DP World Australia Ltd ABN 52 000 049 301 AAReview Independent Pricing and Regulatory Tribunaldoc

Sydney Regional Office160 Sussex Street Sydney NSW 2000 GPO Box 4084 Sydney NSW 2001 Tel +61 2 9364 8450 Fax +61 2 9364 8408 wwwdpworldcom

8th June 2007 Dr Michael Keating AC Chairman Review of the Interface between the Land Transport Industries and the Stevedores of Port Botany Independent Pricing and Regulatory Tribunal of New South Wales PO Box Q290 QVB Post Office NSW 1230 By email portbotanyipartnswgovau Dear Sir Re Review of the Interface between the Land Transport Industries and the Stevedores of Port Botany We welcome the opportunity to make a submission in relation to the Tribunalrsquos review of the interface between Land Transport and both Stevedores at Port Botany We have endeavoured to provide detailed responses to IPARTrsquos questions Some of the information provided is commercially sensitive and we have therefore marked that part of the submission and request that it be kept confidential and not made publicly available without our express consent The landside interface is significant to our container terminal operations in Port Botany While we are happy to support a review of the landside interface we think it is important to recognise that all of the interrelated activities that may occur within the terminal need to be taken into account DP Worldrsquos terminal in Sydney is managed as a single integrated operation servicing ship road and rail as well as supplying other services to regulatory bodies including the Australian Customs Service (ACS) and AQIS The commercial arrangements governing service level and price of stevedoring services at DP World Sydney are overwhelmingly a function of the National contracts DP World enters into with the shipping lines The only parties to these contracts are DP World as stevedore and the shipping lines either as individual lines or as members of consortia The shipping lines expect as a condition of service under these contracts that the stevedore will provide best practice landside arrangements to maximise the shipping lines own competitive position in the marketplace and not to inhibit the retention and growth of the shipping linesrsquo business

In the delivery of a best practice landside interface there is also the clear expectation by our landlord (and therefore NSW Government) that DP World Sydney will minimise if not eliminate truck queuing at the Port This can only be achieved by having in place a system that ensures the orderly arrival of trucks to the terminal

A DP World Company

2

Access to the container terminal is available to transport carriers through either the VBS bulk runs or by using the standby queue (ie non VBS) There are more than sufficient time slots available and terminal resources deployed to allow import containers to be delivered within the three day free storage period without impeding the delivery of export containers before cut-off of containers for the shipsrsquo departures We have developed the VBS as a transparent and equitable model aimed at promoting port and supply chain efficiency We support the Government and Sydney Ports Corporation (ldquoSPCrdquo) objective of increasing rail modal share Facing similar issues to the road interface at the rail terminal within DP World Sydney we introduced a rail windows concept In our view this windows concept has even greater application to rail given the nature of rail Again these windows were introduced as a transparent and equitable means of promoting overall rail efficiency Access to the container terminal for rail operators is in accordance with agreed timing windows that take into consideration the availability of rail paths Port Botany Rail Yard operations and the fact that trains are required to access both of the two container terminals at Port Botany Currently rail window utilisation at DP World Sydney is 55 The charges for booking access to the terminal by the landside operators (road and rail) are currently set at minimal notional levels keeping in mind the purpose of encouraging these operators to arrive at the terminal at the agreed time The current fees and penalties are designed to create incentives for landside operators to modify their behaviour as opposed to generating revenue for DP World VBS subscriptions and penalties only account for 1 of total revenue at DP World Sydney DP World has always been open to discussing ways in which our booking systems should deal with circumstances where landside operators do not arrive at the container terminal at the agreed time Operators not arriving on time create significant inefficiencies for the terminal and the wasted resources could have been used to meet the needs of other carriers Notwithstanding the wasted costs and inefficiencies resulting from landside operators not arriving on time DP World Sydney provides a significant level of flexibility for landside operators who are genuinely unable to meet commitments due to operational reasons and in appropriate circumstances will waive the penalties The interface at Port Botany between the land transport industries and the stevedores in Sydney exists in a port environment that is characterised by bull a dominance of import containers (full) entering the Port where carriers collect the

import without sufficient notice to the terminal resulting in a relatively high number of container moves performed by container handling equipment by the operator before the container is delivered to the carrier

bull an expectation to deliver to the terminal a relatively high number of empty containers for export at the lowest possible cost to shipping lines and carriers via bulk runs

bull insufficient rail infrastructure that favours the delivery and collection of containers via road as opposed to rail which adds additional operating costs to the terminal that are partially recovered to ensure NSW Government objectives are achieved

bull an expectation from stakeholders to minimise truck queuing in the Port Precinct understandably in the interests of the community and other port operators

A DP World Company

3

bull an expectation from road transport operators to be serviced at the terminal in less than 60 minutes (as measured by the carriersrsquo definition)

bull poor use of relatively high cost terminal resources being concentrated during weekday daylight hours rather than being spread evenly over 24 hours per day 7 days per week and 52 weeks per annum

bull over 200 carriers seeking access to the terminal

bull the lowest truck to container ratio in an Australian Port and

bull transport carrier representation that is fragmented and sometimes misaligned to the broader interests of the port community

While containers delivered to and from the rail interface present higher costs to DP World in comparison to containers delivered to the road interface DP World supports the objective of increasing containers moved through rail as a percentage of total moves and we have plans to invest capital into improving our rail infrastructure within the container terminal to facilitate the achievement of this objective Fundamentally we are of the view that a consolidation in the transport carrier industry sector would be in the interests of port stakeholders as a whole Port Botany is served by over 200 carriers A consolidation in the number of carriers would in our view promote more efficient utilisation of trucks and greater back loading resulting in fewer truck movements through the community to the benefit of consumers generally We have made progress working with port stakeholders in other capital cities in Australia where change continues to improve the landside interface while maintaining and improving our service levels to shipping lines This has created an environment that supports trade growth and we intend to achieve that same objective at Port Botany If you would like any further information or would like us to elaborate on any areas of our submission then please let us know We would welcome an opportunity to meet with you prior to IPART forming a view on recommendations Yours faithfully

Andrew Adam Director Operations DP World Australia

A DP World Company

4

Introduction to DP World DP World is one of the largest marine terminal operators in the world and has the widest network of any with 42 terminals spanning 24 countries and five continents We have a global capacity of more than 50 million TEU and a dedicated experienced and professional team of around 34000 people providing services in some of the most dynamic economies in the world

Headquartered in Dubai DP World has been at the forefront of the countrys extraordinary transformation into one of the worlds leading trade and commerce hubs We have experienced phenomenal growth through investment in developing existing and new facilities round the world for our customers and through the acquisition of two major marine terminal operators CSX in 2005 and PampO in 2006 DP World is wholly owned by the Government of Dubai

In early 2006 DP World acquired The Peninsular amp Oriental Steamship Navigation Company (ldquoPampOSNCordquo) This acquisition included PampOSNCorsquos Ports Division including all operations in Australia The Ports Division has been re-branded to DP World with Australia to operate as a region named DP World Australia

Australian Operations DP World operates in five container terminals in Brisbane Sydney Melbourne Adelaide and Fremantle

DP World is committed to its role in the economic development of New South Wales and sees its role at Port Botany as a key link between markets that enable NSWrsquos industries to effectively reach customers and NSW consumers to have efficient access to goods to enhance their business opportunities

DP World also recognises the increasing role technology plays in the industry and it has devoted considerable resources to developing and improving its technological systems

DP World believes that this combination of expertise and the continued use of advanced technologies ensure the company is well placed to face the challenges and to seek the opportunities that the future holds

DP World Sydney DP World operates its container terminal (DP World Sydney) at Port Botany the primary gateway for container traffic in and out of New South Wales DP World Sydney is a Rubber Tyred Gantry (ldquoRTGrdquo) facility where we currently operate 20 RTGrsquos 7 Quay cranes 11 Fork Lifts There is a fleet of 36 ITVs providing the yard to quay rail interface We continue to progressively equip and develop the facility ahead of demand In the coming years we intend to enhance the facility with extended rail sidings complete the development of the facility and introduce additional quay cranes and yard equipment A significant majority of the throughput is Origin amp Destination (ldquoOampDrdquo) 92 with transhipment volume at 8

DP World Sydney offers a range of electronic business support to clients including electronic Customs release of cargo Electronic Data Interchange (EDI) reporting and web browser based information services

IPART Review of the Interface between the Land Transport Industries and the Stevedore at Port Botany June 2007 DP World Submission 1 The Tribunal invites stakeholders to comment on any aspects of arrangements

between shippers (shipping lines) and stevedores that may be causing inefficiencies or extra costs to arise in the landside supply chain

11 The commercial arrangements governing service levels and prices at DP Worldrsquos

Port Botany Container Terminal (DP World Sydney) are overwhelmingly a function of the national contracts DP World enters into with the shipping lines The only parties to these contracts are DP World as stevedore and the shipping lines either as individual lines or on a consortium basis

12 The shipping lines expect the stevedore to provide best practice standards of performance at the roadside interface (Rail Road) to ensure that the shipping linesrsquo overall services to its customers remains competitive

13 It is our view that these arrangements continue to deliver cost effective services to the shipping lines and other stakeholders in the maritime logistics chain

14 When considering the efficiency of stevedoring services all of the interrelated services provided by the stevedore have to be taken into account Focussing on one particular aspects of performance runs the risk of ignoring impacts on all other aspects of the terminal operations

15 As evidence in ACCC and BTRE Waterline published data the overall outcome of the existing arrangements at Australiarsquos container terminals shows that vessel rates continue to improve for shipping lines with real prices falling while the landside interface performance measured on container turn time has continued to improve

Electrical Messaging to eliminate delays at the Container Terminal

16 The industry has embraced a number of electronic messaging solutions to

improve efficiencies The Pre-Receival Advice (PRA) introduced in August 2004 as a replacement for the paper based Export Receival Advice (ERA) is an example of a benefit to the industry with shipping lines working closely with the stevedores

Industry Benefits bull Eliminating the poor ERA legibility problems which caused significant delays

at the container terminals

bull Standardises the Export receival process for both Road and Rail

bull Crosschecking the pre-advice against the Shipping Line bookings ensures that the correct cargo is received for the correct destination and the correct Line operator

Page 1 of 48

bull Reduces the resources required at the Line to manually check receival details

bull Reduces data entry required at the wharf gate

bull Reduces truck-processing time at the wharf gate

bull Potentially reduces data entry time by the shipper as the Pre-Advice is system generated or web form fields which subject to agreement by the shipping lines on the level of information will be pre-populated with the Line Booking information

bull Ensures acceptance through the gate at the wharf if the CAN and Shipping Line information is validated prior to arrival

bull Eliminates the risk of Customs fines to the shipper for delivering cargo to the wharf with an invalid CAN

bull Eliminates the cost associated with double handling cargo received or rejected with incorrect information and

bull Could streamline the US Customs reporting process and assist in replicating the process for other trading partners as or when required

17 The next initiative which is supported by Shipping Australia Limited (SAL) we

hope to see generally adopted is the Electronic Import Delivery Order (eIDO)

The eIDO is bull A progressive replacement for Hard Copy Delivery Orders

bull A communication of ldquoauthority to deliverrdquo via electronic messaging and

bull Generated by shipping lines and sent to the relevant stevedore via 1-Stop

The benefits of an eIDO bull Security of cargo through greater documentation security

bull Shipping line reduction in documentation costs courier costs

bull Ability to link eIDO to other functionality eg VBS Com-Pay etc

bull Combined with PRArsquos the ability to fully automated gate entry and processing systems

bull Flexibility for the transports carrier by allowing the assignment of alternate trucks if required without having to provide the truck driver with paperwork (Delivery Order) and

bull The importer freight forwarder receives confirmation of shipping line release more efficiently thereby increasing the time the transport carrier has to organise the pick up of the container

18 Further developments in electronic messaging to provide interface enhancements

for all stakeholders are expected to benefits the supply chain

Repositioning of Empty Containers back to the Port

19 Shipping lines continue to seek to store empty containers at the Port which we believe is an inefficient use of high valued Port land However we understand the shipping linesrsquo position in the Australian context (import dominated) in needing to be able to reposition empties to export at short notice to take advantage of available space on ships

110 It is our view that container terminal facilities should be considered purely as

transit facilities Any activities which utilise terminals as storage facilities are contributing towards terminal inefficiencies with the potential to impact upon many

Page 2 of 48

parties within the supply chain Receival of empty containers directly back to the wharf after importer unpack is fine if they are treated as per any export container and received accordingly for a specified vessel The inefficiency related to these activities occurs when the containers are received into a terminal for a non specified vessel pool purely for top up if the vessel alongside has surplus capacity This arrangement uses expensive waterfront terminal land for the storage of empty containers The effects of such are an increase in overall container dwell time which results in terminal congestion and associated handling inefficiencies and costs

2 The Tribunal invites stakeholders to comment on any aspects of the stevedoresrsquo

methods and hours of operation or other business practices relating to the provision of access to the port terminals that may be causing inefficiencies or extra costs to rise in the landside supply chain The Tribunal further invites comments on why the Port of Melbourne appears to offer considerably more VBS slots than Port Botany

Road 21 We are unclear as to what specifically the Tribunal is referring to with regard to

methods of operation However with regard to transport carrier access there are three methods in which a transport carrier can access the DP World Sydney Terminal

a) A carrier can use a timeslot which is booked or reserved through the VBS

operated by DP World

b) A carrier may access the terminal through a standby queue and

c) A carrier may organise a bulk run

22 Our stevedoring resources are available to service vessels road and rail 24 hours per day 7 days per week 52 weeks per year

23 Shipping lines expect and are provided with vessel operations and rail operations

on a 247 basis Road services are provided on a 246 basis on the basis of demand Despite encouragement by the stevedore there is minimal demand on Saturday and no demand for road services on Sunday

24 The VBS is simply a means by which to communicate with the transport carrier

community What determines the number of slots made available are resource levels provided at the container terminal DP World Sydney provides more than sufficient resource levels to enable all containers to be delivered as required to road within the three free day period even accepting the industryrsquos current limited use of the available 247 terminal operation It is acknowledged that resource levels provided to road operations may be varied day to day as resources may need to be directed to ship operations but this follows from running the terminal as an integrated operation which is ultimately most efficient Providing further day time slots without addressing market inefficiencies only risks service levels to shipping lines that are demanding higher performance levels and perpetuating the industryrsquos unwillingness to support 247 operations

25 DP World also notes that all carriers may and do from time to time contact the

terminal and request additional timeslots if there are none available on the VBS The terminal will endeavour to accommodate such requests where there is operational capacity to do so If there is capacity the Terminal will book the timeslot in the name of the carrier that has made the request

26 Access to DP World Sydney is via a rail window assigned to the rail operator The

rail window timing duration and size (the number of lifts) is negotiated with the rail operator and aligned to the path the operator has acquired into Botany Rail Yard The rail windows are designed with the intention of allowing the rail operator

Page 3 of 48

Botany Rail Yard management and the terminal operator the ability to plan their operational requirements in order to maximise efficiency

27 Prior to the establishment of rail windows the order of arrival of trains into the

facility was on a first come first served basis This method of operation created inefficiencies where a rail operator would occupy rail siding time to the detriment of other rail operators and create large periods of idle time occupying the sidings This would invariably mean that other rail operators carrying containers for ships about to leave port could not deliver containers in time to ship on the targeted vessel voyage resulting in large short shipments Invariably missed sailings cost shippers because alternative storage facilities need to be sought together with the associated additional handling costs

28 In Table 1 below we have provided an indicative analysis explaining the apparent

significant difference in slots provided in Sydney and in Melbourne during the 0800-1600 period Monday to Friday for the June 2006 Quarter

Table 1 Comparison of slots offered in Sydney and in Melbourne

Table 1 Comparison of slots offered Notes Melbourn

e Sydney Variance Mel Syd

Terminal volume for the Quarter Ctr000 (1) 139 118 177 Proportion of Exports (2) 500 500 Proportion of Exports as Empties (3) 260 520 Proportion of containers as Empties (4) 130 260 Rail proportion (5) - 215 VBS slots available Ctr (6) 45941 26632 725 Utlisation (7) 956 948 08 VBS slots used Ctr (8) 43920 25247 740 Adjusting Melbourne to allow for like for like comparison

Terminal volume for the Quarter (9) 849 Proportion of Exports as Empties (10) 851 Rail proportion (11) 823 Sub-total 595 Adjusted VBS slots used Ctr 26118 25247 34 Notes

1 Actual DP World container volumes for the quarter

2 Estimated

3 Based on year to Dec 2006 averages

4 Calculated as (2) x (3) 5 Estimated based on Port rail volumes for Year to Jun 2006 Rail volume in Melbourne is about 10

but at DP World Melbourne rail volumes are as a matter of operational practice delivered by slotted truck access to the rail terminal at West Swanson Intermodal Terminal

6 As quoted by IPART from BTRE Waterline Figures appear to be DP World rather than Port figures 7 Source DP World 8 Calculated as (6) x (7) 9 Reducing Melbourne slots in line in proportion to volumes handled 10

Reducing Melbourne slots in line in proportion with higher empties which are typically handled as bulk runs and not slotted

11 Reducing Melbourne slots in line in proportion with lower volumes handled by rail

29 We note that these figures are for a single quarter The analysis is simplistic as noted in the table above It also assumes that the adjustments simply accumulate which may not be strictly true

210 It is to be recognised that in Sydney over 90 of bulk runs are performed on day

and evening shifts (0600-2200)

Page 4 of 48

211 Allowing for a reasonable margin of error given the estimates invoiced this analysis supports our view that Sydney is provided with proportionally equivalent day and evening slots compared with Melbourne

3 The Tribunal invites stakeholders to comment on any aspects of the road transport

operatorsrsquo current work practices and any trends in storage charges and volumes (both for on-port storage and at transport operatorsrsquo own depot storage) that may be causing inefficiencies or extra costs or arise in the downstream supply chain

31 Unlike in other states in Australia in New South Wales in our view there is no

effective peak body broadly representative of the transport carrier industry with which we as a stevedore may engage in a meaningful dialogue on port related issues However we continue to meet with individual carriers to discuss such issues

32 The delivery of removal of a container at the terminal is a decision that is

determined by or shared between the consignee and their agents (eg customs broker carrier) It is the consignee and their contracted agents which dictate when the container is required to be delivered to the warehouse Post release of the container by the ACS AQIS and shipping line the consignee and their agents decide on the most cost efficient option for storage of the imported container (or goods) ie on port storage or other storage option (either packed or unpacked)

33 On-port storage of containers may suit the consignee and their agents However

it is not conducive to efficient container terminal operations

34 As demonstrated in Figure 1 the on-port (ie container terminal) storage revenue has decreased as a percentage of revenue over the past two years This trend follows a decrease in average import dwell time over the same period In line with this the average import container dwell time (this is the average time an import container remains in the terminal) has decreased despite the overall terminal throughput having increased

Figure 1 DP World Sydney ndash Import Container Dwell Time and Storage Revenue

35 Transport carriers are able to book an available timeslot in a time zone and alter which container (number) is to be collected in that timeslot up until the time zone

Page 5 of 48

commences Once a time zone commences it is no longer possible to book a time slot in that zone Transport carriers thus have the flexibility to select a different container slot at short notice This short notice advice of which container (number) is to be collected makes it impossible for the terminal to move the container to the best position to facilitate the best possible truck turn time This is discussed further under Question 11

36 Transport carriers do not always check that a container is released from all

impediments (ACS Holds AQIS Holds storage fees paid) before arriving at the terminal This can cause delays for the truck at the terminal and congestion within the terminal and congestion within the terminal truck marshalling area reducing the opportunity for other carriers to access the terminal which have ensured there are no impediments on the processing of their containers for collection This is seen as inefficient practice that contributes to further delays and costs in the logistics chain

37 Speculative booking of timeslots appears to occur within the VBS whereby

carriers book what they can during the initial booking period rather than what they need This is evidenced by the number of time slots released into the exchange pool The exchange pool is available for carriers to offer the time slots they have booked to another carrier

38 Table 2 below shows the number of time slots that were exchanged over a period

of 8 days Saturdays and Public holidays were not included and non-peak zones were not included The table indicates that during this period an average of 24 of time slots advertised for exchange which shows that carriers initially booked these time slots however in time before the time zone commenced they decided that they did not need the time slot This high number of time slots offered for exchange is due to speculative bookings or other circumstances including change of plans more time slots being made available by the terminal or timeslots becoming available within the exchange pool and thus better suited time slots become available to the carrier DP World is unable to determine how much each factor contributes to the high percentage of slots that are offered for exchange

Table 2 DP World Sydney Percentage of timeslots exchanged during the period of time zones 05-07

Total timeslots

Exchanged 05-17 zones

Total Time Slots available 05-17

zones

Percentage of time slots exchanged

23-Jan-06 48 585 8 24-Jan-06 167 675 25 25-Jan-06 253 770 33 27-Jan-06 206 585 35 30-Jan-06 217 605 36 31-Jan-06 195 720 27 1-Feb-06 52 485 11 2-Feb-06 56 590 9 Average 149 627 24

39 As illustrated in Figure 2 below the transport operators in Sydney have the lowest

containers per truck visit to Port Botany compared to all other ports in Australia

Page 6 of 48

Figure 2 DP World Terminals ndash Containers per Truck Ratio

]

Source DP World

310 Transport carrier operations are still heavily focused on the traditional daytime

period We understand that this reflects the carriers needs to maximise profit margin in a competitive market place However DP World Sydney comes under criticism for not releasing further slots during the traditional peak periods despite resources and slots being available in ldquonon-peakrdquo periods The net result appears to be that there has been very limited success in embracing 247 operations which ultimately we believe is generally accepted as being in the long term interests of the industry as a whole We also believe that it would be in the interests of the industry as a whole if a consolidation in the transport carrier sector occurred resulting in fewer higher volume carriers with the scale to operate with a wider spread of hours

311 Storage charges apply in the vast majority of marine container terminals around

the world Storage free days vary from port to port around the world however at least three free storage days is not unusual

4 The Tribunal invites stakeholders to comment on any aspects of access to rail

infrastructure or of the current work practices of rail transport operators the supply chain

41 There are a number of public reports and studies that outline the issues

associated with rail infrastructure intermodal terminals and rail access to the port In general the conclusions being drawn are that significant investment is required in this area This is most recently supported by the New South Wales Governmentrsquos response to the FIAB report

42 DP World Sydney is seeking to extend its rail sidings to 600metres in the near

future At the same time there are a number of issues with the rail infrastructure connecting these sidings to port rail we are seeking to resolve with RIC

43 The utilisation of the rail windows at DP World Sydney was 55 during 2006

This utilisation is measured on the basis of the total number of containers actually loaded and unloaded against what could be unloaded if all window were fully utilised at the current agreed performance levels on the part of the rail operators and DP World Sydney Few rail windows are south for Saturday and none for Sunday operations When demand justifies it DP World through the provision of additional resources has the capacity to more than double the volumes handled in

Page 7 of 48

any particular window The extensions of sidings will provide further opportunity to increase rail handlings capacity at the terminals

44 Figure 3 shows the trends in terminal rail window utilisation during 2005 and 2006

Although there is a small improvement in window utilisation during this period the utilisation is low and there is considerable capacity available to increase the number of containers that can be transported by rail

Figure 3 DP World Sydney ndash Weekly Terminal Rail Window Utilisation

DP World Sydney Weekly Rail Window Utilisation 2005-07

20

30

40

50

60

70

80

Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07

45 Contributing factors to the relatively low level of utilisation include

bull the late arrival of the rail operator at the terminal which reduces window

duration and the terminalrsquos inability to increase productivity to meet window capacity requirements without incurring extra costs We understand that the late arrivals by rail operators can be due to equipment breakdowns the passenger network restrictions and the inadequate rail infrastructure for freight

bull overestimation of the volumes rail window duration required by the rail operator

bull fluctuations in freight movements on a daily basis creating peaks and troughs

bull the drought and the decrease in rural export containers

bull train shunting operations

bull the AQIS inspection required for each import container before it leaves the terminal

bull the train and wagon inspection required before the train leaves the terminal

bull the use of labour intensive manual twistlocks instead of auto twistlocks on rail wagons

bull the necessity to break split trains in Botany Rail Yard

bull infrastructure limitations within the Botany Rail Yard and

bull rail operators using the Botany Rail Yard as a storage facility for their wagons and causing congestion

46 As indicated above DP World Sydney has plans to improve the infrastructure

within the terminal in order to meet predicted rail volumes in the future However

Page 8 of 48

unless improvements are made against the issues listed above then window utilisation and efficiency may not improve to levels required to meet the NSW Governmentrsquos 40 rail mode target

5 The Tribunal invites stakeholders to comment on any aspects of the operations of

the regulatory authorities that may be causing inefficiencies or extra costs to arise in the downstream supply chain 51 The Australian Customs Service (Customs) has introduced Container Examination

Facility (CEF) operations in most major ports around Australia Each of these facilities incorporates the use of modern technology such as container x-ray equipment and other examination tools to support Customs in their aim of identifying illegal activities through containerised trade Since the inception of the CEF in Sydney in February 2003 Customs has reported many successful interceptions of prohibited imports

52 The CEF in Sydney operates two shifts each week day (day and evening shifts)

and one shift on Saturdays (day shift) This operating arrangement has created more competition for terminal resources during the peak hours 0500-1700hrs Monday ndash Friday This has resulted in the terminal deploying more equipment and labour resources at the terminal to meet the obligations of contracts with Customs but at the same time has increased competition for resources depending where the container is place in the terminal and how the yard equipment is coping with the demands of industry

53 DP World Sydney has contracted performance KPIs to deliver along with following

factors to overcome that contributed to resource competition

bull Random arrival of Customs transport provider trucks (B Doubles) and random selection of containers due to weight constraints of the trucks

bull Multiple containers per truck relating to up to six different locations a truck has to visit within an RTG terminal and the potential to utilise six different resources

bull The requirement for DP World Sydney to block stack Customs targeted containers from a vessel in order to minimise the variability of locations a Customs truck has to visit This block stacking requirement has a negative impact on vessel performance and creates more competition for internal resources

bull DP World Sydney does not control the transport to and from the CEF Customs have appointed a carrier in each port and who under the contract is responsible for the effective co-ordination between the terminals of the movement of X-Ray containers DP World Sydney does liaise with the Carrier but the carrier has the final say as to how many trucks are allocated to each terminal and

bull DP World is of the view that the current operating hours of the CEF are contributing to resource competition within the terminal during the peak periods If the CEF opened midnight shifts rather than day shift this would reduce resource competition increase terminal resource utilisation in the non-peak hours and an improvement in efficiency would be gained by industry

Declaration of Cargo

54 The Australian Customs Service (ACS) has put in place a requirement for

importers to declare cargo at least 48 hours prior to a vesselrsquos first port of call in Australia This is an initiative that has the ability to increase the efficiency of import container movements and decrease the time containers remain in a stevedore terminal The on-time reporting performance in NSW during March 07 was 87

Page 9 of 48

The ACS should continue to put in place incentives to increase this clearance rate of containers in order to gain 100 compliance

55 The Australian Quarantine Inspection Service (AQIS) could assist by utilising an

electronic means of communicating the application and release of AQIS holds required on containers Currently AQIS operate a totally manual operation

6 The Tribunal specifically invites comments on the current role of the SPC and on

the role SPC might take in improving the efficiency of the supply chain

61 Sydney Ports Corporation has stated objectives which include

bull Enhancing and developing strategic assets to ensure efficient optimum utilisation

bull Continuing to build effective relationships with stakeholders that improve the competitive positioning of the ports and

bull Taking the lead in facilitating port related freight solutions

62 DP World in Sydney has participated in efforts by SPC to facilitate efforts to achieve mutual outcomes between both the stevedores and section of the road transport industry

63 In addition SPC has

bull Measured TTT at Port Botany and published these statistics since (2001)

bull Encouraged more use of rail with the support and investment by DP World

bull Requested more capital investment to improve road transport interface which has been supported by DP World through the acquisition of additional container handling equipment

bull Sought the elimination of truck queuing outside the container terminal with the support and implementation of a Vehicle Booking System by DP World

bull Sought the development of inland intermodal terminals with the support of DP World and

bull Sought the inclusion of suitable landside Key Performance Indicators within future lease terms

64 We consider that SPC has taken the leadership role appropriate for its position in

terms of seeking to facilitate improvements in overall port efficiency without interfering in the various commercial arrangements between stakeholders

7 The Tribunal invites stakeholders to comment on any aspects of the current work

practices of freight forwarders customs brokers and any remaining industry participants that may be causing inefficiencies or extra costs to arise in the downstream supply chain

Customs Brokers

71 It is the practise of some customs brokers to wait until the storage free period at

the terminal has almost expired before paying the duty to the Australian Customs This has the impact of retarding the stevedorersquos efforts to improve the velocity of container movement through the terminal Customs brokers should therefore be encouraged to pay duty as soon as possible

72 Customs brokers can also contribute to congestion at the terminal by not paying the Customs duty up to at least 2 hours prior to the carrierrsquos time slot This results in the truck waiting at the terminal for the information to flow through to the terminal operating system via EDI

Page 10 of 48

73 One way of achieving flow in (71) and (72) above is to disconnect the relationship between the payment of duty and the physical control of cargo movement To maximise the effect here the ACS could request the Customs brokers to also lodge the lsquoImport Declarationrsquo 24 hrs prior to arrival and collect duties on account after the event

74 An initiative at DP World Brisbanersquos terminal has been successful in obtaining early container information as part of their VBS (linking timeslot to the container number)

75 The system has been in place for almost 12 months now and the availability of information at DP World Brisbane has contributed to improved service levels at this terminal

Empty Container Depot Opening Times

76 A majority of Empty Container Depots reside within 10 km radius to the port

precinct Depot opening ties do not match container terminal operating hours The result is an inability for carriers to return and pick up an empty container 24hrs a day to depots This reduces the potential of utilising the existing vehicles on the road creating potential traffic congestion and therefore free up their trucks to collect import containers from the terminal Through tariff structures the shipping lines have the ability to influence the depots to increase their opening hours thus resulting in greater vehicle utilisation and subsequent reduction in transport charges The extended spread of hours will also have the effect of flattening the peak traffic periods and reducing road congestion and travelling times

8 The Tribunal invites stakeholders to comment on any aspects of the VBS

particularly in relation to the number of timeslots made available and on what basis and the process by which those slots are made available across the day(s) and to whom

81 The VBS is simply a means by which to communicate with the transport carrier

community What determine the number of slots made available are resource levels provided at the container terminal DP World Sydney provides more than sufficient resource levels to enable all containers to be delivered as required to road within the three free day period even accepting the industryrsquos current limited use of the available 247 terminal operation It is acknowledged that resource levels provided to road operations may be varied day to day as resources may need to be directed to ship operations but this follows from running the terminal as an integrated operation which is ultimately most efficient Providing further day time slots without addressing underlying market inefficiencies only risks service levels to shipping lines that are demanding higher performance levels and perpetuating the industryrsquos unwillingness to support 247 operations

82 DP World also notes that all carriers may and do from time to time contact the

terminal and request additional timeslots if there are none available on the VBS The terminal will endeavour to accommodate such requests where there is operational capacity to do so If there is capacity the Terminal will book the timeslot in the name of the carrier that has made the request

83 Further details of the VBS are provided in responses to subsequent questions

However we believe that the VBS at DP World Port Botany Terminal has delivered benefits including

bull No random queuing at the terminal which results in significant unplanned

delays to transport users due to the random arrival of trucks at any point in time to the terminal where the terminal is not resourced to handle the high peaking demand for landside resources whilst at the same time meeting contractual obligations with shipping lines

Page 11 of 48

bull The terminal is able to carry out bulk moves while maintaining service levels to other general carriers

bull Provides choice to carriers in terms of access as well as providing transparency to industry

bull States subscriptions fees in a public document which are transparent to industry

bull Increase slot allocation to road users based on irregular shipping schedules and

bull While not referred to in the Carrier Access Arrangements (see attachment 1) all B class carriers are allowed to engage in a process called ldquoexport taggingrdquo Export tagging involves a carrier booking an import timeslot in ePorts which will give them access to the terminal A carrier is then able to bring and export container on the truck that is arriving to collect the import container without booking a slot for that export container (during most timeslots in the day) The purpose of this flexibility to carriers is to increase two-way running which reduces costs to carriers and decreases the number of trucks in the port community

9 The Tribunal asks stakeholders to comment on the variability of average

turnaround times across the major ports and the variability of turnaround times faced by individual transport operators at Port Botany itself The Tribunal also invites comment on how important predictability of turnaround times is to transport operators relative to average turnaround times at Port Botany The Tribunal further invites comment on why turnaround times are higher for Port Botany compared to Melbourne Adelaide and Fremantle

91 The precise nature of operations differs between the ports and between the

terminals operated at those ports These differences arise because of the range of shipping lines that arrive at the various terminals and the volumes of containers and type of cargo going through each terminal There are also differences in the container yard handling equipment yard configurations at each terminal and hours of operation resulting in differences in the way each terminal operates These differences result in variations amongst each terminalrsquos service performance levels

92 During 2002 DP World Sydney management met with a representative group of

carriers to discuss the VBS and access arrangements at the terminal A common view of the carriers was that they would like consistency to truck turn times and that 60mins (carrier measurement) is acceptable The outcome from these meetings was that DP World introduced three internal KPIs

bull Truck processing to truck complete measurement ndash 38 mins average

bull TTTs of 60 mins or less to be 90 to total trucks

bull TTTs of 120 mins or more to be 1 or less

93 Figure 4 below shows the percentage of truck turn times that are 60 minutes or less at DP World Sydney There is a noted improvement in during mid 2005 from an average prior to this time of 73 to an average during 2006 of 85 This indicates that the predictability of the truck turn times has improved during the life of the VBS

Page 12 of 48

Figure 4 DP World Sydney ndash Percentage of Truck Turn Time under 60 mins

DP World Sydney - Percentage of Truck Turn Time under 60 mins

50

60

70

80

90

100

Jan-04

Mar-04

May-04

Jul-04

Sep-04

Nov-04

Jan-05

Mar-05

May-05

Jul-05

Sep-05

Nov-05

Jan-06

Mar-06

May-06

Jul-06

Sep-06

Nov-06

Jan-07

Mar-07

94 Figure 5 below shows the terminal truck turn time and the stevedoring volume since July 2003 at DP World Sydney Note that the volumes are hidden on the left Y axis for commercial reasons As a result of terminal improvements and putting in place the KPIs described above the average TTT performance has improved (right Y axis) whilst at the same time the terminal volume has increased (left Y axis)

Figure 5 DP World Sydney ndash Truck Turn Time and Container Volume

95 DP World operates in all five major ports in Australia and has three different modes of operation namely Straddles in Melbourne and Adelaide RTGrsquos in Sydney and Fremantle and Forklift and Reach-stacker in Brisbane The Variability in TTT between ports is attributed to a number of factors including but not limited to the site processes and physical constraints of each facility

96 The measurement of TTT differs mainly due to

a) the layouts of in-gates and its approaches and

Page 13 of 48

b) the measurement of the job steps which apply to a truck from arrival to departure due to (a)

97 All the above terminals have different truck parking arrangements within and

outside the terminal which impacts TTT Across the board TTT is measured from job processing to job complete (98c to 98e below) however the physical layout and mode can influence when processing commences

98 The process of truck management in simple terms is

a) Pre-arrival of trucks

b) Validation of time slots

c) Processing of job (Manual but if automated it takes effect in b above)

d) Enter the operational yard

e) Job transact and complete (by straddle RTG or Forklift Reach-stacker) and

f) AQIS check for full trucks and depart (gate-out)

99 Depending on the physical layout and provision of sufficient space to hold trucks within the terminal boundary or otherwise the distribution of trucks varies through steps 98a to 98c above

910 At DP World Sydney the equivalent hourly truck volume can be held in the

terminal entry marshalling area therefore multiple trucks can enter the terminal park and be processed by terminal staff Post processing all time spent in the marshalling area forms part of the TTT whilst the truck has not necessarily entered the operational yard (see Annexure 2)

911 At DP World Melbourne on the other hand due to restricted space within the

terminal trucks are normally held outside and a small number is constantly drip fed into the terminal (controlled rate of entry) These trucks then approach the processing points (6 lanes x processing booths) further which they directly enter the operational yard and the TTT is measured from this point

912 DP World Fremantle does not have a truck holding area within the terminal which

means the truck enter the terminal and queue at the Entry to Operational Yard Immediately after being processed the truck enters the terminal yard Therefore unlike Sydney time from Entry to Operational Yard is time historically not published Therefore TTT between DP World Sydney and DPW Fremantle are not comparable

913 DP World Fremantle is also an RTG operation similar to DP World Sydney

However the physical layout and the resulting entry arrangements differ Due to restricted space within the terminal the trucks are normally held outside and constantly drip fed into the terminal (controlled rate of entry) The trucks operate through 3 lanes within the terminal and truck turn time is measured at this processing point when the trucks actually enter the operational yard

914 DP World Adelaide is a straddle operation similar to DP World Melbourne

However its physical layout and resulting entry arrangement is different to that of DP World Melbourne and has some similarities with what takes place in Sydney The hourly truck volume can be held within the terminal and the TTT is measured from entry into the terminal main gate to departure from the terminal main gate The measure differs from the other facilities on both entry are exit gates

915 The benefits of this TTT data is not so much the raw data itself but more so the

long term trend in the data If TTT is constant or even improved during periods of volume growth then this reflects a firm commitment to the landside process Continuous improvement reflects a commitment to landside efficiencies

Page 14 of 48

916 TTT is influenced by the mode of operation the Gate In infrastructure and volume

of containers required to be handled

917 The RTG mode of operation requires the truck to travel to the yard stack where the container is located or assigned as opposed to the straddle operation where the straddle comes to the truck that is parked in a bay external to the stacking area The mode of operation at DP World Sydney generally results in a truck with multiple containers being serviced by multiple RTGs and also having to travel to multiple yard locations At each of these yard locations there will be a different level of demand on the particular RTG covering the area This will result in variations in the time it will take to service the truck in that particular area and therefore will influence the truck turnaround time

918 In comparison a terminal running a straddle operation could employ a different

straddle to handle each of the containers processed for the truck

919 The mode of operations employed by container terminals have various strength and weaknesses and need to be considered based on many factors in a Port (ie not just the landside interface) but both modes can contribute to variability

10 The Tribunal invites comment on how truck turnaround times are currently

measured by supply chain participants and how they should be measured The Tribunal further invites comment on the extent to which the stevedores provide access to their facilities at the specific times booked on the VBS

Truck Turn Time (TTT)

101 DP World Sydney currently measures truck turn times from the time the containers on a truck are processed to the time the last container is completely loaded onto the truck (import containers) or discharged from a truck and landed in the terminal (export containers)

102 TTT is directly influenced by the number of containers to be handled by an RTG

terminal on a truck run ie a higher number of containers results in a longer truck turn time on average This due to the truck having to potentially visit multiple locations within the RTG terminal

103 The reason the container Terminal does not measure the time following

completion of loadingdischarging container from truck is measure regulatory bodies (ie AGIS) have commenced inspection of containers on terminal exit gate which is beyond the control of the container terminal

104 The process time is used to measure the start of the truck turn time as this is the

closest time to the truck being in the terminalrsquos control

105 Trucks that take advantage of the autogate processing (currently 25 of trucks) actually start the truck turn time as they come through the terminal gate as this is where the transponder reader is located DP World Sydney support the increase of the autogate processing and the result that the truck turn time starts at the gate For trucks that do not use the autogate processing opportunity the terminal does not start the truck turn time at the gate as the truck driver may not move efficiently to have the container processed

106 Carriers often use TTT measured from the time the truck services at the standby

queue or the arrival of the truck at the zone queue which are waiting for the next time zone to open

107 In relation to standby queue the CAA clearly stipulates that the use of this system

does not guarantee immediate call-up to the terminal in priority to trucks that have booked a time slot

Page 15 of 48

108 In relation to TTT measured from arrival at the time zone queue the fact that the truck has arrived prior to the commencement of the zone opening is purely a decision of the transport carrier and is beyond the control of the Container Terminal and is not supported by DP World

Container Turn Times

109 DP World Sydney currently measures container turn time from the time the

container is processed to the time the container is loaded onto the truck (import container) or discharged from a truck and landed in the terminal (export container) Over the last 5 years the transport regulators have allowed truck operators to operate larger trucks thereby ultimately improving the efficiency of road transport As transport operators increase the use of larger trucks (capable of carrying multiple containers) the handling of these trucks produces a multiple handling of containers on the same truck at the terminals For example in the past one would handle one container per truck and in that case the CTT and TTT were almost identical With multiple containers on trucks the difference between the CTT and TTT is increasing To be able to benchmark this across a port and other ports becomes hard with TTT due to the ever changing ratio of containers per truck (depends on percentage of large truck operators) firstly within the same port and secondly between different ports Therefore CTT enables us to benchmark the measurement on common grounds across all our operations around the country

Access Times at DP World

1010 DP World Sydney divide the day into hourly time zones within the VBS The time

zones start on the house (eg 0700hrs) and complete at the end of the hour (eg 0759hrs) There is a time zone board located at Simblist Road which indicates which time zone is open Trucks queue at this point waiting for the board to change each hour During daylight hours on average there are 15 trucks waiting for the time zone to open The trucks then make their way to the terminal in gate located on Friendship Road once the zone is open

11 The Tribunal invites comment on the choice between a system where container

numbers are nominated in advance thereby offering the possibility of faster turnaround times or not providing container numbers which would provide road carriers with greater flexibility Or would industry participants prefer a system that allows the choice between both

Import Timeslots

111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the import container number in a timeslot booking up to the start of the time zone The disadvantage for the terminal and the carrier is that this flexible system arrangement does not allow the terminal the chance to reposition the container to a position that will minimise the number of containers that have to be moved (known as ldquoconsolidation movesrdquo) in order to access the container that is to be delivered to the truck once the truck has been processed and is in position for loading The more consolidation moves the terminal has to do to load an import container to a truck the longer the truck turn time will be

112 Undertaking consolidation moves prior to truck arrival would provide the opportunity

to decrease truck turn time

113 To achieve a further reduction in truck turn times and a reduction in cost of delivering a container the terminal would need to control the order in which the import containers are delivered This occurs in other ports in the world

Controlling the order of import deliveries

114 The current arrangement where the shipper controls the order of import containers

to be delivered from the terminals results in extra costs incurred by stevedores and also decreased efficiencies The longer a container remains in the terminal (an

Page 16 of 48

increase in the dwell time) results in increased consolidation (rehandles) undertaken by terminal equipment and an increase in the time taken to load a container to a truck or train

Matching of resources to meet demand

115 The terminal allocates the resources required based on the demand or the

number of timeslots released This occurs 24 hrs in advance

116 Carriers who book timeslots and do not meet their commitment (No Show) results in the terminal resources to be under utilised at certain times and creates an opportunity loss There is also an opportunity lost by another carrier to utilise the time slot for each No Show

117 Carrier who book timeslots and arrive late for their commitment (Wrong Zones)

results in terminal resources being under utilised at times and over utilised at other times The troughs in terminal resource utilisation result in an opportunity loss and the peaks result in a decrease in efficiency (increased truck turn time) or increased cost (increased resources applied) The increase in truck turn time has an impact on carriers who arrive on time for their time slot

118 The current VBS allows for carriers to arrive at the terminal to deliver or pick up a

container without committing to a time and container number thus not enabling the terminal to completely plan the required resources to meet the demand This is termed unplanned work The Standby Queue export tagging by B Carrier no advanced deadline for entering an import container number prior to the time zone and no requirement for an export container number being entered into a time slot booking results in an increase in unplanned work Unplanned work results in peaks in the work required by the planned resources and a decrease in efficiency

119 Rail also has similar problems

1110 By changing this arrangement and giving control to the stevedores to determine

the order of container delivery from the terminal will reduce the costs incurred by the terminal and decrease the turnaround time for trucks

Export Timeslots

1111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the export container number in a timeslot booking up to the start of the time zone It also allows an export time slot to be processed without a container number entered in the time slot booking The container number in then entered by the RampD Clerk at the terminal This often results in human error by the truck driver or the RampD Clerk resulting in delays to trucks This practice also eliminates the opportunity for the carrier to use the automatic processing described below in Question 12 To maximise the use of automation and eliminate human error the export container number needs to be a mandatory field to be updated in the time slot booking by a nominated time prior to the start of the time zone eg 2 hours prior to the start of the time zone

12 The Tribunal invites comments on the increased use of ICT and automation and

any other ways to reduce turnaround times and otherwise improve supply chain efficiency

121 DP World support and are driving the increased use of automation for the

processing of trucks DP World have developed and currently make available an automated truck processing system for carriers who use ePORTS to book and manage timeslots The percentage use of this system at DP World Sydney by carriers averages about 25 of total truck movements excluding stack run trucks

122 This system requires the purchase of a transponder unit from the terminal at the

cost that the terminal purchases the unit plus GST Currently the units are sold to

Page 17 of 48

the carrier for $12050 Also required is access to an eGATE screen in ePORTS The process for carriers wanting to move a number of containers on a transponder run involves

a) Booking through EPORTS the required number of time slots in a time zone

For example if a transport carrier wanted to deliver two export containers and collect one import container on a single truck run it needed to book three slots and

b) Setting up the transponder by inputting the slots truck number container numbers and whether they are import or export containers in the transponder booking screen in ePORTS

123 The benefits for carriers of using this automated processing include

a) The processing occurs earlier (ie at the gate as compared to in the RampD Office) therefore this decreases the chance of Wrong Zones being incurred

b) No need for the truck driver to present documentation at the RampD Office therefore reducing the truck turn time by avoiding any potential queues

c) No interaction between the truck driver and the RampD Clerk therefore decreasing human error during processing and causing further delays

d) As the processing occurs at the gate the trucks can skip ahead of other trucks where their drivers have to manually process in the RampD Office effectively jumping the queue

e) Allows reprogramming of trucks up to 15mins before the end of the time zone (eg 0645 for an 06 slot) without the truck driver needing the Delivery Order in his possession

f) Provides the carrier with the ability to educate their customers to provide the Delivery Orders in a timely manner in order to lodge them at the terminal

g) Electronic copies of the Delivery Orders (excluding scanned copies of originals) can be forwarded to the terminal via email therefore eliminating the need to physically lodge them

h) Enables the carrier to take all advantage of Electronic Import Delivery Orders (eIDOs) that are currently being used by Evergreen Marine at DP World Sydney Other shipping lines will move to the use of eIDOs in the future

13 The Tribunal invites stakeholders to comment on VBS capital and operating costs

and to assist it to distinguish between stand-alone VBS costs and those shared with other stevedoring activities

131 It is important to distinguish between the capital and operating costs of operating

the VBS and the costs of operating the landside interface ie delivering containers to and from trucks

132 The costs of a VBS comprise the following components

bull IT development and maintenance costs and

bull Management and administration time to manage and administer the system

These costs are low relative to the costs of actually providing the services within the terminal ndash loading and unloading the trucks

133 Having a system which requires the terminal to provide a guaranteed number of

slots per hours is to the disadvantage of the terminal Terminal operations are by their nature unpredictable due to the irregular arrival of ships Having to guarantee a number of slots which carry with it a high expectation of performance in terms of TTT tends to force the terminal to set the number of slots at a level which includes a risk mitigation factor against all things not going to plan The net result of this is

Page 18 of 48

that the terminal tends to effectively oversupply equipment and labour increasing its costs The impact of this is far more significant than the isolated costs of running the actual vehicle booking systems

134 Direct VBS costs have nothing to do with ship or rail operations

135 The container yard is run as a single operation servicing ship road and rail By

this means while there are practical limitations we seek to pool resources to maximise the overall efficiency of terminal operations particularly to absorb the peaks and troughs of demand across the operations as a whole This effective sharing of costs improves overall efficiency and results in lower costs to the benefits of users as a whole We anticipate that systems and technology improvements will see greater use of such pooling and greater overall efficiency as a result

14 The Tribunal invites stakeholders to comment on VBS access and penalty charges

and the level of transparency of access through the stevedoresrsquo VBSs

141 The VBS facilitates the provision of orderly access to DP World Sydney Terminal for over 200 individual carriers

142 DP World considers the achievement of orderly access to its terminals as a

primary objective of the VBS To achieve orderly access DP World considers it important to require carriers to pay a nominal subscription charge for the level and rights of access they require and to issue ldquono showrdquo and ldquolaterdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay lsquoon timersquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs

143 The VBS is essentially an ldquoappointment bookrdquo to assist transport carriers to

organise themselves more efficiently leading to a reduction in waiting times at the container terminal The VBS divides all working days into time periods containing a pre-determined number of timeslots The timeslots represent the number of import and export containers that can be handled in that period The number of timeslots in a day is determined by expected carrier demand and the availability of labour and equipment Carriers are then able to book timeslots for collection or delivery of containers

144 The alternative is random access to container terminals by carriers and significant

truck queues with associated demurrage costs which are ultimately paid for by the end user

145 At DP World Sydney the VBS offers transport carriers the ability to access an

internet based computer system or telephone bureau for the purpose of booking time slots for those carriers who do no wish to use the computer system The VBS in its present form offers access on a transparent and equitable basis to all carriers encourages the efficient movement of containers from the ship through the terminal and onto customers and vice-versa encourages innovative practices which are beneficial to terminal efficiency road congestion and the overall cost of the supply chain The ldquono showrdquo and ldquolaterdquo fees encourage these operational practices and efficiencies

146 DP World has adopted a class structure with an annual subscription for access

because this system allows carriers to determine what access is required for their business while providing the industry significant level of transparency in terms of access costs

147 All carriers have an equal opportunity to subscribe to any of the three classes of

access to the VBS (bearing in mind that smaller carriers are allowed to consolidate

Page 19 of 48

their subscriptions in order to share the cost of a B Class subscription) and equal access to timeslots amongst carriers of the same class

148 Annual fees are payable in advance Table 3 sets out the various carrier classes

currently in operation at each terminal and the applicable subscription fees for each class There are no annual limits on the number of slots carriers can book

Table 3 DP World Sydney ndash Current carrier classes and VBS deposit and registration fees for the year commencing 1 July 2005

Terminal Carrier Classes Price Number of active

carriers at Feb 06 Port Botany New South Wales

B Carrier ndash online internet access with high service levels

$2922150 (Non-refundable deposit) No fixed upper limit on annual time slots1

28

A Carrier ndash online internet access with standard service levels

$133400 (Annual registration fee) No fixed upper limit on annual time slots2

162

AB Carrier ndash access via the PampO Phone Booking Bureau with standard service levels

$66760 (Annual registration fee) No fixed upper limit on annual time slots3 39

149 Any carrier selecting the ldquoBrdquo classification is encouraged to also consider the ldquoArdquo

classification unless they are confident of utilising a high level of timeslots that would render the higher subscription fee as attractive per timeslot

1410 In addition to the VBS annual subscription fees the carrier access arrangements

provide for the levying of a no-show fee on carriers who fail to arrive for slots they have booked in the amount of $110 per time slot The terminal also charges carriers late fees of $55 per slot if they fail to arrive for a slot booking within the nominated time zone No fees are charged where a carrier is unable to meet the time slot due to delays caused and acknowledged by DP World Australia or where delays are caused by circumstances genuinely outside of the carrierrsquos control DP World Australia also has the discretion to and does waive ldquono showrdquo and ldquowrong zonerdquo fees in the interest of maintaining a good working relationship with carriers Failure by carriers to pay these ldquono showrdquo and ldquowrong zonerdquo fees may lead to them being prevented from making further bookings ldquoNo showrdquo and ldquowrong zonerdquo fees are the means by which DP World ensures that access to itrsquos terminals is provided in the most efficient manner to all 1carriers as late carriers cause delays for those carriers that are on time

1 No fixed upper limit on annual timeslots ndash Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 2 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 3 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release

Page 20 of 48

1411 The ldquono showrdquo and ldquowrong zonerdquo fee structure was introduced following

consultation with carriers It was originally $20 per late arrival (in Victoria where VBS first commenced) but this is proved to be ineffective in disciplining carrier conduct In response to requests from many carriers DP World increased the ldquono showrdquo fee to $110 The fees also discourage carriers from the practice of overbooking slots which they have no intention of using and preventing other carriers from using those slots

1412 The actual cost of a truck turning up late (Wrong Zone) or not turning up at all (No

Show) is the cost of planned resources (labour equipment etc) based on the VBS demand (number of containers expected to handle during a time period) not being utilised during the time period they are employed

