectly threaten jobs in the supply chain. We are disappointed with what's being proposed; we will challenge it, not just for ourselves, but to minimize the impact on importers and exporters in Victoria, and we remain concerned that a short-term focus may create a long-term negative impact on the Victorian economy, and we are calling on the Victorian government to review the approach taken by the Port of Melbourne corporation."

The Australian Logistics Council (ALC) has also expressed concern at the rent increases: "If Melbourne (right) 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.

Saying the ALC is "generally supportive" of plans to sell a long-term lease to the highest bidder to fund improvements in the state's infrastructure, Kilgariff added: "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."

Acknowledging last year's winning bid by International Container Terminal Services and Anglo Ports for stevedoring services at Melbourne's third international container terminal, Kilgariff said the price paid by the company should not impact legacy operators: "This matter highlights the need for the logistics industry to be engaged in all consultations with government on the future lease of the port of Melbourne, including arrangements for pricing, lease structure and proposed regulatory frameworks," he declared.

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