Port “Dirty Tricks” List Released

30 May 2002

New Zealand ports are under fire today from the CPC Group as it released a list of examples of the “dirty tricks” used by ports to extract excess fees from captive customers.

The Captive Port Customers Group (CPC Group), which surveyed port users over the past three months, released a list (attached) of some of the examples given to it by port users of their treatment at the hand of ports.

Spokesperson for the CPC Group, Paul Nicholas said the list detailed a “litany of greed, pettiness, bullying, and obstruction”.

“Ports appear to have gone to extraordinary lengths to stop captive customers from using alternative or cheaper services, “ Mr Nicholas said.

“The actions are not those of competitive businesses acting in a fair and reasonable manner. They look more like companies abusing their monopoly.

“Captive customers have little choice but to use particular ports, but they want to keep their options open for ancillary services so they can reduce costs where possible, and get the best quality service,” he said.

He said the ports’ actions looked to be the result of greed - trying to make profits considerably above those ordinary businesses would be happy with.

A recent study by economists Simon Terry Associates had estimated that New Zealand ports had earned at least $300m over the past ten years above what would be considered a fair return.

“The statistics and economic arguments are important, but nothing speaks as loudly about the monopoly abuse as the real experiences of customers,”

“We will be working with the Government over the next few months to sort out some ways ports will be forced to deal more fairly with captive customers,” Mr Nicholas said.

CPC Group has had to remove Port and customer names from its public list of examples because captive customers fear retaliation if they complain about their treatment publicly.

Captive customers include those with special facilities on wharves, like pipelines, storage units and processing plant.

Ends

Attached: List of examples from CPC Group port user survey.

Mistreatment of Captive Port Customers - some examples

Extracted from survey of port users, January-April 2002

Note: To prevent Ports from taking vindictive action, details have been removed which would identify ports and their customers.

Over-charging and double dipping

- Wharfage and berthage rates

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Most ports are charged a daily “berthage” rate as part of their “marine services” fees when they use a wharf, however captive users are charged an additional fee called “wharfage” when they use the wharf, which pays for the same services a second time.

- Pipelines

In some cases the services provided and paid for under wharfage, seem to be paid for again by those paying “pipeline” charges to cover the maintenance of pipes running across ports. So a captive customer pays wharfage charges, and then has to pay the same costs again

- Land use

A wharf user is charged for the use of a “land shadow” behind a wharf . When the wharf user also formally uses the land on that “land shadow” they are charged rental for the land. That means the wharf user is paying twice for the same land.

- Fence repair

One port tried to charge a customer 20 times the quote of an independent contractor to fixed a damaged fence that was already in a poor condition.

- Overcharging on lights

A port added a 33% mark up on the fee charged to it by a Regional Council for harbour navigation lights, before passing that cost on to customers.

2.

- Electricity

Using power for five minutes at one port incurs a charge that is the same as using the power outlet for 24 hours. Should two machines be plugged in the same outlet during a 24-hour period, two separate charges are made at the same fixed rate.

Penalising captive customers

- Selective wharfage

A customer is effectively charged $33.78 per trailer. Non-captured users of the wharf are only charged $19.00 per trailer.

- Stevedoring

One port company charged independent stevedores more than the port’s own stevedoring customers for carrying out basic services. For example, if a vessel can’t berth at the specified loading area, independents are charged for moving the containers to another berth, whereas port customers are not.

Another port offers shipping companies rate reductions for its favoured stevedore company, but not for independent stevedoring services. Independent stevedores have restricted access to working and berth areas.

At another port, independent stevedores are restricted to a small defined area, which the port continually reduces without explanation. If an independent stevedore vessel needs a crane, the port company does the handling - at extremely high prices.

- Linesmen

A customer discovered it could get the same linesman service at a quarter of the price charged by the Port. When the customer advised the port that it wished to change linesmen services, the port threatened to deny and/or delay access to the berth, denied the new provider port access, only agreed to rebate less than half of the cost of lines services bundled in the wharf services package.

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