1413 Adjacent to each time zone are grace periods one prior to the time zone and one

following the time zone These grace periods and the trucks arrival time for processing determine the status of the time slot ie arrived on time or arrived late (Wrong Zone) Currently the grace period following the time zone is set at 20 minutes which means that if a truck arrives later than one hour and 20 minutes after the start of the time zone then the time slot will be initially recorded as a Wrong Zone Following the completion of each VBS day Wrong Zones are reviewed and any penalty waived if any of the following determined

a) The terminal is aware that it has contributed to a truck arriving late for the time

slot ie the terminal has previously delayed the truck or carrier on an earlier time slot or

b) The carrier advises that they arrived late due to an unforeseen circumstance eg a break down of the truck

We request that the information in 1414 be kept confidential

1414 Omitted for reasons of confidentiality

1415 Officers at DP World Sydney have regular conversations with carriers in respect of

the waiver of No Show fees as well In certain instances DP World may agree to waive fees prior to an invoice being issued

1416 For both Wrong Zone and No Show fees the terminal provides a grievance

process for carriers who have been issued invoices and do not agree that the fee has been issued fairly The carrier has the opportunity to provide the terminal with an explanation and should officers at DP World Sydney agree that there has been an error in the issuing of the fee or an unforeseen circumstance is explained the terminal will credit the invoice

15 The Tribunal invites stakeholders to indicate the costs of providing the services of

rail windows and rail paths to rail operators

151 Rail windows are based allowance on a rail terminal performance KPI of 30 container moves per hour and charged at $360 per hour A shunting time allowance of 15 mins per window is not charged Additional lifts canare provided by increasing the lifts per hour by applying more machinery at no additional cost

152 The cost of providing terminal rail operations is higher than road operations at DP

World Sydney The RTG mode of operation requires a container to be moved to or from the container stack For road containers the truck takes the export container to the stack and travels to the stack to pick up an import container For a rail container a terminal internal transfer vehicle (ITV) is required to be used by the terminal to move the container from the train to the stack (export containers) or

Page 21 of 48

the stack to the train (import containers) This is not required for container being received or delivered by road

153 For import rail containers there is a loss of efficiency for the vessel discharge

operation in order to stack rail containers separately for delivery to the train For each discharge point in the terminal extra resources are required There is extra administration costs in having to make alternate arrangements to separate these import rail containers

154 Despite the fact that the delivery of containers to rail is higher than road the

terminal seeks only a partial recovery of costs in order to encourage the use of rail in the port in line with the NSW Government objectives

155 There is a management cost of setting up and operating the rail windows This is

similar to the cost of operating a VBS

156 There is additional security infrastructure costs for a rail operation to ensure the terminal meets their legislative security requirements The more terminal entry points created the higher the cost to replicate these security infrastructure requirements

16 The Tribunal invites comment from stakeholders on the planned or mooted

development and expansion of the various intermodal terminals in Sydney and the extent to which this is expected to ease congestion in the landside supply chain at Port Botany

161 DP World supports the development and expansion of an intermodal terminal

network to facilitate an increase in the use of rail as the means of container transport This has the potential flow on benefit of minimising the growth in the number of trucks requiring to access the Port Botany area as port volumes continue to grow

162 Transport between the Botany terminals and the inland intermodal terminals

should be by rail or trucks operating a stack (bulk) run road out during off peak periods eg night shifts or weekends The use of Super B Double trucks would assist with the efficiency of these off peak stack run outs

17 The Tribunal invites comment on the likely effect of the expansion plans at Port

Botany on access to the port terminal during peak periods and efficiency along the supply chain

171 Improving the two-way running or back-loading of trucks has to be a priority in

order to maximise access opportunity at the terminals and efficiency along the supply chain It is likely that a third and separate stevedoring facility will only increase the difficulty of improving truck utilisation over and above the current levels by the increased logistics complexity of coordinating timely access to three terminals rather than two

172 A third stevedore will lead to the same port volume being spread over three

operations While it is resource levels that determine available slots DP World has found that during periodic decreases in volumes carriers favour daytime runs to the terminal as opposed to night time

173 The expansion plans will have a negative impact on rail transport timeliness and

access requirements to DP World Sydney if the requirements to breaksplit trains and shunt sections of trains into multiple terminals continues This will undermine the overall rail effectiveness and the NSW Government rail objectives by the unnecessary increase of splitting trains

Page 22 of 48

18 The Tribunal invites comment on the likely effects of expansion of the intermodal network in Sydney on access to the port and efficiency along the supply chain

181 This is a similar issue to point 16 above

19 The Tribunal invites comment on the likely impact of a peak pricing system along

the lines of the FIC on access to the port terminals and the efficiency of the Port Botany supply chain

191 We understand for the NSW Governmentrsquos announcement (31 May 2007) that the

FIC is no longer being proposed

192 Table 4 shows the average percentage of road containers that are handled by shift at DP World Sydney based on a 6 day x 24 hour receival and delivery operation for the past 4 years The figures indicate that there is surplus capacity on both evening and midnight shifts when compared to day shift Note that the percentage of road containers handled has increased on day shift relative to the combination of evening and midnight shifts This has been due to terminal efficiencies creating increased capacity during day shifts and the road carriers utilising this capacity

193 This is further emphasised in Figure 4 which shows the trend over time for day

shift containers handled has increased from 2005 evening shift has decreased and midnight shift has not changed significantly

Table 4 DP World Sydney ndash Percentage of Daily Road Container Volume handled by Shift

Year Midnight Shift (2230 ndash 0630hrs)

Day Shift (0630 ndash 1430hrs)

Evening Shift (1430 ndash 2230hrs)

2007 YTD 21 47 32

2006 23 45 33

2005 22 43 36

2004 19 44 38

194 Year to date April 2007 figures may reflect the seasonal trend for lower volumes in this period

Figure6 DP World Sydney ndash Road Volume trendlines by shift 2005-07

Page 23 of 48

20 The Tribunal invites comment on the likely impact of the expansion of the freight

rail network in Sydney on the number of containers moved by rail and on congestion at the port

201 The importance of increasing the proportion of containers moved by rail is

recognised and supported by DP World Sydney

202 To complement the expansion of the rail freight network upgrade the terminal is developing plans to increase the length and the number of sidings within the terminal Over the next three years the terminal is planning to spend an estimated $20million on internal rail infrastructure machinery and systems The terminal upgrade will ensure DP World Sydney has the infrastructure in place to meet a target of 40 throughput by rail

203 The expansion of the freight rail network needs to take into account The access

to each of the terminals especially the access to DP World Sydney where by the terminal has a distinct disadvantage in relation to its competitor

21 The Tribunal invites comment on the impact on the supply chain on ARTC

managing the metropolitan freight rail network

211 Management of freight rail infrastructure is ARTCrsquos core business and will bring additional management expertise and focus to the task of reforming operations on the Port Botany rail infrastructure

212 For ARTC to control the MFN (Metropolitan Freight Network) makes sense from

the point of view they can make informed decisions for both inbound and outbound Port services based on the wider NSW Rail Freight Network operation

213 The ARTC proposal to co-ordinate services by performing the full Network Control

Function (both signalling and Train Control) from the one centralised centre for the Southern Sydney Freight Line (SSFL)MFN and Port Botany emphasises their commitment to ensure safety communications and network management is their primary objective

214 ARTC are focussed on improving the efficiencies at the Port and bring to the

industry fresh innovative ideas to improve the overall capacity on the rail network ARTCrsquos willingness to assist and eagerness to invest in the rail infrastructure brings a breath of fresh air to the industry and specifically the stevedore operations ARTC can integrate the Botany line into its overall investment program paving the way for additional investment to improve the efficiency of operations on the Botany rail line and at the port-rail interface

22 The Tribunal invites comment on the following questions in relation to costs of the

VBS

22a What costs underpin the VBS access charges levied by the two stevedores How are the VBS access charges set

22b1 Refer to Question 14 The revenue from VBS charges account for a very

small proportion of DP Worldrsquos total container terminal revenue For the year ended 31 December 2006 they accounted for 13 of total revenue Of that 13 approximately 30 was for No Shows and Wrong Zones

22b What costs are incurred by the stevedores in moving a container from the

wharf to a truck or train

22b1 DP World Sydney is operated as an integrated business servicing ships road and rail within the context of a national business We do no separately account for the costs of each discrete activity Information on

Page 24 of 48

overall costs is provided to the ACCC and published on an industry basis in the ACCCrsquos Container Stevedoring Monitoring Report

22b3 Wharf to truck activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the VBS to provide orderly access for road carriers

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal space to allow truck drivers to park their vehicles in order to unlockset up their twist locks and processing of containers

bull Processing of the container

bull System to manage the truck movement within the terminal

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the truck by RTG or forklift

bull Provision of terminal area for truck drivers to safely leave their vehicle to lock the twist locks on their trucks check the container seal number and check the container for damage

bull Provision of terminal area for AQIS operation and infrastructure

22b3 Wharf to train activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the Rail Windows to provide orderly access for operators

Page 25 of 48

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal area for rail lines associated rail infrastructure and train inspection requirements within the terminal

bull Processing of the container

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the ITV by RTG or forklift

bull Internal Transfer Vehicle (ITV) movement of the container from the yard stack to the rail line

bull Lift of the container from the ITV onto the rail wagon

22c What influences the nature and amount of these costs (for example are they influenced by the type of equipment used by a stevedore Do they fluctuate with the number of containers handled by the stevedores) and how have costs changed over time

22c1 DP World operates very similar Vehicle Booking Systems in Brisbane

Sydney Melbourne and Fremantle where there are differences in volume through the terminals The only difference in subscription between the terminals are the ldquoB Classrdquo carrier subscriptions The annual subscription is influenced by the number of carriers seeking this class and the hourly allocation of slots to their class given the number of subscriptions In addition Melbourne operates a straddle facility and Brisbane operates a forklift reachstacker Therefore the cost of the Vehicle Booking System is not dependant on or mode but the annual subscription to ldquoB Classrdquo carrier depends on competition for that carrier class

22c2 An annual subscription fee per class which is a characteristic of DP

Worldrsquos VBS does not normally increase with volume At DP World Sydney subscription fees have not been increased since 2003

22c3 Overall landside costs have increased with increases in wages and

salaries (4 pa) property costs (substantially ahead of cpi) fuel and other general costs These increases have been offset to some extent by increases in productivity Industry costs history is also available publicly in the ACCC Container Stevedoring Monitoring Reports

22d Where do the port landside costs stop and the VBS costs start

22d1 Prior to the Entry to Operational Yard (see Attachment 2) the truck is

under the influence of the VBS and also under the influence of the external environment which includes but is not limited to port and metropolitan road conditions container clearance issues truck arrival peaks and troughs truck preparedness processing of the container to the handled by the terminal and maritime security requirements

It is DP World Sydneyrsquos view that the port landside costs stop and the VBS costs start at the choke point

22e Do the VBSsrsquo penalty charges reflect the cost to stevedores What should

they reflect

22e1 The primary rationale for the penalty regime is to seek to modify carrier behaviour

Page 26 of 48

22e2 However it is also the case that a ldquono showrdquo or ldquowrong zonerdquo gives rise to a lost opportunity cost to the terminal Resources made available but not utilised may be wasted

22e3 DP World considers the achievement of orderly access to its terminal as

a primary objective of the VBS To achieve orderly access PampO considers it important to issue ldquono showrdquo and ldquowrong zonerdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay ldquoon timerdquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs The alternative is random access to container terminals by carriers and significant truck queues with associated demurrage costs which are ultimately paid for by the end consumer

22f Should there be different charging arrangements for empty containers that

are returned to the port as opposed to full export containers

22f1 DP World Sydney terminal handles a full container in a similar way to an empty container using purpose built container stacking equipment controlled by a DP World employee A container occupies the same amount of space whether it is full or empty This leads to the same cost for the handling of a single empty container as a single full container Single empty containers returned to the port should be charged a similar rate to full containers

22f2 To reduce the cost of handling empty containers in the terminal destined

for the same port on the one vessel and that are of the same size the terminal in conjunction with the shipping line and the shipping linersquos nominated carrier work together to create a bulk run of empty containers The bulk run maximises the number of empty containers that are handled in a specific time period The terminal dedicates resources to thee bulk runs and also provides priority access to the transport carrier in order to create efficiency and an economy of scale In this way the cost of returning an empty container via a bulk run is reduced

23 The Tribunal invites comment on the following questions in relation to the different

pricing regimes of the two stevedores

23a Why do the stevedores have different pricing schemes for their VBSs

23a1 We do not know why Toll-PatrickAsciano has adopted the pricing scheme it has

23a2 In order to improve earlier versions of its VBS in the mid-1990s DP

World (PampO) introduced categories of carriers and began charging differential subscription fees for carriers registering to use the VBS depending on the level of access required by the carrier Prior to this change some carriers were engaging multiple computer terminals to the detriment of other carriers and it had become clear that a level of differentiation would be in all carrierrsquos interests The different classes of carrier access were introduced to ensure the most balanced overall outcome The level of differentiation is an annual choice of access levels available to all carriers regardless of size Under this approach different subscription fees are charged for each category but all carriers registering in a particular category pay the same fee Our view remains that an annual subscription as opposed to a pay as you go is far less of an administrative burden on both the carriers and the terminal

Page 27 of 48

23a3 There are no restrictions upon carriers wishing to obtain a certain carrier category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for the same carrier categories as larger carriers Smaller carriers may also apply for consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst charging the burden of the cost of that subscription

23a4 Subscription fees based on differences in class are designed to

encourage choice whilst at the same time communicating a level of transparency with terminal pricing and service

23b Do the different pricing schemes influence the efficiency with which

transporters obtain access to the terminals

23b1 We do not believe this to be the case

23c Would standardisation of charges be more appropriate

23c1 It is our understanding that it would be unlawful for a supplier itself to standardise charges by reason of Section 45 of the Trade Practices Act This may be something that Government wishes to consider

24 The Tribunal invites comment on the following non-price access issues to consider

in relation to the operation of the VBSs

24a What effect do access rules and conditions and non price constraints have on booking a timeslot How to the stevedores use their discretion in determining access and charges and what impact does this have

24a1 The introduction of different categories of access stages the carriersrsquo

access to the VBS for the purposes of booking timeslots ldquoB classrdquo carriers are given exclusive access to a pool of slots between 0730-0820 During this period they are subject to zone limitations which restrict carriers to a maximum number of slots for any given hour The zone limit ensures all carriers within that carrier class are given fair and equitable access to the initial release of slots After the initial booking period the zone limit is lifted and carriers are permitted to book any number of unused slots per hour from those remaining in their pool Similar arrangements exist for A class carriers culminating in the cascading of all remaining slots from all segregated pools into a general pool at 1030 for access by all registered carriers

24a2 There are not restrictions upon carriers wishing to obtain a certain carrier

category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for a consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst sharing the burden of the cost of that subscription

24b What are the stevedoresrsquo obligations with regard to access to port facilities

and what should they be

24b1 Without providing an analysis of our obligations under law in general terms we are required to provide access to carriers on an equitable basis recognising the competitive environment we operate in

Page 28 of 48

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

A DP World Company

3

bull an expectation from road transport operators to be serviced at the terminal in less than 60 minutes (as measured by the carriersrsquo definition)

bull poor use of relatively high cost terminal resources being concentrated during weekday daylight hours rather than being spread evenly over 24 hours per day 7 days per week and 52 weeks per annum

bull over 200 carriers seeking access to the terminal

bull the lowest truck to container ratio in an Australian Port and

bull transport carrier representation that is fragmented and sometimes misaligned to the broader interests of the port community

While containers delivered to and from the rail interface present higher costs to DP World in comparison to containers delivered to the road interface DP World supports the objective of increasing containers moved through rail as a percentage of total moves and we have plans to invest capital into improving our rail infrastructure within the container terminal to facilitate the achievement of this objective Fundamentally we are of the view that a consolidation in the transport carrier industry sector would be in the interests of port stakeholders as a whole Port Botany is served by over 200 carriers A consolidation in the number of carriers would in our view promote more efficient utilisation of trucks and greater back loading resulting in fewer truck movements through the community to the benefit of consumers generally We have made progress working with port stakeholders in other capital cities in Australia where change continues to improve the landside interface while maintaining and improving our service levels to shipping lines This has created an environment that supports trade growth and we intend to achieve that same objective at Port Botany If you would like any further information or would like us to elaborate on any areas of our submission then please let us know We would welcome an opportunity to meet with you prior to IPART forming a view on recommendations Yours faithfully

Andrew Adam Director Operations DP World Australia

A DP World Company

4

Introduction to DP World DP World is one of the largest marine terminal operators in the world and has the widest network of any with 42 terminals spanning 24 countries and five continents We have a global capacity of more than 50 million TEU and a dedicated experienced and professional team of around 34000 people providing services in some of the most dynamic economies in the world

Headquartered in Dubai DP World has been at the forefront of the countrys extraordinary transformation into one of the worlds leading trade and commerce hubs We have experienced phenomenal growth through investment in developing existing and new facilities round the world for our customers and through the acquisition of two major marine terminal operators CSX in 2005 and PampO in 2006 DP World is wholly owned by the Government of Dubai

In early 2006 DP World acquired The Peninsular amp Oriental Steamship Navigation Company (ldquoPampOSNCordquo) This acquisition included PampOSNCorsquos Ports Division including all operations in Australia The Ports Division has been re-branded to DP World with Australia to operate as a region named DP World Australia

Australian Operations DP World operates in five container terminals in Brisbane Sydney Melbourne Adelaide and Fremantle

DP World is committed to its role in the economic development of New South Wales and sees its role at Port Botany as a key link between markets that enable NSWrsquos industries to effectively reach customers and NSW consumers to have efficient access to goods to enhance their business opportunities

DP World also recognises the increasing role technology plays in the industry and it has devoted considerable resources to developing and improving its technological systems

DP World believes that this combination of expertise and the continued use of advanced technologies ensure the company is well placed to face the challenges and to seek the opportunities that the future holds

DP World Sydney DP World operates its container terminal (DP World Sydney) at Port Botany the primary gateway for container traffic in and out of New South Wales DP World Sydney is a Rubber Tyred Gantry (ldquoRTGrdquo) facility where we currently operate 20 RTGrsquos 7 Quay cranes 11 Fork Lifts There is a fleet of 36 ITVs providing the yard to quay rail interface We continue to progressively equip and develop the facility ahead of demand In the coming years we intend to enhance the facility with extended rail sidings complete the development of the facility and introduce additional quay cranes and yard equipment A significant majority of the throughput is Origin amp Destination (ldquoOampDrdquo) 92 with transhipment volume at 8

DP World Sydney offers a range of electronic business support to clients including electronic Customs release of cargo Electronic Data Interchange (EDI) reporting and web browser based information services

IPART Review of the Interface between the Land Transport Industries and the Stevedore at Port Botany June 2007 DP World Submission 1 The Tribunal invites stakeholders to comment on any aspects of arrangements

between shippers (shipping lines) and stevedores that may be causing inefficiencies or extra costs to arise in the landside supply chain

11 The commercial arrangements governing service levels and prices at DP Worldrsquos

Port Botany Container Terminal (DP World Sydney) are overwhelmingly a function of the national contracts DP World enters into with the shipping lines The only parties to these contracts are DP World as stevedore and the shipping lines either as individual lines or on a consortium basis

12 The shipping lines expect the stevedore to provide best practice standards of performance at the roadside interface (Rail Road) to ensure that the shipping linesrsquo overall services to its customers remains competitive

13 It is our view that these arrangements continue to deliver cost effective services to the shipping lines and other stakeholders in the maritime logistics chain

14 When considering the efficiency of stevedoring services all of the interrelated services provided by the stevedore have to be taken into account Focussing on one particular aspects of performance runs the risk of ignoring impacts on all other aspects of the terminal operations

15 As evidence in ACCC and BTRE Waterline published data the overall outcome of the existing arrangements at Australiarsquos container terminals shows that vessel rates continue to improve for shipping lines with real prices falling while the landside interface performance measured on container turn time has continued to improve

Electrical Messaging to eliminate delays at the Container Terminal

16 The industry has embraced a number of electronic messaging solutions to

improve efficiencies The Pre-Receival Advice (PRA) introduced in August 2004 as a replacement for the paper based Export Receival Advice (ERA) is an example of a benefit to the industry with shipping lines working closely with the stevedores

Industry Benefits bull Eliminating the poor ERA legibility problems which caused significant delays

at the container terminals

bull Standardises the Export receival process for both Road and Rail

bull Crosschecking the pre-advice against the Shipping Line bookings ensures that the correct cargo is received for the correct destination and the correct Line operator

Page 1 of 48

bull Reduces the resources required at the Line to manually check receival details

bull Reduces data entry required at the wharf gate

bull Reduces truck-processing time at the wharf gate

bull Potentially reduces data entry time by the shipper as the Pre-Advice is system generated or web form fields which subject to agreement by the shipping lines on the level of information will be pre-populated with the Line Booking information

bull Ensures acceptance through the gate at the wharf if the CAN and Shipping Line information is validated prior to arrival

bull Eliminates the risk of Customs fines to the shipper for delivering cargo to the wharf with an invalid CAN

bull Eliminates the cost associated with double handling cargo received or rejected with incorrect information and

bull Could streamline the US Customs reporting process and assist in replicating the process for other trading partners as or when required

17 The next initiative which is supported by Shipping Australia Limited (SAL) we

hope to see generally adopted is the Electronic Import Delivery Order (eIDO)

The eIDO is bull A progressive replacement for Hard Copy Delivery Orders

bull A communication of ldquoauthority to deliverrdquo via electronic messaging and

bull Generated by shipping lines and sent to the relevant stevedore via 1-Stop

The benefits of an eIDO bull Security of cargo through greater documentation security

bull Shipping line reduction in documentation costs courier costs

bull Ability to link eIDO to other functionality eg VBS Com-Pay etc

bull Combined with PRArsquos the ability to fully automated gate entry and processing systems

bull Flexibility for the transports carrier by allowing the assignment of alternate trucks if required without having to provide the truck driver with paperwork (Delivery Order) and

bull The importer freight forwarder receives confirmation of shipping line release more efficiently thereby increasing the time the transport carrier has to organise the pick up of the container

18 Further developments in electronic messaging to provide interface enhancements

for all stakeholders are expected to benefits the supply chain

Repositioning of Empty Containers back to the Port

19 Shipping lines continue to seek to store empty containers at the Port which we believe is an inefficient use of high valued Port land However we understand the shipping linesrsquo position in the Australian context (import dominated) in needing to be able to reposition empties to export at short notice to take advantage of available space on ships

110 It is our view that container terminal facilities should be considered purely as

transit facilities Any activities which utilise terminals as storage facilities are contributing towards terminal inefficiencies with the potential to impact upon many

Page 2 of 48

parties within the supply chain Receival of empty containers directly back to the wharf after importer unpack is fine if they are treated as per any export container and received accordingly for a specified vessel The inefficiency related to these activities occurs when the containers are received into a terminal for a non specified vessel pool purely for top up if the vessel alongside has surplus capacity This arrangement uses expensive waterfront terminal land for the storage of empty containers The effects of such are an increase in overall container dwell time which results in terminal congestion and associated handling inefficiencies and costs

2 The Tribunal invites stakeholders to comment on any aspects of the stevedoresrsquo

methods and hours of operation or other business practices relating to the provision of access to the port terminals that may be causing inefficiencies or extra costs to rise in the landside supply chain The Tribunal further invites comments on why the Port of Melbourne appears to offer considerably more VBS slots than Port Botany

Road 21 We are unclear as to what specifically the Tribunal is referring to with regard to

methods of operation However with regard to transport carrier access there are three methods in which a transport carrier can access the DP World Sydney Terminal

a) A carrier can use a timeslot which is booked or reserved through the VBS

operated by DP World

b) A carrier may access the terminal through a standby queue and

c) A carrier may organise a bulk run

22 Our stevedoring resources are available to service vessels road and rail 24 hours per day 7 days per week 52 weeks per year

23 Shipping lines expect and are provided with vessel operations and rail operations

on a 247 basis Road services are provided on a 246 basis on the basis of demand Despite encouragement by the stevedore there is minimal demand on Saturday and no demand for road services on Sunday

24 The VBS is simply a means by which to communicate with the transport carrier

community What determines the number of slots made available are resource levels provided at the container terminal DP World Sydney provides more than sufficient resource levels to enable all containers to be delivered as required to road within the three free day period even accepting the industryrsquos current limited use of the available 247 terminal operation It is acknowledged that resource levels provided to road operations may be varied day to day as resources may need to be directed to ship operations but this follows from running the terminal as an integrated operation which is ultimately most efficient Providing further day time slots without addressing market inefficiencies only risks service levels to shipping lines that are demanding higher performance levels and perpetuating the industryrsquos unwillingness to support 247 operations

25 DP World also notes that all carriers may and do from time to time contact the

terminal and request additional timeslots if there are none available on the VBS The terminal will endeavour to accommodate such requests where there is operational capacity to do so If there is capacity the Terminal will book the timeslot in the name of the carrier that has made the request

26 Access to DP World Sydney is via a rail window assigned to the rail operator The

rail window timing duration and size (the number of lifts) is negotiated with the rail operator and aligned to the path the operator has acquired into Botany Rail Yard The rail windows are designed with the intention of allowing the rail operator

Page 3 of 48

Botany Rail Yard management and the terminal operator the ability to plan their operational requirements in order to maximise efficiency

27 Prior to the establishment of rail windows the order of arrival of trains into the

facility was on a first come first served basis This method of operation created inefficiencies where a rail operator would occupy rail siding time to the detriment of other rail operators and create large periods of idle time occupying the sidings This would invariably mean that other rail operators carrying containers for ships about to leave port could not deliver containers in time to ship on the targeted vessel voyage resulting in large short shipments Invariably missed sailings cost shippers because alternative storage facilities need to be sought together with the associated additional handling costs

28 In Table 1 below we have provided an indicative analysis explaining the apparent

significant difference in slots provided in Sydney and in Melbourne during the 0800-1600 period Monday to Friday for the June 2006 Quarter

Table 1 Comparison of slots offered in Sydney and in Melbourne

Table 1 Comparison of slots offered Notes Melbourn

e Sydney Variance Mel Syd

Terminal volume for the Quarter Ctr000 (1) 139 118 177 Proportion of Exports (2) 500 500 Proportion of Exports as Empties (3) 260 520 Proportion of containers as Empties (4) 130 260 Rail proportion (5) - 215 VBS slots available Ctr (6) 45941 26632 725 Utlisation (7) 956 948 08 VBS slots used Ctr (8) 43920 25247 740 Adjusting Melbourne to allow for like for like comparison

Terminal volume for the Quarter (9) 849 Proportion of Exports as Empties (10) 851 Rail proportion (11) 823 Sub-total 595 Adjusted VBS slots used Ctr 26118 25247 34 Notes

1 Actual DP World container volumes for the quarter

2 Estimated

3 Based on year to Dec 2006 averages

4 Calculated as (2) x (3) 5 Estimated based on Port rail volumes for Year to Jun 2006 Rail volume in Melbourne is about 10

but at DP World Melbourne rail volumes are as a matter of operational practice delivered by slotted truck access to the rail terminal at West Swanson Intermodal Terminal

6 As quoted by IPART from BTRE Waterline Figures appear to be DP World rather than Port figures 7 Source DP World 8 Calculated as (6) x (7) 9 Reducing Melbourne slots in line in proportion to volumes handled 10

Reducing Melbourne slots in line in proportion with higher empties which are typically handled as bulk runs and not slotted

11 Reducing Melbourne slots in line in proportion with lower volumes handled by rail

29 We note that these figures are for a single quarter The analysis is simplistic as noted in the table above It also assumes that the adjustments simply accumulate which may not be strictly true

210 It is to be recognised that in Sydney over 90 of bulk runs are performed on day

and evening shifts (0600-2200)

Page 4 of 48

211 Allowing for a reasonable margin of error given the estimates invoiced this analysis supports our view that Sydney is provided with proportionally equivalent day and evening slots compared with Melbourne

3 The Tribunal invites stakeholders to comment on any aspects of the road transport

operatorsrsquo current work practices and any trends in storage charges and volumes (both for on-port storage and at transport operatorsrsquo own depot storage) that may be causing inefficiencies or extra costs or arise in the downstream supply chain

31 Unlike in other states in Australia in New South Wales in our view there is no

effective peak body broadly representative of the transport carrier industry with which we as a stevedore may engage in a meaningful dialogue on port related issues However we continue to meet with individual carriers to discuss such issues

32 The delivery of removal of a container at the terminal is a decision that is

determined by or shared between the consignee and their agents (eg customs broker carrier) It is the consignee and their contracted agents which dictate when the container is required to be delivered to the warehouse Post release of the container by the ACS AQIS and shipping line the consignee and their agents decide on the most cost efficient option for storage of the imported container (or goods) ie on port storage or other storage option (either packed or unpacked)

33 On-port storage of containers may suit the consignee and their agents However

it is not conducive to efficient container terminal operations

34 As demonstrated in Figure 1 the on-port (ie container terminal) storage revenue has decreased as a percentage of revenue over the past two years This trend follows a decrease in average import dwell time over the same period In line with this the average import container dwell time (this is the average time an import container remains in the terminal) has decreased despite the overall terminal throughput having increased

Figure 1 DP World Sydney ndash Import Container Dwell Time and Storage Revenue

35 Transport carriers are able to book an available timeslot in a time zone and alter which container (number) is to be collected in that timeslot up until the time zone

Page 5 of 48

commences Once a time zone commences it is no longer possible to book a time slot in that zone Transport carriers thus have the flexibility to select a different container slot at short notice This short notice advice of which container (number) is to be collected makes it impossible for the terminal to move the container to the best position to facilitate the best possible truck turn time This is discussed further under Question 11

36 Transport carriers do not always check that a container is released from all

impediments (ACS Holds AQIS Holds storage fees paid) before arriving at the terminal This can cause delays for the truck at the terminal and congestion within the terminal and congestion within the terminal truck marshalling area reducing the opportunity for other carriers to access the terminal which have ensured there are no impediments on the processing of their containers for collection This is seen as inefficient practice that contributes to further delays and costs in the logistics chain

37 Speculative booking of timeslots appears to occur within the VBS whereby

carriers book what they can during the initial booking period rather than what they need This is evidenced by the number of time slots released into the exchange pool The exchange pool is available for carriers to offer the time slots they have booked to another carrier

38 Table 2 below shows the number of time slots that were exchanged over a period

of 8 days Saturdays and Public holidays were not included and non-peak zones were not included The table indicates that during this period an average of 24 of time slots advertised for exchange which shows that carriers initially booked these time slots however in time before the time zone commenced they decided that they did not need the time slot This high number of time slots offered for exchange is due to speculative bookings or other circumstances including change of plans more time slots being made available by the terminal or timeslots becoming available within the exchange pool and thus better suited time slots become available to the carrier DP World is unable to determine how much each factor contributes to the high percentage of slots that are offered for exchange

Table 2 DP World Sydney Percentage of timeslots exchanged during the period of time zones 05-07

Total timeslots

Exchanged 05-17 zones

Total Time Slots available 05-17

zones

Percentage of time slots exchanged

23-Jan-06 48 585 8 24-Jan-06 167 675 25 25-Jan-06 253 770 33 27-Jan-06 206 585 35 30-Jan-06 217 605 36 31-Jan-06 195 720 27 1-Feb-06 52 485 11 2-Feb-06 56 590 9 Average 149 627 24

39 As illustrated in Figure 2 below the transport operators in Sydney have the lowest

containers per truck visit to Port Botany compared to all other ports in Australia

Page 6 of 48

Figure 2 DP World Terminals ndash Containers per Truck Ratio

]

Source DP World

310 Transport carrier operations are still heavily focused on the traditional daytime

period We understand that this reflects the carriers needs to maximise profit margin in a competitive market place However DP World Sydney comes under criticism for not releasing further slots during the traditional peak periods despite resources and slots being available in ldquonon-peakrdquo periods The net result appears to be that there has been very limited success in embracing 247 operations which ultimately we believe is generally accepted as being in the long term interests of the industry as a whole We also believe that it would be in the interests of the industry as a whole if a consolidation in the transport carrier sector occurred resulting in fewer higher volume carriers with the scale to operate with a wider spread of hours

311 Storage charges apply in the vast majority of marine container terminals around

the world Storage free days vary from port to port around the world however at least three free storage days is not unusual

4 The Tribunal invites stakeholders to comment on any aspects of access to rail

infrastructure or of the current work practices of rail transport operators the supply chain

41 There are a number of public reports and studies that outline the issues

associated with rail infrastructure intermodal terminals and rail access to the port In general the conclusions being drawn are that significant investment is required in this area This is most recently supported by the New South Wales Governmentrsquos response to the FIAB report

42 DP World Sydney is seeking to extend its rail sidings to 600metres in the near

future At the same time there are a number of issues with the rail infrastructure connecting these sidings to port rail we are seeking to resolve with RIC

43 The utilisation of the rail windows at DP World Sydney was 55 during 2006

This utilisation is measured on the basis of the total number of containers actually loaded and unloaded against what could be unloaded if all window were fully utilised at the current agreed performance levels on the part of the rail operators and DP World Sydney Few rail windows are south for Saturday and none for Sunday operations When demand justifies it DP World through the provision of additional resources has the capacity to more than double the volumes handled in

Page 7 of 48

any particular window The extensions of sidings will provide further opportunity to increase rail handlings capacity at the terminals

44 Figure 3 shows the trends in terminal rail window utilisation during 2005 and 2006

Although there is a small improvement in window utilisation during this period the utilisation is low and there is considerable capacity available to increase the number of containers that can be transported by rail

Figure 3 DP World Sydney ndash Weekly Terminal Rail Window Utilisation

DP World Sydney Weekly Rail Window Utilisation 2005-07

20

30

40

50

60

70

80

Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07

45 Contributing factors to the relatively low level of utilisation include

bull the late arrival of the rail operator at the terminal which reduces window

duration and the terminalrsquos inability to increase productivity to meet window capacity requirements without incurring extra costs We understand that the late arrivals by rail operators can be due to equipment breakdowns the passenger network restrictions and the inadequate rail infrastructure for freight

bull overestimation of the volumes rail window duration required by the rail operator

bull fluctuations in freight movements on a daily basis creating peaks and troughs

bull the drought and the decrease in rural export containers

bull train shunting operations

bull the AQIS inspection required for each import container before it leaves the terminal

bull the train and wagon inspection required before the train leaves the terminal

bull the use of labour intensive manual twistlocks instead of auto twistlocks on rail wagons

bull the necessity to break split trains in Botany Rail Yard

bull infrastructure limitations within the Botany Rail Yard and

bull rail operators using the Botany Rail Yard as a storage facility for their wagons and causing congestion

46 As indicated above DP World Sydney has plans to improve the infrastructure

within the terminal in order to meet predicted rail volumes in the future However

Page 8 of 48

unless improvements are made against the issues listed above then window utilisation and efficiency may not improve to levels required to meet the NSW Governmentrsquos 40 rail mode target

5 The Tribunal invites stakeholders to comment on any aspects of the operations of

the regulatory authorities that may be causing inefficiencies or extra costs to arise in the downstream supply chain 51 The Australian Customs Service (Customs) has introduced Container Examination

Facility (CEF) operations in most major ports around Australia Each of these facilities incorporates the use of modern technology such as container x-ray equipment and other examination tools to support Customs in their aim of identifying illegal activities through containerised trade Since the inception of the CEF in Sydney in February 2003 Customs has reported many successful interceptions of prohibited imports

52 The CEF in Sydney operates two shifts each week day (day and evening shifts)

and one shift on Saturdays (day shift) This operating arrangement has created more competition for terminal resources during the peak hours 0500-1700hrs Monday ndash Friday This has resulted in the terminal deploying more equipment and labour resources at the terminal to meet the obligations of contracts with Customs but at the same time has increased competition for resources depending where the container is place in the terminal and how the yard equipment is coping with the demands of industry

53 DP World Sydney has contracted performance KPIs to deliver along with following

factors to overcome that contributed to resource competition

bull Random arrival of Customs transport provider trucks (B Doubles) and random selection of containers due to weight constraints of the trucks

bull Multiple containers per truck relating to up to six different locations a truck has to visit within an RTG terminal and the potential to utilise six different resources

bull The requirement for DP World Sydney to block stack Customs targeted containers from a vessel in order to minimise the variability of locations a Customs truck has to visit This block stacking requirement has a negative impact on vessel performance and creates more competition for internal resources

bull DP World Sydney does not control the transport to and from the CEF Customs have appointed a carrier in each port and who under the contract is responsible for the effective co-ordination between the terminals of the movement of X-Ray containers DP World Sydney does liaise with the Carrier but the carrier has the final say as to how many trucks are allocated to each terminal and

bull DP World is of the view that the current operating hours of the CEF are contributing to resource competition within the terminal during the peak periods If the CEF opened midnight shifts rather than day shift this would reduce resource competition increase terminal resource utilisation in the non-peak hours and an improvement in efficiency would be gained by industry

Declaration of Cargo

54 The Australian Customs Service (ACS) has put in place a requirement for

importers to declare cargo at least 48 hours prior to a vesselrsquos first port of call in Australia This is an initiative that has the ability to increase the efficiency of import container movements and decrease the time containers remain in a stevedore terminal The on-time reporting performance in NSW during March 07 was 87

Page 9 of 48

The ACS should continue to put in place incentives to increase this clearance rate of containers in order to gain 100 compliance

55 The Australian Quarantine Inspection Service (AQIS) could assist by utilising an

electronic means of communicating the application and release of AQIS holds required on containers Currently AQIS operate a totally manual operation

6 The Tribunal specifically invites comments on the current role of the SPC and on

the role SPC might take in improving the efficiency of the supply chain

61 Sydney Ports Corporation has stated objectives which include

bull Enhancing and developing strategic assets to ensure efficient optimum utilisation

bull Continuing to build effective relationships with stakeholders that improve the competitive positioning of the ports and

bull Taking the lead in facilitating port related freight solutions

62 DP World in Sydney has participated in efforts by SPC to facilitate efforts to achieve mutual outcomes between both the stevedores and section of the road transport industry

63 In addition SPC has

bull Measured TTT at Port Botany and published these statistics since (2001)

bull Encouraged more use of rail with the support and investment by DP World

bull Requested more capital investment to improve road transport interface which has been supported by DP World through the acquisition of additional container handling equipment

bull Sought the elimination of truck queuing outside the container terminal with the support and implementation of a Vehicle Booking System by DP World

bull Sought the development of inland intermodal terminals with the support of DP World and

bull Sought the inclusion of suitable landside Key Performance Indicators within future lease terms

64 We consider that SPC has taken the leadership role appropriate for its position in

terms of seeking to facilitate improvements in overall port efficiency without interfering in the various commercial arrangements between stakeholders

7 The Tribunal invites stakeholders to comment on any aspects of the current work

practices of freight forwarders customs brokers and any remaining industry participants that may be causing inefficiencies or extra costs to arise in the downstream supply chain

Customs Brokers

71 It is the practise of some customs brokers to wait until the storage free period at

the terminal has almost expired before paying the duty to the Australian Customs This has the impact of retarding the stevedorersquos efforts to improve the velocity of container movement through the terminal Customs brokers should therefore be encouraged to pay duty as soon as possible

72 Customs brokers can also contribute to congestion at the terminal by not paying the Customs duty up to at least 2 hours prior to the carrierrsquos time slot This results in the truck waiting at the terminal for the information to flow through to the terminal operating system via EDI

Page 10 of 48

73 One way of achieving flow in (71) and (72) above is to disconnect the relationship between the payment of duty and the physical control of cargo movement To maximise the effect here the ACS could request the Customs brokers to also lodge the lsquoImport Declarationrsquo 24 hrs prior to arrival and collect duties on account after the event

74 An initiative at DP World Brisbanersquos terminal has been successful in obtaining early container information as part of their VBS (linking timeslot to the container number)

75 The system has been in place for almost 12 months now and the availability of information at DP World Brisbane has contributed to improved service levels at this terminal

Empty Container Depot Opening Times

76 A majority of Empty Container Depots reside within 10 km radius to the port

precinct Depot opening ties do not match container terminal operating hours The result is an inability for carriers to return and pick up an empty container 24hrs a day to depots This reduces the potential of utilising the existing vehicles on the road creating potential traffic congestion and therefore free up their trucks to collect import containers from the terminal Through tariff structures the shipping lines have the ability to influence the depots to increase their opening hours thus resulting in greater vehicle utilisation and subsequent reduction in transport charges The extended spread of hours will also have the effect of flattening the peak traffic periods and reducing road congestion and travelling times

8 The Tribunal invites stakeholders to comment on any aspects of the VBS

particularly in relation to the number of timeslots made available and on what basis and the process by which those slots are made available across the day(s) and to whom

81 The VBS is simply a means by which to communicate with the transport carrier

community What determine the number of slots made available are resource levels provided at the container terminal DP World Sydney provides more than sufficient resource levels to enable all containers to be delivered as required to road within the three free day period even accepting the industryrsquos current limited use of the available 247 terminal operation It is acknowledged that resource levels provided to road operations may be varied day to day as resources may need to be directed to ship operations but this follows from running the terminal as an integrated operation which is ultimately most efficient Providing further day time slots without addressing underlying market inefficiencies only risks service levels to shipping lines that are demanding higher performance levels and perpetuating the industryrsquos unwillingness to support 247 operations

82 DP World also notes that all carriers may and do from time to time contact the

terminal and request additional timeslots if there are none available on the VBS The terminal will endeavour to accommodate such requests where there is operational capacity to do so If there is capacity the Terminal will book the timeslot in the name of the carrier that has made the request

83 Further details of the VBS are provided in responses to subsequent questions

However we believe that the VBS at DP World Port Botany Terminal has delivered benefits including

bull No random queuing at the terminal which results in significant unplanned

delays to transport users due to the random arrival of trucks at any point in time to the terminal where the terminal is not resourced to handle the high peaking demand for landside resources whilst at the same time meeting contractual obligations with shipping lines

Page 11 of 48

bull The terminal is able to carry out bulk moves while maintaining service levels to other general carriers

bull Provides choice to carriers in terms of access as well as providing transparency to industry

bull States subscriptions fees in a public document which are transparent to industry

bull Increase slot allocation to road users based on irregular shipping schedules and

bull While not referred to in the Carrier Access Arrangements (see attachment 1) all B class carriers are allowed to engage in a process called ldquoexport taggingrdquo Export tagging involves a carrier booking an import timeslot in ePorts which will give them access to the terminal A carrier is then able to bring and export container on the truck that is arriving to collect the import container without booking a slot for that export container (during most timeslots in the day) The purpose of this flexibility to carriers is to increase two-way running which reduces costs to carriers and decreases the number of trucks in the port community

9 The Tribunal asks stakeholders to comment on the variability of average

turnaround times across the major ports and the variability of turnaround times faced by individual transport operators at Port Botany itself The Tribunal also invites comment on how important predictability of turnaround times is to transport operators relative to average turnaround times at Port Botany The Tribunal further invites comment on why turnaround times are higher for Port Botany compared to Melbourne Adelaide and Fremantle

91 The precise nature of operations differs between the ports and between the

terminals operated at those ports These differences arise because of the range of shipping lines that arrive at the various terminals and the volumes of containers and type of cargo going through each terminal There are also differences in the container yard handling equipment yard configurations at each terminal and hours of operation resulting in differences in the way each terminal operates These differences result in variations amongst each terminalrsquos service performance levels

92 During 2002 DP World Sydney management met with a representative group of

carriers to discuss the VBS and access arrangements at the terminal A common view of the carriers was that they would like consistency to truck turn times and that 60mins (carrier measurement) is acceptable The outcome from these meetings was that DP World introduced three internal KPIs

bull Truck processing to truck complete measurement ndash 38 mins average

bull TTTs of 60 mins or less to be 90 to total trucks

bull TTTs of 120 mins or more to be 1 or less

93 Figure 4 below shows the percentage of truck turn times that are 60 minutes or less at DP World Sydney There is a noted improvement in during mid 2005 from an average prior to this time of 73 to an average during 2006 of 85 This indicates that the predictability of the truck turn times has improved during the life of the VBS

Page 12 of 48

Figure 4 DP World Sydney ndash Percentage of Truck Turn Time under 60 mins

DP World Sydney - Percentage of Truck Turn Time under 60 mins

50

60

70

80

90

100

Jan-04

Mar-04

May-04

Jul-04

Sep-04

Nov-04

Jan-05

Mar-05

May-05

Jul-05

Sep-05

Nov-05

Jan-06

Mar-06

May-06

Jul-06

Sep-06

Nov-06

Jan-07

Mar-07

94 Figure 5 below shows the terminal truck turn time and the stevedoring volume since July 2003 at DP World Sydney Note that the volumes are hidden on the left Y axis for commercial reasons As a result of terminal improvements and putting in place the KPIs described above the average TTT performance has improved (right Y axis) whilst at the same time the terminal volume has increased (left Y axis)

Figure 5 DP World Sydney ndash Truck Turn Time and Container Volume

95 DP World operates in all five major ports in Australia and has three different modes of operation namely Straddles in Melbourne and Adelaide RTGrsquos in Sydney and Fremantle and Forklift and Reach-stacker in Brisbane The Variability in TTT between ports is attributed to a number of factors including but not limited to the site processes and physical constraints of each facility

96 The measurement of TTT differs mainly due to

a) the layouts of in-gates and its approaches and

Page 13 of 48

b) the measurement of the job steps which apply to a truck from arrival to departure due to (a)

97 All the above terminals have different truck parking arrangements within and

outside the terminal which impacts TTT Across the board TTT is measured from job processing to job complete (98c to 98e below) however the physical layout and mode can influence when processing commences

98 The process of truck management in simple terms is

a) Pre-arrival of trucks

b) Validation of time slots

c) Processing of job (Manual but if automated it takes effect in b above)

d) Enter the operational yard

e) Job transact and complete (by straddle RTG or Forklift Reach-stacker) and

f) AQIS check for full trucks and depart (gate-out)

99 Depending on the physical layout and provision of sufficient space to hold trucks within the terminal boundary or otherwise the distribution of trucks varies through steps 98a to 98c above

910 At DP World Sydney the equivalent hourly truck volume can be held in the

terminal entry marshalling area therefore multiple trucks can enter the terminal park and be processed by terminal staff Post processing all time spent in the marshalling area forms part of the TTT whilst the truck has not necessarily entered the operational yard (see Annexure 2)

911 At DP World Melbourne on the other hand due to restricted space within the

terminal trucks are normally held outside and a small number is constantly drip fed into the terminal (controlled rate of entry) These trucks then approach the processing points (6 lanes x processing booths) further which they directly enter the operational yard and the TTT is measured from this point

912 DP World Fremantle does not have a truck holding area within the terminal which

means the truck enter the terminal and queue at the Entry to Operational Yard Immediately after being processed the truck enters the terminal yard Therefore unlike Sydney time from Entry to Operational Yard is time historically not published Therefore TTT between DP World Sydney and DPW Fremantle are not comparable

913 DP World Fremantle is also an RTG operation similar to DP World Sydney

However the physical layout and the resulting entry arrangements differ Due to restricted space within the terminal the trucks are normally held outside and constantly drip fed into the terminal (controlled rate of entry) The trucks operate through 3 lanes within the terminal and truck turn time is measured at this processing point when the trucks actually enter the operational yard

914 DP World Adelaide is a straddle operation similar to DP World Melbourne

However its physical layout and resulting entry arrangement is different to that of DP World Melbourne and has some similarities with what takes place in Sydney The hourly truck volume can be held within the terminal and the TTT is measured from entry into the terminal main gate to departure from the terminal main gate The measure differs from the other facilities on both entry are exit gates

915 The benefits of this TTT data is not so much the raw data itself but more so the

long term trend in the data If TTT is constant or even improved during periods of volume growth then this reflects a firm commitment to the landside process Continuous improvement reflects a commitment to landside efficiencies

Page 14 of 48

916 TTT is influenced by the mode of operation the Gate In infrastructure and volume

of containers required to be handled

917 The RTG mode of operation requires the truck to travel to the yard stack where the container is located or assigned as opposed to the straddle operation where the straddle comes to the truck that is parked in a bay external to the stacking area The mode of operation at DP World Sydney generally results in a truck with multiple containers being serviced by multiple RTGs and also having to travel to multiple yard locations At each of these yard locations there will be a different level of demand on the particular RTG covering the area This will result in variations in the time it will take to service the truck in that particular area and therefore will influence the truck turnaround time

918 In comparison a terminal running a straddle operation could employ a different

straddle to handle each of the containers processed for the truck

919 The mode of operations employed by container terminals have various strength and weaknesses and need to be considered based on many factors in a Port (ie not just the landside interface) but both modes can contribute to variability

10 The Tribunal invites comment on how truck turnaround times are currently

measured by supply chain participants and how they should be measured The Tribunal further invites comment on the extent to which the stevedores provide access to their facilities at the specific times booked on the VBS

Truck Turn Time (TTT)

101 DP World Sydney currently measures truck turn times from the time the containers on a truck are processed to the time the last container is completely loaded onto the truck (import containers) or discharged from a truck and landed in the terminal (export containers)

102 TTT is directly influenced by the number of containers to be handled by an RTG

terminal on a truck run ie a higher number of containers results in a longer truck turn time on average This due to the truck having to potentially visit multiple locations within the RTG terminal

103 The reason the container Terminal does not measure the time following

completion of loadingdischarging container from truck is measure regulatory bodies (ie AGIS) have commenced inspection of containers on terminal exit gate which is beyond the control of the container terminal

104 The process time is used to measure the start of the truck turn time as this is the

closest time to the truck being in the terminalrsquos control

105 Trucks that take advantage of the autogate processing (currently 25 of trucks) actually start the truck turn time as they come through the terminal gate as this is where the transponder reader is located DP World Sydney support the increase of the autogate processing and the result that the truck turn time starts at the gate For trucks that do not use the autogate processing opportunity the terminal does not start the truck turn time at the gate as the truck driver may not move efficiently to have the container processed

106 Carriers often use TTT measured from the time the truck services at the standby

queue or the arrival of the truck at the zone queue which are waiting for the next time zone to open

107 In relation to standby queue the CAA clearly stipulates that the use of this system

does not guarantee immediate call-up to the terminal in priority to trucks that have booked a time slot

Page 15 of 48

108 In relation to TTT measured from arrival at the time zone queue the fact that the truck has arrived prior to the commencement of the zone opening is purely a decision of the transport carrier and is beyond the control of the Container Terminal and is not supported by DP World

Container Turn Times

109 DP World Sydney currently measures container turn time from the time the

container is processed to the time the container is loaded onto the truck (import container) or discharged from a truck and landed in the terminal (export container) Over the last 5 years the transport regulators have allowed truck operators to operate larger trucks thereby ultimately improving the efficiency of road transport As transport operators increase the use of larger trucks (capable of carrying multiple containers) the handling of these trucks produces a multiple handling of containers on the same truck at the terminals For example in the past one would handle one container per truck and in that case the CTT and TTT were almost identical With multiple containers on trucks the difference between the CTT and TTT is increasing To be able to benchmark this across a port and other ports becomes hard with TTT due to the ever changing ratio of containers per truck (depends on percentage of large truck operators) firstly within the same port and secondly between different ports Therefore CTT enables us to benchmark the measurement on common grounds across all our operations around the country

Access Times at DP World

1010 DP World Sydney divide the day into hourly time zones within the VBS The time

zones start on the house (eg 0700hrs) and complete at the end of the hour (eg 0759hrs) There is a time zone board located at Simblist Road which indicates which time zone is open Trucks queue at this point waiting for the board to change each hour During daylight hours on average there are 15 trucks waiting for the time zone to open The trucks then make their way to the terminal in gate located on Friendship Road once the zone is open

11 The Tribunal invites comment on the choice between a system where container

numbers are nominated in advance thereby offering the possibility of faster turnaround times or not providing container numbers which would provide road carriers with greater flexibility Or would industry participants prefer a system that allows the choice between both

Import Timeslots

111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the import container number in a timeslot booking up to the start of the time zone The disadvantage for the terminal and the carrier is that this flexible system arrangement does not allow the terminal the chance to reposition the container to a position that will minimise the number of containers that have to be moved (known as ldquoconsolidation movesrdquo) in order to access the container that is to be delivered to the truck once the truck has been processed and is in position for loading The more consolidation moves the terminal has to do to load an import container to a truck the longer the truck turn time will be

112 Undertaking consolidation moves prior to truck arrival would provide the opportunity

to decrease truck turn time

113 To achieve a further reduction in truck turn times and a reduction in cost of delivering a container the terminal would need to control the order in which the import containers are delivered This occurs in other ports in the world

Controlling the order of import deliveries

114 The current arrangement where the shipper controls the order of import containers

to be delivered from the terminals results in extra costs incurred by stevedores and also decreased efficiencies The longer a container remains in the terminal (an

Page 16 of 48

increase in the dwell time) results in increased consolidation (rehandles) undertaken by terminal equipment and an increase in the time taken to load a container to a truck or train

Matching of resources to meet demand

115 The terminal allocates the resources required based on the demand or the

number of timeslots released This occurs 24 hrs in advance

116 Carriers who book timeslots and do not meet their commitment (No Show) results in the terminal resources to be under utilised at certain times and creates an opportunity loss There is also an opportunity lost by another carrier to utilise the time slot for each No Show

117 Carrier who book timeslots and arrive late for their commitment (Wrong Zones)

results in terminal resources being under utilised at times and over utilised at other times The troughs in terminal resource utilisation result in an opportunity loss and the peaks result in a decrease in efficiency (increased truck turn time) or increased cost (increased resources applied) The increase in truck turn time has an impact on carriers who arrive on time for their time slot

118 The current VBS allows for carriers to arrive at the terminal to deliver or pick up a

container without committing to a time and container number thus not enabling the terminal to completely plan the required resources to meet the demand This is termed unplanned work The Standby Queue export tagging by B Carrier no advanced deadline for entering an import container number prior to the time zone and no requirement for an export container number being entered into a time slot booking results in an increase in unplanned work Unplanned work results in peaks in the work required by the planned resources and a decrease in efficiency

119 Rail also has similar problems

1110 By changing this arrangement and giving control to the stevedores to determine

the order of container delivery from the terminal will reduce the costs incurred by the terminal and decrease the turnaround time for trucks

Export Timeslots

1111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the export container number in a timeslot booking up to the start of the time zone It also allows an export time slot to be processed without a container number entered in the time slot booking The container number in then entered by the RampD Clerk at the terminal This often results in human error by the truck driver or the RampD Clerk resulting in delays to trucks This practice also eliminates the opportunity for the carrier to use the automatic processing described below in Question 12 To maximise the use of automation and eliminate human error the export container number needs to be a mandatory field to be updated in the time slot booking by a nominated time prior to the start of the time zone eg 2 hours prior to the start of the time zone

12 The Tribunal invites comments on the increased use of ICT and automation and

any other ways to reduce turnaround times and otherwise improve supply chain efficiency

121 DP World support and are driving the increased use of automation for the

processing of trucks DP World have developed and currently make available an automated truck processing system for carriers who use ePORTS to book and manage timeslots The percentage use of this system at DP World Sydney by carriers averages about 25 of total truck movements excluding stack run trucks

122 This system requires the purchase of a transponder unit from the terminal at the

cost that the terminal purchases the unit plus GST Currently the units are sold to

Page 17 of 48

the carrier for $12050 Also required is access to an eGATE screen in ePORTS The process for carriers wanting to move a number of containers on a transponder run involves

a) Booking through EPORTS the required number of time slots in a time zone

For example if a transport carrier wanted to deliver two export containers and collect one import container on a single truck run it needed to book three slots and

b) Setting up the transponder by inputting the slots truck number container numbers and whether they are import or export containers in the transponder booking screen in ePORTS

123 The benefits for carriers of using this automated processing include

a) The processing occurs earlier (ie at the gate as compared to in the RampD Office) therefore this decreases the chance of Wrong Zones being incurred

b) No need for the truck driver to present documentation at the RampD Office therefore reducing the truck turn time by avoiding any potential queues

c) No interaction between the truck driver and the RampD Clerk therefore decreasing human error during processing and causing further delays

d) As the processing occurs at the gate the trucks can skip ahead of other trucks where their drivers have to manually process in the RampD Office effectively jumping the queue

e) Allows reprogramming of trucks up to 15mins before the end of the time zone (eg 0645 for an 06 slot) without the truck driver needing the Delivery Order in his possession

f) Provides the carrier with the ability to educate their customers to provide the Delivery Orders in a timely manner in order to lodge them at the terminal

g) Electronic copies of the Delivery Orders (excluding scanned copies of originals) can be forwarded to the terminal via email therefore eliminating the need to physically lodge them

h) Enables the carrier to take all advantage of Electronic Import Delivery Orders (eIDOs) that are currently being used by Evergreen Marine at DP World Sydney Other shipping lines will move to the use of eIDOs in the future

13 The Tribunal invites stakeholders to comment on VBS capital and operating costs

and to assist it to distinguish between stand-alone VBS costs and those shared with other stevedoring activities

131 It is important to distinguish between the capital and operating costs of operating

the VBS and the costs of operating the landside interface ie delivering containers to and from trucks

132 The costs of a VBS comprise the following components

bull IT development and maintenance costs and

bull Management and administration time to manage and administer the system

These costs are low relative to the costs of actually providing the services within the terminal ndash loading and unloading the trucks

133 Having a system which requires the terminal to provide a guaranteed number of

slots per hours is to the disadvantage of the terminal Terminal operations are by their nature unpredictable due to the irregular arrival of ships Having to guarantee a number of slots which carry with it a high expectation of performance in terms of TTT tends to force the terminal to set the number of slots at a level which includes a risk mitigation factor against all things not going to plan The net result of this is

Page 18 of 48

that the terminal tends to effectively oversupply equipment and labour increasing its costs The impact of this is far more significant than the isolated costs of running the actual vehicle booking systems

134 Direct VBS costs have nothing to do with ship or rail operations

135 The container yard is run as a single operation servicing ship road and rail By

this means while there are practical limitations we seek to pool resources to maximise the overall efficiency of terminal operations particularly to absorb the peaks and troughs of demand across the operations as a whole This effective sharing of costs improves overall efficiency and results in lower costs to the benefits of users as a whole We anticipate that systems and technology improvements will see greater use of such pooling and greater overall efficiency as a result

14 The Tribunal invites stakeholders to comment on VBS access and penalty charges

and the level of transparency of access through the stevedoresrsquo VBSs

141 The VBS facilitates the provision of orderly access to DP World Sydney Terminal for over 200 individual carriers

142 DP World considers the achievement of orderly access to its terminals as a

primary objective of the VBS To achieve orderly access DP World considers it important to require carriers to pay a nominal subscription charge for the level and rights of access they require and to issue ldquono showrdquo and ldquolaterdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay lsquoon timersquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs

143 The VBS is essentially an ldquoappointment bookrdquo to assist transport carriers to

organise themselves more efficiently leading to a reduction in waiting times at the container terminal The VBS divides all working days into time periods containing a pre-determined number of timeslots The timeslots represent the number of import and export containers that can be handled in that period The number of timeslots in a day is determined by expected carrier demand and the availability of labour and equipment Carriers are then able to book timeslots for collection or delivery of containers

144 The alternative is random access to container terminals by carriers and significant

truck queues with associated demurrage costs which are ultimately paid for by the end user

145 At DP World Sydney the VBS offers transport carriers the ability to access an

internet based computer system or telephone bureau for the purpose of booking time slots for those carriers who do no wish to use the computer system The VBS in its present form offers access on a transparent and equitable basis to all carriers encourages the efficient movement of containers from the ship through the terminal and onto customers and vice-versa encourages innovative practices which are beneficial to terminal efficiency road congestion and the overall cost of the supply chain The ldquono showrdquo and ldquolaterdquo fees encourage these operational practices and efficiencies

146 DP World has adopted a class structure with an annual subscription for access

because this system allows carriers to determine what access is required for their business while providing the industry significant level of transparency in terms of access costs

147 All carriers have an equal opportunity to subscribe to any of the three classes of

access to the VBS (bearing in mind that smaller carriers are allowed to consolidate

Page 19 of 48

their subscriptions in order to share the cost of a B Class subscription) and equal access to timeslots amongst carriers of the same class

148 Annual fees are payable in advance Table 3 sets out the various carrier classes

currently in operation at each terminal and the applicable subscription fees for each class There are no annual limits on the number of slots carriers can book

Table 3 DP World Sydney ndash Current carrier classes and VBS deposit and registration fees for the year commencing 1 July 2005

Terminal Carrier Classes Price Number of active

carriers at Feb 06 Port Botany New South Wales

B Carrier ndash online internet access with high service levels

$2922150 (Non-refundable deposit) No fixed upper limit on annual time slots1

28

A Carrier ndash online internet access with standard service levels

$133400 (Annual registration fee) No fixed upper limit on annual time slots2

162

AB Carrier ndash access via the PampO Phone Booking Bureau with standard service levels

$66760 (Annual registration fee) No fixed upper limit on annual time slots3 39

149 Any carrier selecting the ldquoBrdquo classification is encouraged to also consider the ldquoArdquo

classification unless they are confident of utilising a high level of timeslots that would render the higher subscription fee as attractive per timeslot

1410 In addition to the VBS annual subscription fees the carrier access arrangements

provide for the levying of a no-show fee on carriers who fail to arrive for slots they have booked in the amount of $110 per time slot The terminal also charges carriers late fees of $55 per slot if they fail to arrive for a slot booking within the nominated time zone No fees are charged where a carrier is unable to meet the time slot due to delays caused and acknowledged by DP World Australia or where delays are caused by circumstances genuinely outside of the carrierrsquos control DP World Australia also has the discretion to and does waive ldquono showrdquo and ldquowrong zonerdquo fees in the interest of maintaining a good working relationship with carriers Failure by carriers to pay these ldquono showrdquo and ldquowrong zonerdquo fees may lead to them being prevented from making further bookings ldquoNo showrdquo and ldquowrong zonerdquo fees are the means by which DP World ensures that access to itrsquos terminals is provided in the most efficient manner to all 1carriers as late carriers cause delays for those carriers that are on time

1 No fixed upper limit on annual timeslots ndash Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 2 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 3 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release

Page 20 of 48

1411 The ldquono showrdquo and ldquowrong zonerdquo fee structure was introduced following

consultation with carriers It was originally $20 per late arrival (in Victoria where VBS first commenced) but this is proved to be ineffective in disciplining carrier conduct In response to requests from many carriers DP World increased the ldquono showrdquo fee to $110 The fees also discourage carriers from the practice of overbooking slots which they have no intention of using and preventing other carriers from using those slots

1412 The actual cost of a truck turning up late (Wrong Zone) or not turning up at all (No

Show) is the cost of planned resources (labour equipment etc) based on the VBS demand (number of containers expected to handle during a time period) not being utilised during the time period they are employed

1413 Adjacent to each time zone are grace periods one prior to the time zone and one

following the time zone These grace periods and the trucks arrival time for processing determine the status of the time slot ie arrived on time or arrived late (Wrong Zone) Currently the grace period following the time zone is set at 20 minutes which means that if a truck arrives later than one hour and 20 minutes after the start of the time zone then the time slot will be initially recorded as a Wrong Zone Following the completion of each VBS day Wrong Zones are reviewed and any penalty waived if any of the following determined

a) The terminal is aware that it has contributed to a truck arriving late for the time

slot ie the terminal has previously delayed the truck or carrier on an earlier time slot or

b) The carrier advises that they arrived late due to an unforeseen circumstance eg a break down of the truck

We request that the information in 1414 be kept confidential

1414 Omitted for reasons of confidentiality

1415 Officers at DP World Sydney have regular conversations with carriers in respect of

the waiver of No Show fees as well In certain instances DP World may agree to waive fees prior to an invoice being issued

1416 For both Wrong Zone and No Show fees the terminal provides a grievance

process for carriers who have been issued invoices and do not agree that the fee has been issued fairly The carrier has the opportunity to provide the terminal with an explanation and should officers at DP World Sydney agree that there has been an error in the issuing of the fee or an unforeseen circumstance is explained the terminal will credit the invoice

15 The Tribunal invites stakeholders to indicate the costs of providing the services of

rail windows and rail paths to rail operators

151 Rail windows are based allowance on a rail terminal performance KPI of 30 container moves per hour and charged at $360 per hour A shunting time allowance of 15 mins per window is not charged Additional lifts canare provided by increasing the lifts per hour by applying more machinery at no additional cost

152 The cost of providing terminal rail operations is higher than road operations at DP

World Sydney The RTG mode of operation requires a container to be moved to or from the container stack For road containers the truck takes the export container to the stack and travels to the stack to pick up an import container For a rail container a terminal internal transfer vehicle (ITV) is required to be used by the terminal to move the container from the train to the stack (export containers) or

Page 21 of 48

the stack to the train (import containers) This is not required for container being received or delivered by road

153 For import rail containers there is a loss of efficiency for the vessel discharge

operation in order to stack rail containers separately for delivery to the train For each discharge point in the terminal extra resources are required There is extra administration costs in having to make alternate arrangements to separate these import rail containers

154 Despite the fact that the delivery of containers to rail is higher than road the

terminal seeks only a partial recovery of costs in order to encourage the use of rail in the port in line with the NSW Government objectives

155 There is a management cost of setting up and operating the rail windows This is

similar to the cost of operating a VBS

156 There is additional security infrastructure costs for a rail operation to ensure the terminal meets their legislative security requirements The more terminal entry points created the higher the cost to replicate these security infrastructure requirements

16 The Tribunal invites comment from stakeholders on the planned or mooted

development and expansion of the various intermodal terminals in Sydney and the extent to which this is expected to ease congestion in the landside supply chain at Port Botany

161 DP World supports the development and expansion of an intermodal terminal

network to facilitate an increase in the use of rail as the means of container transport This has the potential flow on benefit of minimising the growth in the number of trucks requiring to access the Port Botany area as port volumes continue to grow

162 Transport between the Botany terminals and the inland intermodal terminals

should be by rail or trucks operating a stack (bulk) run road out during off peak periods eg night shifts or weekends The use of Super B Double trucks would assist with the efficiency of these off peak stack run outs

17 The Tribunal invites comment on the likely effect of the expansion plans at Port

Botany on access to the port terminal during peak periods and efficiency along the supply chain

171 Improving the two-way running or back-loading of trucks has to be a priority in

order to maximise access opportunity at the terminals and efficiency along the supply chain It is likely that a third and separate stevedoring facility will only increase the difficulty of improving truck utilisation over and above the current levels by the increased logistics complexity of coordinating timely access to three terminals rather than two

172 A third stevedore will lead to the same port volume being spread over three

operations While it is resource levels that determine available slots DP World has found that during periodic decreases in volumes carriers favour daytime runs to the terminal as opposed to night time

173 The expansion plans will have a negative impact on rail transport timeliness and

access requirements to DP World Sydney if the requirements to breaksplit trains and shunt sections of trains into multiple terminals continues This will undermine the overall rail effectiveness and the NSW Government rail objectives by the unnecessary increase of splitting trains

Page 22 of 48

18 The Tribunal invites comment on the likely effects of expansion of the intermodal network in Sydney on access to the port and efficiency along the supply chain

181 This is a similar issue to point 16 above

19 The Tribunal invites comment on the likely impact of a peak pricing system along

the lines of the FIC on access to the port terminals and the efficiency of the Port Botany supply chain

191 We understand for the NSW Governmentrsquos announcement (31 May 2007) that the

FIC is no longer being proposed

192 Table 4 shows the average percentage of road containers that are handled by shift at DP World Sydney based on a 6 day x 24 hour receival and delivery operation for the past 4 years The figures indicate that there is surplus capacity on both evening and midnight shifts when compared to day shift Note that the percentage of road containers handled has increased on day shift relative to the combination of evening and midnight shifts This has been due to terminal efficiencies creating increased capacity during day shifts and the road carriers utilising this capacity

193 This is further emphasised in Figure 4 which shows the trend over time for day

shift containers handled has increased from 2005 evening shift has decreased and midnight shift has not changed significantly

Table 4 DP World Sydney ndash Percentage of Daily Road Container Volume handled by Shift

Year Midnight Shift (2230 ndash 0630hrs)

Day Shift (0630 ndash 1430hrs)

Evening Shift (1430 ndash 2230hrs)

2007 YTD 21 47 32

2006 23 45 33

2005 22 43 36

2004 19 44 38

194 Year to date April 2007 figures may reflect the seasonal trend for lower volumes in this period

Figure6 DP World Sydney ndash Road Volume trendlines by shift 2005-07

Page 23 of 48

20 The Tribunal invites comment on the likely impact of the expansion of the freight

rail network in Sydney on the number of containers moved by rail and on congestion at the port

201 The importance of increasing the proportion of containers moved by rail is

recognised and supported by DP World Sydney

202 To complement the expansion of the rail freight network upgrade the terminal is developing plans to increase the length and the number of sidings within the terminal Over the next three years the terminal is planning to spend an estimated $20million on internal rail infrastructure machinery and systems The terminal upgrade will ensure DP World Sydney has the infrastructure in place to meet a target of 40 throughput by rail

203 The expansion of the freight rail network needs to take into account The access

to each of the terminals especially the access to DP World Sydney where by the terminal has a distinct disadvantage in relation to its competitor

21 The Tribunal invites comment on the impact on the supply chain on ARTC

managing the metropolitan freight rail network

211 Management of freight rail infrastructure is ARTCrsquos core business and will bring additional management expertise and focus to the task of reforming operations on the Port Botany rail infrastructure

212 For ARTC to control the MFN (Metropolitan Freight Network) makes sense from

the point of view they can make informed decisions for both inbound and outbound Port services based on the wider NSW Rail Freight Network operation

213 The ARTC proposal to co-ordinate services by performing the full Network Control

Function (both signalling and Train Control) from the one centralised centre for the Southern Sydney Freight Line (SSFL)MFN and Port Botany emphasises their commitment to ensure safety communications and network management is their primary objective

214 ARTC are focussed on improving the efficiencies at the Port and bring to the

industry fresh innovative ideas to improve the overall capacity on the rail network ARTCrsquos willingness to assist and eagerness to invest in the rail infrastructure brings a breath of fresh air to the industry and specifically the stevedore operations ARTC can integrate the Botany line into its overall investment program paving the way for additional investment to improve the efficiency of operations on the Botany rail line and at the port-rail interface

22 The Tribunal invites comment on the following questions in relation to costs of the

VBS

22a What costs underpin the VBS access charges levied by the two stevedores How are the VBS access charges set

22b1 Refer to Question 14 The revenue from VBS charges account for a very

small proportion of DP Worldrsquos total container terminal revenue For the year ended 31 December 2006 they accounted for 13 of total revenue Of that 13 approximately 30 was for No Shows and Wrong Zones

22b What costs are incurred by the stevedores in moving a container from the

wharf to a truck or train

22b1 DP World Sydney is operated as an integrated business servicing ships road and rail within the context of a national business We do no separately account for the costs of each discrete activity Information on

Page 24 of 48

overall costs is provided to the ACCC and published on an industry basis in the ACCCrsquos Container Stevedoring Monitoring Report

22b3 Wharf to truck activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the VBS to provide orderly access for road carriers

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal space to allow truck drivers to park their vehicles in order to unlockset up their twist locks and processing of containers

bull Processing of the container

bull System to manage the truck movement within the terminal

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the truck by RTG or forklift

bull Provision of terminal area for truck drivers to safely leave their vehicle to lock the twist locks on their trucks check the container seal number and check the container for damage

bull Provision of terminal area for AQIS operation and infrastructure

22b3 Wharf to train activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the Rail Windows to provide orderly access for operators

Page 25 of 48

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal area for rail lines associated rail infrastructure and train inspection requirements within the terminal

bull Processing of the container

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the ITV by RTG or forklift

bull Internal Transfer Vehicle (ITV) movement of the container from the yard stack to the rail line

bull Lift of the container from the ITV onto the rail wagon

22c What influences the nature and amount of these costs (for example are they influenced by the type of equipment used by a stevedore Do they fluctuate with the number of containers handled by the stevedores) and how have costs changed over time

22c1 DP World operates very similar Vehicle Booking Systems in Brisbane

Sydney Melbourne and Fremantle where there are differences in volume through the terminals The only difference in subscription between the terminals are the ldquoB Classrdquo carrier subscriptions The annual subscription is influenced by the number of carriers seeking this class and the hourly allocation of slots to their class given the number of subscriptions In addition Melbourne operates a straddle facility and Brisbane operates a forklift reachstacker Therefore the cost of the Vehicle Booking System is not dependant on or mode but the annual subscription to ldquoB Classrdquo carrier depends on competition for that carrier class

22c2 An annual subscription fee per class which is a characteristic of DP

Worldrsquos VBS does not normally increase with volume At DP World Sydney subscription fees have not been increased since 2003

22c3 Overall landside costs have increased with increases in wages and

salaries (4 pa) property costs (substantially ahead of cpi) fuel and other general costs These increases have been offset to some extent by increases in productivity Industry costs history is also available publicly in the ACCC Container Stevedoring Monitoring Reports

22d Where do the port landside costs stop and the VBS costs start

22d1 Prior to the Entry to Operational Yard (see Attachment 2) the truck is

under the influence of the VBS and also under the influence of the external environment which includes but is not limited to port and metropolitan road conditions container clearance issues truck arrival peaks and troughs truck preparedness processing of the container to the handled by the terminal and maritime security requirements

It is DP World Sydneyrsquos view that the port landside costs stop and the VBS costs start at the choke point

22e Do the VBSsrsquo penalty charges reflect the cost to stevedores What should

they reflect

22e1 The primary rationale for the penalty regime is to seek to modify carrier behaviour

Page 26 of 48

22e2 However it is also the case that a ldquono showrdquo or ldquowrong zonerdquo gives rise to a lost opportunity cost to the terminal Resources made available but not utilised may be wasted

22e3 DP World considers the achievement of orderly access to its terminal as

a primary objective of the VBS To achieve orderly access PampO considers it important to issue ldquono showrdquo and ldquowrong zonerdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay ldquoon timerdquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs The alternative is random access to container terminals by carriers and significant truck queues with associated demurrage costs which are ultimately paid for by the end consumer

22f Should there be different charging arrangements for empty containers that

are returned to the port as opposed to full export containers

22f1 DP World Sydney terminal handles a full container in a similar way to an empty container using purpose built container stacking equipment controlled by a DP World employee A container occupies the same amount of space whether it is full or empty This leads to the same cost for the handling of a single empty container as a single full container Single empty containers returned to the port should be charged a similar rate to full containers

22f2 To reduce the cost of handling empty containers in the terminal destined

for the same port on the one vessel and that are of the same size the terminal in conjunction with the shipping line and the shipping linersquos nominated carrier work together to create a bulk run of empty containers The bulk run maximises the number of empty containers that are handled in a specific time period The terminal dedicates resources to thee bulk runs and also provides priority access to the transport carrier in order to create efficiency and an economy of scale In this way the cost of returning an empty container via a bulk run is reduced

23 The Tribunal invites comment on the following questions in relation to the different

pricing regimes of the two stevedores

23a Why do the stevedores have different pricing schemes for their VBSs

23a1 We do not know why Toll-PatrickAsciano has adopted the pricing scheme it has

23a2 In order to improve earlier versions of its VBS in the mid-1990s DP

World (PampO) introduced categories of carriers and began charging differential subscription fees for carriers registering to use the VBS depending on the level of access required by the carrier Prior to this change some carriers were engaging multiple computer terminals to the detriment of other carriers and it had become clear that a level of differentiation would be in all carrierrsquos interests The different classes of carrier access were introduced to ensure the most balanced overall outcome The level of differentiation is an annual choice of access levels available to all carriers regardless of size Under this approach different subscription fees are charged for each category but all carriers registering in a particular category pay the same fee Our view remains that an annual subscription as opposed to a pay as you go is far less of an administrative burden on both the carriers and the terminal

Page 27 of 48

23a3 There are no restrictions upon carriers wishing to obtain a certain carrier category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for the same carrier categories as larger carriers Smaller carriers may also apply for consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst charging the burden of the cost of that subscription

23a4 Subscription fees based on differences in class are designed to

encourage choice whilst at the same time communicating a level of transparency with terminal pricing and service

23b Do the different pricing schemes influence the efficiency with which

transporters obtain access to the terminals

23b1 We do not believe this to be the case

23c Would standardisation of charges be more appropriate

23c1 It is our understanding that it would be unlawful for a supplier itself to standardise charges by reason of Section 45 of the Trade Practices Act This may be something that Government wishes to consider

24 The Tribunal invites comment on the following non-price access issues to consider

in relation to the operation of the VBSs

24a What effect do access rules and conditions and non price constraints have on booking a timeslot How to the stevedores use their discretion in determining access and charges and what impact does this have

24a1 The introduction of different categories of access stages the carriersrsquo

access to the VBS for the purposes of booking timeslots ldquoB classrdquo carriers are given exclusive access to a pool of slots between 0730-0820 During this period they are subject to zone limitations which restrict carriers to a maximum number of slots for any given hour The zone limit ensures all carriers within that carrier class are given fair and equitable access to the initial release of slots After the initial booking period the zone limit is lifted and carriers are permitted to book any number of unused slots per hour from those remaining in their pool Similar arrangements exist for A class carriers culminating in the cascading of all remaining slots from all segregated pools into a general pool at 1030 for access by all registered carriers

24a2 There are not restrictions upon carriers wishing to obtain a certain carrier

category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for a consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst sharing the burden of the cost of that subscription

24b What are the stevedoresrsquo obligations with regard to access to port facilities

and what should they be

24b1 Without providing an analysis of our obligations under law in general terms we are required to provide access to carriers on an equitable basis recognising the competitive environment we operate in

Page 28 of 48

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

A DP World Company

4

Introduction to DP World DP World is one of the largest marine terminal operators in the world and has the widest network of any with 42 terminals spanning 24 countries and five continents We have a global capacity of more than 50 million TEU and a dedicated experienced and professional team of around 34000 people providing services in some of the most dynamic economies in the world

Headquartered in Dubai DP World has been at the forefront of the countrys extraordinary transformation into one of the worlds leading trade and commerce hubs We have experienced phenomenal growth through investment in developing existing and new facilities round the world for our customers and through the acquisition of two major marine terminal operators CSX in 2005 and PampO in 2006 DP World is wholly owned by the Government of Dubai

In early 2006 DP World acquired The Peninsular amp Oriental Steamship Navigation Company (ldquoPampOSNCordquo) This acquisition included PampOSNCorsquos Ports Division including all operations in Australia The Ports Division has been re-branded to DP World with Australia to operate as a region named DP World Australia

Australian Operations DP World operates in five container terminals in Brisbane Sydney Melbourne Adelaide and Fremantle

DP World is committed to its role in the economic development of New South Wales and sees its role at Port Botany as a key link between markets that enable NSWrsquos industries to effectively reach customers and NSW consumers to have efficient access to goods to enhance their business opportunities

DP World also recognises the increasing role technology plays in the industry and it has devoted considerable resources to developing and improving its technological systems

DP World believes that this combination of expertise and the continued use of advanced technologies ensure the company is well placed to face the challenges and to seek the opportunities that the future holds

DP World Sydney DP World operates its container terminal (DP World Sydney) at Port Botany the primary gateway for container traffic in and out of New South Wales DP World Sydney is a Rubber Tyred Gantry (ldquoRTGrdquo) facility where we currently operate 20 RTGrsquos 7 Quay cranes 11 Fork Lifts There is a fleet of 36 ITVs providing the yard to quay rail interface We continue to progressively equip and develop the facility ahead of demand In the coming years we intend to enhance the facility with extended rail sidings complete the development of the facility and introduce additional quay cranes and yard equipment A significant majority of the throughput is Origin amp Destination (ldquoOampDrdquo) 92 with transhipment volume at 8

DP World Sydney offers a range of electronic business support to clients including electronic Customs release of cargo Electronic Data Interchange (EDI) reporting and web browser based information services

IPART Review of the Interface between the Land Transport Industries and the Stevedore at Port Botany June 2007 DP World Submission 1 The Tribunal invites stakeholders to comment on any aspects of arrangements

between shippers (shipping lines) and stevedores that may be causing inefficiencies or extra costs to arise in the landside supply chain

11 The commercial arrangements governing service levels and prices at DP Worldrsquos

Port Botany Container Terminal (DP World Sydney) are overwhelmingly a function of the national contracts DP World enters into with the shipping lines The only parties to these contracts are DP World as stevedore and the shipping lines either as individual lines or on a consortium basis

12 The shipping lines expect the stevedore to provide best practice standards of performance at the roadside interface (Rail Road) to ensure that the shipping linesrsquo overall services to its customers remains competitive

13 It is our view that these arrangements continue to deliver cost effective services to the shipping lines and other stakeholders in the maritime logistics chain

14 When considering the efficiency of stevedoring services all of the interrelated services provided by the stevedore have to be taken into account Focussing on one particular aspects of performance runs the risk of ignoring impacts on all other aspects of the terminal operations

15 As evidence in ACCC and BTRE Waterline published data the overall outcome of the existing arrangements at Australiarsquos container terminals shows that vessel rates continue to improve for shipping lines with real prices falling while the landside interface performance measured on container turn time has continued to improve

Electrical Messaging to eliminate delays at the Container Terminal

16 The industry has embraced a number of electronic messaging solutions to

improve efficiencies The Pre-Receival Advice (PRA) introduced in August 2004 as a replacement for the paper based Export Receival Advice (ERA) is an example of a benefit to the industry with shipping lines working closely with the stevedores

Industry Benefits bull Eliminating the poor ERA legibility problems which caused significant delays

at the container terminals

bull Standardises the Export receival process for both Road and Rail

bull Crosschecking the pre-advice against the Shipping Line bookings ensures that the correct cargo is received for the correct destination and the correct Line operator

Page 1 of 48

bull Reduces the resources required at the Line to manually check receival details

bull Reduces data entry required at the wharf gate

bull Reduces truck-processing time at the wharf gate

bull Potentially reduces data entry time by the shipper as the Pre-Advice is system generated or web form fields which subject to agreement by the shipping lines on the level of information will be pre-populated with the Line Booking information

bull Ensures acceptance through the gate at the wharf if the CAN and Shipping Line information is validated prior to arrival

bull Eliminates the risk of Customs fines to the shipper for delivering cargo to the wharf with an invalid CAN

bull Eliminates the cost associated with double handling cargo received or rejected with incorrect information and

bull Could streamline the US Customs reporting process and assist in replicating the process for other trading partners as or when required

17 The next initiative which is supported by Shipping Australia Limited (SAL) we

hope to see generally adopted is the Electronic Import Delivery Order (eIDO)

The eIDO is bull A progressive replacement for Hard Copy Delivery Orders

bull A communication of ldquoauthority to deliverrdquo via electronic messaging and

bull Generated by shipping lines and sent to the relevant stevedore via 1-Stop

The benefits of an eIDO bull Security of cargo through greater documentation security

bull Shipping line reduction in documentation costs courier costs

bull Ability to link eIDO to other functionality eg VBS Com-Pay etc

bull Combined with PRArsquos the ability to fully automated gate entry and processing systems

bull Flexibility for the transports carrier by allowing the assignment of alternate trucks if required without having to provide the truck driver with paperwork (Delivery Order) and

bull The importer freight forwarder receives confirmation of shipping line release more efficiently thereby increasing the time the transport carrier has to organise the pick up of the container

18 Further developments in electronic messaging to provide interface enhancements

for all stakeholders are expected to benefits the supply chain

Repositioning of Empty Containers back to the Port

19 Shipping lines continue to seek to store empty containers at the Port which we believe is an inefficient use of high valued Port land However we understand the shipping linesrsquo position in the Australian context (import dominated) in needing to be able to reposition empties to export at short notice to take advantage of available space on ships

110 It is our view that container terminal facilities should be considered purely as

transit facilities Any activities which utilise terminals as storage facilities are contributing towards terminal inefficiencies with the potential to impact upon many

Page 2 of 48

parties within the supply chain Receival of empty containers directly back to the wharf after importer unpack is fine if they are treated as per any export container and received accordingly for a specified vessel The inefficiency related to these activities occurs when the containers are received into a terminal for a non specified vessel pool purely for top up if the vessel alongside has surplus capacity This arrangement uses expensive waterfront terminal land for the storage of empty containers The effects of such are an increase in overall container dwell time which results in terminal congestion and associated handling inefficiencies and costs

2 The Tribunal invites stakeholders to comment on any aspects of the stevedoresrsquo

methods and hours of operation or other business practices relating to the provision of access to the port terminals that may be causing inefficiencies or extra costs to rise in the landside supply chain The Tribunal further invites comments on why the Port of Melbourne appears to offer considerably more VBS slots than Port Botany

Road 21 We are unclear as to what specifically the Tribunal is referring to with regard to

methods of operation However with regard to transport carrier access there are three methods in which a transport carrier can access the DP World Sydney Terminal

a) A carrier can use a timeslot which is booked or reserved through the VBS

operated by DP World

b) A carrier may access the terminal through a standby queue and

c) A carrier may organise a bulk run

22 Our stevedoring resources are available to service vessels road and rail 24 hours per day 7 days per week 52 weeks per year

23 Shipping lines expect and are provided with vessel operations and rail operations

on a 247 basis Road services are provided on a 246 basis on the basis of demand Despite encouragement by the stevedore there is minimal demand on Saturday and no demand for road services on Sunday

24 The VBS is simply a means by which to communicate with the transport carrier

community What determines the number of slots made available are resource levels provided at the container terminal DP World Sydney provides more than sufficient resource levels to enable all containers to be delivered as required to road within the three free day period even accepting the industryrsquos current limited use of the available 247 terminal operation It is acknowledged that resource levels provided to road operations may be varied day to day as resources may need to be directed to ship operations but this follows from running the terminal as an integrated operation which is ultimately most efficient Providing further day time slots without addressing market inefficiencies only risks service levels to shipping lines that are demanding higher performance levels and perpetuating the industryrsquos unwillingness to support 247 operations

25 DP World also notes that all carriers may and do from time to time contact the

terminal and request additional timeslots if there are none available on the VBS The terminal will endeavour to accommodate such requests where there is operational capacity to do so If there is capacity the Terminal will book the timeslot in the name of the carrier that has made the request

26 Access to DP World Sydney is via a rail window assigned to the rail operator The

rail window timing duration and size (the number of lifts) is negotiated with the rail operator and aligned to the path the operator has acquired into Botany Rail Yard The rail windows are designed with the intention of allowing the rail operator

Page 3 of 48

Botany Rail Yard management and the terminal operator the ability to plan their operational requirements in order to maximise efficiency

27 Prior to the establishment of rail windows the order of arrival of trains into the

facility was on a first come first served basis This method of operation created inefficiencies where a rail operator would occupy rail siding time to the detriment of other rail operators and create large periods of idle time occupying the sidings This would invariably mean that other rail operators carrying containers for ships about to leave port could not deliver containers in time to ship on the targeted vessel voyage resulting in large short shipments Invariably missed sailings cost shippers because alternative storage facilities need to be sought together with the associated additional handling costs

28 In Table 1 below we have provided an indicative analysis explaining the apparent

significant difference in slots provided in Sydney and in Melbourne during the 0800-1600 period Monday to Friday for the June 2006 Quarter

Table 1 Comparison of slots offered in Sydney and in Melbourne

Table 1 Comparison of slots offered Notes Melbourn

e Sydney Variance Mel Syd

Terminal volume for the Quarter Ctr000 (1) 139 118 177 Proportion of Exports (2) 500 500 Proportion of Exports as Empties (3) 260 520 Proportion of containers as Empties (4) 130 260 Rail proportion (5) - 215 VBS slots available Ctr (6) 45941 26632 725 Utlisation (7) 956 948 08 VBS slots used Ctr (8) 43920 25247 740 Adjusting Melbourne to allow for like for like comparison

Terminal volume for the Quarter (9) 849 Proportion of Exports as Empties (10) 851 Rail proportion (11) 823 Sub-total 595 Adjusted VBS slots used Ctr 26118 25247 34 Notes

1 Actual DP World container volumes for the quarter

2 Estimated

3 Based on year to Dec 2006 averages

4 Calculated as (2) x (3) 5 Estimated based on Port rail volumes for Year to Jun 2006 Rail volume in Melbourne is about 10

but at DP World Melbourne rail volumes are as a matter of operational practice delivered by slotted truck access to the rail terminal at West Swanson Intermodal Terminal

6 As quoted by IPART from BTRE Waterline Figures appear to be DP World rather than Port figures 7 Source DP World 8 Calculated as (6) x (7) 9 Reducing Melbourne slots in line in proportion to volumes handled 10

Reducing Melbourne slots in line in proportion with higher empties which are typically handled as bulk runs and not slotted

11 Reducing Melbourne slots in line in proportion with lower volumes handled by rail

29 We note that these figures are for a single quarter The analysis is simplistic as noted in the table above It also assumes that the adjustments simply accumulate which may not be strictly true

210 It is to be recognised that in Sydney over 90 of bulk runs are performed on day

and evening shifts (0600-2200)

Page 4 of 48

211 Allowing for a reasonable margin of error given the estimates invoiced this analysis supports our view that Sydney is provided with proportionally equivalent day and evening slots compared with Melbourne

3 The Tribunal invites stakeholders to comment on any aspects of the road transport

operatorsrsquo current work practices and any trends in storage charges and volumes (both for on-port storage and at transport operatorsrsquo own depot storage) that may be causing inefficiencies or extra costs or arise in the downstream supply chain

31 Unlike in other states in Australia in New South Wales in our view there is no

effective peak body broadly representative of the transport carrier industry with which we as a stevedore may engage in a meaningful dialogue on port related issues However we continue to meet with individual carriers to discuss such issues

32 The delivery of removal of a container at the terminal is a decision that is

determined by or shared between the consignee and their agents (eg customs broker carrier) It is the consignee and their contracted agents which dictate when the container is required to be delivered to the warehouse Post release of the container by the ACS AQIS and shipping line the consignee and their agents decide on the most cost efficient option for storage of the imported container (or goods) ie on port storage or other storage option (either packed or unpacked)

33 On-port storage of containers may suit the consignee and their agents However

it is not conducive to efficient container terminal operations

34 As demonstrated in Figure 1 the on-port (ie container terminal) storage revenue has decreased as a percentage of revenue over the past two years This trend follows a decrease in average import dwell time over the same period In line with this the average import container dwell time (this is the average time an import container remains in the terminal) has decreased despite the overall terminal throughput having increased

Figure 1 DP World Sydney ndash Import Container Dwell Time and Storage Revenue

35 Transport carriers are able to book an available timeslot in a time zone and alter which container (number) is to be collected in that timeslot up until the time zone

Page 5 of 48

commences Once a time zone commences it is no longer possible to book a time slot in that zone Transport carriers thus have the flexibility to select a different container slot at short notice This short notice advice of which container (number) is to be collected makes it impossible for the terminal to move the container to the best position to facilitate the best possible truck turn time This is discussed further under Question 11

36 Transport carriers do not always check that a container is released from all

impediments (ACS Holds AQIS Holds storage fees paid) before arriving at the terminal This can cause delays for the truck at the terminal and congestion within the terminal and congestion within the terminal truck marshalling area reducing the opportunity for other carriers to access the terminal which have ensured there are no impediments on the processing of their containers for collection This is seen as inefficient practice that contributes to further delays and costs in the logistics chain

37 Speculative booking of timeslots appears to occur within the VBS whereby

carriers book what they can during the initial booking period rather than what they need This is evidenced by the number of time slots released into the exchange pool The exchange pool is available for carriers to offer the time slots they have booked to another carrier

38 Table 2 below shows the number of time slots that were exchanged over a period

of 8 days Saturdays and Public holidays were not included and non-peak zones were not included The table indicates that during this period an average of 24 of time slots advertised for exchange which shows that carriers initially booked these time slots however in time before the time zone commenced they decided that they did not need the time slot This high number of time slots offered for exchange is due to speculative bookings or other circumstances including change of plans more time slots being made available by the terminal or timeslots becoming available within the exchange pool and thus better suited time slots become available to the carrier DP World is unable to determine how much each factor contributes to the high percentage of slots that are offered for exchange

Table 2 DP World Sydney Percentage of timeslots exchanged during the period of time zones 05-07

Total timeslots

Exchanged 05-17 zones

Total Time Slots available 05-17

zones

Percentage of time slots exchanged

23-Jan-06 48 585 8 24-Jan-06 167 675 25 25-Jan-06 253 770 33 27-Jan-06 206 585 35 30-Jan-06 217 605 36 31-Jan-06 195 720 27 1-Feb-06 52 485 11 2-Feb-06 56 590 9 Average 149 627 24

39 As illustrated in Figure 2 below the transport operators in Sydney have the lowest

containers per truck visit to Port Botany compared to all other ports in Australia

Page 6 of 48

Figure 2 DP World Terminals ndash Containers per Truck Ratio

]

Source DP World

310 Transport carrier operations are still heavily focused on the traditional daytime

period We understand that this reflects the carriers needs to maximise profit margin in a competitive market place However DP World Sydney comes under criticism for not releasing further slots during the traditional peak periods despite resources and slots being available in ldquonon-peakrdquo periods The net result appears to be that there has been very limited success in embracing 247 operations which ultimately we believe is generally accepted as being in the long term interests of the industry as a whole We also believe that it would be in the interests of the industry as a whole if a consolidation in the transport carrier sector occurred resulting in fewer higher volume carriers with the scale to operate with a wider spread of hours

311 Storage charges apply in the vast majority of marine container terminals around

the world Storage free days vary from port to port around the world however at least three free storage days is not unusual

4 The Tribunal invites stakeholders to comment on any aspects of access to rail

infrastructure or of the current work practices of rail transport operators the supply chain

41 There are a number of public reports and studies that outline the issues

associated with rail infrastructure intermodal terminals and rail access to the port In general the conclusions being drawn are that significant investment is required in this area This is most recently supported by the New South Wales Governmentrsquos response to the FIAB report

42 DP World Sydney is seeking to extend its rail sidings to 600metres in the near

future At the same time there are a number of issues with the rail infrastructure connecting these sidings to port rail we are seeking to resolve with RIC

43 The utilisation of the rail windows at DP World Sydney was 55 during 2006

This utilisation is measured on the basis of the total number of containers actually loaded and unloaded against what could be unloaded if all window were fully utilised at the current agreed performance levels on the part of the rail operators and DP World Sydney Few rail windows are south for Saturday and none for Sunday operations When demand justifies it DP World through the provision of additional resources has the capacity to more than double the volumes handled in

Page 7 of 48

any particular window The extensions of sidings will provide further opportunity to increase rail handlings capacity at the terminals

44 Figure 3 shows the trends in terminal rail window utilisation during 2005 and 2006

Although there is a small improvement in window utilisation during this period the utilisation is low and there is considerable capacity available to increase the number of containers that can be transported by rail

Figure 3 DP World Sydney ndash Weekly Terminal Rail Window Utilisation

DP World Sydney Weekly Rail Window Utilisation 2005-07

20

30

40

50

60

70

80

Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07

45 Contributing factors to the relatively low level of utilisation include

bull the late arrival of the rail operator at the terminal which reduces window

duration and the terminalrsquos inability to increase productivity to meet window capacity requirements without incurring extra costs We understand that the late arrivals by rail operators can be due to equipment breakdowns the passenger network restrictions and the inadequate rail infrastructure for freight

bull overestimation of the volumes rail window duration required by the rail operator

bull fluctuations in freight movements on a daily basis creating peaks and troughs

bull the drought and the decrease in rural export containers

bull train shunting operations

bull the AQIS inspection required for each import container before it leaves the terminal

bull the train and wagon inspection required before the train leaves the terminal

bull the use of labour intensive manual twistlocks instead of auto twistlocks on rail wagons

bull the necessity to break split trains in Botany Rail Yard

bull infrastructure limitations within the Botany Rail Yard and

bull rail operators using the Botany Rail Yard as a storage facility for their wagons and causing congestion

46 As indicated above DP World Sydney has plans to improve the infrastructure

within the terminal in order to meet predicted rail volumes in the future However

Page 8 of 48

unless improvements are made against the issues listed above then window utilisation and efficiency may not improve to levels required to meet the NSW Governmentrsquos 40 rail mode target

5 The Tribunal invites stakeholders to comment on any aspects of the operations of

the regulatory authorities that may be causing inefficiencies or extra costs to arise in the downstream supply chain 51 The Australian Customs Service (Customs) has introduced Container Examination

Facility (CEF) operations in most major ports around Australia Each of these facilities incorporates the use of modern technology such as container x-ray equipment and other examination tools to support Customs in their aim of identifying illegal activities through containerised trade Since the inception of the CEF in Sydney in February 2003 Customs has reported many successful interceptions of prohibited imports

52 The CEF in Sydney operates two shifts each week day (day and evening shifts)

and one shift on Saturdays (day shift) This operating arrangement has created more competition for terminal resources during the peak hours 0500-1700hrs Monday ndash Friday This has resulted in the terminal deploying more equipment and labour resources at the terminal to meet the obligations of contracts with Customs but at the same time has increased competition for resources depending where the container is place in the terminal and how the yard equipment is coping with the demands of industry

53 DP World Sydney has contracted performance KPIs to deliver along with following

factors to overcome that contributed to resource competition

bull Random arrival of Customs transport provider trucks (B Doubles) and random selection of containers due to weight constraints of the trucks

bull Multiple containers per truck relating to up to six different locations a truck has to visit within an RTG terminal and the potential to utilise six different resources

bull The requirement for DP World Sydney to block stack Customs targeted containers from a vessel in order to minimise the variability of locations a Customs truck has to visit This block stacking requirement has a negative impact on vessel performance and creates more competition for internal resources

bull DP World Sydney does not control the transport to and from the CEF Customs have appointed a carrier in each port and who under the contract is responsible for the effective co-ordination between the terminals of the movement of X-Ray containers DP World Sydney does liaise with the Carrier but the carrier has the final say as to how many trucks are allocated to each terminal and

bull DP World is of the view that the current operating hours of the CEF are contributing to resource competition within the terminal during the peak periods If the CEF opened midnight shifts rather than day shift this would reduce resource competition increase terminal resource utilisation in the non-peak hours and an improvement in efficiency would be gained by industry

Declaration of Cargo

54 The Australian Customs Service (ACS) has put in place a requirement for

importers to declare cargo at least 48 hours prior to a vesselrsquos first port of call in Australia This is an initiative that has the ability to increase the efficiency of import container movements and decrease the time containers remain in a stevedore terminal The on-time reporting performance in NSW during March 07 was 87

Page 9 of 48

The ACS should continue to put in place incentives to increase this clearance rate of containers in order to gain 100 compliance

55 The Australian Quarantine Inspection Service (AQIS) could assist by utilising an

electronic means of communicating the application and release of AQIS holds required on containers Currently AQIS operate a totally manual operation

6 The Tribunal specifically invites comments on the current role of the SPC and on

the role SPC might take in improving the efficiency of the supply chain

61 Sydney Ports Corporation has stated objectives which include

bull Enhancing and developing strategic assets to ensure efficient optimum utilisation

bull Continuing to build effective relationships with stakeholders that improve the competitive positioning of the ports and

bull Taking the lead in facilitating port related freight solutions

62 DP World in Sydney has participated in efforts by SPC to facilitate efforts to achieve mutual outcomes between both the stevedores and section of the road transport industry

63 In addition SPC has

bull Measured TTT at Port Botany and published these statistics since (2001)

bull Encouraged more use of rail with the support and investment by DP World

bull Requested more capital investment to improve road transport interface which has been supported by DP World through the acquisition of additional container handling equipment

bull Sought the elimination of truck queuing outside the container terminal with the support and implementation of a Vehicle Booking System by DP World

bull Sought the development of inland intermodal terminals with the support of DP World and

bull Sought the inclusion of suitable landside Key Performance Indicators within future lease terms

64 We consider that SPC has taken the leadership role appropriate for its position in

terms of seeking to facilitate improvements in overall port efficiency without interfering in the various commercial arrangements between stakeholders

7 The Tribunal invites stakeholders to comment on any aspects of the current work

practices of freight forwarders customs brokers and any remaining industry participants that may be causing inefficiencies or extra costs to arise in the downstream supply chain

Customs Brokers

71 It is the practise of some customs brokers to wait until the storage free period at

the terminal has almost expired before paying the duty to the Australian Customs This has the impact of retarding the stevedorersquos efforts to improve the velocity of container movement through the terminal Customs brokers should therefore be encouraged to pay duty as soon as possible

72 Customs brokers can also contribute to congestion at the terminal by not paying the Customs duty up to at least 2 hours prior to the carrierrsquos time slot This results in the truck waiting at the terminal for the information to flow through to the terminal operating system via EDI

Page 10 of 48

73 One way of achieving flow in (71) and (72) above is to disconnect the relationship between the payment of duty and the physical control of cargo movement To maximise the effect here the ACS could request the Customs brokers to also lodge the lsquoImport Declarationrsquo 24 hrs prior to arrival and collect duties on account after the event

74 An initiative at DP World Brisbanersquos terminal has been successful in obtaining early container information as part of their VBS (linking timeslot to the container number)

75 The system has been in place for almost 12 months now and the availability of information at DP World Brisbane has contributed to improved service levels at this terminal

Empty Container Depot Opening Times

76 A majority of Empty Container Depots reside within 10 km radius to the port

precinct Depot opening ties do not match container terminal operating hours The result is an inability for carriers to return and pick up an empty container 24hrs a day to depots This reduces the potential of utilising the existing vehicles on the road creating potential traffic congestion and therefore free up their trucks to collect import containers from the terminal Through tariff structures the shipping lines have the ability to influence the depots to increase their opening hours thus resulting in greater vehicle utilisation and subsequent reduction in transport charges The extended spread of hours will also have the effect of flattening the peak traffic periods and reducing road congestion and travelling times

8 The Tribunal invites stakeholders to comment on any aspects of the VBS

particularly in relation to the number of timeslots made available and on what basis and the process by which those slots are made available across the day(s) and to whom

81 The VBS is simply a means by which to communicate with the transport carrier

community What determine the number of slots made available are resource levels provided at the container terminal DP World Sydney provides more than sufficient resource levels to enable all containers to be delivered as required to road within the three free day period even accepting the industryrsquos current limited use of the available 247 terminal operation It is acknowledged that resource levels provided to road operations may be varied day to day as resources may need to be directed to ship operations but this follows from running the terminal as an integrated operation which is ultimately most efficient Providing further day time slots without addressing underlying market inefficiencies only risks service levels to shipping lines that are demanding higher performance levels and perpetuating the industryrsquos unwillingness to support 247 operations

82 DP World also notes that all carriers may and do from time to time contact the

terminal and request additional timeslots if there are none available on the VBS The terminal will endeavour to accommodate such requests where there is operational capacity to do so If there is capacity the Terminal will book the timeslot in the name of the carrier that has made the request

83 Further details of the VBS are provided in responses to subsequent questions

However we believe that the VBS at DP World Port Botany Terminal has delivered benefits including

bull No random queuing at the terminal which results in significant unplanned

delays to transport users due to the random arrival of trucks at any point in time to the terminal where the terminal is not resourced to handle the high peaking demand for landside resources whilst at the same time meeting contractual obligations with shipping lines

Page 11 of 48

bull The terminal is able to carry out bulk moves while maintaining service levels to other general carriers

bull Provides choice to carriers in terms of access as well as providing transparency to industry

bull States subscriptions fees in a public document which are transparent to industry

bull Increase slot allocation to road users based on irregular shipping schedules and

bull While not referred to in the Carrier Access Arrangements (see attachment 1) all B class carriers are allowed to engage in a process called ldquoexport taggingrdquo Export tagging involves a carrier booking an import timeslot in ePorts which will give them access to the terminal A carrier is then able to bring and export container on the truck that is arriving to collect the import container without booking a slot for that export container (during most timeslots in the day) The purpose of this flexibility to carriers is to increase two-way running which reduces costs to carriers and decreases the number of trucks in the port community

9 The Tribunal asks stakeholders to comment on the variability of average

turnaround times across the major ports and the variability of turnaround times faced by individual transport operators at Port Botany itself The Tribunal also invites comment on how important predictability of turnaround times is to transport operators relative to average turnaround times at Port Botany The Tribunal further invites comment on why turnaround times are higher for Port Botany compared to Melbourne Adelaide and Fremantle

91 The precise nature of operations differs between the ports and between the

terminals operated at those ports These differences arise because of the range of shipping lines that arrive at the various terminals and the volumes of containers and type of cargo going through each terminal There are also differences in the container yard handling equipment yard configurations at each terminal and hours of operation resulting in differences in the way each terminal operates These differences result in variations amongst each terminalrsquos service performance levels

92 During 2002 DP World Sydney management met with a representative group of

carriers to discuss the VBS and access arrangements at the terminal A common view of the carriers was that they would like consistency to truck turn times and that 60mins (carrier measurement) is acceptable The outcome from these meetings was that DP World introduced three internal KPIs

bull Truck processing to truck complete measurement ndash 38 mins average

bull TTTs of 60 mins or less to be 90 to total trucks

bull TTTs of 120 mins or more to be 1 or less

93 Figure 4 below shows the percentage of truck turn times that are 60 minutes or less at DP World Sydney There is a noted improvement in during mid 2005 from an average prior to this time of 73 to an average during 2006 of 85 This indicates that the predictability of the truck turn times has improved during the life of the VBS

Page 12 of 48

Figure 4 DP World Sydney ndash Percentage of Truck Turn Time under 60 mins

DP World Sydney - Percentage of Truck Turn Time under 60 mins

50

60

70

80

90

100

Jan-04

Mar-04

May-04

Jul-04

Sep-04

Nov-04

Jan-05

Mar-05

May-05

Jul-05

Sep-05

Nov-05

Jan-06

Mar-06

May-06

Jul-06

Sep-06

Nov-06

Jan-07

Mar-07

94 Figure 5 below shows the terminal truck turn time and the stevedoring volume since July 2003 at DP World Sydney Note that the volumes are hidden on the left Y axis for commercial reasons As a result of terminal improvements and putting in place the KPIs described above the average TTT performance has improved (right Y axis) whilst at the same time the terminal volume has increased (left Y axis)

Figure 5 DP World Sydney ndash Truck Turn Time and Container Volume

95 DP World operates in all five major ports in Australia and has three different modes of operation namely Straddles in Melbourne and Adelaide RTGrsquos in Sydney and Fremantle and Forklift and Reach-stacker in Brisbane The Variability in TTT between ports is attributed to a number of factors including but not limited to the site processes and physical constraints of each facility

96 The measurement of TTT differs mainly due to

a) the layouts of in-gates and its approaches and

Page 13 of 48

b) the measurement of the job steps which apply to a truck from arrival to departure due to (a)

97 All the above terminals have different truck parking arrangements within and

outside the terminal which impacts TTT Across the board TTT is measured from job processing to job complete (98c to 98e below) however the physical layout and mode can influence when processing commences

98 The process of truck management in simple terms is

a) Pre-arrival of trucks

b) Validation of time slots

c) Processing of job (Manual but if automated it takes effect in b above)

d) Enter the operational yard

e) Job transact and complete (by straddle RTG or Forklift Reach-stacker) and

f) AQIS check for full trucks and depart (gate-out)

99 Depending on the physical layout and provision of sufficient space to hold trucks within the terminal boundary or otherwise the distribution of trucks varies through steps 98a to 98c above

910 At DP World Sydney the equivalent hourly truck volume can be held in the

terminal entry marshalling area therefore multiple trucks can enter the terminal park and be processed by terminal staff Post processing all time spent in the marshalling area forms part of the TTT whilst the truck has not necessarily entered the operational yard (see Annexure 2)

911 At DP World Melbourne on the other hand due to restricted space within the

terminal trucks are normally held outside and a small number is constantly drip fed into the terminal (controlled rate of entry) These trucks then approach the processing points (6 lanes x processing booths) further which they directly enter the operational yard and the TTT is measured from this point

912 DP World Fremantle does not have a truck holding area within the terminal which

means the truck enter the terminal and queue at the Entry to Operational Yard Immediately after being processed the truck enters the terminal yard Therefore unlike Sydney time from Entry to Operational Yard is time historically not published Therefore TTT between DP World Sydney and DPW Fremantle are not comparable

913 DP World Fremantle is also an RTG operation similar to DP World Sydney

However the physical layout and the resulting entry arrangements differ Due to restricted space within the terminal the trucks are normally held outside and constantly drip fed into the terminal (controlled rate of entry) The trucks operate through 3 lanes within the terminal and truck turn time is measured at this processing point when the trucks actually enter the operational yard

914 DP World Adelaide is a straddle operation similar to DP World Melbourne

However its physical layout and resulting entry arrangement is different to that of DP World Melbourne and has some similarities with what takes place in Sydney The hourly truck volume can be held within the terminal and the TTT is measured from entry into the terminal main gate to departure from the terminal main gate The measure differs from the other facilities on both entry are exit gates

915 The benefits of this TTT data is not so much the raw data itself but more so the

long term trend in the data If TTT is constant or even improved during periods of volume growth then this reflects a firm commitment to the landside process Continuous improvement reflects a commitment to landside efficiencies

Page 14 of 48

916 TTT is influenced by the mode of operation the Gate In infrastructure and volume

of containers required to be handled

917 The RTG mode of operation requires the truck to travel to the yard stack where the container is located or assigned as opposed to the straddle operation where the straddle comes to the truck that is parked in a bay external to the stacking area The mode of operation at DP World Sydney generally results in a truck with multiple containers being serviced by multiple RTGs and also having to travel to multiple yard locations At each of these yard locations there will be a different level of demand on the particular RTG covering the area This will result in variations in the time it will take to service the truck in that particular area and therefore will influence the truck turnaround time

918 In comparison a terminal running a straddle operation could employ a different

straddle to handle each of the containers processed for the truck

919 The mode of operations employed by container terminals have various strength and weaknesses and need to be considered based on many factors in a Port (ie not just the landside interface) but both modes can contribute to variability

10 The Tribunal invites comment on how truck turnaround times are currently

measured by supply chain participants and how they should be measured The Tribunal further invites comment on the extent to which the stevedores provide access to their facilities at the specific times booked on the VBS

Truck Turn Time (TTT)

101 DP World Sydney currently measures truck turn times from the time the containers on a truck are processed to the time the last container is completely loaded onto the truck (import containers) or discharged from a truck and landed in the terminal (export containers)

102 TTT is directly influenced by the number of containers to be handled by an RTG

terminal on a truck run ie a higher number of containers results in a longer truck turn time on average This due to the truck having to potentially visit multiple locations within the RTG terminal

103 The reason the container Terminal does not measure the time following

completion of loadingdischarging container from truck is measure regulatory bodies (ie AGIS) have commenced inspection of containers on terminal exit gate which is beyond the control of the container terminal

104 The process time is used to measure the start of the truck turn time as this is the

closest time to the truck being in the terminalrsquos control

105 Trucks that take advantage of the autogate processing (currently 25 of trucks) actually start the truck turn time as they come through the terminal gate as this is where the transponder reader is located DP World Sydney support the increase of the autogate processing and the result that the truck turn time starts at the gate For trucks that do not use the autogate processing opportunity the terminal does not start the truck turn time at the gate as the truck driver may not move efficiently to have the container processed

106 Carriers often use TTT measured from the time the truck services at the standby

queue or the arrival of the truck at the zone queue which are waiting for the next time zone to open

107 In relation to standby queue the CAA clearly stipulates that the use of this system

does not guarantee immediate call-up to the terminal in priority to trucks that have booked a time slot

Page 15 of 48

108 In relation to TTT measured from arrival at the time zone queue the fact that the truck has arrived prior to the commencement of the zone opening is purely a decision of the transport carrier and is beyond the control of the Container Terminal and is not supported by DP World

Container Turn Times

109 DP World Sydney currently measures container turn time from the time the

container is processed to the time the container is loaded onto the truck (import container) or discharged from a truck and landed in the terminal (export container) Over the last 5 years the transport regulators have allowed truck operators to operate larger trucks thereby ultimately improving the efficiency of road transport As transport operators increase the use of larger trucks (capable of carrying multiple containers) the handling of these trucks produces a multiple handling of containers on the same truck at the terminals For example in the past one would handle one container per truck and in that case the CTT and TTT were almost identical With multiple containers on trucks the difference between the CTT and TTT is increasing To be able to benchmark this across a port and other ports becomes hard with TTT due to the ever changing ratio of containers per truck (depends on percentage of large truck operators) firstly within the same port and secondly between different ports Therefore CTT enables us to benchmark the measurement on common grounds across all our operations around the country

Access Times at DP World

1010 DP World Sydney divide the day into hourly time zones within the VBS The time

zones start on the house (eg 0700hrs) and complete at the end of the hour (eg 0759hrs) There is a time zone board located at Simblist Road which indicates which time zone is open Trucks queue at this point waiting for the board to change each hour During daylight hours on average there are 15 trucks waiting for the time zone to open The trucks then make their way to the terminal in gate located on Friendship Road once the zone is open

11 The Tribunal invites comment on the choice between a system where container

numbers are nominated in advance thereby offering the possibility of faster turnaround times or not providing container numbers which would provide road carriers with greater flexibility Or would industry participants prefer a system that allows the choice between both

Import Timeslots

111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the import container number in a timeslot booking up to the start of the time zone The disadvantage for the terminal and the carrier is that this flexible system arrangement does not allow the terminal the chance to reposition the container to a position that will minimise the number of containers that have to be moved (known as ldquoconsolidation movesrdquo) in order to access the container that is to be delivered to the truck once the truck has been processed and is in position for loading The more consolidation moves the terminal has to do to load an import container to a truck the longer the truck turn time will be

112 Undertaking consolidation moves prior to truck arrival would provide the opportunity

to decrease truck turn time

113 To achieve a further reduction in truck turn times and a reduction in cost of delivering a container the terminal would need to control the order in which the import containers are delivered This occurs in other ports in the world

Controlling the order of import deliveries

114 The current arrangement where the shipper controls the order of import containers

to be delivered from the terminals results in extra costs incurred by stevedores and also decreased efficiencies The longer a container remains in the terminal (an

Page 16 of 48

increase in the dwell time) results in increased consolidation (rehandles) undertaken by terminal equipment and an increase in the time taken to load a container to a truck or train

Matching of resources to meet demand

115 The terminal allocates the resources required based on the demand or the

number of timeslots released This occurs 24 hrs in advance

116 Carriers who book timeslots and do not meet their commitment (No Show) results in the terminal resources to be under utilised at certain times and creates an opportunity loss There is also an opportunity lost by another carrier to utilise the time slot for each No Show

117 Carrier who book timeslots and arrive late for their commitment (Wrong Zones)

results in terminal resources being under utilised at times and over utilised at other times The troughs in terminal resource utilisation result in an opportunity loss and the peaks result in a decrease in efficiency (increased truck turn time) or increased cost (increased resources applied) The increase in truck turn time has an impact on carriers who arrive on time for their time slot

118 The current VBS allows for carriers to arrive at the terminal to deliver or pick up a

container without committing to a time and container number thus not enabling the terminal to completely plan the required resources to meet the demand This is termed unplanned work The Standby Queue export tagging by B Carrier no advanced deadline for entering an import container number prior to the time zone and no requirement for an export container number being entered into a time slot booking results in an increase in unplanned work Unplanned work results in peaks in the work required by the planned resources and a decrease in efficiency

119 Rail also has similar problems

1110 By changing this arrangement and giving control to the stevedores to determine

the order of container delivery from the terminal will reduce the costs incurred by the terminal and decrease the turnaround time for trucks

Export Timeslots

1111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the export container number in a timeslot booking up to the start of the time zone It also allows an export time slot to be processed without a container number entered in the time slot booking The container number in then entered by the RampD Clerk at the terminal This often results in human error by the truck driver or the RampD Clerk resulting in delays to trucks This practice also eliminates the opportunity for the carrier to use the automatic processing described below in Question 12 To maximise the use of automation and eliminate human error the export container number needs to be a mandatory field to be updated in the time slot booking by a nominated time prior to the start of the time zone eg 2 hours prior to the start of the time zone

12 The Tribunal invites comments on the increased use of ICT and automation and

any other ways to reduce turnaround times and otherwise improve supply chain efficiency

121 DP World support and are driving the increased use of automation for the

processing of trucks DP World have developed and currently make available an automated truck processing system for carriers who use ePORTS to book and manage timeslots The percentage use of this system at DP World Sydney by carriers averages about 25 of total truck movements excluding stack run trucks

122 This system requires the purchase of a transponder unit from the terminal at the

cost that the terminal purchases the unit plus GST Currently the units are sold to

Page 17 of 48

the carrier for $12050 Also required is access to an eGATE screen in ePORTS The process for carriers wanting to move a number of containers on a transponder run involves

a) Booking through EPORTS the required number of time slots in a time zone

For example if a transport carrier wanted to deliver two export containers and collect one import container on a single truck run it needed to book three slots and

b) Setting up the transponder by inputting the slots truck number container numbers and whether they are import or export containers in the transponder booking screen in ePORTS

123 The benefits for carriers of using this automated processing include

a) The processing occurs earlier (ie at the gate as compared to in the RampD Office) therefore this decreases the chance of Wrong Zones being incurred

b) No need for the truck driver to present documentation at the RampD Office therefore reducing the truck turn time by avoiding any potential queues

c) No interaction between the truck driver and the RampD Clerk therefore decreasing human error during processing and causing further delays

d) As the processing occurs at the gate the trucks can skip ahead of other trucks where their drivers have to manually process in the RampD Office effectively jumping the queue

e) Allows reprogramming of trucks up to 15mins before the end of the time zone (eg 0645 for an 06 slot) without the truck driver needing the Delivery Order in his possession

f) Provides the carrier with the ability to educate their customers to provide the Delivery Orders in a timely manner in order to lodge them at the terminal

g) Electronic copies of the Delivery Orders (excluding scanned copies of originals) can be forwarded to the terminal via email therefore eliminating the need to physically lodge them

h) Enables the carrier to take all advantage of Electronic Import Delivery Orders (eIDOs) that are currently being used by Evergreen Marine at DP World Sydney Other shipping lines will move to the use of eIDOs in the future

13 The Tribunal invites stakeholders to comment on VBS capital and operating costs

and to assist it to distinguish between stand-alone VBS costs and those shared with other stevedoring activities

131 It is important to distinguish between the capital and operating costs of operating

the VBS and the costs of operating the landside interface ie delivering containers to and from trucks

132 The costs of a VBS comprise the following components

bull IT development and maintenance costs and

bull Management and administration time to manage and administer the system

These costs are low relative to the costs of actually providing the services within the terminal ndash loading and unloading the trucks

133 Having a system which requires the terminal to provide a guaranteed number of

slots per hours is to the disadvantage of the terminal Terminal operations are by their nature unpredictable due to the irregular arrival of ships Having to guarantee a number of slots which carry with it a high expectation of performance in terms of TTT tends to force the terminal to set the number of slots at a level which includes a risk mitigation factor against all things not going to plan The net result of this is

Page 18 of 48

that the terminal tends to effectively oversupply equipment and labour increasing its costs The impact of this is far more significant than the isolated costs of running the actual vehicle booking systems

134 Direct VBS costs have nothing to do with ship or rail operations

135 The container yard is run as a single operation servicing ship road and rail By

this means while there are practical limitations we seek to pool resources to maximise the overall efficiency of terminal operations particularly to absorb the peaks and troughs of demand across the operations as a whole This effective sharing of costs improves overall efficiency and results in lower costs to the benefits of users as a whole We anticipate that systems and technology improvements will see greater use of such pooling and greater overall efficiency as a result

14 The Tribunal invites stakeholders to comment on VBS access and penalty charges

and the level of transparency of access through the stevedoresrsquo VBSs

141 The VBS facilitates the provision of orderly access to DP World Sydney Terminal for over 200 individual carriers

142 DP World considers the achievement of orderly access to its terminals as a

primary objective of the VBS To achieve orderly access DP World considers it important to require carriers to pay a nominal subscription charge for the level and rights of access they require and to issue ldquono showrdquo and ldquolaterdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay lsquoon timersquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs

143 The VBS is essentially an ldquoappointment bookrdquo to assist transport carriers to

organise themselves more efficiently leading to a reduction in waiting times at the container terminal The VBS divides all working days into time periods containing a pre-determined number of timeslots The timeslots represent the number of import and export containers that can be handled in that period The number of timeslots in a day is determined by expected carrier demand and the availability of labour and equipment Carriers are then able to book timeslots for collection or delivery of containers

144 The alternative is random access to container terminals by carriers and significant

truck queues with associated demurrage costs which are ultimately paid for by the end user

145 At DP World Sydney the VBS offers transport carriers the ability to access an

internet based computer system or telephone bureau for the purpose of booking time slots for those carriers who do no wish to use the computer system The VBS in its present form offers access on a transparent and equitable basis to all carriers encourages the efficient movement of containers from the ship through the terminal and onto customers and vice-versa encourages innovative practices which are beneficial to terminal efficiency road congestion and the overall cost of the supply chain The ldquono showrdquo and ldquolaterdquo fees encourage these operational practices and efficiencies

146 DP World has adopted a class structure with an annual subscription for access

because this system allows carriers to determine what access is required for their business while providing the industry significant level of transparency in terms of access costs

147 All carriers have an equal opportunity to subscribe to any of the three classes of

access to the VBS (bearing in mind that smaller carriers are allowed to consolidate

Page 19 of 48

their subscriptions in order to share the cost of a B Class subscription) and equal access to timeslots amongst carriers of the same class

148 Annual fees are payable in advance Table 3 sets out the various carrier classes

currently in operation at each terminal and the applicable subscription fees for each class There are no annual limits on the number of slots carriers can book

Table 3 DP World Sydney ndash Current carrier classes and VBS deposit and registration fees for the year commencing 1 July 2005

Terminal Carrier Classes Price Number of active

carriers at Feb 06 Port Botany New South Wales

B Carrier ndash online internet access with high service levels

$2922150 (Non-refundable deposit) No fixed upper limit on annual time slots1

28

A Carrier ndash online internet access with standard service levels

$133400 (Annual registration fee) No fixed upper limit on annual time slots2

162

AB Carrier ndash access via the PampO Phone Booking Bureau with standard service levels

$66760 (Annual registration fee) No fixed upper limit on annual time slots3 39

149 Any carrier selecting the ldquoBrdquo classification is encouraged to also consider the ldquoArdquo

classification unless they are confident of utilising a high level of timeslots that would render the higher subscription fee as attractive per timeslot

1410 In addition to the VBS annual subscription fees the carrier access arrangements

provide for the levying of a no-show fee on carriers who fail to arrive for slots they have booked in the amount of $110 per time slot The terminal also charges carriers late fees of $55 per slot if they fail to arrive for a slot booking within the nominated time zone No fees are charged where a carrier is unable to meet the time slot due to delays caused and acknowledged by DP World Australia or where delays are caused by circumstances genuinely outside of the carrierrsquos control DP World Australia also has the discretion to and does waive ldquono showrdquo and ldquowrong zonerdquo fees in the interest of maintaining a good working relationship with carriers Failure by carriers to pay these ldquono showrdquo and ldquowrong zonerdquo fees may lead to them being prevented from making further bookings ldquoNo showrdquo and ldquowrong zonerdquo fees are the means by which DP World ensures that access to itrsquos terminals is provided in the most efficient manner to all 1carriers as late carriers cause delays for those carriers that are on time

1 No fixed upper limit on annual timeslots ndash Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 2 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 3 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release

Page 20 of 48

1411 The ldquono showrdquo and ldquowrong zonerdquo fee structure was introduced following

consultation with carriers It was originally $20 per late arrival (in Victoria where VBS first commenced) but this is proved to be ineffective in disciplining carrier conduct In response to requests from many carriers DP World increased the ldquono showrdquo fee to $110 The fees also discourage carriers from the practice of overbooking slots which they have no intention of using and preventing other carriers from using those slots

1412 The actual cost of a truck turning up late (Wrong Zone) or not turning up at all (No

Show) is the cost of planned resources (labour equipment etc) based on the VBS demand (number of containers expected to handle during a time period) not being utilised during the time period they are employed

1413 Adjacent to each time zone are grace periods one prior to the time zone and one

following the time zone These grace periods and the trucks arrival time for processing determine the status of the time slot ie arrived on time or arrived late (Wrong Zone) Currently the grace period following the time zone is set at 20 minutes which means that if a truck arrives later than one hour and 20 minutes after the start of the time zone then the time slot will be initially recorded as a Wrong Zone Following the completion of each VBS day Wrong Zones are reviewed and any penalty waived if any of the following determined

a) The terminal is aware that it has contributed to a truck arriving late for the time

slot ie the terminal has previously delayed the truck or carrier on an earlier time slot or

b) The carrier advises that they arrived late due to an unforeseen circumstance eg a break down of the truck

We request that the information in 1414 be kept confidential

1414 Omitted for reasons of confidentiality

1415 Officers at DP World Sydney have regular conversations with carriers in respect of

the waiver of No Show fees as well In certain instances DP World may agree to waive fees prior to an invoice being issued

1416 For both Wrong Zone and No Show fees the terminal provides a grievance

process for carriers who have been issued invoices and do not agree that the fee has been issued fairly The carrier has the opportunity to provide the terminal with an explanation and should officers at DP World Sydney agree that there has been an error in the issuing of the fee or an unforeseen circumstance is explained the terminal will credit the invoice

15 The Tribunal invites stakeholders to indicate the costs of providing the services of

rail windows and rail paths to rail operators

151 Rail windows are based allowance on a rail terminal performance KPI of 30 container moves per hour and charged at $360 per hour A shunting time allowance of 15 mins per window is not charged Additional lifts canare provided by increasing the lifts per hour by applying more machinery at no additional cost

152 The cost of providing terminal rail operations is higher than road operations at DP

World Sydney The RTG mode of operation requires a container to be moved to or from the container stack For road containers the truck takes the export container to the stack and travels to the stack to pick up an import container For a rail container a terminal internal transfer vehicle (ITV) is required to be used by the terminal to move the container from the train to the stack (export containers) or

Page 21 of 48

the stack to the train (import containers) This is not required for container being received or delivered by road

153 For import rail containers there is a loss of efficiency for the vessel discharge

operation in order to stack rail containers separately for delivery to the train For each discharge point in the terminal extra resources are required There is extra administration costs in having to make alternate arrangements to separate these import rail containers

154 Despite the fact that the delivery of containers to rail is higher than road the

terminal seeks only a partial recovery of costs in order to encourage the use of rail in the port in line with the NSW Government objectives

155 There is a management cost of setting up and operating the rail windows This is

similar to the cost of operating a VBS

156 There is additional security infrastructure costs for a rail operation to ensure the terminal meets their legislative security requirements The more terminal entry points created the higher the cost to replicate these security infrastructure requirements

16 The Tribunal invites comment from stakeholders on the planned or mooted

development and expansion of the various intermodal terminals in Sydney and the extent to which this is expected to ease congestion in the landside supply chain at Port Botany

161 DP World supports the development and expansion of an intermodal terminal

network to facilitate an increase in the use of rail as the means of container transport This has the potential flow on benefit of minimising the growth in the number of trucks requiring to access the Port Botany area as port volumes continue to grow

162 Transport between the Botany terminals and the inland intermodal terminals

should be by rail or trucks operating a stack (bulk) run road out during off peak periods eg night shifts or weekends The use of Super B Double trucks would assist with the efficiency of these off peak stack run outs

17 The Tribunal invites comment on the likely effect of the expansion plans at Port

Botany on access to the port terminal during peak periods and efficiency along the supply chain

171 Improving the two-way running or back-loading of trucks has to be a priority in

order to maximise access opportunity at the terminals and efficiency along the supply chain It is likely that a third and separate stevedoring facility will only increase the difficulty of improving truck utilisation over and above the current levels by the increased logistics complexity of coordinating timely access to three terminals rather than two

172 A third stevedore will lead to the same port volume being spread over three

operations While it is resource levels that determine available slots DP World has found that during periodic decreases in volumes carriers favour daytime runs to the terminal as opposed to night time

173 The expansion plans will have a negative impact on rail transport timeliness and

access requirements to DP World Sydney if the requirements to breaksplit trains and shunt sections of trains into multiple terminals continues This will undermine the overall rail effectiveness and the NSW Government rail objectives by the unnecessary increase of splitting trains

Page 22 of 48

18 The Tribunal invites comment on the likely effects of expansion of the intermodal network in Sydney on access to the port and efficiency along the supply chain

181 This is a similar issue to point 16 above

19 The Tribunal invites comment on the likely impact of a peak pricing system along

the lines of the FIC on access to the port terminals and the efficiency of the Port Botany supply chain

191 We understand for the NSW Governmentrsquos announcement (31 May 2007) that the

FIC is no longer being proposed

192 Table 4 shows the average percentage of road containers that are handled by shift at DP World Sydney based on a 6 day x 24 hour receival and delivery operation for the past 4 years The figures indicate that there is surplus capacity on both evening and midnight shifts when compared to day shift Note that the percentage of road containers handled has increased on day shift relative to the combination of evening and midnight shifts This has been due to terminal efficiencies creating increased capacity during day shifts and the road carriers utilising this capacity

193 This is further emphasised in Figure 4 which shows the trend over time for day

shift containers handled has increased from 2005 evening shift has decreased and midnight shift has not changed significantly

Table 4 DP World Sydney ndash Percentage of Daily Road Container Volume handled by Shift

Year Midnight Shift (2230 ndash 0630hrs)

Day Shift (0630 ndash 1430hrs)

Evening Shift (1430 ndash 2230hrs)

2007 YTD 21 47 32

2006 23 45 33

2005 22 43 36

2004 19 44 38

194 Year to date April 2007 figures may reflect the seasonal trend for lower volumes in this period

Figure6 DP World Sydney ndash Road Volume trendlines by shift 2005-07

Page 23 of 48

20 The Tribunal invites comment on the likely impact of the expansion of the freight

rail network in Sydney on the number of containers moved by rail and on congestion at the port

201 The importance of increasing the proportion of containers moved by rail is

recognised and supported by DP World Sydney

202 To complement the expansion of the rail freight network upgrade the terminal is developing plans to increase the length and the number of sidings within the terminal Over the next three years the terminal is planning to spend an estimated $20million on internal rail infrastructure machinery and systems The terminal upgrade will ensure DP World Sydney has the infrastructure in place to meet a target of 40 throughput by rail

203 The expansion of the freight rail network needs to take into account The access

to each of the terminals especially the access to DP World Sydney where by the terminal has a distinct disadvantage in relation to its competitor

21 The Tribunal invites comment on the impact on the supply chain on ARTC

managing the metropolitan freight rail network

211 Management of freight rail infrastructure is ARTCrsquos core business and will bring additional management expertise and focus to the task of reforming operations on the Port Botany rail infrastructure

212 For ARTC to control the MFN (Metropolitan Freight Network) makes sense from

the point of view they can make informed decisions for both inbound and outbound Port services based on the wider NSW Rail Freight Network operation

213 The ARTC proposal to co-ordinate services by performing the full Network Control

Function (both signalling and Train Control) from the one centralised centre for the Southern Sydney Freight Line (SSFL)MFN and Port Botany emphasises their commitment to ensure safety communications and network management is their primary objective

214 ARTC are focussed on improving the efficiencies at the Port and bring to the

industry fresh innovative ideas to improve the overall capacity on the rail network ARTCrsquos willingness to assist and eagerness to invest in the rail infrastructure brings a breath of fresh air to the industry and specifically the stevedore operations ARTC can integrate the Botany line into its overall investment program paving the way for additional investment to improve the efficiency of operations on the Botany rail line and at the port-rail interface

22 The Tribunal invites comment on the following questions in relation to costs of the

VBS

22a What costs underpin the VBS access charges levied by the two stevedores How are the VBS access charges set

22b1 Refer to Question 14 The revenue from VBS charges account for a very

small proportion of DP Worldrsquos total container terminal revenue For the year ended 31 December 2006 they accounted for 13 of total revenue Of that 13 approximately 30 was for No Shows and Wrong Zones

22b What costs are incurred by the stevedores in moving a container from the

wharf to a truck or train

22b1 DP World Sydney is operated as an integrated business servicing ships road and rail within the context of a national business We do no separately account for the costs of each discrete activity Information on

Page 24 of 48

overall costs is provided to the ACCC and published on an industry basis in the ACCCrsquos Container Stevedoring Monitoring Report

22b3 Wharf to truck activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the VBS to provide orderly access for road carriers

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal space to allow truck drivers to park their vehicles in order to unlockset up their twist locks and processing of containers

bull Processing of the container

bull System to manage the truck movement within the terminal

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the truck by RTG or forklift

bull Provision of terminal area for truck drivers to safely leave their vehicle to lock the twist locks on their trucks check the container seal number and check the container for damage

bull Provision of terminal area for AQIS operation and infrastructure

22b3 Wharf to train activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the Rail Windows to provide orderly access for operators

Page 25 of 48

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal area for rail lines associated rail infrastructure and train inspection requirements within the terminal

bull Processing of the container

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the ITV by RTG or forklift

bull Internal Transfer Vehicle (ITV) movement of the container from the yard stack to the rail line

bull Lift of the container from the ITV onto the rail wagon

22c What influences the nature and amount of these costs (for example are they influenced by the type of equipment used by a stevedore Do they fluctuate with the number of containers handled by the stevedores) and how have costs changed over time

22c1 DP World operates very similar Vehicle Booking Systems in Brisbane

Sydney Melbourne and Fremantle where there are differences in volume through the terminals The only difference in subscription between the terminals are the ldquoB Classrdquo carrier subscriptions The annual subscription is influenced by the number of carriers seeking this class and the hourly allocation of slots to their class given the number of subscriptions In addition Melbourne operates a straddle facility and Brisbane operates a forklift reachstacker Therefore the cost of the Vehicle Booking System is not dependant on or mode but the annual subscription to ldquoB Classrdquo carrier depends on competition for that carrier class

22c2 An annual subscription fee per class which is a characteristic of DP

Worldrsquos VBS does not normally increase with volume At DP World Sydney subscription fees have not been increased since 2003

22c3 Overall landside costs have increased with increases in wages and

salaries (4 pa) property costs (substantially ahead of cpi) fuel and other general costs These increases have been offset to some extent by increases in productivity Industry costs history is also available publicly in the ACCC Container Stevedoring Monitoring Reports

22d Where do the port landside costs stop and the VBS costs start

22d1 Prior to the Entry to Operational Yard (see Attachment 2) the truck is

under the influence of the VBS and also under the influence of the external environment which includes but is not limited to port and metropolitan road conditions container clearance issues truck arrival peaks and troughs truck preparedness processing of the container to the handled by the terminal and maritime security requirements

It is DP World Sydneyrsquos view that the port landside costs stop and the VBS costs start at the choke point

22e Do the VBSsrsquo penalty charges reflect the cost to stevedores What should

they reflect

22e1 The primary rationale for the penalty regime is to seek to modify carrier behaviour

Page 26 of 48

22e2 However it is also the case that a ldquono showrdquo or ldquowrong zonerdquo gives rise to a lost opportunity cost to the terminal Resources made available but not utilised may be wasted

22e3 DP World considers the achievement of orderly access to its terminal as

a primary objective of the VBS To achieve orderly access PampO considers it important to issue ldquono showrdquo and ldquowrong zonerdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay ldquoon timerdquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs The alternative is random access to container terminals by carriers and significant truck queues with associated demurrage costs which are ultimately paid for by the end consumer

22f Should there be different charging arrangements for empty containers that

are returned to the port as opposed to full export containers

22f1 DP World Sydney terminal handles a full container in a similar way to an empty container using purpose built container stacking equipment controlled by a DP World employee A container occupies the same amount of space whether it is full or empty This leads to the same cost for the handling of a single empty container as a single full container Single empty containers returned to the port should be charged a similar rate to full containers

22f2 To reduce the cost of handling empty containers in the terminal destined

for the same port on the one vessel and that are of the same size the terminal in conjunction with the shipping line and the shipping linersquos nominated carrier work together to create a bulk run of empty containers The bulk run maximises the number of empty containers that are handled in a specific time period The terminal dedicates resources to thee bulk runs and also provides priority access to the transport carrier in order to create efficiency and an economy of scale In this way the cost of returning an empty container via a bulk run is reduced

23 The Tribunal invites comment on the following questions in relation to the different

pricing regimes of the two stevedores

23a Why do the stevedores have different pricing schemes for their VBSs

23a1 We do not know why Toll-PatrickAsciano has adopted the pricing scheme it has

23a2 In order to improve earlier versions of its VBS in the mid-1990s DP

World (PampO) introduced categories of carriers and began charging differential subscription fees for carriers registering to use the VBS depending on the level of access required by the carrier Prior to this change some carriers were engaging multiple computer terminals to the detriment of other carriers and it had become clear that a level of differentiation would be in all carrierrsquos interests The different classes of carrier access were introduced to ensure the most balanced overall outcome The level of differentiation is an annual choice of access levels available to all carriers regardless of size Under this approach different subscription fees are charged for each category but all carriers registering in a particular category pay the same fee Our view remains that an annual subscription as opposed to a pay as you go is far less of an administrative burden on both the carriers and the terminal

Page 27 of 48

23a3 There are no restrictions upon carriers wishing to obtain a certain carrier category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for the same carrier categories as larger carriers Smaller carriers may also apply for consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst charging the burden of the cost of that subscription

23a4 Subscription fees based on differences in class are designed to

encourage choice whilst at the same time communicating a level of transparency with terminal pricing and service

23b Do the different pricing schemes influence the efficiency with which

transporters obtain access to the terminals

23b1 We do not believe this to be the case

23c Would standardisation of charges be more appropriate

23c1 It is our understanding that it would be unlawful for a supplier itself to standardise charges by reason of Section 45 of the Trade Practices Act This may be something that Government wishes to consider

24 The Tribunal invites comment on the following non-price access issues to consider

in relation to the operation of the VBSs

24a What effect do access rules and conditions and non price constraints have on booking a timeslot How to the stevedores use their discretion in determining access and charges and what impact does this have

24a1 The introduction of different categories of access stages the carriersrsquo

access to the VBS for the purposes of booking timeslots ldquoB classrdquo carriers are given exclusive access to a pool of slots between 0730-0820 During this period they are subject to zone limitations which restrict carriers to a maximum number of slots for any given hour The zone limit ensures all carriers within that carrier class are given fair and equitable access to the initial release of slots After the initial booking period the zone limit is lifted and carriers are permitted to book any number of unused slots per hour from those remaining in their pool Similar arrangements exist for A class carriers culminating in the cascading of all remaining slots from all segregated pools into a general pool at 1030 for access by all registered carriers

24a2 There are not restrictions upon carriers wishing to obtain a certain carrier

category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for a consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst sharing the burden of the cost of that subscription

24b What are the stevedoresrsquo obligations with regard to access to port facilities

and what should they be

24b1 Without providing an analysis of our obligations under law in general terms we are required to provide access to carriers on an equitable basis recognising the competitive environment we operate in

Page 28 of 48

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

IPART Review of the Interface between the Land Transport Industries and the Stevedore at Port Botany June 2007 DP World Submission 1 The Tribunal invites stakeholders to comment on any aspects of arrangements

between shippers (shipping lines) and stevedores that may be causing inefficiencies or extra costs to arise in the landside supply chain

11 The commercial arrangements governing service levels and prices at DP Worldrsquos

Port Botany Container Terminal (DP World Sydney) are overwhelmingly a function of the national contracts DP World enters into with the shipping lines The only parties to these contracts are DP World as stevedore and the shipping lines either as individual lines or on a consortium basis

12 The shipping lines expect the stevedore to provide best practice standards of performance at the roadside interface (Rail Road) to ensure that the shipping linesrsquo overall services to its customers remains competitive

13 It is our view that these arrangements continue to deliver cost effective services to the shipping lines and other stakeholders in the maritime logistics chain

14 When considering the efficiency of stevedoring services all of the interrelated services provided by the stevedore have to be taken into account Focussing on one particular aspects of performance runs the risk of ignoring impacts on all other aspects of the terminal operations

15 As evidence in ACCC and BTRE Waterline published data the overall outcome of the existing arrangements at Australiarsquos container terminals shows that vessel rates continue to improve for shipping lines with real prices falling while the landside interface performance measured on container turn time has continued to improve

Electrical Messaging to eliminate delays at the Container Terminal

16 The industry has embraced a number of electronic messaging solutions to

improve efficiencies The Pre-Receival Advice (PRA) introduced in August 2004 as a replacement for the paper based Export Receival Advice (ERA) is an example of a benefit to the industry with shipping lines working closely with the stevedores

Industry Benefits bull Eliminating the poor ERA legibility problems which caused significant delays

at the container terminals

bull Standardises the Export receival process for both Road and Rail

bull Crosschecking the pre-advice against the Shipping Line bookings ensures that the correct cargo is received for the correct destination and the correct Line operator

Page 1 of 48

bull Reduces the resources required at the Line to manually check receival details

bull Reduces data entry required at the wharf gate

bull Reduces truck-processing time at the wharf gate

bull Potentially reduces data entry time by the shipper as the Pre-Advice is system generated or web form fields which subject to agreement by the shipping lines on the level of information will be pre-populated with the Line Booking information

bull Ensures acceptance through the gate at the wharf if the CAN and Shipping Line information is validated prior to arrival

bull Eliminates the risk of Customs fines to the shipper for delivering cargo to the wharf with an invalid CAN

bull Eliminates the cost associated with double handling cargo received or rejected with incorrect information and

bull Could streamline the US Customs reporting process and assist in replicating the process for other trading partners as or when required

17 The next initiative which is supported by Shipping Australia Limited (SAL) we

hope to see generally adopted is the Electronic Import Delivery Order (eIDO)

The eIDO is bull A progressive replacement for Hard Copy Delivery Orders

bull A communication of ldquoauthority to deliverrdquo via electronic messaging and

bull Generated by shipping lines and sent to the relevant stevedore via 1-Stop

The benefits of an eIDO bull Security of cargo through greater documentation security

bull Shipping line reduction in documentation costs courier costs

bull Ability to link eIDO to other functionality eg VBS Com-Pay etc

bull Combined with PRArsquos the ability to fully automated gate entry and processing systems

bull Flexibility for the transports carrier by allowing the assignment of alternate trucks if required without having to provide the truck driver with paperwork (Delivery Order) and

bull The importer freight forwarder receives confirmation of shipping line release more efficiently thereby increasing the time the transport carrier has to organise the pick up of the container

18 Further developments in electronic messaging to provide interface enhancements

for all stakeholders are expected to benefits the supply chain

Repositioning of Empty Containers back to the Port

19 Shipping lines continue to seek to store empty containers at the Port which we believe is an inefficient use of high valued Port land However we understand the shipping linesrsquo position in the Australian context (import dominated) in needing to be able to reposition empties to export at short notice to take advantage of available space on ships

110 It is our view that container terminal facilities should be considered purely as

transit facilities Any activities which utilise terminals as storage facilities are contributing towards terminal inefficiencies with the potential to impact upon many

Page 2 of 48

parties within the supply chain Receival of empty containers directly back to the wharf after importer unpack is fine if they are treated as per any export container and received accordingly for a specified vessel The inefficiency related to these activities occurs when the containers are received into a terminal for a non specified vessel pool purely for top up if the vessel alongside has surplus capacity This arrangement uses expensive waterfront terminal land for the storage of empty containers The effects of such are an increase in overall container dwell time which results in terminal congestion and associated handling inefficiencies and costs

2 The Tribunal invites stakeholders to comment on any aspects of the stevedoresrsquo

methods and hours of operation or other business practices relating to the provision of access to the port terminals that may be causing inefficiencies or extra costs to rise in the landside supply chain The Tribunal further invites comments on why the Port of Melbourne appears to offer considerably more VBS slots than Port Botany

Road 21 We are unclear as to what specifically the Tribunal is referring to with regard to

methods of operation However with regard to transport carrier access there are three methods in which a transport carrier can access the DP World Sydney Terminal

a) A carrier can use a timeslot which is booked or reserved through the VBS

operated by DP World

b) A carrier may access the terminal through a standby queue and

c) A carrier may organise a bulk run

22 Our stevedoring resources are available to service vessels road and rail 24 hours per day 7 days per week 52 weeks per year

23 Shipping lines expect and are provided with vessel operations and rail operations

on a 247 basis Road services are provided on a 246 basis on the basis of demand Despite encouragement by the stevedore there is minimal demand on Saturday and no demand for road services on Sunday

24 The VBS is simply a means by which to communicate with the transport carrier

community What determines the number of slots made available are resource levels provided at the container terminal DP World Sydney provides more than sufficient resource levels to enable all containers to be delivered as required to road within the three free day period even accepting the industryrsquos current limited use of the available 247 terminal operation It is acknowledged that resource levels provided to road operations may be varied day to day as resources may need to be directed to ship operations but this follows from running the terminal as an integrated operation which is ultimately most efficient Providing further day time slots without addressing market inefficiencies only risks service levels to shipping lines that are demanding higher performance levels and perpetuating the industryrsquos unwillingness to support 247 operations

25 DP World also notes that all carriers may and do from time to time contact the

terminal and request additional timeslots if there are none available on the VBS The terminal will endeavour to accommodate such requests where there is operational capacity to do so If there is capacity the Terminal will book the timeslot in the name of the carrier that has made the request

26 Access to DP World Sydney is via a rail window assigned to the rail operator The

rail window timing duration and size (the number of lifts) is negotiated with the rail operator and aligned to the path the operator has acquired into Botany Rail Yard The rail windows are designed with the intention of allowing the rail operator

Page 3 of 48

Botany Rail Yard management and the terminal operator the ability to plan their operational requirements in order to maximise efficiency

27 Prior to the establishment of rail windows the order of arrival of trains into the

facility was on a first come first served basis This method of operation created inefficiencies where a rail operator would occupy rail siding time to the detriment of other rail operators and create large periods of idle time occupying the sidings This would invariably mean that other rail operators carrying containers for ships about to leave port could not deliver containers in time to ship on the targeted vessel voyage resulting in large short shipments Invariably missed sailings cost shippers because alternative storage facilities need to be sought together with the associated additional handling costs

28 In Table 1 below we have provided an indicative analysis explaining the apparent

significant difference in slots provided in Sydney and in Melbourne during the 0800-1600 period Monday to Friday for the June 2006 Quarter

Table 1 Comparison of slots offered in Sydney and in Melbourne

Table 1 Comparison of slots offered Notes Melbourn

e Sydney Variance Mel Syd

Terminal volume for the Quarter Ctr000 (1) 139 118 177 Proportion of Exports (2) 500 500 Proportion of Exports as Empties (3) 260 520 Proportion of containers as Empties (4) 130 260 Rail proportion (5) - 215 VBS slots available Ctr (6) 45941 26632 725 Utlisation (7) 956 948 08 VBS slots used Ctr (8) 43920 25247 740 Adjusting Melbourne to allow for like for like comparison

Terminal volume for the Quarter (9) 849 Proportion of Exports as Empties (10) 851 Rail proportion (11) 823 Sub-total 595 Adjusted VBS slots used Ctr 26118 25247 34 Notes

1 Actual DP World container volumes for the quarter

2 Estimated

3 Based on year to Dec 2006 averages

4 Calculated as (2) x (3) 5 Estimated based on Port rail volumes for Year to Jun 2006 Rail volume in Melbourne is about 10

but at DP World Melbourne rail volumes are as a matter of operational practice delivered by slotted truck access to the rail terminal at West Swanson Intermodal Terminal

6 As quoted by IPART from BTRE Waterline Figures appear to be DP World rather than Port figures 7 Source DP World 8 Calculated as (6) x (7) 9 Reducing Melbourne slots in line in proportion to volumes handled 10

Reducing Melbourne slots in line in proportion with higher empties which are typically handled as bulk runs and not slotted

11 Reducing Melbourne slots in line in proportion with lower volumes handled by rail

29 We note that these figures are for a single quarter The analysis is simplistic as noted in the table above It also assumes that the adjustments simply accumulate which may not be strictly true

210 It is to be recognised that in Sydney over 90 of bulk runs are performed on day

and evening shifts (0600-2200)

Page 4 of 48

211 Allowing for a reasonable margin of error given the estimates invoiced this analysis supports our view that Sydney is provided with proportionally equivalent day and evening slots compared with Melbourne

3 The Tribunal invites stakeholders to comment on any aspects of the road transport

operatorsrsquo current work practices and any trends in storage charges and volumes (both for on-port storage and at transport operatorsrsquo own depot storage) that may be causing inefficiencies or extra costs or arise in the downstream supply chain

31 Unlike in other states in Australia in New South Wales in our view there is no

effective peak body broadly representative of the transport carrier industry with which we as a stevedore may engage in a meaningful dialogue on port related issues However we continue to meet with individual carriers to discuss such issues

32 The delivery of removal of a container at the terminal is a decision that is

determined by or shared between the consignee and their agents (eg customs broker carrier) It is the consignee and their contracted agents which dictate when the container is required to be delivered to the warehouse Post release of the container by the ACS AQIS and shipping line the consignee and their agents decide on the most cost efficient option for storage of the imported container (or goods) ie on port storage or other storage option (either packed or unpacked)

33 On-port storage of containers may suit the consignee and their agents However

it is not conducive to efficient container terminal operations

34 As demonstrated in Figure 1 the on-port (ie container terminal) storage revenue has decreased as a percentage of revenue over the past two years This trend follows a decrease in average import dwell time over the same period In line with this the average import container dwell time (this is the average time an import container remains in the terminal) has decreased despite the overall terminal throughput having increased

Figure 1 DP World Sydney ndash Import Container Dwell Time and Storage Revenue

35 Transport carriers are able to book an available timeslot in a time zone and alter which container (number) is to be collected in that timeslot up until the time zone

Page 5 of 48

commences Once a time zone commences it is no longer possible to book a time slot in that zone Transport carriers thus have the flexibility to select a different container slot at short notice This short notice advice of which container (number) is to be collected makes it impossible for the terminal to move the container to the best position to facilitate the best possible truck turn time This is discussed further under Question 11

36 Transport carriers do not always check that a container is released from all

impediments (ACS Holds AQIS Holds storage fees paid) before arriving at the terminal This can cause delays for the truck at the terminal and congestion within the terminal and congestion within the terminal truck marshalling area reducing the opportunity for other carriers to access the terminal which have ensured there are no impediments on the processing of their containers for collection This is seen as inefficient practice that contributes to further delays and costs in the logistics chain

37 Speculative booking of timeslots appears to occur within the VBS whereby

carriers book what they can during the initial booking period rather than what they need This is evidenced by the number of time slots released into the exchange pool The exchange pool is available for carriers to offer the time slots they have booked to another carrier

38 Table 2 below shows the number of time slots that were exchanged over a period

of 8 days Saturdays and Public holidays were not included and non-peak zones were not included The table indicates that during this period an average of 24 of time slots advertised for exchange which shows that carriers initially booked these time slots however in time before the time zone commenced they decided that they did not need the time slot This high number of time slots offered for exchange is due to speculative bookings or other circumstances including change of plans more time slots being made available by the terminal or timeslots becoming available within the exchange pool and thus better suited time slots become available to the carrier DP World is unable to determine how much each factor contributes to the high percentage of slots that are offered for exchange

Table 2 DP World Sydney Percentage of timeslots exchanged during the period of time zones 05-07

Total timeslots

Exchanged 05-17 zones

Total Time Slots available 05-17

zones

Percentage of time slots exchanged

23-Jan-06 48 585 8 24-Jan-06 167 675 25 25-Jan-06 253 770 33 27-Jan-06 206 585 35 30-Jan-06 217 605 36 31-Jan-06 195 720 27 1-Feb-06 52 485 11 2-Feb-06 56 590 9 Average 149 627 24

39 As illustrated in Figure 2 below the transport operators in Sydney have the lowest

containers per truck visit to Port Botany compared to all other ports in Australia

Page 6 of 48

Figure 2 DP World Terminals ndash Containers per Truck Ratio

]

Source DP World

310 Transport carrier operations are still heavily focused on the traditional daytime

period We understand that this reflects the carriers needs to maximise profit margin in a competitive market place However DP World Sydney comes under criticism for not releasing further slots during the traditional peak periods despite resources and slots being available in ldquonon-peakrdquo periods The net result appears to be that there has been very limited success in embracing 247 operations which ultimately we believe is generally accepted as being in the long term interests of the industry as a whole We also believe that it would be in the interests of the industry as a whole if a consolidation in the transport carrier sector occurred resulting in fewer higher volume carriers with the scale to operate with a wider spread of hours

311 Storage charges apply in the vast majority of marine container terminals around

the world Storage free days vary from port to port around the world however at least three free storage days is not unusual

4 The Tribunal invites stakeholders to comment on any aspects of access to rail

infrastructure or of the current work practices of rail transport operators the supply chain

41 There are a number of public reports and studies that outline the issues

associated with rail infrastructure intermodal terminals and rail access to the port In general the conclusions being drawn are that significant investment is required in this area This is most recently supported by the New South Wales Governmentrsquos response to the FIAB report

42 DP World Sydney is seeking to extend its rail sidings to 600metres in the near

future At the same time there are a number of issues with the rail infrastructure connecting these sidings to port rail we are seeking to resolve with RIC

43 The utilisation of the rail windows at DP World Sydney was 55 during 2006

This utilisation is measured on the basis of the total number of containers actually loaded and unloaded against what could be unloaded if all window were fully utilised at the current agreed performance levels on the part of the rail operators and DP World Sydney Few rail windows are south for Saturday and none for Sunday operations When demand justifies it DP World through the provision of additional resources has the capacity to more than double the volumes handled in

Page 7 of 48

any particular window The extensions of sidings will provide further opportunity to increase rail handlings capacity at the terminals

44 Figure 3 shows the trends in terminal rail window utilisation during 2005 and 2006

Although there is a small improvement in window utilisation during this period the utilisation is low and there is considerable capacity available to increase the number of containers that can be transported by rail

Figure 3 DP World Sydney ndash Weekly Terminal Rail Window Utilisation

DP World Sydney Weekly Rail Window Utilisation 2005-07

20

30

40

50

60

70

80

Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07

45 Contributing factors to the relatively low level of utilisation include

bull the late arrival of the rail operator at the terminal which reduces window

duration and the terminalrsquos inability to increase productivity to meet window capacity requirements without incurring extra costs We understand that the late arrivals by rail operators can be due to equipment breakdowns the passenger network restrictions and the inadequate rail infrastructure for freight

bull overestimation of the volumes rail window duration required by the rail operator

bull fluctuations in freight movements on a daily basis creating peaks and troughs

bull the drought and the decrease in rural export containers

bull train shunting operations

bull the AQIS inspection required for each import container before it leaves the terminal

bull the train and wagon inspection required before the train leaves the terminal

bull the use of labour intensive manual twistlocks instead of auto twistlocks on rail wagons

bull the necessity to break split trains in Botany Rail Yard

bull infrastructure limitations within the Botany Rail Yard and

bull rail operators using the Botany Rail Yard as a storage facility for their wagons and causing congestion

46 As indicated above DP World Sydney has plans to improve the infrastructure

within the terminal in order to meet predicted rail volumes in the future However

Page 8 of 48

unless improvements are made against the issues listed above then window utilisation and efficiency may not improve to levels required to meet the NSW Governmentrsquos 40 rail mode target

5 The Tribunal invites stakeholders to comment on any aspects of the operations of

the regulatory authorities that may be causing inefficiencies or extra costs to arise in the downstream supply chain 51 The Australian Customs Service (Customs) has introduced Container Examination

Facility (CEF) operations in most major ports around Australia Each of these facilities incorporates the use of modern technology such as container x-ray equipment and other examination tools to support Customs in their aim of identifying illegal activities through containerised trade Since the inception of the CEF in Sydney in February 2003 Customs has reported many successful interceptions of prohibited imports

52 The CEF in Sydney operates two shifts each week day (day and evening shifts)

and one shift on Saturdays (day shift) This operating arrangement has created more competition for terminal resources during the peak hours 0500-1700hrs Monday ndash Friday This has resulted in the terminal deploying more equipment and labour resources at the terminal to meet the obligations of contracts with Customs but at the same time has increased competition for resources depending where the container is place in the terminal and how the yard equipment is coping with the demands of industry

53 DP World Sydney has contracted performance KPIs to deliver along with following

factors to overcome that contributed to resource competition

bull Random arrival of Customs transport provider trucks (B Doubles) and random selection of containers due to weight constraints of the trucks

bull Multiple containers per truck relating to up to six different locations a truck has to visit within an RTG terminal and the potential to utilise six different resources

bull The requirement for DP World Sydney to block stack Customs targeted containers from a vessel in order to minimise the variability of locations a Customs truck has to visit This block stacking requirement has a negative impact on vessel performance and creates more competition for internal resources

bull DP World Sydney does not control the transport to and from the CEF Customs have appointed a carrier in each port and who under the contract is responsible for the effective co-ordination between the terminals of the movement of X-Ray containers DP World Sydney does liaise with the Carrier but the carrier has the final say as to how many trucks are allocated to each terminal and

bull DP World is of the view that the current operating hours of the CEF are contributing to resource competition within the terminal during the peak periods If the CEF opened midnight shifts rather than day shift this would reduce resource competition increase terminal resource utilisation in the non-peak hours and an improvement in efficiency would be gained by industry

Declaration of Cargo

54 The Australian Customs Service (ACS) has put in place a requirement for

importers to declare cargo at least 48 hours prior to a vesselrsquos first port of call in Australia This is an initiative that has the ability to increase the efficiency of import container movements and decrease the time containers remain in a stevedore terminal The on-time reporting performance in NSW during March 07 was 87

Page 9 of 48

The ACS should continue to put in place incentives to increase this clearance rate of containers in order to gain 100 compliance

55 The Australian Quarantine Inspection Service (AQIS) could assist by utilising an

electronic means of communicating the application and release of AQIS holds required on containers Currently AQIS operate a totally manual operation

6 The Tribunal specifically invites comments on the current role of the SPC and on

the role SPC might take in improving the efficiency of the supply chain

61 Sydney Ports Corporation has stated objectives which include

bull Enhancing and developing strategic assets to ensure efficient optimum utilisation

bull Continuing to build effective relationships with stakeholders that improve the competitive positioning of the ports and

bull Taking the lead in facilitating port related freight solutions

62 DP World in Sydney has participated in efforts by SPC to facilitate efforts to achieve mutual outcomes between both the stevedores and section of the road transport industry

63 In addition SPC has

bull Measured TTT at Port Botany and published these statistics since (2001)

bull Encouraged more use of rail with the support and investment by DP World

bull Requested more capital investment to improve road transport interface which has been supported by DP World through the acquisition of additional container handling equipment

bull Sought the elimination of truck queuing outside the container terminal with the support and implementation of a Vehicle Booking System by DP World

bull Sought the development of inland intermodal terminals with the support of DP World and

bull Sought the inclusion of suitable landside Key Performance Indicators within future lease terms

64 We consider that SPC has taken the leadership role appropriate for its position in

terms of seeking to facilitate improvements in overall port efficiency without interfering in the various commercial arrangements between stakeholders

7 The Tribunal invites stakeholders to comment on any aspects of the current work

practices of freight forwarders customs brokers and any remaining industry participants that may be causing inefficiencies or extra costs to arise in the downstream supply chain

Customs Brokers

71 It is the practise of some customs brokers to wait until the storage free period at

the terminal has almost expired before paying the duty to the Australian Customs This has the impact of retarding the stevedorersquos efforts to improve the velocity of container movement through the terminal Customs brokers should therefore be encouraged to pay duty as soon as possible

72 Customs brokers can also contribute to congestion at the terminal by not paying the Customs duty up to at least 2 hours prior to the carrierrsquos time slot This results in the truck waiting at the terminal for the information to flow through to the terminal operating system via EDI

Page 10 of 48

73 One way of achieving flow in (71) and (72) above is to disconnect the relationship between the payment of duty and the physical control of cargo movement To maximise the effect here the ACS could request the Customs brokers to also lodge the lsquoImport Declarationrsquo 24 hrs prior to arrival and collect duties on account after the event

74 An initiative at DP World Brisbanersquos terminal has been successful in obtaining early container information as part of their VBS (linking timeslot to the container number)

75 The system has been in place for almost 12 months now and the availability of information at DP World Brisbane has contributed to improved service levels at this terminal

Empty Container Depot Opening Times

76 A majority of Empty Container Depots reside within 10 km radius to the port

precinct Depot opening ties do not match container terminal operating hours The result is an inability for carriers to return and pick up an empty container 24hrs a day to depots This reduces the potential of utilising the existing vehicles on the road creating potential traffic congestion and therefore free up their trucks to collect import containers from the terminal Through tariff structures the shipping lines have the ability to influence the depots to increase their opening hours thus resulting in greater vehicle utilisation and subsequent reduction in transport charges The extended spread of hours will also have the effect of flattening the peak traffic periods and reducing road congestion and travelling times

8 The Tribunal invites stakeholders to comment on any aspects of the VBS

particularly in relation to the number of timeslots made available and on what basis and the process by which those slots are made available across the day(s) and to whom

81 The VBS is simply a means by which to communicate with the transport carrier

community What determine the number of slots made available are resource levels provided at the container terminal DP World Sydney provides more than sufficient resource levels to enable all containers to be delivered as required to road within the three free day period even accepting the industryrsquos current limited use of the available 247 terminal operation It is acknowledged that resource levels provided to road operations may be varied day to day as resources may need to be directed to ship operations but this follows from running the terminal as an integrated operation which is ultimately most efficient Providing further day time slots without addressing underlying market inefficiencies only risks service levels to shipping lines that are demanding higher performance levels and perpetuating the industryrsquos unwillingness to support 247 operations

82 DP World also notes that all carriers may and do from time to time contact the

terminal and request additional timeslots if there are none available on the VBS The terminal will endeavour to accommodate such requests where there is operational capacity to do so If there is capacity the Terminal will book the timeslot in the name of the carrier that has made the request

83 Further details of the VBS are provided in responses to subsequent questions

However we believe that the VBS at DP World Port Botany Terminal has delivered benefits including

bull No random queuing at the terminal which results in significant unplanned

delays to transport users due to the random arrival of trucks at any point in time to the terminal where the terminal is not resourced to handle the high peaking demand for landside resources whilst at the same time meeting contractual obligations with shipping lines

Page 11 of 48

bull The terminal is able to carry out bulk moves while maintaining service levels to other general carriers

bull Provides choice to carriers in terms of access as well as providing transparency to industry

bull States subscriptions fees in a public document which are transparent to industry

bull Increase slot allocation to road users based on irregular shipping schedules and

bull While not referred to in the Carrier Access Arrangements (see attachment 1) all B class carriers are allowed to engage in a process called ldquoexport taggingrdquo Export tagging involves a carrier booking an import timeslot in ePorts which will give them access to the terminal A carrier is then able to bring and export container on the truck that is arriving to collect the import container without booking a slot for that export container (during most timeslots in the day) The purpose of this flexibility to carriers is to increase two-way running which reduces costs to carriers and decreases the number of trucks in the port community

9 The Tribunal asks stakeholders to comment on the variability of average

turnaround times across the major ports and the variability of turnaround times faced by individual transport operators at Port Botany itself The Tribunal also invites comment on how important predictability of turnaround times is to transport operators relative to average turnaround times at Port Botany The Tribunal further invites comment on why turnaround times are higher for Port Botany compared to Melbourne Adelaide and Fremantle

91 The precise nature of operations differs between the ports and between the

terminals operated at those ports These differences arise because of the range of shipping lines that arrive at the various terminals and the volumes of containers and type of cargo going through each terminal There are also differences in the container yard handling equipment yard configurations at each terminal and hours of operation resulting in differences in the way each terminal operates These differences result in variations amongst each terminalrsquos service performance levels

92 During 2002 DP World Sydney management met with a representative group of

carriers to discuss the VBS and access arrangements at the terminal A common view of the carriers was that they would like consistency to truck turn times and that 60mins (carrier measurement) is acceptable The outcome from these meetings was that DP World introduced three internal KPIs

bull Truck processing to truck complete measurement ndash 38 mins average

bull TTTs of 60 mins or less to be 90 to total trucks

bull TTTs of 120 mins or more to be 1 or less

93 Figure 4 below shows the percentage of truck turn times that are 60 minutes or less at DP World Sydney There is a noted improvement in during mid 2005 from an average prior to this time of 73 to an average during 2006 of 85 This indicates that the predictability of the truck turn times has improved during the life of the VBS

Page 12 of 48

Figure 4 DP World Sydney ndash Percentage of Truck Turn Time under 60 mins

DP World Sydney - Percentage of Truck Turn Time under 60 mins

50

60

70

80

90

100

Jan-04

Mar-04

May-04

Jul-04

Sep-04

Nov-04

Jan-05

Mar-05

May-05

Jul-05

Sep-05

Nov-05

Jan-06

Mar-06

May-06

Jul-06

Sep-06

Nov-06

Jan-07

Mar-07

94 Figure 5 below shows the terminal truck turn time and the stevedoring volume since July 2003 at DP World Sydney Note that the volumes are hidden on the left Y axis for commercial reasons As a result of terminal improvements and putting in place the KPIs described above the average TTT performance has improved (right Y axis) whilst at the same time the terminal volume has increased (left Y axis)

Figure 5 DP World Sydney ndash Truck Turn Time and Container Volume

95 DP World operates in all five major ports in Australia and has three different modes of operation namely Straddles in Melbourne and Adelaide RTGrsquos in Sydney and Fremantle and Forklift and Reach-stacker in Brisbane The Variability in TTT between ports is attributed to a number of factors including but not limited to the site processes and physical constraints of each facility

96 The measurement of TTT differs mainly due to

a) the layouts of in-gates and its approaches and

Page 13 of 48

b) the measurement of the job steps which apply to a truck from arrival to departure due to (a)

97 All the above terminals have different truck parking arrangements within and

outside the terminal which impacts TTT Across the board TTT is measured from job processing to job complete (98c to 98e below) however the physical layout and mode can influence when processing commences

98 The process of truck management in simple terms is

a) Pre-arrival of trucks

b) Validation of time slots

c) Processing of job (Manual but if automated it takes effect in b above)

d) Enter the operational yard

e) Job transact and complete (by straddle RTG or Forklift Reach-stacker) and

f) AQIS check for full trucks and depart (gate-out)

99 Depending on the physical layout and provision of sufficient space to hold trucks within the terminal boundary or otherwise the distribution of trucks varies through steps 98a to 98c above

910 At DP World Sydney the equivalent hourly truck volume can be held in the

terminal entry marshalling area therefore multiple trucks can enter the terminal park and be processed by terminal staff Post processing all time spent in the marshalling area forms part of the TTT whilst the truck has not necessarily entered the operational yard (see Annexure 2)

911 At DP World Melbourne on the other hand due to restricted space within the

terminal trucks are normally held outside and a small number is constantly drip fed into the terminal (controlled rate of entry) These trucks then approach the processing points (6 lanes x processing booths) further which they directly enter the operational yard and the TTT is measured from this point

912 DP World Fremantle does not have a truck holding area within the terminal which

means the truck enter the terminal and queue at the Entry to Operational Yard Immediately after being processed the truck enters the terminal yard Therefore unlike Sydney time from Entry to Operational Yard is time historically not published Therefore TTT between DP World Sydney and DPW Fremantle are not comparable

913 DP World Fremantle is also an RTG operation similar to DP World Sydney

However the physical layout and the resulting entry arrangements differ Due to restricted space within the terminal the trucks are normally held outside and constantly drip fed into the terminal (controlled rate of entry) The trucks operate through 3 lanes within the terminal and truck turn time is measured at this processing point when the trucks actually enter the operational yard

914 DP World Adelaide is a straddle operation similar to DP World Melbourne

However its physical layout and resulting entry arrangement is different to that of DP World Melbourne and has some similarities with what takes place in Sydney The hourly truck volume can be held within the terminal and the TTT is measured from entry into the terminal main gate to departure from the terminal main gate The measure differs from the other facilities on both entry are exit gates

915 The benefits of this TTT data is not so much the raw data itself but more so the

long term trend in the data If TTT is constant or even improved during periods of volume growth then this reflects a firm commitment to the landside process Continuous improvement reflects a commitment to landside efficiencies

Page 14 of 48

916 TTT is influenced by the mode of operation the Gate In infrastructure and volume

of containers required to be handled

917 The RTG mode of operation requires the truck to travel to the yard stack where the container is located or assigned as opposed to the straddle operation where the straddle comes to the truck that is parked in a bay external to the stacking area The mode of operation at DP World Sydney generally results in a truck with multiple containers being serviced by multiple RTGs and also having to travel to multiple yard locations At each of these yard locations there will be a different level of demand on the particular RTG covering the area This will result in variations in the time it will take to service the truck in that particular area and therefore will influence the truck turnaround time

918 In comparison a terminal running a straddle operation could employ a different

straddle to handle each of the containers processed for the truck

919 The mode of operations employed by container terminals have various strength and weaknesses and need to be considered based on many factors in a Port (ie not just the landside interface) but both modes can contribute to variability

10 The Tribunal invites comment on how truck turnaround times are currently

measured by supply chain participants and how they should be measured The Tribunal further invites comment on the extent to which the stevedores provide access to their facilities at the specific times booked on the VBS

Truck Turn Time (TTT)

101 DP World Sydney currently measures truck turn times from the time the containers on a truck are processed to the time the last container is completely loaded onto the truck (import containers) or discharged from a truck and landed in the terminal (export containers)

102 TTT is directly influenced by the number of containers to be handled by an RTG

terminal on a truck run ie a higher number of containers results in a longer truck turn time on average This due to the truck having to potentially visit multiple locations within the RTG terminal

103 The reason the container Terminal does not measure the time following

completion of loadingdischarging container from truck is measure regulatory bodies (ie AGIS) have commenced inspection of containers on terminal exit gate which is beyond the control of the container terminal

104 The process time is used to measure the start of the truck turn time as this is the

closest time to the truck being in the terminalrsquos control

105 Trucks that take advantage of the autogate processing (currently 25 of trucks) actually start the truck turn time as they come through the terminal gate as this is where the transponder reader is located DP World Sydney support the increase of the autogate processing and the result that the truck turn time starts at the gate For trucks that do not use the autogate processing opportunity the terminal does not start the truck turn time at the gate as the truck driver may not move efficiently to have the container processed

106 Carriers often use TTT measured from the time the truck services at the standby

queue or the arrival of the truck at the zone queue which are waiting for the next time zone to open

107 In relation to standby queue the CAA clearly stipulates that the use of this system

does not guarantee immediate call-up to the terminal in priority to trucks that have booked a time slot

Page 15 of 48

108 In relation to TTT measured from arrival at the time zone queue the fact that the truck has arrived prior to the commencement of the zone opening is purely a decision of the transport carrier and is beyond the control of the Container Terminal and is not supported by DP World

Container Turn Times

109 DP World Sydney currently measures container turn time from the time the

container is processed to the time the container is loaded onto the truck (import container) or discharged from a truck and landed in the terminal (export container) Over the last 5 years the transport regulators have allowed truck operators to operate larger trucks thereby ultimately improving the efficiency of road transport As transport operators increase the use of larger trucks (capable of carrying multiple containers) the handling of these trucks produces a multiple handling of containers on the same truck at the terminals For example in the past one would handle one container per truck and in that case the CTT and TTT were almost identical With multiple containers on trucks the difference between the CTT and TTT is increasing To be able to benchmark this across a port and other ports becomes hard with TTT due to the ever changing ratio of containers per truck (depends on percentage of large truck operators) firstly within the same port and secondly between different ports Therefore CTT enables us to benchmark the measurement on common grounds across all our operations around the country

Access Times at DP World

1010 DP World Sydney divide the day into hourly time zones within the VBS The time

zones start on the house (eg 0700hrs) and complete at the end of the hour (eg 0759hrs) There is a time zone board located at Simblist Road which indicates which time zone is open Trucks queue at this point waiting for the board to change each hour During daylight hours on average there are 15 trucks waiting for the time zone to open The trucks then make their way to the terminal in gate located on Friendship Road once the zone is open

11 The Tribunal invites comment on the choice between a system where container

numbers are nominated in advance thereby offering the possibility of faster turnaround times or not providing container numbers which would provide road carriers with greater flexibility Or would industry participants prefer a system that allows the choice between both

Import Timeslots

111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the import container number in a timeslot booking up to the start of the time zone The disadvantage for the terminal and the carrier is that this flexible system arrangement does not allow the terminal the chance to reposition the container to a position that will minimise the number of containers that have to be moved (known as ldquoconsolidation movesrdquo) in order to access the container that is to be delivered to the truck once the truck has been processed and is in position for loading The more consolidation moves the terminal has to do to load an import container to a truck the longer the truck turn time will be

112 Undertaking consolidation moves prior to truck arrival would provide the opportunity

to decrease truck turn time

113 To achieve a further reduction in truck turn times and a reduction in cost of delivering a container the terminal would need to control the order in which the import containers are delivered This occurs in other ports in the world

Controlling the order of import deliveries

114 The current arrangement where the shipper controls the order of import containers

to be delivered from the terminals results in extra costs incurred by stevedores and also decreased efficiencies The longer a container remains in the terminal (an

Page 16 of 48

increase in the dwell time) results in increased consolidation (rehandles) undertaken by terminal equipment and an increase in the time taken to load a container to a truck or train

Matching of resources to meet demand

115 The terminal allocates the resources required based on the demand or the

number of timeslots released This occurs 24 hrs in advance

116 Carriers who book timeslots and do not meet their commitment (No Show) results in the terminal resources to be under utilised at certain times and creates an opportunity loss There is also an opportunity lost by another carrier to utilise the time slot for each No Show

117 Carrier who book timeslots and arrive late for their commitment (Wrong Zones)

results in terminal resources being under utilised at times and over utilised at other times The troughs in terminal resource utilisation result in an opportunity loss and the peaks result in a decrease in efficiency (increased truck turn time) or increased cost (increased resources applied) The increase in truck turn time has an impact on carriers who arrive on time for their time slot

118 The current VBS allows for carriers to arrive at the terminal to deliver or pick up a

container without committing to a time and container number thus not enabling the terminal to completely plan the required resources to meet the demand This is termed unplanned work The Standby Queue export tagging by B Carrier no advanced deadline for entering an import container number prior to the time zone and no requirement for an export container number being entered into a time slot booking results in an increase in unplanned work Unplanned work results in peaks in the work required by the planned resources and a decrease in efficiency

119 Rail also has similar problems

1110 By changing this arrangement and giving control to the stevedores to determine

the order of container delivery from the terminal will reduce the costs incurred by the terminal and decrease the turnaround time for trucks

Export Timeslots

1111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the export container number in a timeslot booking up to the start of the time zone It also allows an export time slot to be processed without a container number entered in the time slot booking The container number in then entered by the RampD Clerk at the terminal This often results in human error by the truck driver or the RampD Clerk resulting in delays to trucks This practice also eliminates the opportunity for the carrier to use the automatic processing described below in Question 12 To maximise the use of automation and eliminate human error the export container number needs to be a mandatory field to be updated in the time slot booking by a nominated time prior to the start of the time zone eg 2 hours prior to the start of the time zone

12 The Tribunal invites comments on the increased use of ICT and automation and

any other ways to reduce turnaround times and otherwise improve supply chain efficiency

121 DP World support and are driving the increased use of automation for the

processing of trucks DP World have developed and currently make available an automated truck processing system for carriers who use ePORTS to book and manage timeslots The percentage use of this system at DP World Sydney by carriers averages about 25 of total truck movements excluding stack run trucks

122 This system requires the purchase of a transponder unit from the terminal at the

cost that the terminal purchases the unit plus GST Currently the units are sold to

Page 17 of 48

the carrier for $12050 Also required is access to an eGATE screen in ePORTS The process for carriers wanting to move a number of containers on a transponder run involves

a) Booking through EPORTS the required number of time slots in a time zone

For example if a transport carrier wanted to deliver two export containers and collect one import container on a single truck run it needed to book three slots and

b) Setting up the transponder by inputting the slots truck number container numbers and whether they are import or export containers in the transponder booking screen in ePORTS

123 The benefits for carriers of using this automated processing include

a) The processing occurs earlier (ie at the gate as compared to in the RampD Office) therefore this decreases the chance of Wrong Zones being incurred

b) No need for the truck driver to present documentation at the RampD Office therefore reducing the truck turn time by avoiding any potential queues

c) No interaction between the truck driver and the RampD Clerk therefore decreasing human error during processing and causing further delays

d) As the processing occurs at the gate the trucks can skip ahead of other trucks where their drivers have to manually process in the RampD Office effectively jumping the queue

e) Allows reprogramming of trucks up to 15mins before the end of the time zone (eg 0645 for an 06 slot) without the truck driver needing the Delivery Order in his possession

f) Provides the carrier with the ability to educate their customers to provide the Delivery Orders in a timely manner in order to lodge them at the terminal

g) Electronic copies of the Delivery Orders (excluding scanned copies of originals) can be forwarded to the terminal via email therefore eliminating the need to physically lodge them

h) Enables the carrier to take all advantage of Electronic Import Delivery Orders (eIDOs) that are currently being used by Evergreen Marine at DP World Sydney Other shipping lines will move to the use of eIDOs in the future

13 The Tribunal invites stakeholders to comment on VBS capital and operating costs

and to assist it to distinguish between stand-alone VBS costs and those shared with other stevedoring activities

131 It is important to distinguish between the capital and operating costs of operating

the VBS and the costs of operating the landside interface ie delivering containers to and from trucks

132 The costs of a VBS comprise the following components

bull IT development and maintenance costs and

bull Management and administration time to manage and administer the system

These costs are low relative to the costs of actually providing the services within the terminal ndash loading and unloading the trucks

133 Having a system which requires the terminal to provide a guaranteed number of

slots per hours is to the disadvantage of the terminal Terminal operations are by their nature unpredictable due to the irregular arrival of ships Having to guarantee a number of slots which carry with it a high expectation of performance in terms of TTT tends to force the terminal to set the number of slots at a level which includes a risk mitigation factor against all things not going to plan The net result of this is

Page 18 of 48

that the terminal tends to effectively oversupply equipment and labour increasing its costs The impact of this is far more significant than the isolated costs of running the actual vehicle booking systems

134 Direct VBS costs have nothing to do with ship or rail operations

135 The container yard is run as a single operation servicing ship road and rail By

this means while there are practical limitations we seek to pool resources to maximise the overall efficiency of terminal operations particularly to absorb the peaks and troughs of demand across the operations as a whole This effective sharing of costs improves overall efficiency and results in lower costs to the benefits of users as a whole We anticipate that systems and technology improvements will see greater use of such pooling and greater overall efficiency as a result

14 The Tribunal invites stakeholders to comment on VBS access and penalty charges

and the level of transparency of access through the stevedoresrsquo VBSs

141 The VBS facilitates the provision of orderly access to DP World Sydney Terminal for over 200 individual carriers

142 DP World considers the achievement of orderly access to its terminals as a

primary objective of the VBS To achieve orderly access DP World considers it important to require carriers to pay a nominal subscription charge for the level and rights of access they require and to issue ldquono showrdquo and ldquolaterdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay lsquoon timersquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs

143 The VBS is essentially an ldquoappointment bookrdquo to assist transport carriers to

organise themselves more efficiently leading to a reduction in waiting times at the container terminal The VBS divides all working days into time periods containing a pre-determined number of timeslots The timeslots represent the number of import and export containers that can be handled in that period The number of timeslots in a day is determined by expected carrier demand and the availability of labour and equipment Carriers are then able to book timeslots for collection or delivery of containers

144 The alternative is random access to container terminals by carriers and significant

truck queues with associated demurrage costs which are ultimately paid for by the end user

145 At DP World Sydney the VBS offers transport carriers the ability to access an

internet based computer system or telephone bureau for the purpose of booking time slots for those carriers who do no wish to use the computer system The VBS in its present form offers access on a transparent and equitable basis to all carriers encourages the efficient movement of containers from the ship through the terminal and onto customers and vice-versa encourages innovative practices which are beneficial to terminal efficiency road congestion and the overall cost of the supply chain The ldquono showrdquo and ldquolaterdquo fees encourage these operational practices and efficiencies

146 DP World has adopted a class structure with an annual subscription for access

because this system allows carriers to determine what access is required for their business while providing the industry significant level of transparency in terms of access costs

147 All carriers have an equal opportunity to subscribe to any of the three classes of

access to the VBS (bearing in mind that smaller carriers are allowed to consolidate

Page 19 of 48

their subscriptions in order to share the cost of a B Class subscription) and equal access to timeslots amongst carriers of the same class

148 Annual fees are payable in advance Table 3 sets out the various carrier classes

currently in operation at each terminal and the applicable subscription fees for each class There are no annual limits on the number of slots carriers can book

Table 3 DP World Sydney ndash Current carrier classes and VBS deposit and registration fees for the year commencing 1 July 2005

Terminal Carrier Classes Price Number of active

carriers at Feb 06 Port Botany New South Wales

B Carrier ndash online internet access with high service levels

$2922150 (Non-refundable deposit) No fixed upper limit on annual time slots1

28

A Carrier ndash online internet access with standard service levels

$133400 (Annual registration fee) No fixed upper limit on annual time slots2

162

AB Carrier ndash access via the PampO Phone Booking Bureau with standard service levels

$66760 (Annual registration fee) No fixed upper limit on annual time slots3 39

149 Any carrier selecting the ldquoBrdquo classification is encouraged to also consider the ldquoArdquo

classification unless they are confident of utilising a high level of timeslots that would render the higher subscription fee as attractive per timeslot

1410 In addition to the VBS annual subscription fees the carrier access arrangements

provide for the levying of a no-show fee on carriers who fail to arrive for slots they have booked in the amount of $110 per time slot The terminal also charges carriers late fees of $55 per slot if they fail to arrive for a slot booking within the nominated time zone No fees are charged where a carrier is unable to meet the time slot due to delays caused and acknowledged by DP World Australia or where delays are caused by circumstances genuinely outside of the carrierrsquos control DP World Australia also has the discretion to and does waive ldquono showrdquo and ldquowrong zonerdquo fees in the interest of maintaining a good working relationship with carriers Failure by carriers to pay these ldquono showrdquo and ldquowrong zonerdquo fees may lead to them being prevented from making further bookings ldquoNo showrdquo and ldquowrong zonerdquo fees are the means by which DP World ensures that access to itrsquos terminals is provided in the most efficient manner to all 1carriers as late carriers cause delays for those carriers that are on time

1 No fixed upper limit on annual timeslots ndash Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 2 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 3 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release

Page 20 of 48

1411 The ldquono showrdquo and ldquowrong zonerdquo fee structure was introduced following

consultation with carriers It was originally $20 per late arrival (in Victoria where VBS first commenced) but this is proved to be ineffective in disciplining carrier conduct In response to requests from many carriers DP World increased the ldquono showrdquo fee to $110 The fees also discourage carriers from the practice of overbooking slots which they have no intention of using and preventing other carriers from using those slots

1412 The actual cost of a truck turning up late (Wrong Zone) or not turning up at all (No

Show) is the cost of planned resources (labour equipment etc) based on the VBS demand (number of containers expected to handle during a time period) not being utilised during the time period they are employed

1413 Adjacent to each time zone are grace periods one prior to the time zone and one

following the time zone These grace periods and the trucks arrival time for processing determine the status of the time slot ie arrived on time or arrived late (Wrong Zone) Currently the grace period following the time zone is set at 20 minutes which means that if a truck arrives later than one hour and 20 minutes after the start of the time zone then the time slot will be initially recorded as a Wrong Zone Following the completion of each VBS day Wrong Zones are reviewed and any penalty waived if any of the following determined

a) The terminal is aware that it has contributed to a truck arriving late for the time

slot ie the terminal has previously delayed the truck or carrier on an earlier time slot or

b) The carrier advises that they arrived late due to an unforeseen circumstance eg a break down of the truck

We request that the information in 1414 be kept confidential

1414 Omitted for reasons of confidentiality

1415 Officers at DP World Sydney have regular conversations with carriers in respect of

the waiver of No Show fees as well In certain instances DP World may agree to waive fees prior to an invoice being issued

1416 For both Wrong Zone and No Show fees the terminal provides a grievance

process for carriers who have been issued invoices and do not agree that the fee has been issued fairly The carrier has the opportunity to provide the terminal with an explanation and should officers at DP World Sydney agree that there has been an error in the issuing of the fee or an unforeseen circumstance is explained the terminal will credit the invoice

15 The Tribunal invites stakeholders to indicate the costs of providing the services of

rail windows and rail paths to rail operators

151 Rail windows are based allowance on a rail terminal performance KPI of 30 container moves per hour and charged at $360 per hour A shunting time allowance of 15 mins per window is not charged Additional lifts canare provided by increasing the lifts per hour by applying more machinery at no additional cost

152 The cost of providing terminal rail operations is higher than road operations at DP

World Sydney The RTG mode of operation requires a container to be moved to or from the container stack For road containers the truck takes the export container to the stack and travels to the stack to pick up an import container For a rail container a terminal internal transfer vehicle (ITV) is required to be used by the terminal to move the container from the train to the stack (export containers) or

Page 21 of 48

the stack to the train (import containers) This is not required for container being received or delivered by road

153 For import rail containers there is a loss of efficiency for the vessel discharge

operation in order to stack rail containers separately for delivery to the train For each discharge point in the terminal extra resources are required There is extra administration costs in having to make alternate arrangements to separate these import rail containers

154 Despite the fact that the delivery of containers to rail is higher than road the

terminal seeks only a partial recovery of costs in order to encourage the use of rail in the port in line with the NSW Government objectives

155 There is a management cost of setting up and operating the rail windows This is

similar to the cost of operating a VBS

156 There is additional security infrastructure costs for a rail operation to ensure the terminal meets their legislative security requirements The more terminal entry points created the higher the cost to replicate these security infrastructure requirements

16 The Tribunal invites comment from stakeholders on the planned or mooted

development and expansion of the various intermodal terminals in Sydney and the extent to which this is expected to ease congestion in the landside supply chain at Port Botany

161 DP World supports the development and expansion of an intermodal terminal

network to facilitate an increase in the use of rail as the means of container transport This has the potential flow on benefit of minimising the growth in the number of trucks requiring to access the Port Botany area as port volumes continue to grow

162 Transport between the Botany terminals and the inland intermodal terminals

should be by rail or trucks operating a stack (bulk) run road out during off peak periods eg night shifts or weekends The use of Super B Double trucks would assist with the efficiency of these off peak stack run outs

17 The Tribunal invites comment on the likely effect of the expansion plans at Port

Botany on access to the port terminal during peak periods and efficiency along the supply chain

171 Improving the two-way running or back-loading of trucks has to be a priority in

order to maximise access opportunity at the terminals and efficiency along the supply chain It is likely that a third and separate stevedoring facility will only increase the difficulty of improving truck utilisation over and above the current levels by the increased logistics complexity of coordinating timely access to three terminals rather than two

172 A third stevedore will lead to the same port volume being spread over three

operations While it is resource levels that determine available slots DP World has found that during periodic decreases in volumes carriers favour daytime runs to the terminal as opposed to night time

173 The expansion plans will have a negative impact on rail transport timeliness and

access requirements to DP World Sydney if the requirements to breaksplit trains and shunt sections of trains into multiple terminals continues This will undermine the overall rail effectiveness and the NSW Government rail objectives by the unnecessary increase of splitting trains

Page 22 of 48

18 The Tribunal invites comment on the likely effects of expansion of the intermodal network in Sydney on access to the port and efficiency along the supply chain

181 This is a similar issue to point 16 above

19 The Tribunal invites comment on the likely impact of a peak pricing system along

the lines of the FIC on access to the port terminals and the efficiency of the Port Botany supply chain

191 We understand for the NSW Governmentrsquos announcement (31 May 2007) that the

FIC is no longer being proposed

192 Table 4 shows the average percentage of road containers that are handled by shift at DP World Sydney based on a 6 day x 24 hour receival and delivery operation for the past 4 years The figures indicate that there is surplus capacity on both evening and midnight shifts when compared to day shift Note that the percentage of road containers handled has increased on day shift relative to the combination of evening and midnight shifts This has been due to terminal efficiencies creating increased capacity during day shifts and the road carriers utilising this capacity

193 This is further emphasised in Figure 4 which shows the trend over time for day

shift containers handled has increased from 2005 evening shift has decreased and midnight shift has not changed significantly

Table 4 DP World Sydney ndash Percentage of Daily Road Container Volume handled by Shift

Year Midnight Shift (2230 ndash 0630hrs)

Day Shift (0630 ndash 1430hrs)

Evening Shift (1430 ndash 2230hrs)

2007 YTD 21 47 32

2006 23 45 33

2005 22 43 36

2004 19 44 38

194 Year to date April 2007 figures may reflect the seasonal trend for lower volumes in this period

Figure6 DP World Sydney ndash Road Volume trendlines by shift 2005-07

Page 23 of 48

20 The Tribunal invites comment on the likely impact of the expansion of the freight

rail network in Sydney on the number of containers moved by rail and on congestion at the port

201 The importance of increasing the proportion of containers moved by rail is

recognised and supported by DP World Sydney

202 To complement the expansion of the rail freight network upgrade the terminal is developing plans to increase the length and the number of sidings within the terminal Over the next three years the terminal is planning to spend an estimated $20million on internal rail infrastructure machinery and systems The terminal upgrade will ensure DP World Sydney has the infrastructure in place to meet a target of 40 throughput by rail

203 The expansion of the freight rail network needs to take into account The access

to each of the terminals especially the access to DP World Sydney where by the terminal has a distinct disadvantage in relation to its competitor

21 The Tribunal invites comment on the impact on the supply chain on ARTC

managing the metropolitan freight rail network

211 Management of freight rail infrastructure is ARTCrsquos core business and will bring additional management expertise and focus to the task of reforming operations on the Port Botany rail infrastructure

212 For ARTC to control the MFN (Metropolitan Freight Network) makes sense from

the point of view they can make informed decisions for both inbound and outbound Port services based on the wider NSW Rail Freight Network operation

213 The ARTC proposal to co-ordinate services by performing the full Network Control

Function (both signalling and Train Control) from the one centralised centre for the Southern Sydney Freight Line (SSFL)MFN and Port Botany emphasises their commitment to ensure safety communications and network management is their primary objective

214 ARTC are focussed on improving the efficiencies at the Port and bring to the

industry fresh innovative ideas to improve the overall capacity on the rail network ARTCrsquos willingness to assist and eagerness to invest in the rail infrastructure brings a breath of fresh air to the industry and specifically the stevedore operations ARTC can integrate the Botany line into its overall investment program paving the way for additional investment to improve the efficiency of operations on the Botany rail line and at the port-rail interface

22 The Tribunal invites comment on the following questions in relation to costs of the

VBS

22a What costs underpin the VBS access charges levied by the two stevedores How are the VBS access charges set

22b1 Refer to Question 14 The revenue from VBS charges account for a very

small proportion of DP Worldrsquos total container terminal revenue For the year ended 31 December 2006 they accounted for 13 of total revenue Of that 13 approximately 30 was for No Shows and Wrong Zones

22b What costs are incurred by the stevedores in moving a container from the

wharf to a truck or train

22b1 DP World Sydney is operated as an integrated business servicing ships road and rail within the context of a national business We do no separately account for the costs of each discrete activity Information on

Page 24 of 48

overall costs is provided to the ACCC and published on an industry basis in the ACCCrsquos Container Stevedoring Monitoring Report

22b3 Wharf to truck activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the VBS to provide orderly access for road carriers

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal space to allow truck drivers to park their vehicles in order to unlockset up their twist locks and processing of containers

bull Processing of the container

bull System to manage the truck movement within the terminal

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the truck by RTG or forklift

bull Provision of terminal area for truck drivers to safely leave their vehicle to lock the twist locks on their trucks check the container seal number and check the container for damage

bull Provision of terminal area for AQIS operation and infrastructure

22b3 Wharf to train activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the Rail Windows to provide orderly access for operators

Page 25 of 48

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal area for rail lines associated rail infrastructure and train inspection requirements within the terminal

bull Processing of the container

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the ITV by RTG or forklift

bull Internal Transfer Vehicle (ITV) movement of the container from the yard stack to the rail line

bull Lift of the container from the ITV onto the rail wagon

22c What influences the nature and amount of these costs (for example are they influenced by the type of equipment used by a stevedore Do they fluctuate with the number of containers handled by the stevedores) and how have costs changed over time

22c1 DP World operates very similar Vehicle Booking Systems in Brisbane

Sydney Melbourne and Fremantle where there are differences in volume through the terminals The only difference in subscription between the terminals are the ldquoB Classrdquo carrier subscriptions The annual subscription is influenced by the number of carriers seeking this class and the hourly allocation of slots to their class given the number of subscriptions In addition Melbourne operates a straddle facility and Brisbane operates a forklift reachstacker Therefore the cost of the Vehicle Booking System is not dependant on or mode but the annual subscription to ldquoB Classrdquo carrier depends on competition for that carrier class

22c2 An annual subscription fee per class which is a characteristic of DP

Worldrsquos VBS does not normally increase with volume At DP World Sydney subscription fees have not been increased since 2003

22c3 Overall landside costs have increased with increases in wages and

salaries (4 pa) property costs (substantially ahead of cpi) fuel and other general costs These increases have been offset to some extent by increases in productivity Industry costs history is also available publicly in the ACCC Container Stevedoring Monitoring Reports

22d Where do the port landside costs stop and the VBS costs start

22d1 Prior to the Entry to Operational Yard (see Attachment 2) the truck is

under the influence of the VBS and also under the influence of the external environment which includes but is not limited to port and metropolitan road conditions container clearance issues truck arrival peaks and troughs truck preparedness processing of the container to the handled by the terminal and maritime security requirements

It is DP World Sydneyrsquos view that the port landside costs stop and the VBS costs start at the choke point

22e Do the VBSsrsquo penalty charges reflect the cost to stevedores What should

they reflect

22e1 The primary rationale for the penalty regime is to seek to modify carrier behaviour

Page 26 of 48

22e2 However it is also the case that a ldquono showrdquo or ldquowrong zonerdquo gives rise to a lost opportunity cost to the terminal Resources made available but not utilised may be wasted

22e3 DP World considers the achievement of orderly access to its terminal as

a primary objective of the VBS To achieve orderly access PampO considers it important to issue ldquono showrdquo and ldquowrong zonerdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay ldquoon timerdquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs The alternative is random access to container terminals by carriers and significant truck queues with associated demurrage costs which are ultimately paid for by the end consumer

22f Should there be different charging arrangements for empty containers that

are returned to the port as opposed to full export containers

22f1 DP World Sydney terminal handles a full container in a similar way to an empty container using purpose built container stacking equipment controlled by a DP World employee A container occupies the same amount of space whether it is full or empty This leads to the same cost for the handling of a single empty container as a single full container Single empty containers returned to the port should be charged a similar rate to full containers

22f2 To reduce the cost of handling empty containers in the terminal destined

for the same port on the one vessel and that are of the same size the terminal in conjunction with the shipping line and the shipping linersquos nominated carrier work together to create a bulk run of empty containers The bulk run maximises the number of empty containers that are handled in a specific time period The terminal dedicates resources to thee bulk runs and also provides priority access to the transport carrier in order to create efficiency and an economy of scale In this way the cost of returning an empty container via a bulk run is reduced

23 The Tribunal invites comment on the following questions in relation to the different

pricing regimes of the two stevedores

23a Why do the stevedores have different pricing schemes for their VBSs

23a1 We do not know why Toll-PatrickAsciano has adopted the pricing scheme it has

23a2 In order to improve earlier versions of its VBS in the mid-1990s DP

World (PampO) introduced categories of carriers and began charging differential subscription fees for carriers registering to use the VBS depending on the level of access required by the carrier Prior to this change some carriers were engaging multiple computer terminals to the detriment of other carriers and it had become clear that a level of differentiation would be in all carrierrsquos interests The different classes of carrier access were introduced to ensure the most balanced overall outcome The level of differentiation is an annual choice of access levels available to all carriers regardless of size Under this approach different subscription fees are charged for each category but all carriers registering in a particular category pay the same fee Our view remains that an annual subscription as opposed to a pay as you go is far less of an administrative burden on both the carriers and the terminal

Page 27 of 48

23a3 There are no restrictions upon carriers wishing to obtain a certain carrier category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for the same carrier categories as larger carriers Smaller carriers may also apply for consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst charging the burden of the cost of that subscription

23a4 Subscription fees based on differences in class are designed to

encourage choice whilst at the same time communicating a level of transparency with terminal pricing and service

23b Do the different pricing schemes influence the efficiency with which

transporters obtain access to the terminals

23b1 We do not believe this to be the case

23c Would standardisation of charges be more appropriate

23c1 It is our understanding that it would be unlawful for a supplier itself to standardise charges by reason of Section 45 of the Trade Practices Act This may be something that Government wishes to consider

24 The Tribunal invites comment on the following non-price access issues to consider

in relation to the operation of the VBSs

24a What effect do access rules and conditions and non price constraints have on booking a timeslot How to the stevedores use their discretion in determining access and charges and what impact does this have

24a1 The introduction of different categories of access stages the carriersrsquo

access to the VBS for the purposes of booking timeslots ldquoB classrdquo carriers are given exclusive access to a pool of slots between 0730-0820 During this period they are subject to zone limitations which restrict carriers to a maximum number of slots for any given hour The zone limit ensures all carriers within that carrier class are given fair and equitable access to the initial release of slots After the initial booking period the zone limit is lifted and carriers are permitted to book any number of unused slots per hour from those remaining in their pool Similar arrangements exist for A class carriers culminating in the cascading of all remaining slots from all segregated pools into a general pool at 1030 for access by all registered carriers

24a2 There are not restrictions upon carriers wishing to obtain a certain carrier

category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for a consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst sharing the burden of the cost of that subscription

24b What are the stevedoresrsquo obligations with regard to access to port facilities

and what should they be

24b1 Without providing an analysis of our obligations under law in general terms we are required to provide access to carriers on an equitable basis recognising the competitive environment we operate in

Page 28 of 48

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

bull Reduces the resources required at the Line to manually check receival details

bull Reduces data entry required at the wharf gate

bull Reduces truck-processing time at the wharf gate

bull Potentially reduces data entry time by the shipper as the Pre-Advice is system generated or web form fields which subject to agreement by the shipping lines on the level of information will be pre-populated with the Line Booking information

bull Ensures acceptance through the gate at the wharf if the CAN and Shipping Line information is validated prior to arrival

bull Eliminates the risk of Customs fines to the shipper for delivering cargo to the wharf with an invalid CAN

bull Eliminates the cost associated with double handling cargo received or rejected with incorrect information and

bull Could streamline the US Customs reporting process and assist in replicating the process for other trading partners as or when required

17 The next initiative which is supported by Shipping Australia Limited (SAL) we

hope to see generally adopted is the Electronic Import Delivery Order (eIDO)

The eIDO is bull A progressive replacement for Hard Copy Delivery Orders

bull A communication of ldquoauthority to deliverrdquo via electronic messaging and

bull Generated by shipping lines and sent to the relevant stevedore via 1-Stop

The benefits of an eIDO bull Security of cargo through greater documentation security

bull Shipping line reduction in documentation costs courier costs

bull Ability to link eIDO to other functionality eg VBS Com-Pay etc

bull Combined with PRArsquos the ability to fully automated gate entry and processing systems

bull Flexibility for the transports carrier by allowing the assignment of alternate trucks if required without having to provide the truck driver with paperwork (Delivery Order) and

bull The importer freight forwarder receives confirmation of shipping line release more efficiently thereby increasing the time the transport carrier has to organise the pick up of the container

18 Further developments in electronic messaging to provide interface enhancements

for all stakeholders are expected to benefits the supply chain

Repositioning of Empty Containers back to the Port

19 Shipping lines continue to seek to store empty containers at the Port which we believe is an inefficient use of high valued Port land However we understand the shipping linesrsquo position in the Australian context (import dominated) in needing to be able to reposition empties to export at short notice to take advantage of available space on ships

110 It is our view that container terminal facilities should be considered purely as

transit facilities Any activities which utilise terminals as storage facilities are contributing towards terminal inefficiencies with the potential to impact upon many

Page 2 of 48

parties within the supply chain Receival of empty containers directly back to the wharf after importer unpack is fine if they are treated as per any export container and received accordingly for a specified vessel The inefficiency related to these activities occurs when the containers are received into a terminal for a non specified vessel pool purely for top up if the vessel alongside has surplus capacity This arrangement uses expensive waterfront terminal land for the storage of empty containers The effects of such are an increase in overall container dwell time which results in terminal congestion and associated handling inefficiencies and costs

2 The Tribunal invites stakeholders to comment on any aspects of the stevedoresrsquo

methods and hours of operation or other business practices relating to the provision of access to the port terminals that may be causing inefficiencies or extra costs to rise in the landside supply chain The Tribunal further invites comments on why the Port of Melbourne appears to offer considerably more VBS slots than Port Botany

Road 21 We are unclear as to what specifically the Tribunal is referring to with regard to

methods of operation However with regard to transport carrier access there are three methods in which a transport carrier can access the DP World Sydney Terminal

a) A carrier can use a timeslot which is booked or reserved through the VBS

operated by DP World

b) A carrier may access the terminal through a standby queue and

c) A carrier may organise a bulk run

22 Our stevedoring resources are available to service vessels road and rail 24 hours per day 7 days per week 52 weeks per year

23 Shipping lines expect and are provided with vessel operations and rail operations

on a 247 basis Road services are provided on a 246 basis on the basis of demand Despite encouragement by the stevedore there is minimal demand on Saturday and no demand for road services on Sunday

24 The VBS is simply a means by which to communicate with the transport carrier

community What determines the number of slots made available are resource levels provided at the container terminal DP World Sydney provides more than sufficient resource levels to enable all containers to be delivered as required to road within the three free day period even accepting the industryrsquos current limited use of the available 247 terminal operation It is acknowledged that resource levels provided to road operations may be varied day to day as resources may need to be directed to ship operations but this follows from running the terminal as an integrated operation which is ultimately most efficient Providing further day time slots without addressing market inefficiencies only risks service levels to shipping lines that are demanding higher performance levels and perpetuating the industryrsquos unwillingness to support 247 operations

25 DP World also notes that all carriers may and do from time to time contact the

terminal and request additional timeslots if there are none available on the VBS The terminal will endeavour to accommodate such requests where there is operational capacity to do so If there is capacity the Terminal will book the timeslot in the name of the carrier that has made the request

26 Access to DP World Sydney is via a rail window assigned to the rail operator The

rail window timing duration and size (the number of lifts) is negotiated with the rail operator and aligned to the path the operator has acquired into Botany Rail Yard The rail windows are designed with the intention of allowing the rail operator

Page 3 of 48

Botany Rail Yard management and the terminal operator the ability to plan their operational requirements in order to maximise efficiency

27 Prior to the establishment of rail windows the order of arrival of trains into the

facility was on a first come first served basis This method of operation created inefficiencies where a rail operator would occupy rail siding time to the detriment of other rail operators and create large periods of idle time occupying the sidings This would invariably mean that other rail operators carrying containers for ships about to leave port could not deliver containers in time to ship on the targeted vessel voyage resulting in large short shipments Invariably missed sailings cost shippers because alternative storage facilities need to be sought together with the associated additional handling costs

28 In Table 1 below we have provided an indicative analysis explaining the apparent

significant difference in slots provided in Sydney and in Melbourne during the 0800-1600 period Monday to Friday for the June 2006 Quarter

Table 1 Comparison of slots offered in Sydney and in Melbourne

Table 1 Comparison of slots offered Notes Melbourn

e Sydney Variance Mel Syd

Terminal volume for the Quarter Ctr000 (1) 139 118 177 Proportion of Exports (2) 500 500 Proportion of Exports as Empties (3) 260 520 Proportion of containers as Empties (4) 130 260 Rail proportion (5) - 215 VBS slots available Ctr (6) 45941 26632 725 Utlisation (7) 956 948 08 VBS slots used Ctr (8) 43920 25247 740 Adjusting Melbourne to allow for like for like comparison

Terminal volume for the Quarter (9) 849 Proportion of Exports as Empties (10) 851 Rail proportion (11) 823 Sub-total 595 Adjusted VBS slots used Ctr 26118 25247 34 Notes

1 Actual DP World container volumes for the quarter

2 Estimated

3 Based on year to Dec 2006 averages

4 Calculated as (2) x (3) 5 Estimated based on Port rail volumes for Year to Jun 2006 Rail volume in Melbourne is about 10

but at DP World Melbourne rail volumes are as a matter of operational practice delivered by slotted truck access to the rail terminal at West Swanson Intermodal Terminal

6 As quoted by IPART from BTRE Waterline Figures appear to be DP World rather than Port figures 7 Source DP World 8 Calculated as (6) x (7) 9 Reducing Melbourne slots in line in proportion to volumes handled 10

Reducing Melbourne slots in line in proportion with higher empties which are typically handled as bulk runs and not slotted

11 Reducing Melbourne slots in line in proportion with lower volumes handled by rail

29 We note that these figures are for a single quarter The analysis is simplistic as noted in the table above It also assumes that the adjustments simply accumulate which may not be strictly true

210 It is to be recognised that in Sydney over 90 of bulk runs are performed on day

and evening shifts (0600-2200)

Page 4 of 48

211 Allowing for a reasonable margin of error given the estimates invoiced this analysis supports our view that Sydney is provided with proportionally equivalent day and evening slots compared with Melbourne

3 The Tribunal invites stakeholders to comment on any aspects of the road transport

operatorsrsquo current work practices and any trends in storage charges and volumes (both for on-port storage and at transport operatorsrsquo own depot storage) that may be causing inefficiencies or extra costs or arise in the downstream supply chain

31 Unlike in other states in Australia in New South Wales in our view there is no

effective peak body broadly representative of the transport carrier industry with which we as a stevedore may engage in a meaningful dialogue on port related issues However we continue to meet with individual carriers to discuss such issues

32 The delivery of removal of a container at the terminal is a decision that is

determined by or shared between the consignee and their agents (eg customs broker carrier) It is the consignee and their contracted agents which dictate when the container is required to be delivered to the warehouse Post release of the container by the ACS AQIS and shipping line the consignee and their agents decide on the most cost efficient option for storage of the imported container (or goods) ie on port storage or other storage option (either packed or unpacked)

33 On-port storage of containers may suit the consignee and their agents However

it is not conducive to efficient container terminal operations

34 As demonstrated in Figure 1 the on-port (ie container terminal) storage revenue has decreased as a percentage of revenue over the past two years This trend follows a decrease in average import dwell time over the same period In line with this the average import container dwell time (this is the average time an import container remains in the terminal) has decreased despite the overall terminal throughput having increased

Figure 1 DP World Sydney ndash Import Container Dwell Time and Storage Revenue

35 Transport carriers are able to book an available timeslot in a time zone and alter which container (number) is to be collected in that timeslot up until the time zone

Page 5 of 48

commences Once a time zone commences it is no longer possible to book a time slot in that zone Transport carriers thus have the flexibility to select a different container slot at short notice This short notice advice of which container (number) is to be collected makes it impossible for the terminal to move the container to the best position to facilitate the best possible truck turn time This is discussed further under Question 11

36 Transport carriers do not always check that a container is released from all

impediments (ACS Holds AQIS Holds storage fees paid) before arriving at the terminal This can cause delays for the truck at the terminal and congestion within the terminal and congestion within the terminal truck marshalling area reducing the opportunity for other carriers to access the terminal which have ensured there are no impediments on the processing of their containers for collection This is seen as inefficient practice that contributes to further delays and costs in the logistics chain

37 Speculative booking of timeslots appears to occur within the VBS whereby

carriers book what they can during the initial booking period rather than what they need This is evidenced by the number of time slots released into the exchange pool The exchange pool is available for carriers to offer the time slots they have booked to another carrier

38 Table 2 below shows the number of time slots that were exchanged over a period

of 8 days Saturdays and Public holidays were not included and non-peak zones were not included The table indicates that during this period an average of 24 of time slots advertised for exchange which shows that carriers initially booked these time slots however in time before the time zone commenced they decided that they did not need the time slot This high number of time slots offered for exchange is due to speculative bookings or other circumstances including change of plans more time slots being made available by the terminal or timeslots becoming available within the exchange pool and thus better suited time slots become available to the carrier DP World is unable to determine how much each factor contributes to the high percentage of slots that are offered for exchange

Table 2 DP World Sydney Percentage of timeslots exchanged during the period of time zones 05-07

Total timeslots

Exchanged 05-17 zones

Total Time Slots available 05-17

zones

Percentage of time slots exchanged

23-Jan-06 48 585 8 24-Jan-06 167 675 25 25-Jan-06 253 770 33 27-Jan-06 206 585 35 30-Jan-06 217 605 36 31-Jan-06 195 720 27 1-Feb-06 52 485 11 2-Feb-06 56 590 9 Average 149 627 24

39 As illustrated in Figure 2 below the transport operators in Sydney have the lowest

containers per truck visit to Port Botany compared to all other ports in Australia

Page 6 of 48

Figure 2 DP World Terminals ndash Containers per Truck Ratio

]

Source DP World

310 Transport carrier operations are still heavily focused on the traditional daytime

period We understand that this reflects the carriers needs to maximise profit margin in a competitive market place However DP World Sydney comes under criticism for not releasing further slots during the traditional peak periods despite resources and slots being available in ldquonon-peakrdquo periods The net result appears to be that there has been very limited success in embracing 247 operations which ultimately we believe is generally accepted as being in the long term interests of the industry as a whole We also believe that it would be in the interests of the industry as a whole if a consolidation in the transport carrier sector occurred resulting in fewer higher volume carriers with the scale to operate with a wider spread of hours

311 Storage charges apply in the vast majority of marine container terminals around

the world Storage free days vary from port to port around the world however at least three free storage days is not unusual

4 The Tribunal invites stakeholders to comment on any aspects of access to rail

infrastructure or of the current work practices of rail transport operators the supply chain

41 There are a number of public reports and studies that outline the issues

associated with rail infrastructure intermodal terminals and rail access to the port In general the conclusions being drawn are that significant investment is required in this area This is most recently supported by the New South Wales Governmentrsquos response to the FIAB report

42 DP World Sydney is seeking to extend its rail sidings to 600metres in the near

future At the same time there are a number of issues with the rail infrastructure connecting these sidings to port rail we are seeking to resolve with RIC

43 The utilisation of the rail windows at DP World Sydney was 55 during 2006

This utilisation is measured on the basis of the total number of containers actually loaded and unloaded against what could be unloaded if all window were fully utilised at the current agreed performance levels on the part of the rail operators and DP World Sydney Few rail windows are south for Saturday and none for Sunday operations When demand justifies it DP World through the provision of additional resources has the capacity to more than double the volumes handled in

Page 7 of 48

any particular window The extensions of sidings will provide further opportunity to increase rail handlings capacity at the terminals

44 Figure 3 shows the trends in terminal rail window utilisation during 2005 and 2006

Although there is a small improvement in window utilisation during this period the utilisation is low and there is considerable capacity available to increase the number of containers that can be transported by rail

Figure 3 DP World Sydney ndash Weekly Terminal Rail Window Utilisation

DP World Sydney Weekly Rail Window Utilisation 2005-07

20

30

40

50

60

70

80

Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07

45 Contributing factors to the relatively low level of utilisation include

bull the late arrival of the rail operator at the terminal which reduces window

duration and the terminalrsquos inability to increase productivity to meet window capacity requirements without incurring extra costs We understand that the late arrivals by rail operators can be due to equipment breakdowns the passenger network restrictions and the inadequate rail infrastructure for freight

bull overestimation of the volumes rail window duration required by the rail operator

bull fluctuations in freight movements on a daily basis creating peaks and troughs

bull the drought and the decrease in rural export containers

bull train shunting operations

bull the AQIS inspection required for each import container before it leaves the terminal

bull the train and wagon inspection required before the train leaves the terminal

bull the use of labour intensive manual twistlocks instead of auto twistlocks on rail wagons

bull the necessity to break split trains in Botany Rail Yard

bull infrastructure limitations within the Botany Rail Yard and

bull rail operators using the Botany Rail Yard as a storage facility for their wagons and causing congestion

46 As indicated above DP World Sydney has plans to improve the infrastructure

within the terminal in order to meet predicted rail volumes in the future However

Page 8 of 48

unless improvements are made against the issues listed above then window utilisation and efficiency may not improve to levels required to meet the NSW Governmentrsquos 40 rail mode target

5 The Tribunal invites stakeholders to comment on any aspects of the operations of

the regulatory authorities that may be causing inefficiencies or extra costs to arise in the downstream supply chain 51 The Australian Customs Service (Customs) has introduced Container Examination

Facility (CEF) operations in most major ports around Australia Each of these facilities incorporates the use of modern technology such as container x-ray equipment and other examination tools to support Customs in their aim of identifying illegal activities through containerised trade Since the inception of the CEF in Sydney in February 2003 Customs has reported many successful interceptions of prohibited imports

52 The CEF in Sydney operates two shifts each week day (day and evening shifts)

and one shift on Saturdays (day shift) This operating arrangement has created more competition for terminal resources during the peak hours 0500-1700hrs Monday ndash Friday This has resulted in the terminal deploying more equipment and labour resources at the terminal to meet the obligations of contracts with Customs but at the same time has increased competition for resources depending where the container is place in the terminal and how the yard equipment is coping with the demands of industry

53 DP World Sydney has contracted performance KPIs to deliver along with following

factors to overcome that contributed to resource competition

bull Random arrival of Customs transport provider trucks (B Doubles) and random selection of containers due to weight constraints of the trucks

bull Multiple containers per truck relating to up to six different locations a truck has to visit within an RTG terminal and the potential to utilise six different resources

bull The requirement for DP World Sydney to block stack Customs targeted containers from a vessel in order to minimise the variability of locations a Customs truck has to visit This block stacking requirement has a negative impact on vessel performance and creates more competition for internal resources

bull DP World Sydney does not control the transport to and from the CEF Customs have appointed a carrier in each port and who under the contract is responsible for the effective co-ordination between the terminals of the movement of X-Ray containers DP World Sydney does liaise with the Carrier but the carrier has the final say as to how many trucks are allocated to each terminal and

bull DP World is of the view that the current operating hours of the CEF are contributing to resource competition within the terminal during the peak periods If the CEF opened midnight shifts rather than day shift this would reduce resource competition increase terminal resource utilisation in the non-peak hours and an improvement in efficiency would be gained by industry

Declaration of Cargo

54 The Australian Customs Service (ACS) has put in place a requirement for

importers to declare cargo at least 48 hours prior to a vesselrsquos first port of call in Australia This is an initiative that has the ability to increase the efficiency of import container movements and decrease the time containers remain in a stevedore terminal The on-time reporting performance in NSW during March 07 was 87

Page 9 of 48

The ACS should continue to put in place incentives to increase this clearance rate of containers in order to gain 100 compliance

55 The Australian Quarantine Inspection Service (AQIS) could assist by utilising an

electronic means of communicating the application and release of AQIS holds required on containers Currently AQIS operate a totally manual operation

6 The Tribunal specifically invites comments on the current role of the SPC and on

the role SPC might take in improving the efficiency of the supply chain

61 Sydney Ports Corporation has stated objectives which include

bull Enhancing and developing strategic assets to ensure efficient optimum utilisation

bull Continuing to build effective relationships with stakeholders that improve the competitive positioning of the ports and

bull Taking the lead in facilitating port related freight solutions

62 DP World in Sydney has participated in efforts by SPC to facilitate efforts to achieve mutual outcomes between both the stevedores and section of the road transport industry

63 In addition SPC has

bull Measured TTT at Port Botany and published these statistics since (2001)

bull Encouraged more use of rail with the support and investment by DP World

bull Requested more capital investment to improve road transport interface which has been supported by DP World through the acquisition of additional container handling equipment

bull Sought the elimination of truck queuing outside the container terminal with the support and implementation of a Vehicle Booking System by DP World

bull Sought the development of inland intermodal terminals with the support of DP World and

bull Sought the inclusion of suitable landside Key Performance Indicators within future lease terms

64 We consider that SPC has taken the leadership role appropriate for its position in

terms of seeking to facilitate improvements in overall port efficiency without interfering in the various commercial arrangements between stakeholders

7 The Tribunal invites stakeholders to comment on any aspects of the current work

practices of freight forwarders customs brokers and any remaining industry participants that may be causing inefficiencies or extra costs to arise in the downstream supply chain

Customs Brokers

71 It is the practise of some customs brokers to wait until the storage free period at

the terminal has almost expired before paying the duty to the Australian Customs This has the impact of retarding the stevedorersquos efforts to improve the velocity of container movement through the terminal Customs brokers should therefore be encouraged to pay duty as soon as possible

72 Customs brokers can also contribute to congestion at the terminal by not paying the Customs duty up to at least 2 hours prior to the carrierrsquos time slot This results in the truck waiting at the terminal for the information to flow through to the terminal operating system via EDI

Page 10 of 48

73 One way of achieving flow in (71) and (72) above is to disconnect the relationship between the payment of duty and the physical control of cargo movement To maximise the effect here the ACS could request the Customs brokers to also lodge the lsquoImport Declarationrsquo 24 hrs prior to arrival and collect duties on account after the event

74 An initiative at DP World Brisbanersquos terminal has been successful in obtaining early container information as part of their VBS (linking timeslot to the container number)

75 The system has been in place for almost 12 months now and the availability of information at DP World Brisbane has contributed to improved service levels at this terminal

Empty Container Depot Opening Times

76 A majority of Empty Container Depots reside within 10 km radius to the port

precinct Depot opening ties do not match container terminal operating hours The result is an inability for carriers to return and pick up an empty container 24hrs a day to depots This reduces the potential of utilising the existing vehicles on the road creating potential traffic congestion and therefore free up their trucks to collect import containers from the terminal Through tariff structures the shipping lines have the ability to influence the depots to increase their opening hours thus resulting in greater vehicle utilisation and subsequent reduction in transport charges The extended spread of hours will also have the effect of flattening the peak traffic periods and reducing road congestion and travelling times

8 The Tribunal invites stakeholders to comment on any aspects of the VBS

particularly in relation to the number of timeslots made available and on what basis and the process by which those slots are made available across the day(s) and to whom

81 The VBS is simply a means by which to communicate with the transport carrier

community What determine the number of slots made available are resource levels provided at the container terminal DP World Sydney provides more than sufficient resource levels to enable all containers to be delivered as required to road within the three free day period even accepting the industryrsquos current limited use of the available 247 terminal operation It is acknowledged that resource levels provided to road operations may be varied day to day as resources may need to be directed to ship operations but this follows from running the terminal as an integrated operation which is ultimately most efficient Providing further day time slots without addressing underlying market inefficiencies only risks service levels to shipping lines that are demanding higher performance levels and perpetuating the industryrsquos unwillingness to support 247 operations

82 DP World also notes that all carriers may and do from time to time contact the

terminal and request additional timeslots if there are none available on the VBS The terminal will endeavour to accommodate such requests where there is operational capacity to do so If there is capacity the Terminal will book the timeslot in the name of the carrier that has made the request

83 Further details of the VBS are provided in responses to subsequent questions

However we believe that the VBS at DP World Port Botany Terminal has delivered benefits including

bull No random queuing at the terminal which results in significant unplanned

delays to transport users due to the random arrival of trucks at any point in time to the terminal where the terminal is not resourced to handle the high peaking demand for landside resources whilst at the same time meeting contractual obligations with shipping lines

Page 11 of 48

bull The terminal is able to carry out bulk moves while maintaining service levels to other general carriers

bull Provides choice to carriers in terms of access as well as providing transparency to industry

bull States subscriptions fees in a public document which are transparent to industry

bull Increase slot allocation to road users based on irregular shipping schedules and

bull While not referred to in the Carrier Access Arrangements (see attachment 1) all B class carriers are allowed to engage in a process called ldquoexport taggingrdquo Export tagging involves a carrier booking an import timeslot in ePorts which will give them access to the terminal A carrier is then able to bring and export container on the truck that is arriving to collect the import container without booking a slot for that export container (during most timeslots in the day) The purpose of this flexibility to carriers is to increase two-way running which reduces costs to carriers and decreases the number of trucks in the port community

9 The Tribunal asks stakeholders to comment on the variability of average

turnaround times across the major ports and the variability of turnaround times faced by individual transport operators at Port Botany itself The Tribunal also invites comment on how important predictability of turnaround times is to transport operators relative to average turnaround times at Port Botany The Tribunal further invites comment on why turnaround times are higher for Port Botany compared to Melbourne Adelaide and Fremantle

91 The precise nature of operations differs between the ports and between the

terminals operated at those ports These differences arise because of the range of shipping lines that arrive at the various terminals and the volumes of containers and type of cargo going through each terminal There are also differences in the container yard handling equipment yard configurations at each terminal and hours of operation resulting in differences in the way each terminal operates These differences result in variations amongst each terminalrsquos service performance levels

92 During 2002 DP World Sydney management met with a representative group of

carriers to discuss the VBS and access arrangements at the terminal A common view of the carriers was that they would like consistency to truck turn times and that 60mins (carrier measurement) is acceptable The outcome from these meetings was that DP World introduced three internal KPIs

bull Truck processing to truck complete measurement ndash 38 mins average

bull TTTs of 60 mins or less to be 90 to total trucks

bull TTTs of 120 mins or more to be 1 or less

93 Figure 4 below shows the percentage of truck turn times that are 60 minutes or less at DP World Sydney There is a noted improvement in during mid 2005 from an average prior to this time of 73 to an average during 2006 of 85 This indicates that the predictability of the truck turn times has improved during the life of the VBS

Page 12 of 48

Figure 4 DP World Sydney ndash Percentage of Truck Turn Time under 60 mins

DP World Sydney - Percentage of Truck Turn Time under 60 mins

50

60

70

80

90

100

Jan-04

Mar-04

May-04

Jul-04

Sep-04

Nov-04

Jan-05

Mar-05

May-05

Jul-05

Sep-05

Nov-05

Jan-06

Mar-06

May-06

Jul-06

Sep-06

Nov-06

Jan-07

Mar-07

94 Figure 5 below shows the terminal truck turn time and the stevedoring volume since July 2003 at DP World Sydney Note that the volumes are hidden on the left Y axis for commercial reasons As a result of terminal improvements and putting in place the KPIs described above the average TTT performance has improved (right Y axis) whilst at the same time the terminal volume has increased (left Y axis)

Figure 5 DP World Sydney ndash Truck Turn Time and Container Volume

95 DP World operates in all five major ports in Australia and has three different modes of operation namely Straddles in Melbourne and Adelaide RTGrsquos in Sydney and Fremantle and Forklift and Reach-stacker in Brisbane The Variability in TTT between ports is attributed to a number of factors including but not limited to the site processes and physical constraints of each facility

96 The measurement of TTT differs mainly due to

a) the layouts of in-gates and its approaches and

Page 13 of 48

b) the measurement of the job steps which apply to a truck from arrival to departure due to (a)

97 All the above terminals have different truck parking arrangements within and

outside the terminal which impacts TTT Across the board TTT is measured from job processing to job complete (98c to 98e below) however the physical layout and mode can influence when processing commences

98 The process of truck management in simple terms is

a) Pre-arrival of trucks

b) Validation of time slots

c) Processing of job (Manual but if automated it takes effect in b above)

d) Enter the operational yard

e) Job transact and complete (by straddle RTG or Forklift Reach-stacker) and

f) AQIS check for full trucks and depart (gate-out)

99 Depending on the physical layout and provision of sufficient space to hold trucks within the terminal boundary or otherwise the distribution of trucks varies through steps 98a to 98c above

910 At DP World Sydney the equivalent hourly truck volume can be held in the

terminal entry marshalling area therefore multiple trucks can enter the terminal park and be processed by terminal staff Post processing all time spent in the marshalling area forms part of the TTT whilst the truck has not necessarily entered the operational yard (see Annexure 2)

911 At DP World Melbourne on the other hand due to restricted space within the

terminal trucks are normally held outside and a small number is constantly drip fed into the terminal (controlled rate of entry) These trucks then approach the processing points (6 lanes x processing booths) further which they directly enter the operational yard and the TTT is measured from this point

912 DP World Fremantle does not have a truck holding area within the terminal which

means the truck enter the terminal and queue at the Entry to Operational Yard Immediately after being processed the truck enters the terminal yard Therefore unlike Sydney time from Entry to Operational Yard is time historically not published Therefore TTT between DP World Sydney and DPW Fremantle are not comparable

913 DP World Fremantle is also an RTG operation similar to DP World Sydney

However the physical layout and the resulting entry arrangements differ Due to restricted space within the terminal the trucks are normally held outside and constantly drip fed into the terminal (controlled rate of entry) The trucks operate through 3 lanes within the terminal and truck turn time is measured at this processing point when the trucks actually enter the operational yard

914 DP World Adelaide is a straddle operation similar to DP World Melbourne

However its physical layout and resulting entry arrangement is different to that of DP World Melbourne and has some similarities with what takes place in Sydney The hourly truck volume can be held within the terminal and the TTT is measured from entry into the terminal main gate to departure from the terminal main gate The measure differs from the other facilities on both entry are exit gates

915 The benefits of this TTT data is not so much the raw data itself but more so the

long term trend in the data If TTT is constant or even improved during periods of volume growth then this reflects a firm commitment to the landside process Continuous improvement reflects a commitment to landside efficiencies

Page 14 of 48

916 TTT is influenced by the mode of operation the Gate In infrastructure and volume

of containers required to be handled

917 The RTG mode of operation requires the truck to travel to the yard stack where the container is located or assigned as opposed to the straddle operation where the straddle comes to the truck that is parked in a bay external to the stacking area The mode of operation at DP World Sydney generally results in a truck with multiple containers being serviced by multiple RTGs and also having to travel to multiple yard locations At each of these yard locations there will be a different level of demand on the particular RTG covering the area This will result in variations in the time it will take to service the truck in that particular area and therefore will influence the truck turnaround time

918 In comparison a terminal running a straddle operation could employ a different

straddle to handle each of the containers processed for the truck

919 The mode of operations employed by container terminals have various strength and weaknesses and need to be considered based on many factors in a Port (ie not just the landside interface) but both modes can contribute to variability

10 The Tribunal invites comment on how truck turnaround times are currently

measured by supply chain participants and how they should be measured The Tribunal further invites comment on the extent to which the stevedores provide access to their facilities at the specific times booked on the VBS

Truck Turn Time (TTT)

101 DP World Sydney currently measures truck turn times from the time the containers on a truck are processed to the time the last container is completely loaded onto the truck (import containers) or discharged from a truck and landed in the terminal (export containers)

102 TTT is directly influenced by the number of containers to be handled by an RTG

terminal on a truck run ie a higher number of containers results in a longer truck turn time on average This due to the truck having to potentially visit multiple locations within the RTG terminal

103 The reason the container Terminal does not measure the time following

completion of loadingdischarging container from truck is measure regulatory bodies (ie AGIS) have commenced inspection of containers on terminal exit gate which is beyond the control of the container terminal

104 The process time is used to measure the start of the truck turn time as this is the

closest time to the truck being in the terminalrsquos control

105 Trucks that take advantage of the autogate processing (currently 25 of trucks) actually start the truck turn time as they come through the terminal gate as this is where the transponder reader is located DP World Sydney support the increase of the autogate processing and the result that the truck turn time starts at the gate For trucks that do not use the autogate processing opportunity the terminal does not start the truck turn time at the gate as the truck driver may not move efficiently to have the container processed

106 Carriers often use TTT measured from the time the truck services at the standby

queue or the arrival of the truck at the zone queue which are waiting for the next time zone to open

107 In relation to standby queue the CAA clearly stipulates that the use of this system

does not guarantee immediate call-up to the terminal in priority to trucks that have booked a time slot

Page 15 of 48

108 In relation to TTT measured from arrival at the time zone queue the fact that the truck has arrived prior to the commencement of the zone opening is purely a decision of the transport carrier and is beyond the control of the Container Terminal and is not supported by DP World

Container Turn Times

109 DP World Sydney currently measures container turn time from the time the

container is processed to the time the container is loaded onto the truck (import container) or discharged from a truck and landed in the terminal (export container) Over the last 5 years the transport regulators have allowed truck operators to operate larger trucks thereby ultimately improving the efficiency of road transport As transport operators increase the use of larger trucks (capable of carrying multiple containers) the handling of these trucks produces a multiple handling of containers on the same truck at the terminals For example in the past one would handle one container per truck and in that case the CTT and TTT were almost identical With multiple containers on trucks the difference between the CTT and TTT is increasing To be able to benchmark this across a port and other ports becomes hard with TTT due to the ever changing ratio of containers per truck (depends on percentage of large truck operators) firstly within the same port and secondly between different ports Therefore CTT enables us to benchmark the measurement on common grounds across all our operations around the country

Access Times at DP World

1010 DP World Sydney divide the day into hourly time zones within the VBS The time

zones start on the house (eg 0700hrs) and complete at the end of the hour (eg 0759hrs) There is a time zone board located at Simblist Road which indicates which time zone is open Trucks queue at this point waiting for the board to change each hour During daylight hours on average there are 15 trucks waiting for the time zone to open The trucks then make their way to the terminal in gate located on Friendship Road once the zone is open

11 The Tribunal invites comment on the choice between a system where container

numbers are nominated in advance thereby offering the possibility of faster turnaround times or not providing container numbers which would provide road carriers with greater flexibility Or would industry participants prefer a system that allows the choice between both

Import Timeslots

111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the import container number in a timeslot booking up to the start of the time zone The disadvantage for the terminal and the carrier is that this flexible system arrangement does not allow the terminal the chance to reposition the container to a position that will minimise the number of containers that have to be moved (known as ldquoconsolidation movesrdquo) in order to access the container that is to be delivered to the truck once the truck has been processed and is in position for loading The more consolidation moves the terminal has to do to load an import container to a truck the longer the truck turn time will be

112 Undertaking consolidation moves prior to truck arrival would provide the opportunity

to decrease truck turn time

113 To achieve a further reduction in truck turn times and a reduction in cost of delivering a container the terminal would need to control the order in which the import containers are delivered This occurs in other ports in the world

Controlling the order of import deliveries

114 The current arrangement where the shipper controls the order of import containers

to be delivered from the terminals results in extra costs incurred by stevedores and also decreased efficiencies The longer a container remains in the terminal (an

Page 16 of 48

increase in the dwell time) results in increased consolidation (rehandles) undertaken by terminal equipment and an increase in the time taken to load a container to a truck or train

Matching of resources to meet demand

115 The terminal allocates the resources required based on the demand or the

number of timeslots released This occurs 24 hrs in advance

116 Carriers who book timeslots and do not meet their commitment (No Show) results in the terminal resources to be under utilised at certain times and creates an opportunity loss There is also an opportunity lost by another carrier to utilise the time slot for each No Show

117 Carrier who book timeslots and arrive late for their commitment (Wrong Zones)

results in terminal resources being under utilised at times and over utilised at other times The troughs in terminal resource utilisation result in an opportunity loss and the peaks result in a decrease in efficiency (increased truck turn time) or increased cost (increased resources applied) The increase in truck turn time has an impact on carriers who arrive on time for their time slot

118 The current VBS allows for carriers to arrive at the terminal to deliver or pick up a

container without committing to a time and container number thus not enabling the terminal to completely plan the required resources to meet the demand This is termed unplanned work The Standby Queue export tagging by B Carrier no advanced deadline for entering an import container number prior to the time zone and no requirement for an export container number being entered into a time slot booking results in an increase in unplanned work Unplanned work results in peaks in the work required by the planned resources and a decrease in efficiency

119 Rail also has similar problems

1110 By changing this arrangement and giving control to the stevedores to determine

the order of container delivery from the terminal will reduce the costs incurred by the terminal and decrease the turnaround time for trucks

Export Timeslots

1111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the export container number in a timeslot booking up to the start of the time zone It also allows an export time slot to be processed without a container number entered in the time slot booking The container number in then entered by the RampD Clerk at the terminal This often results in human error by the truck driver or the RampD Clerk resulting in delays to trucks This practice also eliminates the opportunity for the carrier to use the automatic processing described below in Question 12 To maximise the use of automation and eliminate human error the export container number needs to be a mandatory field to be updated in the time slot booking by a nominated time prior to the start of the time zone eg 2 hours prior to the start of the time zone

12 The Tribunal invites comments on the increased use of ICT and automation and

any other ways to reduce turnaround times and otherwise improve supply chain efficiency

121 DP World support and are driving the increased use of automation for the

processing of trucks DP World have developed and currently make available an automated truck processing system for carriers who use ePORTS to book and manage timeslots The percentage use of this system at DP World Sydney by carriers averages about 25 of total truck movements excluding stack run trucks

122 This system requires the purchase of a transponder unit from the terminal at the

cost that the terminal purchases the unit plus GST Currently the units are sold to

Page 17 of 48

the carrier for $12050 Also required is access to an eGATE screen in ePORTS The process for carriers wanting to move a number of containers on a transponder run involves

a) Booking through EPORTS the required number of time slots in a time zone

For example if a transport carrier wanted to deliver two export containers and collect one import container on a single truck run it needed to book three slots and

b) Setting up the transponder by inputting the slots truck number container numbers and whether they are import or export containers in the transponder booking screen in ePORTS

123 The benefits for carriers of using this automated processing include

a) The processing occurs earlier (ie at the gate as compared to in the RampD Office) therefore this decreases the chance of Wrong Zones being incurred

b) No need for the truck driver to present documentation at the RampD Office therefore reducing the truck turn time by avoiding any potential queues

c) No interaction between the truck driver and the RampD Clerk therefore decreasing human error during processing and causing further delays

d) As the processing occurs at the gate the trucks can skip ahead of other trucks where their drivers have to manually process in the RampD Office effectively jumping the queue

e) Allows reprogramming of trucks up to 15mins before the end of the time zone (eg 0645 for an 06 slot) without the truck driver needing the Delivery Order in his possession

f) Provides the carrier with the ability to educate their customers to provide the Delivery Orders in a timely manner in order to lodge them at the terminal

g) Electronic copies of the Delivery Orders (excluding scanned copies of originals) can be forwarded to the terminal via email therefore eliminating the need to physically lodge them

h) Enables the carrier to take all advantage of Electronic Import Delivery Orders (eIDOs) that are currently being used by Evergreen Marine at DP World Sydney Other shipping lines will move to the use of eIDOs in the future

13 The Tribunal invites stakeholders to comment on VBS capital and operating costs

and to assist it to distinguish between stand-alone VBS costs and those shared with other stevedoring activities

131 It is important to distinguish between the capital and operating costs of operating

the VBS and the costs of operating the landside interface ie delivering containers to and from trucks

132 The costs of a VBS comprise the following components

bull IT development and maintenance costs and

bull Management and administration time to manage and administer the system

These costs are low relative to the costs of actually providing the services within the terminal ndash loading and unloading the trucks

133 Having a system which requires the terminal to provide a guaranteed number of

slots per hours is to the disadvantage of the terminal Terminal operations are by their nature unpredictable due to the irregular arrival of ships Having to guarantee a number of slots which carry with it a high expectation of performance in terms of TTT tends to force the terminal to set the number of slots at a level which includes a risk mitigation factor against all things not going to plan The net result of this is

Page 18 of 48

that the terminal tends to effectively oversupply equipment and labour increasing its costs The impact of this is far more significant than the isolated costs of running the actual vehicle booking systems

134 Direct VBS costs have nothing to do with ship or rail operations

135 The container yard is run as a single operation servicing ship road and rail By

this means while there are practical limitations we seek to pool resources to maximise the overall efficiency of terminal operations particularly to absorb the peaks and troughs of demand across the operations as a whole This effective sharing of costs improves overall efficiency and results in lower costs to the benefits of users as a whole We anticipate that systems and technology improvements will see greater use of such pooling and greater overall efficiency as a result

14 The Tribunal invites stakeholders to comment on VBS access and penalty charges

and the level of transparency of access through the stevedoresrsquo VBSs

141 The VBS facilitates the provision of orderly access to DP World Sydney Terminal for over 200 individual carriers

142 DP World considers the achievement of orderly access to its terminals as a

primary objective of the VBS To achieve orderly access DP World considers it important to require carriers to pay a nominal subscription charge for the level and rights of access they require and to issue ldquono showrdquo and ldquolaterdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay lsquoon timersquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs

143 The VBS is essentially an ldquoappointment bookrdquo to assist transport carriers to

organise themselves more efficiently leading to a reduction in waiting times at the container terminal The VBS divides all working days into time periods containing a pre-determined number of timeslots The timeslots represent the number of import and export containers that can be handled in that period The number of timeslots in a day is determined by expected carrier demand and the availability of labour and equipment Carriers are then able to book timeslots for collection or delivery of containers

144 The alternative is random access to container terminals by carriers and significant

truck queues with associated demurrage costs which are ultimately paid for by the end user

145 At DP World Sydney the VBS offers transport carriers the ability to access an

internet based computer system or telephone bureau for the purpose of booking time slots for those carriers who do no wish to use the computer system The VBS in its present form offers access on a transparent and equitable basis to all carriers encourages the efficient movement of containers from the ship through the terminal and onto customers and vice-versa encourages innovative practices which are beneficial to terminal efficiency road congestion and the overall cost of the supply chain The ldquono showrdquo and ldquolaterdquo fees encourage these operational practices and efficiencies

146 DP World has adopted a class structure with an annual subscription for access

because this system allows carriers to determine what access is required for their business while providing the industry significant level of transparency in terms of access costs

147 All carriers have an equal opportunity to subscribe to any of the three classes of

access to the VBS (bearing in mind that smaller carriers are allowed to consolidate

Page 19 of 48

their subscriptions in order to share the cost of a B Class subscription) and equal access to timeslots amongst carriers of the same class

148 Annual fees are payable in advance Table 3 sets out the various carrier classes

currently in operation at each terminal and the applicable subscription fees for each class There are no annual limits on the number of slots carriers can book

Table 3 DP World Sydney ndash Current carrier classes and VBS deposit and registration fees for the year commencing 1 July 2005

Terminal Carrier Classes Price Number of active

carriers at Feb 06 Port Botany New South Wales

B Carrier ndash online internet access with high service levels

$2922150 (Non-refundable deposit) No fixed upper limit on annual time slots1

28

A Carrier ndash online internet access with standard service levels

$133400 (Annual registration fee) No fixed upper limit on annual time slots2

162

AB Carrier ndash access via the PampO Phone Booking Bureau with standard service levels

$66760 (Annual registration fee) No fixed upper limit on annual time slots3 39

149 Any carrier selecting the ldquoBrdquo classification is encouraged to also consider the ldquoArdquo

classification unless they are confident of utilising a high level of timeslots that would render the higher subscription fee as attractive per timeslot

1410 In addition to the VBS annual subscription fees the carrier access arrangements

provide for the levying of a no-show fee on carriers who fail to arrive for slots they have booked in the amount of $110 per time slot The terminal also charges carriers late fees of $55 per slot if they fail to arrive for a slot booking within the nominated time zone No fees are charged where a carrier is unable to meet the time slot due to delays caused and acknowledged by DP World Australia or where delays are caused by circumstances genuinely outside of the carrierrsquos control DP World Australia also has the discretion to and does waive ldquono showrdquo and ldquowrong zonerdquo fees in the interest of maintaining a good working relationship with carriers Failure by carriers to pay these ldquono showrdquo and ldquowrong zonerdquo fees may lead to them being prevented from making further bookings ldquoNo showrdquo and ldquowrong zonerdquo fees are the means by which DP World ensures that access to itrsquos terminals is provided in the most efficient manner to all 1carriers as late carriers cause delays for those carriers that are on time

1 No fixed upper limit on annual timeslots ndash Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 2 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 3 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release

Page 20 of 48

1411 The ldquono showrdquo and ldquowrong zonerdquo fee structure was introduced following

consultation with carriers It was originally $20 per late arrival (in Victoria where VBS first commenced) but this is proved to be ineffective in disciplining carrier conduct In response to requests from many carriers DP World increased the ldquono showrdquo fee to $110 The fees also discourage carriers from the practice of overbooking slots which they have no intention of using and preventing other carriers from using those slots

1412 The actual cost of a truck turning up late (Wrong Zone) or not turning up at all (No

Show) is the cost of planned resources (labour equipment etc) based on the VBS demand (number of containers expected to handle during a time period) not being utilised during the time period they are employed

1413 Adjacent to each time zone are grace periods one prior to the time zone and one

following the time zone These grace periods and the trucks arrival time for processing determine the status of the time slot ie arrived on time or arrived late (Wrong Zone) Currently the grace period following the time zone is set at 20 minutes which means that if a truck arrives later than one hour and 20 minutes after the start of the time zone then the time slot will be initially recorded as a Wrong Zone Following the completion of each VBS day Wrong Zones are reviewed and any penalty waived if any of the following determined

a) The terminal is aware that it has contributed to a truck arriving late for the time

slot ie the terminal has previously delayed the truck or carrier on an earlier time slot or

b) The carrier advises that they arrived late due to an unforeseen circumstance eg a break down of the truck

We request that the information in 1414 be kept confidential

1414 Omitted for reasons of confidentiality

1415 Officers at DP World Sydney have regular conversations with carriers in respect of

the waiver of No Show fees as well In certain instances DP World may agree to waive fees prior to an invoice being issued

1416 For both Wrong Zone and No Show fees the terminal provides a grievance

process for carriers who have been issued invoices and do not agree that the fee has been issued fairly The carrier has the opportunity to provide the terminal with an explanation and should officers at DP World Sydney agree that there has been an error in the issuing of the fee or an unforeseen circumstance is explained the terminal will credit the invoice

15 The Tribunal invites stakeholders to indicate the costs of providing the services of

rail windows and rail paths to rail operators

151 Rail windows are based allowance on a rail terminal performance KPI of 30 container moves per hour and charged at $360 per hour A shunting time allowance of 15 mins per window is not charged Additional lifts canare provided by increasing the lifts per hour by applying more machinery at no additional cost

152 The cost of providing terminal rail operations is higher than road operations at DP

World Sydney The RTG mode of operation requires a container to be moved to or from the container stack For road containers the truck takes the export container to the stack and travels to the stack to pick up an import container For a rail container a terminal internal transfer vehicle (ITV) is required to be used by the terminal to move the container from the train to the stack (export containers) or

Page 21 of 48

the stack to the train (import containers) This is not required for container being received or delivered by road

153 For import rail containers there is a loss of efficiency for the vessel discharge

operation in order to stack rail containers separately for delivery to the train For each discharge point in the terminal extra resources are required There is extra administration costs in having to make alternate arrangements to separate these import rail containers

154 Despite the fact that the delivery of containers to rail is higher than road the

terminal seeks only a partial recovery of costs in order to encourage the use of rail in the port in line with the NSW Government objectives

155 There is a management cost of setting up and operating the rail windows This is

similar to the cost of operating a VBS

156 There is additional security infrastructure costs for a rail operation to ensure the terminal meets their legislative security requirements The more terminal entry points created the higher the cost to replicate these security infrastructure requirements

16 The Tribunal invites comment from stakeholders on the planned or mooted

development and expansion of the various intermodal terminals in Sydney and the extent to which this is expected to ease congestion in the landside supply chain at Port Botany

161 DP World supports the development and expansion of an intermodal terminal

network to facilitate an increase in the use of rail as the means of container transport This has the potential flow on benefit of minimising the growth in the number of trucks requiring to access the Port Botany area as port volumes continue to grow

162 Transport between the Botany terminals and the inland intermodal terminals

should be by rail or trucks operating a stack (bulk) run road out during off peak periods eg night shifts or weekends The use of Super B Double trucks would assist with the efficiency of these off peak stack run outs

17 The Tribunal invites comment on the likely effect of the expansion plans at Port

Botany on access to the port terminal during peak periods and efficiency along the supply chain

171 Improving the two-way running or back-loading of trucks has to be a priority in

order to maximise access opportunity at the terminals and efficiency along the supply chain It is likely that a third and separate stevedoring facility will only increase the difficulty of improving truck utilisation over and above the current levels by the increased logistics complexity of coordinating timely access to three terminals rather than two

172 A third stevedore will lead to the same port volume being spread over three

operations While it is resource levels that determine available slots DP World has found that during periodic decreases in volumes carriers favour daytime runs to the terminal as opposed to night time

173 The expansion plans will have a negative impact on rail transport timeliness and

access requirements to DP World Sydney if the requirements to breaksplit trains and shunt sections of trains into multiple terminals continues This will undermine the overall rail effectiveness and the NSW Government rail objectives by the unnecessary increase of splitting trains

Page 22 of 48

18 The Tribunal invites comment on the likely effects of expansion of the intermodal network in Sydney on access to the port and efficiency along the supply chain

181 This is a similar issue to point 16 above

19 The Tribunal invites comment on the likely impact of a peak pricing system along

the lines of the FIC on access to the port terminals and the efficiency of the Port Botany supply chain

191 We understand for the NSW Governmentrsquos announcement (31 May 2007) that the

FIC is no longer being proposed

192 Table 4 shows the average percentage of road containers that are handled by shift at DP World Sydney based on a 6 day x 24 hour receival and delivery operation for the past 4 years The figures indicate that there is surplus capacity on both evening and midnight shifts when compared to day shift Note that the percentage of road containers handled has increased on day shift relative to the combination of evening and midnight shifts This has been due to terminal efficiencies creating increased capacity during day shifts and the road carriers utilising this capacity

193 This is further emphasised in Figure 4 which shows the trend over time for day

shift containers handled has increased from 2005 evening shift has decreased and midnight shift has not changed significantly

Table 4 DP World Sydney ndash Percentage of Daily Road Container Volume handled by Shift

Year Midnight Shift (2230 ndash 0630hrs)

Day Shift (0630 ndash 1430hrs)

Evening Shift (1430 ndash 2230hrs)

2007 YTD 21 47 32

2006 23 45 33

2005 22 43 36

2004 19 44 38

194 Year to date April 2007 figures may reflect the seasonal trend for lower volumes in this period

Figure6 DP World Sydney ndash Road Volume trendlines by shift 2005-07

Page 23 of 48

20 The Tribunal invites comment on the likely impact of the expansion of the freight

rail network in Sydney on the number of containers moved by rail and on congestion at the port

201 The importance of increasing the proportion of containers moved by rail is

recognised and supported by DP World Sydney

202 To complement the expansion of the rail freight network upgrade the terminal is developing plans to increase the length and the number of sidings within the terminal Over the next three years the terminal is planning to spend an estimated $20million on internal rail infrastructure machinery and systems The terminal upgrade will ensure DP World Sydney has the infrastructure in place to meet a target of 40 throughput by rail

203 The expansion of the freight rail network needs to take into account The access

to each of the terminals especially the access to DP World Sydney where by the terminal has a distinct disadvantage in relation to its competitor

21 The Tribunal invites comment on the impact on the supply chain on ARTC

managing the metropolitan freight rail network

211 Management of freight rail infrastructure is ARTCrsquos core business and will bring additional management expertise and focus to the task of reforming operations on the Port Botany rail infrastructure

212 For ARTC to control the MFN (Metropolitan Freight Network) makes sense from

the point of view they can make informed decisions for both inbound and outbound Port services based on the wider NSW Rail Freight Network operation

213 The ARTC proposal to co-ordinate services by performing the full Network Control

Function (both signalling and Train Control) from the one centralised centre for the Southern Sydney Freight Line (SSFL)MFN and Port Botany emphasises their commitment to ensure safety communications and network management is their primary objective

214 ARTC are focussed on improving the efficiencies at the Port and bring to the

industry fresh innovative ideas to improve the overall capacity on the rail network ARTCrsquos willingness to assist and eagerness to invest in the rail infrastructure brings a breath of fresh air to the industry and specifically the stevedore operations ARTC can integrate the Botany line into its overall investment program paving the way for additional investment to improve the efficiency of operations on the Botany rail line and at the port-rail interface

22 The Tribunal invites comment on the following questions in relation to costs of the

VBS

22a What costs underpin the VBS access charges levied by the two stevedores How are the VBS access charges set

22b1 Refer to Question 14 The revenue from VBS charges account for a very

small proportion of DP Worldrsquos total container terminal revenue For the year ended 31 December 2006 they accounted for 13 of total revenue Of that 13 approximately 30 was for No Shows and Wrong Zones

22b What costs are incurred by the stevedores in moving a container from the

wharf to a truck or train

22b1 DP World Sydney is operated as an integrated business servicing ships road and rail within the context of a national business We do no separately account for the costs of each discrete activity Information on

Page 24 of 48

overall costs is provided to the ACCC and published on an industry basis in the ACCCrsquos Container Stevedoring Monitoring Report

22b3 Wharf to truck activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the VBS to provide orderly access for road carriers

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal space to allow truck drivers to park their vehicles in order to unlockset up their twist locks and processing of containers

bull Processing of the container

bull System to manage the truck movement within the terminal

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the truck by RTG or forklift

bull Provision of terminal area for truck drivers to safely leave their vehicle to lock the twist locks on their trucks check the container seal number and check the container for damage

bull Provision of terminal area for AQIS operation and infrastructure

22b3 Wharf to train activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the Rail Windows to provide orderly access for operators

Page 25 of 48

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal area for rail lines associated rail infrastructure and train inspection requirements within the terminal

bull Processing of the container

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the ITV by RTG or forklift

bull Internal Transfer Vehicle (ITV) movement of the container from the yard stack to the rail line

bull Lift of the container from the ITV onto the rail wagon

22c What influences the nature and amount of these costs (for example are they influenced by the type of equipment used by a stevedore Do they fluctuate with the number of containers handled by the stevedores) and how have costs changed over time

22c1 DP World operates very similar Vehicle Booking Systems in Brisbane

Sydney Melbourne and Fremantle where there are differences in volume through the terminals The only difference in subscription between the terminals are the ldquoB Classrdquo carrier subscriptions The annual subscription is influenced by the number of carriers seeking this class and the hourly allocation of slots to their class given the number of subscriptions In addition Melbourne operates a straddle facility and Brisbane operates a forklift reachstacker Therefore the cost of the Vehicle Booking System is not dependant on or mode but the annual subscription to ldquoB Classrdquo carrier depends on competition for that carrier class

22c2 An annual subscription fee per class which is a characteristic of DP

Worldrsquos VBS does not normally increase with volume At DP World Sydney subscription fees have not been increased since 2003

22c3 Overall landside costs have increased with increases in wages and

salaries (4 pa) property costs (substantially ahead of cpi) fuel and other general costs These increases have been offset to some extent by increases in productivity Industry costs history is also available publicly in the ACCC Container Stevedoring Monitoring Reports

22d Where do the port landside costs stop and the VBS costs start

22d1 Prior to the Entry to Operational Yard (see Attachment 2) the truck is

under the influence of the VBS and also under the influence of the external environment which includes but is not limited to port and metropolitan road conditions container clearance issues truck arrival peaks and troughs truck preparedness processing of the container to the handled by the terminal and maritime security requirements

It is DP World Sydneyrsquos view that the port landside costs stop and the VBS costs start at the choke point

22e Do the VBSsrsquo penalty charges reflect the cost to stevedores What should

they reflect

22e1 The primary rationale for the penalty regime is to seek to modify carrier behaviour

Page 26 of 48

22e2 However it is also the case that a ldquono showrdquo or ldquowrong zonerdquo gives rise to a lost opportunity cost to the terminal Resources made available but not utilised may be wasted

22e3 DP World considers the achievement of orderly access to its terminal as

a primary objective of the VBS To achieve orderly access PampO considers it important to issue ldquono showrdquo and ldquowrong zonerdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay ldquoon timerdquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs The alternative is random access to container terminals by carriers and significant truck queues with associated demurrage costs which are ultimately paid for by the end consumer

22f Should there be different charging arrangements for empty containers that

are returned to the port as opposed to full export containers

22f1 DP World Sydney terminal handles a full container in a similar way to an empty container using purpose built container stacking equipment controlled by a DP World employee A container occupies the same amount of space whether it is full or empty This leads to the same cost for the handling of a single empty container as a single full container Single empty containers returned to the port should be charged a similar rate to full containers

22f2 To reduce the cost of handling empty containers in the terminal destined

for the same port on the one vessel and that are of the same size the terminal in conjunction with the shipping line and the shipping linersquos nominated carrier work together to create a bulk run of empty containers The bulk run maximises the number of empty containers that are handled in a specific time period The terminal dedicates resources to thee bulk runs and also provides priority access to the transport carrier in order to create efficiency and an economy of scale In this way the cost of returning an empty container via a bulk run is reduced

23 The Tribunal invites comment on the following questions in relation to the different

pricing regimes of the two stevedores

23a Why do the stevedores have different pricing schemes for their VBSs

23a1 We do not know why Toll-PatrickAsciano has adopted the pricing scheme it has

23a2 In order to improve earlier versions of its VBS in the mid-1990s DP

World (PampO) introduced categories of carriers and began charging differential subscription fees for carriers registering to use the VBS depending on the level of access required by the carrier Prior to this change some carriers were engaging multiple computer terminals to the detriment of other carriers and it had become clear that a level of differentiation would be in all carrierrsquos interests The different classes of carrier access were introduced to ensure the most balanced overall outcome The level of differentiation is an annual choice of access levels available to all carriers regardless of size Under this approach different subscription fees are charged for each category but all carriers registering in a particular category pay the same fee Our view remains that an annual subscription as opposed to a pay as you go is far less of an administrative burden on both the carriers and the terminal

Page 27 of 48

23a3 There are no restrictions upon carriers wishing to obtain a certain carrier category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for the same carrier categories as larger carriers Smaller carriers may also apply for consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst charging the burden of the cost of that subscription

23a4 Subscription fees based on differences in class are designed to

encourage choice whilst at the same time communicating a level of transparency with terminal pricing and service

23b Do the different pricing schemes influence the efficiency with which

transporters obtain access to the terminals

23b1 We do not believe this to be the case

23c Would standardisation of charges be more appropriate

23c1 It is our understanding that it would be unlawful for a supplier itself to standardise charges by reason of Section 45 of the Trade Practices Act This may be something that Government wishes to consider

24 The Tribunal invites comment on the following non-price access issues to consider

in relation to the operation of the VBSs

24a What effect do access rules and conditions and non price constraints have on booking a timeslot How to the stevedores use their discretion in determining access and charges and what impact does this have

24a1 The introduction of different categories of access stages the carriersrsquo

access to the VBS for the purposes of booking timeslots ldquoB classrdquo carriers are given exclusive access to a pool of slots between 0730-0820 During this period they are subject to zone limitations which restrict carriers to a maximum number of slots for any given hour The zone limit ensures all carriers within that carrier class are given fair and equitable access to the initial release of slots After the initial booking period the zone limit is lifted and carriers are permitted to book any number of unused slots per hour from those remaining in their pool Similar arrangements exist for A class carriers culminating in the cascading of all remaining slots from all segregated pools into a general pool at 1030 for access by all registered carriers

24a2 There are not restrictions upon carriers wishing to obtain a certain carrier

category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for a consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst sharing the burden of the cost of that subscription

24b What are the stevedoresrsquo obligations with regard to access to port facilities

and what should they be

24b1 Without providing an analysis of our obligations under law in general terms we are required to provide access to carriers on an equitable basis recognising the competitive environment we operate in

Page 28 of 48

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

parties within the supply chain Receival of empty containers directly back to the wharf after importer unpack is fine if they are treated as per any export container and received accordingly for a specified vessel The inefficiency related to these activities occurs when the containers are received into a terminal for a non specified vessel pool purely for top up if the vessel alongside has surplus capacity This arrangement uses expensive waterfront terminal land for the storage of empty containers The effects of such are an increase in overall container dwell time which results in terminal congestion and associated handling inefficiencies and costs

2 The Tribunal invites stakeholders to comment on any aspects of the stevedoresrsquo

methods and hours of operation or other business practices relating to the provision of access to the port terminals that may be causing inefficiencies or extra costs to rise in the landside supply chain The Tribunal further invites comments on why the Port of Melbourne appears to offer considerably more VBS slots than Port Botany

Road 21 We are unclear as to what specifically the Tribunal is referring to with regard to

methods of operation However with regard to transport carrier access there are three methods in which a transport carrier can access the DP World Sydney Terminal

a) A carrier can use a timeslot which is booked or reserved through the VBS

operated by DP World

b) A carrier may access the terminal through a standby queue and

c) A carrier may organise a bulk run

22 Our stevedoring resources are available to service vessels road and rail 24 hours per day 7 days per week 52 weeks per year

23 Shipping lines expect and are provided with vessel operations and rail operations

on a 247 basis Road services are provided on a 246 basis on the basis of demand Despite encouragement by the stevedore there is minimal demand on Saturday and no demand for road services on Sunday

24 The VBS is simply a means by which to communicate with the transport carrier

community What determines the number of slots made available are resource levels provided at the container terminal DP World Sydney provides more than sufficient resource levels to enable all containers to be delivered as required to road within the three free day period even accepting the industryrsquos current limited use of the available 247 terminal operation It is acknowledged that resource levels provided to road operations may be varied day to day as resources may need to be directed to ship operations but this follows from running the terminal as an integrated operation which is ultimately most efficient Providing further day time slots without addressing market inefficiencies only risks service levels to shipping lines that are demanding higher performance levels and perpetuating the industryrsquos unwillingness to support 247 operations

25 DP World also notes that all carriers may and do from time to time contact the

terminal and request additional timeslots if there are none available on the VBS The terminal will endeavour to accommodate such requests where there is operational capacity to do so If there is capacity the Terminal will book the timeslot in the name of the carrier that has made the request

26 Access to DP World Sydney is via a rail window assigned to the rail operator The

rail window timing duration and size (the number of lifts) is negotiated with the rail operator and aligned to the path the operator has acquired into Botany Rail Yard The rail windows are designed with the intention of allowing the rail operator

Page 3 of 48

Botany Rail Yard management and the terminal operator the ability to plan their operational requirements in order to maximise efficiency

27 Prior to the establishment of rail windows the order of arrival of trains into the

facility was on a first come first served basis This method of operation created inefficiencies where a rail operator would occupy rail siding time to the detriment of other rail operators and create large periods of idle time occupying the sidings This would invariably mean that other rail operators carrying containers for ships about to leave port could not deliver containers in time to ship on the targeted vessel voyage resulting in large short shipments Invariably missed sailings cost shippers because alternative storage facilities need to be sought together with the associated additional handling costs

28 In Table 1 below we have provided an indicative analysis explaining the apparent

significant difference in slots provided in Sydney and in Melbourne during the 0800-1600 period Monday to Friday for the June 2006 Quarter

Table 1 Comparison of slots offered in Sydney and in Melbourne

Table 1 Comparison of slots offered Notes Melbourn

e Sydney Variance Mel Syd

Terminal volume for the Quarter Ctr000 (1) 139 118 177 Proportion of Exports (2) 500 500 Proportion of Exports as Empties (3) 260 520 Proportion of containers as Empties (4) 130 260 Rail proportion (5) - 215 VBS slots available Ctr (6) 45941 26632 725 Utlisation (7) 956 948 08 VBS slots used Ctr (8) 43920 25247 740 Adjusting Melbourne to allow for like for like comparison

Terminal volume for the Quarter (9) 849 Proportion of Exports as Empties (10) 851 Rail proportion (11) 823 Sub-total 595 Adjusted VBS slots used Ctr 26118 25247 34 Notes

1 Actual DP World container volumes for the quarter

2 Estimated

3 Based on year to Dec 2006 averages

4 Calculated as (2) x (3) 5 Estimated based on Port rail volumes for Year to Jun 2006 Rail volume in Melbourne is about 10

but at DP World Melbourne rail volumes are as a matter of operational practice delivered by slotted truck access to the rail terminal at West Swanson Intermodal Terminal

6 As quoted by IPART from BTRE Waterline Figures appear to be DP World rather than Port figures 7 Source DP World 8 Calculated as (6) x (7) 9 Reducing Melbourne slots in line in proportion to volumes handled 10

Reducing Melbourne slots in line in proportion with higher empties which are typically handled as bulk runs and not slotted

11 Reducing Melbourne slots in line in proportion with lower volumes handled by rail

29 We note that these figures are for a single quarter The analysis is simplistic as noted in the table above It also assumes that the adjustments simply accumulate which may not be strictly true

210 It is to be recognised that in Sydney over 90 of bulk runs are performed on day

and evening shifts (0600-2200)

Page 4 of 48

211 Allowing for a reasonable margin of error given the estimates invoiced this analysis supports our view that Sydney is provided with proportionally equivalent day and evening slots compared with Melbourne

3 The Tribunal invites stakeholders to comment on any aspects of the road transport

operatorsrsquo current work practices and any trends in storage charges and volumes (both for on-port storage and at transport operatorsrsquo own depot storage) that may be causing inefficiencies or extra costs or arise in the downstream supply chain

31 Unlike in other states in Australia in New South Wales in our view there is no

effective peak body broadly representative of the transport carrier industry with which we as a stevedore may engage in a meaningful dialogue on port related issues However we continue to meet with individual carriers to discuss such issues

32 The delivery of removal of a container at the terminal is a decision that is

determined by or shared between the consignee and their agents (eg customs broker carrier) It is the consignee and their contracted agents which dictate when the container is required to be delivered to the warehouse Post release of the container by the ACS AQIS and shipping line the consignee and their agents decide on the most cost efficient option for storage of the imported container (or goods) ie on port storage or other storage option (either packed or unpacked)

33 On-port storage of containers may suit the consignee and their agents However

it is not conducive to efficient container terminal operations

34 As demonstrated in Figure 1 the on-port (ie container terminal) storage revenue has decreased as a percentage of revenue over the past two years This trend follows a decrease in average import dwell time over the same period In line with this the average import container dwell time (this is the average time an import container remains in the terminal) has decreased despite the overall terminal throughput having increased

Figure 1 DP World Sydney ndash Import Container Dwell Time and Storage Revenue

35 Transport carriers are able to book an available timeslot in a time zone and alter which container (number) is to be collected in that timeslot up until the time zone

Page 5 of 48

commences Once a time zone commences it is no longer possible to book a time slot in that zone Transport carriers thus have the flexibility to select a different container slot at short notice This short notice advice of which container (number) is to be collected makes it impossible for the terminal to move the container to the best position to facilitate the best possible truck turn time This is discussed further under Question 11

36 Transport carriers do not always check that a container is released from all

impediments (ACS Holds AQIS Holds storage fees paid) before arriving at the terminal This can cause delays for the truck at the terminal and congestion within the terminal and congestion within the terminal truck marshalling area reducing the opportunity for other carriers to access the terminal which have ensured there are no impediments on the processing of their containers for collection This is seen as inefficient practice that contributes to further delays and costs in the logistics chain

37 Speculative booking of timeslots appears to occur within the VBS whereby

carriers book what they can during the initial booking period rather than what they need This is evidenced by the number of time slots released into the exchange pool The exchange pool is available for carriers to offer the time slots they have booked to another carrier

38 Table 2 below shows the number of time slots that were exchanged over a period

of 8 days Saturdays and Public holidays were not included and non-peak zones were not included The table indicates that during this period an average of 24 of time slots advertised for exchange which shows that carriers initially booked these time slots however in time before the time zone commenced they decided that they did not need the time slot This high number of time slots offered for exchange is due to speculative bookings or other circumstances including change of plans more time slots being made available by the terminal or timeslots becoming available within the exchange pool and thus better suited time slots become available to the carrier DP World is unable to determine how much each factor contributes to the high percentage of slots that are offered for exchange

Table 2 DP World Sydney Percentage of timeslots exchanged during the period of time zones 05-07

Total timeslots

Exchanged 05-17 zones

Total Time Slots available 05-17

zones

Percentage of time slots exchanged

23-Jan-06 48 585 8 24-Jan-06 167 675 25 25-Jan-06 253 770 33 27-Jan-06 206 585 35 30-Jan-06 217 605 36 31-Jan-06 195 720 27 1-Feb-06 52 485 11 2-Feb-06 56 590 9 Average 149 627 24

39 As illustrated in Figure 2 below the transport operators in Sydney have the lowest

containers per truck visit to Port Botany compared to all other ports in Australia

Page 6 of 48

Figure 2 DP World Terminals ndash Containers per Truck Ratio

]

Source DP World

310 Transport carrier operations are still heavily focused on the traditional daytime

period We understand that this reflects the carriers needs to maximise profit margin in a competitive market place However DP World Sydney comes under criticism for not releasing further slots during the traditional peak periods despite resources and slots being available in ldquonon-peakrdquo periods The net result appears to be that there has been very limited success in embracing 247 operations which ultimately we believe is generally accepted as being in the long term interests of the industry as a whole We also believe that it would be in the interests of the industry as a whole if a consolidation in the transport carrier sector occurred resulting in fewer higher volume carriers with the scale to operate with a wider spread of hours

311 Storage charges apply in the vast majority of marine container terminals around

the world Storage free days vary from port to port around the world however at least three free storage days is not unusual

4 The Tribunal invites stakeholders to comment on any aspects of access to rail

infrastructure or of the current work practices of rail transport operators the supply chain

41 There are a number of public reports and studies that outline the issues

associated with rail infrastructure intermodal terminals and rail access to the port In general the conclusions being drawn are that significant investment is required in this area This is most recently supported by the New South Wales Governmentrsquos response to the FIAB report

42 DP World Sydney is seeking to extend its rail sidings to 600metres in the near

future At the same time there are a number of issues with the rail infrastructure connecting these sidings to port rail we are seeking to resolve with RIC

43 The utilisation of the rail windows at DP World Sydney was 55 during 2006

This utilisation is measured on the basis of the total number of containers actually loaded and unloaded against what could be unloaded if all window were fully utilised at the current agreed performance levels on the part of the rail operators and DP World Sydney Few rail windows are south for Saturday and none for Sunday operations When demand justifies it DP World through the provision of additional resources has the capacity to more than double the volumes handled in

Page 7 of 48

any particular window The extensions of sidings will provide further opportunity to increase rail handlings capacity at the terminals

44 Figure 3 shows the trends in terminal rail window utilisation during 2005 and 2006

Although there is a small improvement in window utilisation during this period the utilisation is low and there is considerable capacity available to increase the number of containers that can be transported by rail

Figure 3 DP World Sydney ndash Weekly Terminal Rail Window Utilisation

DP World Sydney Weekly Rail Window Utilisation 2005-07

20

30

40

50

60

70

80

Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07

45 Contributing factors to the relatively low level of utilisation include

bull the late arrival of the rail operator at the terminal which reduces window

duration and the terminalrsquos inability to increase productivity to meet window capacity requirements without incurring extra costs We understand that the late arrivals by rail operators can be due to equipment breakdowns the passenger network restrictions and the inadequate rail infrastructure for freight

bull overestimation of the volumes rail window duration required by the rail operator

bull fluctuations in freight movements on a daily basis creating peaks and troughs

bull the drought and the decrease in rural export containers

bull train shunting operations

bull the AQIS inspection required for each import container before it leaves the terminal

bull the train and wagon inspection required before the train leaves the terminal

bull the use of labour intensive manual twistlocks instead of auto twistlocks on rail wagons

bull the necessity to break split trains in Botany Rail Yard

bull infrastructure limitations within the Botany Rail Yard and

bull rail operators using the Botany Rail Yard as a storage facility for their wagons and causing congestion

46 As indicated above DP World Sydney has plans to improve the infrastructure

within the terminal in order to meet predicted rail volumes in the future However

Page 8 of 48

unless improvements are made against the issues listed above then window utilisation and efficiency may not improve to levels required to meet the NSW Governmentrsquos 40 rail mode target

5 The Tribunal invites stakeholders to comment on any aspects of the operations of

the regulatory authorities that may be causing inefficiencies or extra costs to arise in the downstream supply chain 51 The Australian Customs Service (Customs) has introduced Container Examination

Facility (CEF) operations in most major ports around Australia Each of these facilities incorporates the use of modern technology such as container x-ray equipment and other examination tools to support Customs in their aim of identifying illegal activities through containerised trade Since the inception of the CEF in Sydney in February 2003 Customs has reported many successful interceptions of prohibited imports

52 The CEF in Sydney operates two shifts each week day (day and evening shifts)

and one shift on Saturdays (day shift) This operating arrangement has created more competition for terminal resources during the peak hours 0500-1700hrs Monday ndash Friday This has resulted in the terminal deploying more equipment and labour resources at the terminal to meet the obligations of contracts with Customs but at the same time has increased competition for resources depending where the container is place in the terminal and how the yard equipment is coping with the demands of industry

53 DP World Sydney has contracted performance KPIs to deliver along with following

factors to overcome that contributed to resource competition

bull Random arrival of Customs transport provider trucks (B Doubles) and random selection of containers due to weight constraints of the trucks

bull Multiple containers per truck relating to up to six different locations a truck has to visit within an RTG terminal and the potential to utilise six different resources

bull The requirement for DP World Sydney to block stack Customs targeted containers from a vessel in order to minimise the variability of locations a Customs truck has to visit This block stacking requirement has a negative impact on vessel performance and creates more competition for internal resources

bull DP World Sydney does not control the transport to and from the CEF Customs have appointed a carrier in each port and who under the contract is responsible for the effective co-ordination between the terminals of the movement of X-Ray containers DP World Sydney does liaise with the Carrier but the carrier has the final say as to how many trucks are allocated to each terminal and

bull DP World is of the view that the current operating hours of the CEF are contributing to resource competition within the terminal during the peak periods If the CEF opened midnight shifts rather than day shift this would reduce resource competition increase terminal resource utilisation in the non-peak hours and an improvement in efficiency would be gained by industry

Declaration of Cargo

54 The Australian Customs Service (ACS) has put in place a requirement for

importers to declare cargo at least 48 hours prior to a vesselrsquos first port of call in Australia This is an initiative that has the ability to increase the efficiency of import container movements and decrease the time containers remain in a stevedore terminal The on-time reporting performance in NSW during March 07 was 87

Page 9 of 48

The ACS should continue to put in place incentives to increase this clearance rate of containers in order to gain 100 compliance

55 The Australian Quarantine Inspection Service (AQIS) could assist by utilising an

electronic means of communicating the application and release of AQIS holds required on containers Currently AQIS operate a totally manual operation

6 The Tribunal specifically invites comments on the current role of the SPC and on

the role SPC might take in improving the efficiency of the supply chain

61 Sydney Ports Corporation has stated objectives which include

bull Enhancing and developing strategic assets to ensure efficient optimum utilisation

bull Continuing to build effective relationships with stakeholders that improve the competitive positioning of the ports and

bull Taking the lead in facilitating port related freight solutions

62 DP World in Sydney has participated in efforts by SPC to facilitate efforts to achieve mutual outcomes between both the stevedores and section of the road transport industry

63 In addition SPC has

bull Measured TTT at Port Botany and published these statistics since (2001)

bull Encouraged more use of rail with the support and investment by DP World

bull Requested more capital investment to improve road transport interface which has been supported by DP World through the acquisition of additional container handling equipment

bull Sought the elimination of truck queuing outside the container terminal with the support and implementation of a Vehicle Booking System by DP World

bull Sought the development of inland intermodal terminals with the support of DP World and

bull Sought the inclusion of suitable landside Key Performance Indicators within future lease terms

64 We consider that SPC has taken the leadership role appropriate for its position in

terms of seeking to facilitate improvements in overall port efficiency without interfering in the various commercial arrangements between stakeholders

7 The Tribunal invites stakeholders to comment on any aspects of the current work

practices of freight forwarders customs brokers and any remaining industry participants that may be causing inefficiencies or extra costs to arise in the downstream supply chain

Customs Brokers

71 It is the practise of some customs brokers to wait until the storage free period at

the terminal has almost expired before paying the duty to the Australian Customs This has the impact of retarding the stevedorersquos efforts to improve the velocity of container movement through the terminal Customs brokers should therefore be encouraged to pay duty as soon as possible

72 Customs brokers can also contribute to congestion at the terminal by not paying the Customs duty up to at least 2 hours prior to the carrierrsquos time slot This results in the truck waiting at the terminal for the information to flow through to the terminal operating system via EDI

Page 10 of 48

73 One way of achieving flow in (71) and (72) above is to disconnect the relationship between the payment of duty and the physical control of cargo movement To maximise the effect here the ACS could request the Customs brokers to also lodge the lsquoImport Declarationrsquo 24 hrs prior to arrival and collect duties on account after the event

74 An initiative at DP World Brisbanersquos terminal has been successful in obtaining early container information as part of their VBS (linking timeslot to the container number)

75 The system has been in place for almost 12 months now and the availability of information at DP World Brisbane has contributed to improved service levels at this terminal

Empty Container Depot Opening Times

76 A majority of Empty Container Depots reside within 10 km radius to the port

precinct Depot opening ties do not match container terminal operating hours The result is an inability for carriers to return and pick up an empty container 24hrs a day to depots This reduces the potential of utilising the existing vehicles on the road creating potential traffic congestion and therefore free up their trucks to collect import containers from the terminal Through tariff structures the shipping lines have the ability to influence the depots to increase their opening hours thus resulting in greater vehicle utilisation and subsequent reduction in transport charges The extended spread of hours will also have the effect of flattening the peak traffic periods and reducing road congestion and travelling times

8 The Tribunal invites stakeholders to comment on any aspects of the VBS

particularly in relation to the number of timeslots made available and on what basis and the process by which those slots are made available across the day(s) and to whom

81 The VBS is simply a means by which to communicate with the transport carrier

community What determine the number of slots made available are resource levels provided at the container terminal DP World Sydney provides more than sufficient resource levels to enable all containers to be delivered as required to road within the three free day period even accepting the industryrsquos current limited use of the available 247 terminal operation It is acknowledged that resource levels provided to road operations may be varied day to day as resources may need to be directed to ship operations but this follows from running the terminal as an integrated operation which is ultimately most efficient Providing further day time slots without addressing underlying market inefficiencies only risks service levels to shipping lines that are demanding higher performance levels and perpetuating the industryrsquos unwillingness to support 247 operations

82 DP World also notes that all carriers may and do from time to time contact the

terminal and request additional timeslots if there are none available on the VBS The terminal will endeavour to accommodate such requests where there is operational capacity to do so If there is capacity the Terminal will book the timeslot in the name of the carrier that has made the request

83 Further details of the VBS are provided in responses to subsequent questions

However we believe that the VBS at DP World Port Botany Terminal has delivered benefits including

bull No random queuing at the terminal which results in significant unplanned

delays to transport users due to the random arrival of trucks at any point in time to the terminal where the terminal is not resourced to handle the high peaking demand for landside resources whilst at the same time meeting contractual obligations with shipping lines

Page 11 of 48

bull The terminal is able to carry out bulk moves while maintaining service levels to other general carriers

bull Provides choice to carriers in terms of access as well as providing transparency to industry

bull States subscriptions fees in a public document which are transparent to industry

bull Increase slot allocation to road users based on irregular shipping schedules and

bull While not referred to in the Carrier Access Arrangements (see attachment 1) all B class carriers are allowed to engage in a process called ldquoexport taggingrdquo Export tagging involves a carrier booking an import timeslot in ePorts which will give them access to the terminal A carrier is then able to bring and export container on the truck that is arriving to collect the import container without booking a slot for that export container (during most timeslots in the day) The purpose of this flexibility to carriers is to increase two-way running which reduces costs to carriers and decreases the number of trucks in the port community

9 The Tribunal asks stakeholders to comment on the variability of average

turnaround times across the major ports and the variability of turnaround times faced by individual transport operators at Port Botany itself The Tribunal also invites comment on how important predictability of turnaround times is to transport operators relative to average turnaround times at Port Botany The Tribunal further invites comment on why turnaround times are higher for Port Botany compared to Melbourne Adelaide and Fremantle

91 The precise nature of operations differs between the ports and between the

terminals operated at those ports These differences arise because of the range of shipping lines that arrive at the various terminals and the volumes of containers and type of cargo going through each terminal There are also differences in the container yard handling equipment yard configurations at each terminal and hours of operation resulting in differences in the way each terminal operates These differences result in variations amongst each terminalrsquos service performance levels

92 During 2002 DP World Sydney management met with a representative group of

carriers to discuss the VBS and access arrangements at the terminal A common view of the carriers was that they would like consistency to truck turn times and that 60mins (carrier measurement) is acceptable The outcome from these meetings was that DP World introduced three internal KPIs

bull Truck processing to truck complete measurement ndash 38 mins average

bull TTTs of 60 mins or less to be 90 to total trucks

bull TTTs of 120 mins or more to be 1 or less

93 Figure 4 below shows the percentage of truck turn times that are 60 minutes or less at DP World Sydney There is a noted improvement in during mid 2005 from an average prior to this time of 73 to an average during 2006 of 85 This indicates that the predictability of the truck turn times has improved during the life of the VBS

Page 12 of 48

Figure 4 DP World Sydney ndash Percentage of Truck Turn Time under 60 mins

DP World Sydney - Percentage of Truck Turn Time under 60 mins

50

60

70

80

90

100

Jan-04

Mar-04

May-04

Jul-04

Sep-04

Nov-04

Jan-05

Mar-05

May-05

Jul-05

Sep-05

Nov-05

Jan-06

Mar-06

May-06

Jul-06

Sep-06

Nov-06

Jan-07

Mar-07

94 Figure 5 below shows the terminal truck turn time and the stevedoring volume since July 2003 at DP World Sydney Note that the volumes are hidden on the left Y axis for commercial reasons As a result of terminal improvements and putting in place the KPIs described above the average TTT performance has improved (right Y axis) whilst at the same time the terminal volume has increased (left Y axis)

Figure 5 DP World Sydney ndash Truck Turn Time and Container Volume

95 DP World operates in all five major ports in Australia and has three different modes of operation namely Straddles in Melbourne and Adelaide RTGrsquos in Sydney and Fremantle and Forklift and Reach-stacker in Brisbane The Variability in TTT between ports is attributed to a number of factors including but not limited to the site processes and physical constraints of each facility

96 The measurement of TTT differs mainly due to

a) the layouts of in-gates and its approaches and

Page 13 of 48

b) the measurement of the job steps which apply to a truck from arrival to departure due to (a)

97 All the above terminals have different truck parking arrangements within and

outside the terminal which impacts TTT Across the board TTT is measured from job processing to job complete (98c to 98e below) however the physical layout and mode can influence when processing commences

98 The process of truck management in simple terms is

a) Pre-arrival of trucks

b) Validation of time slots

c) Processing of job (Manual but if automated it takes effect in b above)

d) Enter the operational yard

e) Job transact and complete (by straddle RTG or Forklift Reach-stacker) and

f) AQIS check for full trucks and depart (gate-out)

99 Depending on the physical layout and provision of sufficient space to hold trucks within the terminal boundary or otherwise the distribution of trucks varies through steps 98a to 98c above

910 At DP World Sydney the equivalent hourly truck volume can be held in the

terminal entry marshalling area therefore multiple trucks can enter the terminal park and be processed by terminal staff Post processing all time spent in the marshalling area forms part of the TTT whilst the truck has not necessarily entered the operational yard (see Annexure 2)

911 At DP World Melbourne on the other hand due to restricted space within the

terminal trucks are normally held outside and a small number is constantly drip fed into the terminal (controlled rate of entry) These trucks then approach the processing points (6 lanes x processing booths) further which they directly enter the operational yard and the TTT is measured from this point

912 DP World Fremantle does not have a truck holding area within the terminal which

means the truck enter the terminal and queue at the Entry to Operational Yard Immediately after being processed the truck enters the terminal yard Therefore unlike Sydney time from Entry to Operational Yard is time historically not published Therefore TTT between DP World Sydney and DPW Fremantle are not comparable

913 DP World Fremantle is also an RTG operation similar to DP World Sydney

However the physical layout and the resulting entry arrangements differ Due to restricted space within the terminal the trucks are normally held outside and constantly drip fed into the terminal (controlled rate of entry) The trucks operate through 3 lanes within the terminal and truck turn time is measured at this processing point when the trucks actually enter the operational yard

914 DP World Adelaide is a straddle operation similar to DP World Melbourne

However its physical layout and resulting entry arrangement is different to that of DP World Melbourne and has some similarities with what takes place in Sydney The hourly truck volume can be held within the terminal and the TTT is measured from entry into the terminal main gate to departure from the terminal main gate The measure differs from the other facilities on both entry are exit gates

915 The benefits of this TTT data is not so much the raw data itself but more so the

long term trend in the data If TTT is constant or even improved during periods of volume growth then this reflects a firm commitment to the landside process Continuous improvement reflects a commitment to landside efficiencies

Page 14 of 48

916 TTT is influenced by the mode of operation the Gate In infrastructure and volume

of containers required to be handled

917 The RTG mode of operation requires the truck to travel to the yard stack where the container is located or assigned as opposed to the straddle operation where the straddle comes to the truck that is parked in a bay external to the stacking area The mode of operation at DP World Sydney generally results in a truck with multiple containers being serviced by multiple RTGs and also having to travel to multiple yard locations At each of these yard locations there will be a different level of demand on the particular RTG covering the area This will result in variations in the time it will take to service the truck in that particular area and therefore will influence the truck turnaround time

918 In comparison a terminal running a straddle operation could employ a different

straddle to handle each of the containers processed for the truck

919 The mode of operations employed by container terminals have various strength and weaknesses and need to be considered based on many factors in a Port (ie not just the landside interface) but both modes can contribute to variability

10 The Tribunal invites comment on how truck turnaround times are currently

measured by supply chain participants and how they should be measured The Tribunal further invites comment on the extent to which the stevedores provide access to their facilities at the specific times booked on the VBS

Truck Turn Time (TTT)

101 DP World Sydney currently measures truck turn times from the time the containers on a truck are processed to the time the last container is completely loaded onto the truck (import containers) or discharged from a truck and landed in the terminal (export containers)

102 TTT is directly influenced by the number of containers to be handled by an RTG

terminal on a truck run ie a higher number of containers results in a longer truck turn time on average This due to the truck having to potentially visit multiple locations within the RTG terminal

103 The reason the container Terminal does not measure the time following

completion of loadingdischarging container from truck is measure regulatory bodies (ie AGIS) have commenced inspection of containers on terminal exit gate which is beyond the control of the container terminal

104 The process time is used to measure the start of the truck turn time as this is the

closest time to the truck being in the terminalrsquos control

105 Trucks that take advantage of the autogate processing (currently 25 of trucks) actually start the truck turn time as they come through the terminal gate as this is where the transponder reader is located DP World Sydney support the increase of the autogate processing and the result that the truck turn time starts at the gate For trucks that do not use the autogate processing opportunity the terminal does not start the truck turn time at the gate as the truck driver may not move efficiently to have the container processed

106 Carriers often use TTT measured from the time the truck services at the standby

queue or the arrival of the truck at the zone queue which are waiting for the next time zone to open

107 In relation to standby queue the CAA clearly stipulates that the use of this system

does not guarantee immediate call-up to the terminal in priority to trucks that have booked a time slot

Page 15 of 48

108 In relation to TTT measured from arrival at the time zone queue the fact that the truck has arrived prior to the commencement of the zone opening is purely a decision of the transport carrier and is beyond the control of the Container Terminal and is not supported by DP World

Container Turn Times

109 DP World Sydney currently measures container turn time from the time the

container is processed to the time the container is loaded onto the truck (import container) or discharged from a truck and landed in the terminal (export container) Over the last 5 years the transport regulators have allowed truck operators to operate larger trucks thereby ultimately improving the efficiency of road transport As transport operators increase the use of larger trucks (capable of carrying multiple containers) the handling of these trucks produces a multiple handling of containers on the same truck at the terminals For example in the past one would handle one container per truck and in that case the CTT and TTT were almost identical With multiple containers on trucks the difference between the CTT and TTT is increasing To be able to benchmark this across a port and other ports becomes hard with TTT due to the ever changing ratio of containers per truck (depends on percentage of large truck operators) firstly within the same port and secondly between different ports Therefore CTT enables us to benchmark the measurement on common grounds across all our operations around the country

Access Times at DP World

1010 DP World Sydney divide the day into hourly time zones within the VBS The time

zones start on the house (eg 0700hrs) and complete at the end of the hour (eg 0759hrs) There is a time zone board located at Simblist Road which indicates which time zone is open Trucks queue at this point waiting for the board to change each hour During daylight hours on average there are 15 trucks waiting for the time zone to open The trucks then make their way to the terminal in gate located on Friendship Road once the zone is open

11 The Tribunal invites comment on the choice between a system where container

numbers are nominated in advance thereby offering the possibility of faster turnaround times or not providing container numbers which would provide road carriers with greater flexibility Or would industry participants prefer a system that allows the choice between both

Import Timeslots

111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the import container number in a timeslot booking up to the start of the time zone The disadvantage for the terminal and the carrier is that this flexible system arrangement does not allow the terminal the chance to reposition the container to a position that will minimise the number of containers that have to be moved (known as ldquoconsolidation movesrdquo) in order to access the container that is to be delivered to the truck once the truck has been processed and is in position for loading The more consolidation moves the terminal has to do to load an import container to a truck the longer the truck turn time will be

112 Undertaking consolidation moves prior to truck arrival would provide the opportunity

to decrease truck turn time

113 To achieve a further reduction in truck turn times and a reduction in cost of delivering a container the terminal would need to control the order in which the import containers are delivered This occurs in other ports in the world

Controlling the order of import deliveries

114 The current arrangement where the shipper controls the order of import containers

to be delivered from the terminals results in extra costs incurred by stevedores and also decreased efficiencies The longer a container remains in the terminal (an

Page 16 of 48

increase in the dwell time) results in increased consolidation (rehandles) undertaken by terminal equipment and an increase in the time taken to load a container to a truck or train

Matching of resources to meet demand

115 The terminal allocates the resources required based on the demand or the

number of timeslots released This occurs 24 hrs in advance

116 Carriers who book timeslots and do not meet their commitment (No Show) results in the terminal resources to be under utilised at certain times and creates an opportunity loss There is also an opportunity lost by another carrier to utilise the time slot for each No Show

117 Carrier who book timeslots and arrive late for their commitment (Wrong Zones)

results in terminal resources being under utilised at times and over utilised at other times The troughs in terminal resource utilisation result in an opportunity loss and the peaks result in a decrease in efficiency (increased truck turn time) or increased cost (increased resources applied) The increase in truck turn time has an impact on carriers who arrive on time for their time slot

118 The current VBS allows for carriers to arrive at the terminal to deliver or pick up a

container without committing to a time and container number thus not enabling the terminal to completely plan the required resources to meet the demand This is termed unplanned work The Standby Queue export tagging by B Carrier no advanced deadline for entering an import container number prior to the time zone and no requirement for an export container number being entered into a time slot booking results in an increase in unplanned work Unplanned work results in peaks in the work required by the planned resources and a decrease in efficiency

119 Rail also has similar problems

1110 By changing this arrangement and giving control to the stevedores to determine

the order of container delivery from the terminal will reduce the costs incurred by the terminal and decrease the turnaround time for trucks

Export Timeslots

1111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the export container number in a timeslot booking up to the start of the time zone It also allows an export time slot to be processed without a container number entered in the time slot booking The container number in then entered by the RampD Clerk at the terminal This often results in human error by the truck driver or the RampD Clerk resulting in delays to trucks This practice also eliminates the opportunity for the carrier to use the automatic processing described below in Question 12 To maximise the use of automation and eliminate human error the export container number needs to be a mandatory field to be updated in the time slot booking by a nominated time prior to the start of the time zone eg 2 hours prior to the start of the time zone

12 The Tribunal invites comments on the increased use of ICT and automation and

any other ways to reduce turnaround times and otherwise improve supply chain efficiency

121 DP World support and are driving the increased use of automation for the

processing of trucks DP World have developed and currently make available an automated truck processing system for carriers who use ePORTS to book and manage timeslots The percentage use of this system at DP World Sydney by carriers averages about 25 of total truck movements excluding stack run trucks

122 This system requires the purchase of a transponder unit from the terminal at the

cost that the terminal purchases the unit plus GST Currently the units are sold to

Page 17 of 48

the carrier for $12050 Also required is access to an eGATE screen in ePORTS The process for carriers wanting to move a number of containers on a transponder run involves

a) Booking through EPORTS the required number of time slots in a time zone

For example if a transport carrier wanted to deliver two export containers and collect one import container on a single truck run it needed to book three slots and

b) Setting up the transponder by inputting the slots truck number container numbers and whether they are import or export containers in the transponder booking screen in ePORTS

123 The benefits for carriers of using this automated processing include

a) The processing occurs earlier (ie at the gate as compared to in the RampD Office) therefore this decreases the chance of Wrong Zones being incurred

b) No need for the truck driver to present documentation at the RampD Office therefore reducing the truck turn time by avoiding any potential queues

c) No interaction between the truck driver and the RampD Clerk therefore decreasing human error during processing and causing further delays

d) As the processing occurs at the gate the trucks can skip ahead of other trucks where their drivers have to manually process in the RampD Office effectively jumping the queue

e) Allows reprogramming of trucks up to 15mins before the end of the time zone (eg 0645 for an 06 slot) without the truck driver needing the Delivery Order in his possession

f) Provides the carrier with the ability to educate their customers to provide the Delivery Orders in a timely manner in order to lodge them at the terminal

g) Electronic copies of the Delivery Orders (excluding scanned copies of originals) can be forwarded to the terminal via email therefore eliminating the need to physically lodge them

h) Enables the carrier to take all advantage of Electronic Import Delivery Orders (eIDOs) that are currently being used by Evergreen Marine at DP World Sydney Other shipping lines will move to the use of eIDOs in the future

13 The Tribunal invites stakeholders to comment on VBS capital and operating costs

and to assist it to distinguish between stand-alone VBS costs and those shared with other stevedoring activities

131 It is important to distinguish between the capital and operating costs of operating

the VBS and the costs of operating the landside interface ie delivering containers to and from trucks

132 The costs of a VBS comprise the following components

bull IT development and maintenance costs and

bull Management and administration time to manage and administer the system

These costs are low relative to the costs of actually providing the services within the terminal ndash loading and unloading the trucks

133 Having a system which requires the terminal to provide a guaranteed number of

slots per hours is to the disadvantage of the terminal Terminal operations are by their nature unpredictable due to the irregular arrival of ships Having to guarantee a number of slots which carry with it a high expectation of performance in terms of TTT tends to force the terminal to set the number of slots at a level which includes a risk mitigation factor against all things not going to plan The net result of this is

Page 18 of 48

that the terminal tends to effectively oversupply equipment and labour increasing its costs The impact of this is far more significant than the isolated costs of running the actual vehicle booking systems

134 Direct VBS costs have nothing to do with ship or rail operations

135 The container yard is run as a single operation servicing ship road and rail By

this means while there are practical limitations we seek to pool resources to maximise the overall efficiency of terminal operations particularly to absorb the peaks and troughs of demand across the operations as a whole This effective sharing of costs improves overall efficiency and results in lower costs to the benefits of users as a whole We anticipate that systems and technology improvements will see greater use of such pooling and greater overall efficiency as a result

14 The Tribunal invites stakeholders to comment on VBS access and penalty charges

and the level of transparency of access through the stevedoresrsquo VBSs

141 The VBS facilitates the provision of orderly access to DP World Sydney Terminal for over 200 individual carriers

142 DP World considers the achievement of orderly access to its terminals as a

primary objective of the VBS To achieve orderly access DP World considers it important to require carriers to pay a nominal subscription charge for the level and rights of access they require and to issue ldquono showrdquo and ldquolaterdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay lsquoon timersquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs

143 The VBS is essentially an ldquoappointment bookrdquo to assist transport carriers to

organise themselves more efficiently leading to a reduction in waiting times at the container terminal The VBS divides all working days into time periods containing a pre-determined number of timeslots The timeslots represent the number of import and export containers that can be handled in that period The number of timeslots in a day is determined by expected carrier demand and the availability of labour and equipment Carriers are then able to book timeslots for collection or delivery of containers

144 The alternative is random access to container terminals by carriers and significant

truck queues with associated demurrage costs which are ultimately paid for by the end user

145 At DP World Sydney the VBS offers transport carriers the ability to access an

internet based computer system or telephone bureau for the purpose of booking time slots for those carriers who do no wish to use the computer system The VBS in its present form offers access on a transparent and equitable basis to all carriers encourages the efficient movement of containers from the ship through the terminal and onto customers and vice-versa encourages innovative practices which are beneficial to terminal efficiency road congestion and the overall cost of the supply chain The ldquono showrdquo and ldquolaterdquo fees encourage these operational practices and efficiencies

146 DP World has adopted a class structure with an annual subscription for access

because this system allows carriers to determine what access is required for their business while providing the industry significant level of transparency in terms of access costs

147 All carriers have an equal opportunity to subscribe to any of the three classes of

access to the VBS (bearing in mind that smaller carriers are allowed to consolidate

Page 19 of 48

their subscriptions in order to share the cost of a B Class subscription) and equal access to timeslots amongst carriers of the same class

148 Annual fees are payable in advance Table 3 sets out the various carrier classes

currently in operation at each terminal and the applicable subscription fees for each class There are no annual limits on the number of slots carriers can book

Table 3 DP World Sydney ndash Current carrier classes and VBS deposit and registration fees for the year commencing 1 July 2005

Terminal Carrier Classes Price Number of active

carriers at Feb 06 Port Botany New South Wales

B Carrier ndash online internet access with high service levels

$2922150 (Non-refundable deposit) No fixed upper limit on annual time slots1

28

A Carrier ndash online internet access with standard service levels

$133400 (Annual registration fee) No fixed upper limit on annual time slots2

162

AB Carrier ndash access via the PampO Phone Booking Bureau with standard service levels

$66760 (Annual registration fee) No fixed upper limit on annual time slots3 39

149 Any carrier selecting the ldquoBrdquo classification is encouraged to also consider the ldquoArdquo

classification unless they are confident of utilising a high level of timeslots that would render the higher subscription fee as attractive per timeslot

1410 In addition to the VBS annual subscription fees the carrier access arrangements

provide for the levying of a no-show fee on carriers who fail to arrive for slots they have booked in the amount of $110 per time slot The terminal also charges carriers late fees of $55 per slot if they fail to arrive for a slot booking within the nominated time zone No fees are charged where a carrier is unable to meet the time slot due to delays caused and acknowledged by DP World Australia or where delays are caused by circumstances genuinely outside of the carrierrsquos control DP World Australia also has the discretion to and does waive ldquono showrdquo and ldquowrong zonerdquo fees in the interest of maintaining a good working relationship with carriers Failure by carriers to pay these ldquono showrdquo and ldquowrong zonerdquo fees may lead to them being prevented from making further bookings ldquoNo showrdquo and ldquowrong zonerdquo fees are the means by which DP World ensures that access to itrsquos terminals is provided in the most efficient manner to all 1carriers as late carriers cause delays for those carriers that are on time

1 No fixed upper limit on annual timeslots ndash Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 2 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 3 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release

Page 20 of 48

1411 The ldquono showrdquo and ldquowrong zonerdquo fee structure was introduced following

consultation with carriers It was originally $20 per late arrival (in Victoria where VBS first commenced) but this is proved to be ineffective in disciplining carrier conduct In response to requests from many carriers DP World increased the ldquono showrdquo fee to $110 The fees also discourage carriers from the practice of overbooking slots which they have no intention of using and preventing other carriers from using those slots

1412 The actual cost of a truck turning up late (Wrong Zone) or not turning up at all (No

Show) is the cost of planned resources (labour equipment etc) based on the VBS demand (number of containers expected to handle during a time period) not being utilised during the time period they are employed

1413 Adjacent to each time zone are grace periods one prior to the time zone and one

following the time zone These grace periods and the trucks arrival time for processing determine the status of the time slot ie arrived on time or arrived late (Wrong Zone) Currently the grace period following the time zone is set at 20 minutes which means that if a truck arrives later than one hour and 20 minutes after the start of the time zone then the time slot will be initially recorded as a Wrong Zone Following the completion of each VBS day Wrong Zones are reviewed and any penalty waived if any of the following determined

a) The terminal is aware that it has contributed to a truck arriving late for the time

slot ie the terminal has previously delayed the truck or carrier on an earlier time slot or

b) The carrier advises that they arrived late due to an unforeseen circumstance eg a break down of the truck

We request that the information in 1414 be kept confidential

1414 Omitted for reasons of confidentiality

1415 Officers at DP World Sydney have regular conversations with carriers in respect of

the waiver of No Show fees as well In certain instances DP World may agree to waive fees prior to an invoice being issued

1416 For both Wrong Zone and No Show fees the terminal provides a grievance

process for carriers who have been issued invoices and do not agree that the fee has been issued fairly The carrier has the opportunity to provide the terminal with an explanation and should officers at DP World Sydney agree that there has been an error in the issuing of the fee or an unforeseen circumstance is explained the terminal will credit the invoice

15 The Tribunal invites stakeholders to indicate the costs of providing the services of

rail windows and rail paths to rail operators

151 Rail windows are based allowance on a rail terminal performance KPI of 30 container moves per hour and charged at $360 per hour A shunting time allowance of 15 mins per window is not charged Additional lifts canare provided by increasing the lifts per hour by applying more machinery at no additional cost

152 The cost of providing terminal rail operations is higher than road operations at DP

World Sydney The RTG mode of operation requires a container to be moved to or from the container stack For road containers the truck takes the export container to the stack and travels to the stack to pick up an import container For a rail container a terminal internal transfer vehicle (ITV) is required to be used by the terminal to move the container from the train to the stack (export containers) or

Page 21 of 48

the stack to the train (import containers) This is not required for container being received or delivered by road

153 For import rail containers there is a loss of efficiency for the vessel discharge

operation in order to stack rail containers separately for delivery to the train For each discharge point in the terminal extra resources are required There is extra administration costs in having to make alternate arrangements to separate these import rail containers

154 Despite the fact that the delivery of containers to rail is higher than road the

terminal seeks only a partial recovery of costs in order to encourage the use of rail in the port in line with the NSW Government objectives

155 There is a management cost of setting up and operating the rail windows This is

similar to the cost of operating a VBS

156 There is additional security infrastructure costs for a rail operation to ensure the terminal meets their legislative security requirements The more terminal entry points created the higher the cost to replicate these security infrastructure requirements

16 The Tribunal invites comment from stakeholders on the planned or mooted

development and expansion of the various intermodal terminals in Sydney and the extent to which this is expected to ease congestion in the landside supply chain at Port Botany

161 DP World supports the development and expansion of an intermodal terminal

network to facilitate an increase in the use of rail as the means of container transport This has the potential flow on benefit of minimising the growth in the number of trucks requiring to access the Port Botany area as port volumes continue to grow

162 Transport between the Botany terminals and the inland intermodal terminals

should be by rail or trucks operating a stack (bulk) run road out during off peak periods eg night shifts or weekends The use of Super B Double trucks would assist with the efficiency of these off peak stack run outs

17 The Tribunal invites comment on the likely effect of the expansion plans at Port

Botany on access to the port terminal during peak periods and efficiency along the supply chain

171 Improving the two-way running or back-loading of trucks has to be a priority in

order to maximise access opportunity at the terminals and efficiency along the supply chain It is likely that a third and separate stevedoring facility will only increase the difficulty of improving truck utilisation over and above the current levels by the increased logistics complexity of coordinating timely access to three terminals rather than two

172 A third stevedore will lead to the same port volume being spread over three

operations While it is resource levels that determine available slots DP World has found that during periodic decreases in volumes carriers favour daytime runs to the terminal as opposed to night time

173 The expansion plans will have a negative impact on rail transport timeliness and

access requirements to DP World Sydney if the requirements to breaksplit trains and shunt sections of trains into multiple terminals continues This will undermine the overall rail effectiveness and the NSW Government rail objectives by the unnecessary increase of splitting trains

Page 22 of 48

18 The Tribunal invites comment on the likely effects of expansion of the intermodal network in Sydney on access to the port and efficiency along the supply chain

181 This is a similar issue to point 16 above

19 The Tribunal invites comment on the likely impact of a peak pricing system along

the lines of the FIC on access to the port terminals and the efficiency of the Port Botany supply chain

191 We understand for the NSW Governmentrsquos announcement (31 May 2007) that the

FIC is no longer being proposed

192 Table 4 shows the average percentage of road containers that are handled by shift at DP World Sydney based on a 6 day x 24 hour receival and delivery operation for the past 4 years The figures indicate that there is surplus capacity on both evening and midnight shifts when compared to day shift Note that the percentage of road containers handled has increased on day shift relative to the combination of evening and midnight shifts This has been due to terminal efficiencies creating increased capacity during day shifts and the road carriers utilising this capacity

193 This is further emphasised in Figure 4 which shows the trend over time for day

shift containers handled has increased from 2005 evening shift has decreased and midnight shift has not changed significantly

Table 4 DP World Sydney ndash Percentage of Daily Road Container Volume handled by Shift

Year Midnight Shift (2230 ndash 0630hrs)

Day Shift (0630 ndash 1430hrs)

Evening Shift (1430 ndash 2230hrs)

2007 YTD 21 47 32

2006 23 45 33

2005 22 43 36

2004 19 44 38

194 Year to date April 2007 figures may reflect the seasonal trend for lower volumes in this period

Figure6 DP World Sydney ndash Road Volume trendlines by shift 2005-07

Page 23 of 48

20 The Tribunal invites comment on the likely impact of the expansion of the freight

rail network in Sydney on the number of containers moved by rail and on congestion at the port

201 The importance of increasing the proportion of containers moved by rail is

recognised and supported by DP World Sydney

202 To complement the expansion of the rail freight network upgrade the terminal is developing plans to increase the length and the number of sidings within the terminal Over the next three years the terminal is planning to spend an estimated $20million on internal rail infrastructure machinery and systems The terminal upgrade will ensure DP World Sydney has the infrastructure in place to meet a target of 40 throughput by rail

203 The expansion of the freight rail network needs to take into account The access

to each of the terminals especially the access to DP World Sydney where by the terminal has a distinct disadvantage in relation to its competitor

21 The Tribunal invites comment on the impact on the supply chain on ARTC

managing the metropolitan freight rail network

211 Management of freight rail infrastructure is ARTCrsquos core business and will bring additional management expertise and focus to the task of reforming operations on the Port Botany rail infrastructure

212 For ARTC to control the MFN (Metropolitan Freight Network) makes sense from

the point of view they can make informed decisions for both inbound and outbound Port services based on the wider NSW Rail Freight Network operation

213 The ARTC proposal to co-ordinate services by performing the full Network Control

Function (both signalling and Train Control) from the one centralised centre for the Southern Sydney Freight Line (SSFL)MFN and Port Botany emphasises their commitment to ensure safety communications and network management is their primary objective

214 ARTC are focussed on improving the efficiencies at the Port and bring to the

industry fresh innovative ideas to improve the overall capacity on the rail network ARTCrsquos willingness to assist and eagerness to invest in the rail infrastructure brings a breath of fresh air to the industry and specifically the stevedore operations ARTC can integrate the Botany line into its overall investment program paving the way for additional investment to improve the efficiency of operations on the Botany rail line and at the port-rail interface

22 The Tribunal invites comment on the following questions in relation to costs of the

VBS

22a What costs underpin the VBS access charges levied by the two stevedores How are the VBS access charges set

22b1 Refer to Question 14 The revenue from VBS charges account for a very

small proportion of DP Worldrsquos total container terminal revenue For the year ended 31 December 2006 they accounted for 13 of total revenue Of that 13 approximately 30 was for No Shows and Wrong Zones

22b What costs are incurred by the stevedores in moving a container from the

wharf to a truck or train

22b1 DP World Sydney is operated as an integrated business servicing ships road and rail within the context of a national business We do no separately account for the costs of each discrete activity Information on

Page 24 of 48

overall costs is provided to the ACCC and published on an industry basis in the ACCCrsquos Container Stevedoring Monitoring Report

22b3 Wharf to truck activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the VBS to provide orderly access for road carriers

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal space to allow truck drivers to park their vehicles in order to unlockset up their twist locks and processing of containers

bull Processing of the container

bull System to manage the truck movement within the terminal

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the truck by RTG or forklift

bull Provision of terminal area for truck drivers to safely leave their vehicle to lock the twist locks on their trucks check the container seal number and check the container for damage

bull Provision of terminal area for AQIS operation and infrastructure

22b3 Wharf to train activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the Rail Windows to provide orderly access for operators

Page 25 of 48

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal area for rail lines associated rail infrastructure and train inspection requirements within the terminal

bull Processing of the container

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the ITV by RTG or forklift

bull Internal Transfer Vehicle (ITV) movement of the container from the yard stack to the rail line

bull Lift of the container from the ITV onto the rail wagon

22c What influences the nature and amount of these costs (for example are they influenced by the type of equipment used by a stevedore Do they fluctuate with the number of containers handled by the stevedores) and how have costs changed over time

22c1 DP World operates very similar Vehicle Booking Systems in Brisbane

Sydney Melbourne and Fremantle where there are differences in volume through the terminals The only difference in subscription between the terminals are the ldquoB Classrdquo carrier subscriptions The annual subscription is influenced by the number of carriers seeking this class and the hourly allocation of slots to their class given the number of subscriptions In addition Melbourne operates a straddle facility and Brisbane operates a forklift reachstacker Therefore the cost of the Vehicle Booking System is not dependant on or mode but the annual subscription to ldquoB Classrdquo carrier depends on competition for that carrier class

22c2 An annual subscription fee per class which is a characteristic of DP

Worldrsquos VBS does not normally increase with volume At DP World Sydney subscription fees have not been increased since 2003

22c3 Overall landside costs have increased with increases in wages and

salaries (4 pa) property costs (substantially ahead of cpi) fuel and other general costs These increases have been offset to some extent by increases in productivity Industry costs history is also available publicly in the ACCC Container Stevedoring Monitoring Reports

22d Where do the port landside costs stop and the VBS costs start

22d1 Prior to the Entry to Operational Yard (see Attachment 2) the truck is

under the influence of the VBS and also under the influence of the external environment which includes but is not limited to port and metropolitan road conditions container clearance issues truck arrival peaks and troughs truck preparedness processing of the container to the handled by the terminal and maritime security requirements

It is DP World Sydneyrsquos view that the port landside costs stop and the VBS costs start at the choke point

22e Do the VBSsrsquo penalty charges reflect the cost to stevedores What should

they reflect

22e1 The primary rationale for the penalty regime is to seek to modify carrier behaviour

Page 26 of 48

22e2 However it is also the case that a ldquono showrdquo or ldquowrong zonerdquo gives rise to a lost opportunity cost to the terminal Resources made available but not utilised may be wasted

22e3 DP World considers the achievement of orderly access to its terminal as

a primary objective of the VBS To achieve orderly access PampO considers it important to issue ldquono showrdquo and ldquowrong zonerdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay ldquoon timerdquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs The alternative is random access to container terminals by carriers and significant truck queues with associated demurrage costs which are ultimately paid for by the end consumer

22f Should there be different charging arrangements for empty containers that

are returned to the port as opposed to full export containers

22f1 DP World Sydney terminal handles a full container in a similar way to an empty container using purpose built container stacking equipment controlled by a DP World employee A container occupies the same amount of space whether it is full or empty This leads to the same cost for the handling of a single empty container as a single full container Single empty containers returned to the port should be charged a similar rate to full containers

22f2 To reduce the cost of handling empty containers in the terminal destined

for the same port on the one vessel and that are of the same size the terminal in conjunction with the shipping line and the shipping linersquos nominated carrier work together to create a bulk run of empty containers The bulk run maximises the number of empty containers that are handled in a specific time period The terminal dedicates resources to thee bulk runs and also provides priority access to the transport carrier in order to create efficiency and an economy of scale In this way the cost of returning an empty container via a bulk run is reduced

23 The Tribunal invites comment on the following questions in relation to the different

pricing regimes of the two stevedores

23a Why do the stevedores have different pricing schemes for their VBSs

23a1 We do not know why Toll-PatrickAsciano has adopted the pricing scheme it has

23a2 In order to improve earlier versions of its VBS in the mid-1990s DP

World (PampO) introduced categories of carriers and began charging differential subscription fees for carriers registering to use the VBS depending on the level of access required by the carrier Prior to this change some carriers were engaging multiple computer terminals to the detriment of other carriers and it had become clear that a level of differentiation would be in all carrierrsquos interests The different classes of carrier access were introduced to ensure the most balanced overall outcome The level of differentiation is an annual choice of access levels available to all carriers regardless of size Under this approach different subscription fees are charged for each category but all carriers registering in a particular category pay the same fee Our view remains that an annual subscription as opposed to a pay as you go is far less of an administrative burden on both the carriers and the terminal

Page 27 of 48

23a3 There are no restrictions upon carriers wishing to obtain a certain carrier category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for the same carrier categories as larger carriers Smaller carriers may also apply for consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst charging the burden of the cost of that subscription

23a4 Subscription fees based on differences in class are designed to

encourage choice whilst at the same time communicating a level of transparency with terminal pricing and service

23b Do the different pricing schemes influence the efficiency with which

transporters obtain access to the terminals

23b1 We do not believe this to be the case

23c Would standardisation of charges be more appropriate

23c1 It is our understanding that it would be unlawful for a supplier itself to standardise charges by reason of Section 45 of the Trade Practices Act This may be something that Government wishes to consider

24 The Tribunal invites comment on the following non-price access issues to consider

in relation to the operation of the VBSs

24a What effect do access rules and conditions and non price constraints have on booking a timeslot How to the stevedores use their discretion in determining access and charges and what impact does this have

24a1 The introduction of different categories of access stages the carriersrsquo

access to the VBS for the purposes of booking timeslots ldquoB classrdquo carriers are given exclusive access to a pool of slots between 0730-0820 During this period they are subject to zone limitations which restrict carriers to a maximum number of slots for any given hour The zone limit ensures all carriers within that carrier class are given fair and equitable access to the initial release of slots After the initial booking period the zone limit is lifted and carriers are permitted to book any number of unused slots per hour from those remaining in their pool Similar arrangements exist for A class carriers culminating in the cascading of all remaining slots from all segregated pools into a general pool at 1030 for access by all registered carriers

24a2 There are not restrictions upon carriers wishing to obtain a certain carrier

category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for a consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst sharing the burden of the cost of that subscription

24b What are the stevedoresrsquo obligations with regard to access to port facilities

and what should they be

24b1 Without providing an analysis of our obligations under law in general terms we are required to provide access to carriers on an equitable basis recognising the competitive environment we operate in

Page 28 of 48

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

Botany Rail Yard management and the terminal operator the ability to plan their operational requirements in order to maximise efficiency

27 Prior to the establishment of rail windows the order of arrival of trains into the

facility was on a first come first served basis This method of operation created inefficiencies where a rail operator would occupy rail siding time to the detriment of other rail operators and create large periods of idle time occupying the sidings This would invariably mean that other rail operators carrying containers for ships about to leave port could not deliver containers in time to ship on the targeted vessel voyage resulting in large short shipments Invariably missed sailings cost shippers because alternative storage facilities need to be sought together with the associated additional handling costs

28 In Table 1 below we have provided an indicative analysis explaining the apparent

significant difference in slots provided in Sydney and in Melbourne during the 0800-1600 period Monday to Friday for the June 2006 Quarter

Table 1 Comparison of slots offered in Sydney and in Melbourne

Table 1 Comparison of slots offered Notes Melbourn

e Sydney Variance Mel Syd

Terminal volume for the Quarter Ctr000 (1) 139 118 177 Proportion of Exports (2) 500 500 Proportion of Exports as Empties (3) 260 520 Proportion of containers as Empties (4) 130 260 Rail proportion (5) - 215 VBS slots available Ctr (6) 45941 26632 725 Utlisation (7) 956 948 08 VBS slots used Ctr (8) 43920 25247 740 Adjusting Melbourne to allow for like for like comparison

Terminal volume for the Quarter (9) 849 Proportion of Exports as Empties (10) 851 Rail proportion (11) 823 Sub-total 595 Adjusted VBS slots used Ctr 26118 25247 34 Notes

1 Actual DP World container volumes for the quarter

2 Estimated

3 Based on year to Dec 2006 averages

4 Calculated as (2) x (3) 5 Estimated based on Port rail volumes for Year to Jun 2006 Rail volume in Melbourne is about 10

but at DP World Melbourne rail volumes are as a matter of operational practice delivered by slotted truck access to the rail terminal at West Swanson Intermodal Terminal

6 As quoted by IPART from BTRE Waterline Figures appear to be DP World rather than Port figures 7 Source DP World 8 Calculated as (6) x (7) 9 Reducing Melbourne slots in line in proportion to volumes handled 10

Reducing Melbourne slots in line in proportion with higher empties which are typically handled as bulk runs and not slotted

11 Reducing Melbourne slots in line in proportion with lower volumes handled by rail

29 We note that these figures are for a single quarter The analysis is simplistic as noted in the table above It also assumes that the adjustments simply accumulate which may not be strictly true

210 It is to be recognised that in Sydney over 90 of bulk runs are performed on day

and evening shifts (0600-2200)

Page 4 of 48

211 Allowing for a reasonable margin of error given the estimates invoiced this analysis supports our view that Sydney is provided with proportionally equivalent day and evening slots compared with Melbourne

3 The Tribunal invites stakeholders to comment on any aspects of the road transport

operatorsrsquo current work practices and any trends in storage charges and volumes (both for on-port storage and at transport operatorsrsquo own depot storage) that may be causing inefficiencies or extra costs or arise in the downstream supply chain

31 Unlike in other states in Australia in New South Wales in our view there is no

effective peak body broadly representative of the transport carrier industry with which we as a stevedore may engage in a meaningful dialogue on port related issues However we continue to meet with individual carriers to discuss such issues

32 The delivery of removal of a container at the terminal is a decision that is

determined by or shared between the consignee and their agents (eg customs broker carrier) It is the consignee and their contracted agents which dictate when the container is required to be delivered to the warehouse Post release of the container by the ACS AQIS and shipping line the consignee and their agents decide on the most cost efficient option for storage of the imported container (or goods) ie on port storage or other storage option (either packed or unpacked)

33 On-port storage of containers may suit the consignee and their agents However

it is not conducive to efficient container terminal operations

34 As demonstrated in Figure 1 the on-port (ie container terminal) storage revenue has decreased as a percentage of revenue over the past two years This trend follows a decrease in average import dwell time over the same period In line with this the average import container dwell time (this is the average time an import container remains in the terminal) has decreased despite the overall terminal throughput having increased

Figure 1 DP World Sydney ndash Import Container Dwell Time and Storage Revenue

35 Transport carriers are able to book an available timeslot in a time zone and alter which container (number) is to be collected in that timeslot up until the time zone

Page 5 of 48

commences Once a time zone commences it is no longer possible to book a time slot in that zone Transport carriers thus have the flexibility to select a different container slot at short notice This short notice advice of which container (number) is to be collected makes it impossible for the terminal to move the container to the best position to facilitate the best possible truck turn time This is discussed further under Question 11

36 Transport carriers do not always check that a container is released from all

impediments (ACS Holds AQIS Holds storage fees paid) before arriving at the terminal This can cause delays for the truck at the terminal and congestion within the terminal and congestion within the terminal truck marshalling area reducing the opportunity for other carriers to access the terminal which have ensured there are no impediments on the processing of their containers for collection This is seen as inefficient practice that contributes to further delays and costs in the logistics chain

37 Speculative booking of timeslots appears to occur within the VBS whereby

carriers book what they can during the initial booking period rather than what they need This is evidenced by the number of time slots released into the exchange pool The exchange pool is available for carriers to offer the time slots they have booked to another carrier

38 Table 2 below shows the number of time slots that were exchanged over a period

of 8 days Saturdays and Public holidays were not included and non-peak zones were not included The table indicates that during this period an average of 24 of time slots advertised for exchange which shows that carriers initially booked these time slots however in time before the time zone commenced they decided that they did not need the time slot This high number of time slots offered for exchange is due to speculative bookings or other circumstances including change of plans more time slots being made available by the terminal or timeslots becoming available within the exchange pool and thus better suited time slots become available to the carrier DP World is unable to determine how much each factor contributes to the high percentage of slots that are offered for exchange

Table 2 DP World Sydney Percentage of timeslots exchanged during the period of time zones 05-07

Total timeslots

Exchanged 05-17 zones

Total Time Slots available 05-17

zones

Percentage of time slots exchanged

23-Jan-06 48 585 8 24-Jan-06 167 675 25 25-Jan-06 253 770 33 27-Jan-06 206 585 35 30-Jan-06 217 605 36 31-Jan-06 195 720 27 1-Feb-06 52 485 11 2-Feb-06 56 590 9 Average 149 627 24

39 As illustrated in Figure 2 below the transport operators in Sydney have the lowest

containers per truck visit to Port Botany compared to all other ports in Australia

Page 6 of 48

Figure 2 DP World Terminals ndash Containers per Truck Ratio

]

Source DP World

310 Transport carrier operations are still heavily focused on the traditional daytime

period We understand that this reflects the carriers needs to maximise profit margin in a competitive market place However DP World Sydney comes under criticism for not releasing further slots during the traditional peak periods despite resources and slots being available in ldquonon-peakrdquo periods The net result appears to be that there has been very limited success in embracing 247 operations which ultimately we believe is generally accepted as being in the long term interests of the industry as a whole We also believe that it would be in the interests of the industry as a whole if a consolidation in the transport carrier sector occurred resulting in fewer higher volume carriers with the scale to operate with a wider spread of hours

311 Storage charges apply in the vast majority of marine container terminals around

the world Storage free days vary from port to port around the world however at least three free storage days is not unusual

4 The Tribunal invites stakeholders to comment on any aspects of access to rail

infrastructure or of the current work practices of rail transport operators the supply chain

41 There are a number of public reports and studies that outline the issues

associated with rail infrastructure intermodal terminals and rail access to the port In general the conclusions being drawn are that significant investment is required in this area This is most recently supported by the New South Wales Governmentrsquos response to the FIAB report

42 DP World Sydney is seeking to extend its rail sidings to 600metres in the near

future At the same time there are a number of issues with the rail infrastructure connecting these sidings to port rail we are seeking to resolve with RIC

43 The utilisation of the rail windows at DP World Sydney was 55 during 2006

This utilisation is measured on the basis of the total number of containers actually loaded and unloaded against what could be unloaded if all window were fully utilised at the current agreed performance levels on the part of the rail operators and DP World Sydney Few rail windows are south for Saturday and none for Sunday operations When demand justifies it DP World through the provision of additional resources has the capacity to more than double the volumes handled in

Page 7 of 48

any particular window The extensions of sidings will provide further opportunity to increase rail handlings capacity at the terminals

44 Figure 3 shows the trends in terminal rail window utilisation during 2005 and 2006

Although there is a small improvement in window utilisation during this period the utilisation is low and there is considerable capacity available to increase the number of containers that can be transported by rail

Figure 3 DP World Sydney ndash Weekly Terminal Rail Window Utilisation

DP World Sydney Weekly Rail Window Utilisation 2005-07

20

30

40

50

60

70

80

Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07

45 Contributing factors to the relatively low level of utilisation include

bull the late arrival of the rail operator at the terminal which reduces window

duration and the terminalrsquos inability to increase productivity to meet window capacity requirements without incurring extra costs We understand that the late arrivals by rail operators can be due to equipment breakdowns the passenger network restrictions and the inadequate rail infrastructure for freight

bull overestimation of the volumes rail window duration required by the rail operator

bull fluctuations in freight movements on a daily basis creating peaks and troughs

bull the drought and the decrease in rural export containers

bull train shunting operations

bull the AQIS inspection required for each import container before it leaves the terminal

bull the train and wagon inspection required before the train leaves the terminal

bull the use of labour intensive manual twistlocks instead of auto twistlocks on rail wagons

bull the necessity to break split trains in Botany Rail Yard

bull infrastructure limitations within the Botany Rail Yard and

bull rail operators using the Botany Rail Yard as a storage facility for their wagons and causing congestion

46 As indicated above DP World Sydney has plans to improve the infrastructure

within the terminal in order to meet predicted rail volumes in the future However

Page 8 of 48

unless improvements are made against the issues listed above then window utilisation and efficiency may not improve to levels required to meet the NSW Governmentrsquos 40 rail mode target

5 The Tribunal invites stakeholders to comment on any aspects of the operations of

the regulatory authorities that may be causing inefficiencies or extra costs to arise in the downstream supply chain 51 The Australian Customs Service (Customs) has introduced Container Examination

Facility (CEF) operations in most major ports around Australia Each of these facilities incorporates the use of modern technology such as container x-ray equipment and other examination tools to support Customs in their aim of identifying illegal activities through containerised trade Since the inception of the CEF in Sydney in February 2003 Customs has reported many successful interceptions of prohibited imports

52 The CEF in Sydney operates two shifts each week day (day and evening shifts)

and one shift on Saturdays (day shift) This operating arrangement has created more competition for terminal resources during the peak hours 0500-1700hrs Monday ndash Friday This has resulted in the terminal deploying more equipment and labour resources at the terminal to meet the obligations of contracts with Customs but at the same time has increased competition for resources depending where the container is place in the terminal and how the yard equipment is coping with the demands of industry

53 DP World Sydney has contracted performance KPIs to deliver along with following

factors to overcome that contributed to resource competition

bull Random arrival of Customs transport provider trucks (B Doubles) and random selection of containers due to weight constraints of the trucks

bull Multiple containers per truck relating to up to six different locations a truck has to visit within an RTG terminal and the potential to utilise six different resources

bull The requirement for DP World Sydney to block stack Customs targeted containers from a vessel in order to minimise the variability of locations a Customs truck has to visit This block stacking requirement has a negative impact on vessel performance and creates more competition for internal resources

bull DP World Sydney does not control the transport to and from the CEF Customs have appointed a carrier in each port and who under the contract is responsible for the effective co-ordination between the terminals of the movement of X-Ray containers DP World Sydney does liaise with the Carrier but the carrier has the final say as to how many trucks are allocated to each terminal and

bull DP World is of the view that the current operating hours of the CEF are contributing to resource competition within the terminal during the peak periods If the CEF opened midnight shifts rather than day shift this would reduce resource competition increase terminal resource utilisation in the non-peak hours and an improvement in efficiency would be gained by industry

Declaration of Cargo

54 The Australian Customs Service (ACS) has put in place a requirement for

importers to declare cargo at least 48 hours prior to a vesselrsquos first port of call in Australia This is an initiative that has the ability to increase the efficiency of import container movements and decrease the time containers remain in a stevedore terminal The on-time reporting performance in NSW during March 07 was 87

Page 9 of 48

The ACS should continue to put in place incentives to increase this clearance rate of containers in order to gain 100 compliance

55 The Australian Quarantine Inspection Service (AQIS) could assist by utilising an

electronic means of communicating the application and release of AQIS holds required on containers Currently AQIS operate a totally manual operation

6 The Tribunal specifically invites comments on the current role of the SPC and on

the role SPC might take in improving the efficiency of the supply chain

61 Sydney Ports Corporation has stated objectives which include

bull Enhancing and developing strategic assets to ensure efficient optimum utilisation

bull Continuing to build effective relationships with stakeholders that improve the competitive positioning of the ports and

bull Taking the lead in facilitating port related freight solutions

62 DP World in Sydney has participated in efforts by SPC to facilitate efforts to achieve mutual outcomes between both the stevedores and section of the road transport industry

63 In addition SPC has

bull Measured TTT at Port Botany and published these statistics since (2001)

bull Encouraged more use of rail with the support and investment by DP World

bull Requested more capital investment to improve road transport interface which has been supported by DP World through the acquisition of additional container handling equipment

bull Sought the elimination of truck queuing outside the container terminal with the support and implementation of a Vehicle Booking System by DP World

bull Sought the development of inland intermodal terminals with the support of DP World and

bull Sought the inclusion of suitable landside Key Performance Indicators within future lease terms

64 We consider that SPC has taken the leadership role appropriate for its position in

terms of seeking to facilitate improvements in overall port efficiency without interfering in the various commercial arrangements between stakeholders

7 The Tribunal invites stakeholders to comment on any aspects of the current work

practices of freight forwarders customs brokers and any remaining industry participants that may be causing inefficiencies or extra costs to arise in the downstream supply chain

Customs Brokers

71 It is the practise of some customs brokers to wait until the storage free period at

the terminal has almost expired before paying the duty to the Australian Customs This has the impact of retarding the stevedorersquos efforts to improve the velocity of container movement through the terminal Customs brokers should therefore be encouraged to pay duty as soon as possible

72 Customs brokers can also contribute to congestion at the terminal by not paying the Customs duty up to at least 2 hours prior to the carrierrsquos time slot This results in the truck waiting at the terminal for the information to flow through to the terminal operating system via EDI

Page 10 of 48

73 One way of achieving flow in (71) and (72) above is to disconnect the relationship between the payment of duty and the physical control of cargo movement To maximise the effect here the ACS could request the Customs brokers to also lodge the lsquoImport Declarationrsquo 24 hrs prior to arrival and collect duties on account after the event

74 An initiative at DP World Brisbanersquos terminal has been successful in obtaining early container information as part of their VBS (linking timeslot to the container number)

75 The system has been in place for almost 12 months now and the availability of information at DP World Brisbane has contributed to improved service levels at this terminal

Empty Container Depot Opening Times

76 A majority of Empty Container Depots reside within 10 km radius to the port

precinct Depot opening ties do not match container terminal operating hours The result is an inability for carriers to return and pick up an empty container 24hrs a day to depots This reduces the potential of utilising the existing vehicles on the road creating potential traffic congestion and therefore free up their trucks to collect import containers from the terminal Through tariff structures the shipping lines have the ability to influence the depots to increase their opening hours thus resulting in greater vehicle utilisation and subsequent reduction in transport charges The extended spread of hours will also have the effect of flattening the peak traffic periods and reducing road congestion and travelling times

8 The Tribunal invites stakeholders to comment on any aspects of the VBS

particularly in relation to the number of timeslots made available and on what basis and the process by which those slots are made available across the day(s) and to whom

81 The VBS is simply a means by which to communicate with the transport carrier

community What determine the number of slots made available are resource levels provided at the container terminal DP World Sydney provides more than sufficient resource levels to enable all containers to be delivered as required to road within the three free day period even accepting the industryrsquos current limited use of the available 247 terminal operation It is acknowledged that resource levels provided to road operations may be varied day to day as resources may need to be directed to ship operations but this follows from running the terminal as an integrated operation which is ultimately most efficient Providing further day time slots without addressing underlying market inefficiencies only risks service levels to shipping lines that are demanding higher performance levels and perpetuating the industryrsquos unwillingness to support 247 operations

82 DP World also notes that all carriers may and do from time to time contact the

terminal and request additional timeslots if there are none available on the VBS The terminal will endeavour to accommodate such requests where there is operational capacity to do so If there is capacity the Terminal will book the timeslot in the name of the carrier that has made the request

83 Further details of the VBS are provided in responses to subsequent questions

However we believe that the VBS at DP World Port Botany Terminal has delivered benefits including

bull No random queuing at the terminal which results in significant unplanned

delays to transport users due to the random arrival of trucks at any point in time to the terminal where the terminal is not resourced to handle the high peaking demand for landside resources whilst at the same time meeting contractual obligations with shipping lines

Page 11 of 48

bull The terminal is able to carry out bulk moves while maintaining service levels to other general carriers

bull Provides choice to carriers in terms of access as well as providing transparency to industry

bull States subscriptions fees in a public document which are transparent to industry

bull Increase slot allocation to road users based on irregular shipping schedules and

bull While not referred to in the Carrier Access Arrangements (see attachment 1) all B class carriers are allowed to engage in a process called ldquoexport taggingrdquo Export tagging involves a carrier booking an import timeslot in ePorts which will give them access to the terminal A carrier is then able to bring and export container on the truck that is arriving to collect the import container without booking a slot for that export container (during most timeslots in the day) The purpose of this flexibility to carriers is to increase two-way running which reduces costs to carriers and decreases the number of trucks in the port community

9 The Tribunal asks stakeholders to comment on the variability of average

turnaround times across the major ports and the variability of turnaround times faced by individual transport operators at Port Botany itself The Tribunal also invites comment on how important predictability of turnaround times is to transport operators relative to average turnaround times at Port Botany The Tribunal further invites comment on why turnaround times are higher for Port Botany compared to Melbourne Adelaide and Fremantle

91 The precise nature of operations differs between the ports and between the

terminals operated at those ports These differences arise because of the range of shipping lines that arrive at the various terminals and the volumes of containers and type of cargo going through each terminal There are also differences in the container yard handling equipment yard configurations at each terminal and hours of operation resulting in differences in the way each terminal operates These differences result in variations amongst each terminalrsquos service performance levels

92 During 2002 DP World Sydney management met with a representative group of

carriers to discuss the VBS and access arrangements at the terminal A common view of the carriers was that they would like consistency to truck turn times and that 60mins (carrier measurement) is acceptable The outcome from these meetings was that DP World introduced three internal KPIs

bull Truck processing to truck complete measurement ndash 38 mins average

bull TTTs of 60 mins or less to be 90 to total trucks

bull TTTs of 120 mins or more to be 1 or less

93 Figure 4 below shows the percentage of truck turn times that are 60 minutes or less at DP World Sydney There is a noted improvement in during mid 2005 from an average prior to this time of 73 to an average during 2006 of 85 This indicates that the predictability of the truck turn times has improved during the life of the VBS

Page 12 of 48

Figure 4 DP World Sydney ndash Percentage of Truck Turn Time under 60 mins

DP World Sydney - Percentage of Truck Turn Time under 60 mins

50

60

70

80

90

100

Jan-04

Mar-04

May-04

Jul-04

Sep-04

Nov-04

Jan-05

Mar-05

May-05

Jul-05

Sep-05

Nov-05

Jan-06

Mar-06

May-06

Jul-06

Sep-06

Nov-06

Jan-07

Mar-07

94 Figure 5 below shows the terminal truck turn time and the stevedoring volume since July 2003 at DP World Sydney Note that the volumes are hidden on the left Y axis for commercial reasons As a result of terminal improvements and putting in place the KPIs described above the average TTT performance has improved (right Y axis) whilst at the same time the terminal volume has increased (left Y axis)

Figure 5 DP World Sydney ndash Truck Turn Time and Container Volume

95 DP World operates in all five major ports in Australia and has three different modes of operation namely Straddles in Melbourne and Adelaide RTGrsquos in Sydney and Fremantle and Forklift and Reach-stacker in Brisbane The Variability in TTT between ports is attributed to a number of factors including but not limited to the site processes and physical constraints of each facility

96 The measurement of TTT differs mainly due to

a) the layouts of in-gates and its approaches and

Page 13 of 48

b) the measurement of the job steps which apply to a truck from arrival to departure due to (a)

97 All the above terminals have different truck parking arrangements within and

outside the terminal which impacts TTT Across the board TTT is measured from job processing to job complete (98c to 98e below) however the physical layout and mode can influence when processing commences

98 The process of truck management in simple terms is

a) Pre-arrival of trucks

b) Validation of time slots

c) Processing of job (Manual but if automated it takes effect in b above)

d) Enter the operational yard

e) Job transact and complete (by straddle RTG or Forklift Reach-stacker) and

f) AQIS check for full trucks and depart (gate-out)

99 Depending on the physical layout and provision of sufficient space to hold trucks within the terminal boundary or otherwise the distribution of trucks varies through steps 98a to 98c above

910 At DP World Sydney the equivalent hourly truck volume can be held in the

terminal entry marshalling area therefore multiple trucks can enter the terminal park and be processed by terminal staff Post processing all time spent in the marshalling area forms part of the TTT whilst the truck has not necessarily entered the operational yard (see Annexure 2)

911 At DP World Melbourne on the other hand due to restricted space within the

terminal trucks are normally held outside and a small number is constantly drip fed into the terminal (controlled rate of entry) These trucks then approach the processing points (6 lanes x processing booths) further which they directly enter the operational yard and the TTT is measured from this point

912 DP World Fremantle does not have a truck holding area within the terminal which

means the truck enter the terminal and queue at the Entry to Operational Yard Immediately after being processed the truck enters the terminal yard Therefore unlike Sydney time from Entry to Operational Yard is time historically not published Therefore TTT between DP World Sydney and DPW Fremantle are not comparable

913 DP World Fremantle is also an RTG operation similar to DP World Sydney

However the physical layout and the resulting entry arrangements differ Due to restricted space within the terminal the trucks are normally held outside and constantly drip fed into the terminal (controlled rate of entry) The trucks operate through 3 lanes within the terminal and truck turn time is measured at this processing point when the trucks actually enter the operational yard

914 DP World Adelaide is a straddle operation similar to DP World Melbourne

However its physical layout and resulting entry arrangement is different to that of DP World Melbourne and has some similarities with what takes place in Sydney The hourly truck volume can be held within the terminal and the TTT is measured from entry into the terminal main gate to departure from the terminal main gate The measure differs from the other facilities on both entry are exit gates

915 The benefits of this TTT data is not so much the raw data itself but more so the

long term trend in the data If TTT is constant or even improved during periods of volume growth then this reflects a firm commitment to the landside process Continuous improvement reflects a commitment to landside efficiencies

Page 14 of 48

916 TTT is influenced by the mode of operation the Gate In infrastructure and volume

of containers required to be handled

917 The RTG mode of operation requires the truck to travel to the yard stack where the container is located or assigned as opposed to the straddle operation where the straddle comes to the truck that is parked in a bay external to the stacking area The mode of operation at DP World Sydney generally results in a truck with multiple containers being serviced by multiple RTGs and also having to travel to multiple yard locations At each of these yard locations there will be a different level of demand on the particular RTG covering the area This will result in variations in the time it will take to service the truck in that particular area and therefore will influence the truck turnaround time

918 In comparison a terminal running a straddle operation could employ a different

straddle to handle each of the containers processed for the truck

919 The mode of operations employed by container terminals have various strength and weaknesses and need to be considered based on many factors in a Port (ie not just the landside interface) but both modes can contribute to variability

10 The Tribunal invites comment on how truck turnaround times are currently

measured by supply chain participants and how they should be measured The Tribunal further invites comment on the extent to which the stevedores provide access to their facilities at the specific times booked on the VBS

Truck Turn Time (TTT)

101 DP World Sydney currently measures truck turn times from the time the containers on a truck are processed to the time the last container is completely loaded onto the truck (import containers) or discharged from a truck and landed in the terminal (export containers)

102 TTT is directly influenced by the number of containers to be handled by an RTG

terminal on a truck run ie a higher number of containers results in a longer truck turn time on average This due to the truck having to potentially visit multiple locations within the RTG terminal

103 The reason the container Terminal does not measure the time following

completion of loadingdischarging container from truck is measure regulatory bodies (ie AGIS) have commenced inspection of containers on terminal exit gate which is beyond the control of the container terminal

104 The process time is used to measure the start of the truck turn time as this is the

closest time to the truck being in the terminalrsquos control

105 Trucks that take advantage of the autogate processing (currently 25 of trucks) actually start the truck turn time as they come through the terminal gate as this is where the transponder reader is located DP World Sydney support the increase of the autogate processing and the result that the truck turn time starts at the gate For trucks that do not use the autogate processing opportunity the terminal does not start the truck turn time at the gate as the truck driver may not move efficiently to have the container processed

106 Carriers often use TTT measured from the time the truck services at the standby

queue or the arrival of the truck at the zone queue which are waiting for the next time zone to open

107 In relation to standby queue the CAA clearly stipulates that the use of this system

does not guarantee immediate call-up to the terminal in priority to trucks that have booked a time slot

Page 15 of 48

108 In relation to TTT measured from arrival at the time zone queue the fact that the truck has arrived prior to the commencement of the zone opening is purely a decision of the transport carrier and is beyond the control of the Container Terminal and is not supported by DP World

Container Turn Times

109 DP World Sydney currently measures container turn time from the time the

container is processed to the time the container is loaded onto the truck (import container) or discharged from a truck and landed in the terminal (export container) Over the last 5 years the transport regulators have allowed truck operators to operate larger trucks thereby ultimately improving the efficiency of road transport As transport operators increase the use of larger trucks (capable of carrying multiple containers) the handling of these trucks produces a multiple handling of containers on the same truck at the terminals For example in the past one would handle one container per truck and in that case the CTT and TTT were almost identical With multiple containers on trucks the difference between the CTT and TTT is increasing To be able to benchmark this across a port and other ports becomes hard with TTT due to the ever changing ratio of containers per truck (depends on percentage of large truck operators) firstly within the same port and secondly between different ports Therefore CTT enables us to benchmark the measurement on common grounds across all our operations around the country

Access Times at DP World

1010 DP World Sydney divide the day into hourly time zones within the VBS The time

zones start on the house (eg 0700hrs) and complete at the end of the hour (eg 0759hrs) There is a time zone board located at Simblist Road which indicates which time zone is open Trucks queue at this point waiting for the board to change each hour During daylight hours on average there are 15 trucks waiting for the time zone to open The trucks then make their way to the terminal in gate located on Friendship Road once the zone is open

11 The Tribunal invites comment on the choice between a system where container

numbers are nominated in advance thereby offering the possibility of faster turnaround times or not providing container numbers which would provide road carriers with greater flexibility Or would industry participants prefer a system that allows the choice between both

Import Timeslots

111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the import container number in a timeslot booking up to the start of the time zone The disadvantage for the terminal and the carrier is that this flexible system arrangement does not allow the terminal the chance to reposition the container to a position that will minimise the number of containers that have to be moved (known as ldquoconsolidation movesrdquo) in order to access the container that is to be delivered to the truck once the truck has been processed and is in position for loading The more consolidation moves the terminal has to do to load an import container to a truck the longer the truck turn time will be

112 Undertaking consolidation moves prior to truck arrival would provide the opportunity

to decrease truck turn time

113 To achieve a further reduction in truck turn times and a reduction in cost of delivering a container the terminal would need to control the order in which the import containers are delivered This occurs in other ports in the world

Controlling the order of import deliveries

114 The current arrangement where the shipper controls the order of import containers

to be delivered from the terminals results in extra costs incurred by stevedores and also decreased efficiencies The longer a container remains in the terminal (an

Page 16 of 48

increase in the dwell time) results in increased consolidation (rehandles) undertaken by terminal equipment and an increase in the time taken to load a container to a truck or train

Matching of resources to meet demand

115 The terminal allocates the resources required based on the demand or the

number of timeslots released This occurs 24 hrs in advance

116 Carriers who book timeslots and do not meet their commitment (No Show) results in the terminal resources to be under utilised at certain times and creates an opportunity loss There is also an opportunity lost by another carrier to utilise the time slot for each No Show

117 Carrier who book timeslots and arrive late for their commitment (Wrong Zones)

results in terminal resources being under utilised at times and over utilised at other times The troughs in terminal resource utilisation result in an opportunity loss and the peaks result in a decrease in efficiency (increased truck turn time) or increased cost (increased resources applied) The increase in truck turn time has an impact on carriers who arrive on time for their time slot

118 The current VBS allows for carriers to arrive at the terminal to deliver or pick up a

container without committing to a time and container number thus not enabling the terminal to completely plan the required resources to meet the demand This is termed unplanned work The Standby Queue export tagging by B Carrier no advanced deadline for entering an import container number prior to the time zone and no requirement for an export container number being entered into a time slot booking results in an increase in unplanned work Unplanned work results in peaks in the work required by the planned resources and a decrease in efficiency

119 Rail also has similar problems

1110 By changing this arrangement and giving control to the stevedores to determine

the order of container delivery from the terminal will reduce the costs incurred by the terminal and decrease the turnaround time for trucks

Export Timeslots

1111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the export container number in a timeslot booking up to the start of the time zone It also allows an export time slot to be processed without a container number entered in the time slot booking The container number in then entered by the RampD Clerk at the terminal This often results in human error by the truck driver or the RampD Clerk resulting in delays to trucks This practice also eliminates the opportunity for the carrier to use the automatic processing described below in Question 12 To maximise the use of automation and eliminate human error the export container number needs to be a mandatory field to be updated in the time slot booking by a nominated time prior to the start of the time zone eg 2 hours prior to the start of the time zone

12 The Tribunal invites comments on the increased use of ICT and automation and

any other ways to reduce turnaround times and otherwise improve supply chain efficiency

121 DP World support and are driving the increased use of automation for the

processing of trucks DP World have developed and currently make available an automated truck processing system for carriers who use ePORTS to book and manage timeslots The percentage use of this system at DP World Sydney by carriers averages about 25 of total truck movements excluding stack run trucks

122 This system requires the purchase of a transponder unit from the terminal at the

cost that the terminal purchases the unit plus GST Currently the units are sold to

Page 17 of 48

the carrier for $12050 Also required is access to an eGATE screen in ePORTS The process for carriers wanting to move a number of containers on a transponder run involves

a) Booking through EPORTS the required number of time slots in a time zone

For example if a transport carrier wanted to deliver two export containers and collect one import container on a single truck run it needed to book three slots and

b) Setting up the transponder by inputting the slots truck number container numbers and whether they are import or export containers in the transponder booking screen in ePORTS

123 The benefits for carriers of using this automated processing include

a) The processing occurs earlier (ie at the gate as compared to in the RampD Office) therefore this decreases the chance of Wrong Zones being incurred

b) No need for the truck driver to present documentation at the RampD Office therefore reducing the truck turn time by avoiding any potential queues

c) No interaction between the truck driver and the RampD Clerk therefore decreasing human error during processing and causing further delays

d) As the processing occurs at the gate the trucks can skip ahead of other trucks where their drivers have to manually process in the RampD Office effectively jumping the queue

e) Allows reprogramming of trucks up to 15mins before the end of the time zone (eg 0645 for an 06 slot) without the truck driver needing the Delivery Order in his possession

f) Provides the carrier with the ability to educate their customers to provide the Delivery Orders in a timely manner in order to lodge them at the terminal

g) Electronic copies of the Delivery Orders (excluding scanned copies of originals) can be forwarded to the terminal via email therefore eliminating the need to physically lodge them

h) Enables the carrier to take all advantage of Electronic Import Delivery Orders (eIDOs) that are currently being used by Evergreen Marine at DP World Sydney Other shipping lines will move to the use of eIDOs in the future

13 The Tribunal invites stakeholders to comment on VBS capital and operating costs

and to assist it to distinguish between stand-alone VBS costs and those shared with other stevedoring activities

131 It is important to distinguish between the capital and operating costs of operating

the VBS and the costs of operating the landside interface ie delivering containers to and from trucks

132 The costs of a VBS comprise the following components

bull IT development and maintenance costs and

bull Management and administration time to manage and administer the system

These costs are low relative to the costs of actually providing the services within the terminal ndash loading and unloading the trucks

133 Having a system which requires the terminal to provide a guaranteed number of

slots per hours is to the disadvantage of the terminal Terminal operations are by their nature unpredictable due to the irregular arrival of ships Having to guarantee a number of slots which carry with it a high expectation of performance in terms of TTT tends to force the terminal to set the number of slots at a level which includes a risk mitigation factor against all things not going to plan The net result of this is

Page 18 of 48

that the terminal tends to effectively oversupply equipment and labour increasing its costs The impact of this is far more significant than the isolated costs of running the actual vehicle booking systems

134 Direct VBS costs have nothing to do with ship or rail operations

135 The container yard is run as a single operation servicing ship road and rail By

this means while there are practical limitations we seek to pool resources to maximise the overall efficiency of terminal operations particularly to absorb the peaks and troughs of demand across the operations as a whole This effective sharing of costs improves overall efficiency and results in lower costs to the benefits of users as a whole We anticipate that systems and technology improvements will see greater use of such pooling and greater overall efficiency as a result

14 The Tribunal invites stakeholders to comment on VBS access and penalty charges

and the level of transparency of access through the stevedoresrsquo VBSs

141 The VBS facilitates the provision of orderly access to DP World Sydney Terminal for over 200 individual carriers

142 DP World considers the achievement of orderly access to its terminals as a

primary objective of the VBS To achieve orderly access DP World considers it important to require carriers to pay a nominal subscription charge for the level and rights of access they require and to issue ldquono showrdquo and ldquolaterdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay lsquoon timersquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs

143 The VBS is essentially an ldquoappointment bookrdquo to assist transport carriers to

organise themselves more efficiently leading to a reduction in waiting times at the container terminal The VBS divides all working days into time periods containing a pre-determined number of timeslots The timeslots represent the number of import and export containers that can be handled in that period The number of timeslots in a day is determined by expected carrier demand and the availability of labour and equipment Carriers are then able to book timeslots for collection or delivery of containers

144 The alternative is random access to container terminals by carriers and significant

truck queues with associated demurrage costs which are ultimately paid for by the end user

145 At DP World Sydney the VBS offers transport carriers the ability to access an

internet based computer system or telephone bureau for the purpose of booking time slots for those carriers who do no wish to use the computer system The VBS in its present form offers access on a transparent and equitable basis to all carriers encourages the efficient movement of containers from the ship through the terminal and onto customers and vice-versa encourages innovative practices which are beneficial to terminal efficiency road congestion and the overall cost of the supply chain The ldquono showrdquo and ldquolaterdquo fees encourage these operational practices and efficiencies

146 DP World has adopted a class structure with an annual subscription for access

because this system allows carriers to determine what access is required for their business while providing the industry significant level of transparency in terms of access costs

147 All carriers have an equal opportunity to subscribe to any of the three classes of

access to the VBS (bearing in mind that smaller carriers are allowed to consolidate

Page 19 of 48

their subscriptions in order to share the cost of a B Class subscription) and equal access to timeslots amongst carriers of the same class

148 Annual fees are payable in advance Table 3 sets out the various carrier classes

currently in operation at each terminal and the applicable subscription fees for each class There are no annual limits on the number of slots carriers can book

Table 3 DP World Sydney ndash Current carrier classes and VBS deposit and registration fees for the year commencing 1 July 2005

Terminal Carrier Classes Price Number of active

carriers at Feb 06 Port Botany New South Wales

B Carrier ndash online internet access with high service levels

$2922150 (Non-refundable deposit) No fixed upper limit on annual time slots1

28

A Carrier ndash online internet access with standard service levels

$133400 (Annual registration fee) No fixed upper limit on annual time slots2

162

AB Carrier ndash access via the PampO Phone Booking Bureau with standard service levels

$66760 (Annual registration fee) No fixed upper limit on annual time slots3 39

149 Any carrier selecting the ldquoBrdquo classification is encouraged to also consider the ldquoArdquo

classification unless they are confident of utilising a high level of timeslots that would render the higher subscription fee as attractive per timeslot

1410 In addition to the VBS annual subscription fees the carrier access arrangements

provide for the levying of a no-show fee on carriers who fail to arrive for slots they have booked in the amount of $110 per time slot The terminal also charges carriers late fees of $55 per slot if they fail to arrive for a slot booking within the nominated time zone No fees are charged where a carrier is unable to meet the time slot due to delays caused and acknowledged by DP World Australia or where delays are caused by circumstances genuinely outside of the carrierrsquos control DP World Australia also has the discretion to and does waive ldquono showrdquo and ldquowrong zonerdquo fees in the interest of maintaining a good working relationship with carriers Failure by carriers to pay these ldquono showrdquo and ldquowrong zonerdquo fees may lead to them being prevented from making further bookings ldquoNo showrdquo and ldquowrong zonerdquo fees are the means by which DP World ensures that access to itrsquos terminals is provided in the most efficient manner to all 1carriers as late carriers cause delays for those carriers that are on time

1 No fixed upper limit on annual timeslots ndash Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 2 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 3 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release

Page 20 of 48

1411 The ldquono showrdquo and ldquowrong zonerdquo fee structure was introduced following

consultation with carriers It was originally $20 per late arrival (in Victoria where VBS first commenced) but this is proved to be ineffective in disciplining carrier conduct In response to requests from many carriers DP World increased the ldquono showrdquo fee to $110 The fees also discourage carriers from the practice of overbooking slots which they have no intention of using and preventing other carriers from using those slots

1412 The actual cost of a truck turning up late (Wrong Zone) or not turning up at all (No

Show) is the cost of planned resources (labour equipment etc) based on the VBS demand (number of containers expected to handle during a time period) not being utilised during the time period they are employed

1413 Adjacent to each time zone are grace periods one prior to the time zone and one

following the time zone These grace periods and the trucks arrival time for processing determine the status of the time slot ie arrived on time or arrived late (Wrong Zone) Currently the grace period following the time zone is set at 20 minutes which means that if a truck arrives later than one hour and 20 minutes after the start of the time zone then the time slot will be initially recorded as a Wrong Zone Following the completion of each VBS day Wrong Zones are reviewed and any penalty waived if any of the following determined

a) The terminal is aware that it has contributed to a truck arriving late for the time

slot ie the terminal has previously delayed the truck or carrier on an earlier time slot or

b) The carrier advises that they arrived late due to an unforeseen circumstance eg a break down of the truck

We request that the information in 1414 be kept confidential

1414 Omitted for reasons of confidentiality

1415 Officers at DP World Sydney have regular conversations with carriers in respect of

the waiver of No Show fees as well In certain instances DP World may agree to waive fees prior to an invoice being issued

1416 For both Wrong Zone and No Show fees the terminal provides a grievance

process for carriers who have been issued invoices and do not agree that the fee has been issued fairly The carrier has the opportunity to provide the terminal with an explanation and should officers at DP World Sydney agree that there has been an error in the issuing of the fee or an unforeseen circumstance is explained the terminal will credit the invoice

15 The Tribunal invites stakeholders to indicate the costs of providing the services of

rail windows and rail paths to rail operators

151 Rail windows are based allowance on a rail terminal performance KPI of 30 container moves per hour and charged at $360 per hour A shunting time allowance of 15 mins per window is not charged Additional lifts canare provided by increasing the lifts per hour by applying more machinery at no additional cost

152 The cost of providing terminal rail operations is higher than road operations at DP

World Sydney The RTG mode of operation requires a container to be moved to or from the container stack For road containers the truck takes the export container to the stack and travels to the stack to pick up an import container For a rail container a terminal internal transfer vehicle (ITV) is required to be used by the terminal to move the container from the train to the stack (export containers) or

Page 21 of 48

the stack to the train (import containers) This is not required for container being received or delivered by road

153 For import rail containers there is a loss of efficiency for the vessel discharge

operation in order to stack rail containers separately for delivery to the train For each discharge point in the terminal extra resources are required There is extra administration costs in having to make alternate arrangements to separate these import rail containers

154 Despite the fact that the delivery of containers to rail is higher than road the

terminal seeks only a partial recovery of costs in order to encourage the use of rail in the port in line with the NSW Government objectives

155 There is a management cost of setting up and operating the rail windows This is

similar to the cost of operating a VBS

156 There is additional security infrastructure costs for a rail operation to ensure the terminal meets their legislative security requirements The more terminal entry points created the higher the cost to replicate these security infrastructure requirements

16 The Tribunal invites comment from stakeholders on the planned or mooted

development and expansion of the various intermodal terminals in Sydney and the extent to which this is expected to ease congestion in the landside supply chain at Port Botany

161 DP World supports the development and expansion of an intermodal terminal

network to facilitate an increase in the use of rail as the means of container transport This has the potential flow on benefit of minimising the growth in the number of trucks requiring to access the Port Botany area as port volumes continue to grow

162 Transport between the Botany terminals and the inland intermodal terminals

should be by rail or trucks operating a stack (bulk) run road out during off peak periods eg night shifts or weekends The use of Super B Double trucks would assist with the efficiency of these off peak stack run outs

17 The Tribunal invites comment on the likely effect of the expansion plans at Port

Botany on access to the port terminal during peak periods and efficiency along the supply chain

171 Improving the two-way running or back-loading of trucks has to be a priority in

order to maximise access opportunity at the terminals and efficiency along the supply chain It is likely that a third and separate stevedoring facility will only increase the difficulty of improving truck utilisation over and above the current levels by the increased logistics complexity of coordinating timely access to three terminals rather than two

172 A third stevedore will lead to the same port volume being spread over three

operations While it is resource levels that determine available slots DP World has found that during periodic decreases in volumes carriers favour daytime runs to the terminal as opposed to night time

173 The expansion plans will have a negative impact on rail transport timeliness and

access requirements to DP World Sydney if the requirements to breaksplit trains and shunt sections of trains into multiple terminals continues This will undermine the overall rail effectiveness and the NSW Government rail objectives by the unnecessary increase of splitting trains

Page 22 of 48

18 The Tribunal invites comment on the likely effects of expansion of the intermodal network in Sydney on access to the port and efficiency along the supply chain

181 This is a similar issue to point 16 above

19 The Tribunal invites comment on the likely impact of a peak pricing system along

the lines of the FIC on access to the port terminals and the efficiency of the Port Botany supply chain

191 We understand for the NSW Governmentrsquos announcement (31 May 2007) that the

FIC is no longer being proposed

192 Table 4 shows the average percentage of road containers that are handled by shift at DP World Sydney based on a 6 day x 24 hour receival and delivery operation for the past 4 years The figures indicate that there is surplus capacity on both evening and midnight shifts when compared to day shift Note that the percentage of road containers handled has increased on day shift relative to the combination of evening and midnight shifts This has been due to terminal efficiencies creating increased capacity during day shifts and the road carriers utilising this capacity

193 This is further emphasised in Figure 4 which shows the trend over time for day

shift containers handled has increased from 2005 evening shift has decreased and midnight shift has not changed significantly

Table 4 DP World Sydney ndash Percentage of Daily Road Container Volume handled by Shift

Year Midnight Shift (2230 ndash 0630hrs)

Day Shift (0630 ndash 1430hrs)

Evening Shift (1430 ndash 2230hrs)

2007 YTD 21 47 32

2006 23 45 33

2005 22 43 36

2004 19 44 38

194 Year to date April 2007 figures may reflect the seasonal trend for lower volumes in this period

Figure6 DP World Sydney ndash Road Volume trendlines by shift 2005-07

Page 23 of 48

20 The Tribunal invites comment on the likely impact of the expansion of the freight

rail network in Sydney on the number of containers moved by rail and on congestion at the port

201 The importance of increasing the proportion of containers moved by rail is

recognised and supported by DP World Sydney

202 To complement the expansion of the rail freight network upgrade the terminal is developing plans to increase the length and the number of sidings within the terminal Over the next three years the terminal is planning to spend an estimated $20million on internal rail infrastructure machinery and systems The terminal upgrade will ensure DP World Sydney has the infrastructure in place to meet a target of 40 throughput by rail

203 The expansion of the freight rail network needs to take into account The access

to each of the terminals especially the access to DP World Sydney where by the terminal has a distinct disadvantage in relation to its competitor

21 The Tribunal invites comment on the impact on the supply chain on ARTC

managing the metropolitan freight rail network

211 Management of freight rail infrastructure is ARTCrsquos core business and will bring additional management expertise and focus to the task of reforming operations on the Port Botany rail infrastructure

212 For ARTC to control the MFN (Metropolitan Freight Network) makes sense from

the point of view they can make informed decisions for both inbound and outbound Port services based on the wider NSW Rail Freight Network operation

213 The ARTC proposal to co-ordinate services by performing the full Network Control

Function (both signalling and Train Control) from the one centralised centre for the Southern Sydney Freight Line (SSFL)MFN and Port Botany emphasises their commitment to ensure safety communications and network management is their primary objective

214 ARTC are focussed on improving the efficiencies at the Port and bring to the

industry fresh innovative ideas to improve the overall capacity on the rail network ARTCrsquos willingness to assist and eagerness to invest in the rail infrastructure brings a breath of fresh air to the industry and specifically the stevedore operations ARTC can integrate the Botany line into its overall investment program paving the way for additional investment to improve the efficiency of operations on the Botany rail line and at the port-rail interface

22 The Tribunal invites comment on the following questions in relation to costs of the

VBS

22a What costs underpin the VBS access charges levied by the two stevedores How are the VBS access charges set

22b1 Refer to Question 14 The revenue from VBS charges account for a very

small proportion of DP Worldrsquos total container terminal revenue For the year ended 31 December 2006 they accounted for 13 of total revenue Of that 13 approximately 30 was for No Shows and Wrong Zones

22b What costs are incurred by the stevedores in moving a container from the

wharf to a truck or train

22b1 DP World Sydney is operated as an integrated business servicing ships road and rail within the context of a national business We do no separately account for the costs of each discrete activity Information on

Page 24 of 48

overall costs is provided to the ACCC and published on an industry basis in the ACCCrsquos Container Stevedoring Monitoring Report

22b3 Wharf to truck activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the VBS to provide orderly access for road carriers

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal space to allow truck drivers to park their vehicles in order to unlockset up their twist locks and processing of containers

bull Processing of the container

bull System to manage the truck movement within the terminal

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the truck by RTG or forklift

bull Provision of terminal area for truck drivers to safely leave their vehicle to lock the twist locks on their trucks check the container seal number and check the container for damage

bull Provision of terminal area for AQIS operation and infrastructure

22b3 Wharf to train activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the Rail Windows to provide orderly access for operators

Page 25 of 48

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal area for rail lines associated rail infrastructure and train inspection requirements within the terminal

bull Processing of the container

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the ITV by RTG or forklift

bull Internal Transfer Vehicle (ITV) movement of the container from the yard stack to the rail line

bull Lift of the container from the ITV onto the rail wagon

22c What influences the nature and amount of these costs (for example are they influenced by the type of equipment used by a stevedore Do they fluctuate with the number of containers handled by the stevedores) and how have costs changed over time

22c1 DP World operates very similar Vehicle Booking Systems in Brisbane

Sydney Melbourne and Fremantle where there are differences in volume through the terminals The only difference in subscription between the terminals are the ldquoB Classrdquo carrier subscriptions The annual subscription is influenced by the number of carriers seeking this class and the hourly allocation of slots to their class given the number of subscriptions In addition Melbourne operates a straddle facility and Brisbane operates a forklift reachstacker Therefore the cost of the Vehicle Booking System is not dependant on or mode but the annual subscription to ldquoB Classrdquo carrier depends on competition for that carrier class

22c2 An annual subscription fee per class which is a characteristic of DP

Worldrsquos VBS does not normally increase with volume At DP World Sydney subscription fees have not been increased since 2003

22c3 Overall landside costs have increased with increases in wages and

salaries (4 pa) property costs (substantially ahead of cpi) fuel and other general costs These increases have been offset to some extent by increases in productivity Industry costs history is also available publicly in the ACCC Container Stevedoring Monitoring Reports

22d Where do the port landside costs stop and the VBS costs start

22d1 Prior to the Entry to Operational Yard (see Attachment 2) the truck is

under the influence of the VBS and also under the influence of the external environment which includes but is not limited to port and metropolitan road conditions container clearance issues truck arrival peaks and troughs truck preparedness processing of the container to the handled by the terminal and maritime security requirements

It is DP World Sydneyrsquos view that the port landside costs stop and the VBS costs start at the choke point

22e Do the VBSsrsquo penalty charges reflect the cost to stevedores What should

they reflect

22e1 The primary rationale for the penalty regime is to seek to modify carrier behaviour

Page 26 of 48

22e2 However it is also the case that a ldquono showrdquo or ldquowrong zonerdquo gives rise to a lost opportunity cost to the terminal Resources made available but not utilised may be wasted

22e3 DP World considers the achievement of orderly access to its terminal as

a primary objective of the VBS To achieve orderly access PampO considers it important to issue ldquono showrdquo and ldquowrong zonerdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay ldquoon timerdquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs The alternative is random access to container terminals by carriers and significant truck queues with associated demurrage costs which are ultimately paid for by the end consumer

22f Should there be different charging arrangements for empty containers that

are returned to the port as opposed to full export containers

22f1 DP World Sydney terminal handles a full container in a similar way to an empty container using purpose built container stacking equipment controlled by a DP World employee A container occupies the same amount of space whether it is full or empty This leads to the same cost for the handling of a single empty container as a single full container Single empty containers returned to the port should be charged a similar rate to full containers

22f2 To reduce the cost of handling empty containers in the terminal destined

for the same port on the one vessel and that are of the same size the terminal in conjunction with the shipping line and the shipping linersquos nominated carrier work together to create a bulk run of empty containers The bulk run maximises the number of empty containers that are handled in a specific time period The terminal dedicates resources to thee bulk runs and also provides priority access to the transport carrier in order to create efficiency and an economy of scale In this way the cost of returning an empty container via a bulk run is reduced

23 The Tribunal invites comment on the following questions in relation to the different

pricing regimes of the two stevedores

23a Why do the stevedores have different pricing schemes for their VBSs

23a1 We do not know why Toll-PatrickAsciano has adopted the pricing scheme it has

23a2 In order to improve earlier versions of its VBS in the mid-1990s DP

World (PampO) introduced categories of carriers and began charging differential subscription fees for carriers registering to use the VBS depending on the level of access required by the carrier Prior to this change some carriers were engaging multiple computer terminals to the detriment of other carriers and it had become clear that a level of differentiation would be in all carrierrsquos interests The different classes of carrier access were introduced to ensure the most balanced overall outcome The level of differentiation is an annual choice of access levels available to all carriers regardless of size Under this approach different subscription fees are charged for each category but all carriers registering in a particular category pay the same fee Our view remains that an annual subscription as opposed to a pay as you go is far less of an administrative burden on both the carriers and the terminal

Page 27 of 48

23a3 There are no restrictions upon carriers wishing to obtain a certain carrier category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for the same carrier categories as larger carriers Smaller carriers may also apply for consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst charging the burden of the cost of that subscription

23a4 Subscription fees based on differences in class are designed to

encourage choice whilst at the same time communicating a level of transparency with terminal pricing and service

23b Do the different pricing schemes influence the efficiency with which

transporters obtain access to the terminals

23b1 We do not believe this to be the case

23c Would standardisation of charges be more appropriate

23c1 It is our understanding that it would be unlawful for a supplier itself to standardise charges by reason of Section 45 of the Trade Practices Act This may be something that Government wishes to consider

24 The Tribunal invites comment on the following non-price access issues to consider

in relation to the operation of the VBSs

24a What effect do access rules and conditions and non price constraints have on booking a timeslot How to the stevedores use their discretion in determining access and charges and what impact does this have

24a1 The introduction of different categories of access stages the carriersrsquo

access to the VBS for the purposes of booking timeslots ldquoB classrdquo carriers are given exclusive access to a pool of slots between 0730-0820 During this period they are subject to zone limitations which restrict carriers to a maximum number of slots for any given hour The zone limit ensures all carriers within that carrier class are given fair and equitable access to the initial release of slots After the initial booking period the zone limit is lifted and carriers are permitted to book any number of unused slots per hour from those remaining in their pool Similar arrangements exist for A class carriers culminating in the cascading of all remaining slots from all segregated pools into a general pool at 1030 for access by all registered carriers

24a2 There are not restrictions upon carriers wishing to obtain a certain carrier

category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for a consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst sharing the burden of the cost of that subscription

24b What are the stevedoresrsquo obligations with regard to access to port facilities

and what should they be

24b1 Without providing an analysis of our obligations under law in general terms we are required to provide access to carriers on an equitable basis recognising the competitive environment we operate in

Page 28 of 48

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

211 Allowing for a reasonable margin of error given the estimates invoiced this analysis supports our view that Sydney is provided with proportionally equivalent day and evening slots compared with Melbourne

3 The Tribunal invites stakeholders to comment on any aspects of the road transport

operatorsrsquo current work practices and any trends in storage charges and volumes (both for on-port storage and at transport operatorsrsquo own depot storage) that may be causing inefficiencies or extra costs or arise in the downstream supply chain

31 Unlike in other states in Australia in New South Wales in our view there is no

effective peak body broadly representative of the transport carrier industry with which we as a stevedore may engage in a meaningful dialogue on port related issues However we continue to meet with individual carriers to discuss such issues

32 The delivery of removal of a container at the terminal is a decision that is

determined by or shared between the consignee and their agents (eg customs broker carrier) It is the consignee and their contracted agents which dictate when the container is required to be delivered to the warehouse Post release of the container by the ACS AQIS and shipping line the consignee and their agents decide on the most cost efficient option for storage of the imported container (or goods) ie on port storage or other storage option (either packed or unpacked)

33 On-port storage of containers may suit the consignee and their agents However

it is not conducive to efficient container terminal operations

34 As demonstrated in Figure 1 the on-port (ie container terminal) storage revenue has decreased as a percentage of revenue over the past two years This trend follows a decrease in average import dwell time over the same period In line with this the average import container dwell time (this is the average time an import container remains in the terminal) has decreased despite the overall terminal throughput having increased

Figure 1 DP World Sydney ndash Import Container Dwell Time and Storage Revenue

35 Transport carriers are able to book an available timeslot in a time zone and alter which container (number) is to be collected in that timeslot up until the time zone

Page 5 of 48

commences Once a time zone commences it is no longer possible to book a time slot in that zone Transport carriers thus have the flexibility to select a different container slot at short notice This short notice advice of which container (number) is to be collected makes it impossible for the terminal to move the container to the best position to facilitate the best possible truck turn time This is discussed further under Question 11

36 Transport carriers do not always check that a container is released from all

impediments (ACS Holds AQIS Holds storage fees paid) before arriving at the terminal This can cause delays for the truck at the terminal and congestion within the terminal and congestion within the terminal truck marshalling area reducing the opportunity for other carriers to access the terminal which have ensured there are no impediments on the processing of their containers for collection This is seen as inefficient practice that contributes to further delays and costs in the logistics chain

37 Speculative booking of timeslots appears to occur within the VBS whereby

carriers book what they can during the initial booking period rather than what they need This is evidenced by the number of time slots released into the exchange pool The exchange pool is available for carriers to offer the time slots they have booked to another carrier

38 Table 2 below shows the number of time slots that were exchanged over a period

of 8 days Saturdays and Public holidays were not included and non-peak zones were not included The table indicates that during this period an average of 24 of time slots advertised for exchange which shows that carriers initially booked these time slots however in time before the time zone commenced they decided that they did not need the time slot This high number of time slots offered for exchange is due to speculative bookings or other circumstances including change of plans more time slots being made available by the terminal or timeslots becoming available within the exchange pool and thus better suited time slots become available to the carrier DP World is unable to determine how much each factor contributes to the high percentage of slots that are offered for exchange

Table 2 DP World Sydney Percentage of timeslots exchanged during the period of time zones 05-07

Total timeslots

Exchanged 05-17 zones

Total Time Slots available 05-17

zones

Percentage of time slots exchanged

23-Jan-06 48 585 8 24-Jan-06 167 675 25 25-Jan-06 253 770 33 27-Jan-06 206 585 35 30-Jan-06 217 605 36 31-Jan-06 195 720 27 1-Feb-06 52 485 11 2-Feb-06 56 590 9 Average 149 627 24

39 As illustrated in Figure 2 below the transport operators in Sydney have the lowest

containers per truck visit to Port Botany compared to all other ports in Australia

Page 6 of 48

Figure 2 DP World Terminals ndash Containers per Truck Ratio

]

Source DP World

310 Transport carrier operations are still heavily focused on the traditional daytime

period We understand that this reflects the carriers needs to maximise profit margin in a competitive market place However DP World Sydney comes under criticism for not releasing further slots during the traditional peak periods despite resources and slots being available in ldquonon-peakrdquo periods The net result appears to be that there has been very limited success in embracing 247 operations which ultimately we believe is generally accepted as being in the long term interests of the industry as a whole We also believe that it would be in the interests of the industry as a whole if a consolidation in the transport carrier sector occurred resulting in fewer higher volume carriers with the scale to operate with a wider spread of hours

311 Storage charges apply in the vast majority of marine container terminals around

the world Storage free days vary from port to port around the world however at least three free storage days is not unusual

4 The Tribunal invites stakeholders to comment on any aspects of access to rail

infrastructure or of the current work practices of rail transport operators the supply chain

41 There are a number of public reports and studies that outline the issues

associated with rail infrastructure intermodal terminals and rail access to the port In general the conclusions being drawn are that significant investment is required in this area This is most recently supported by the New South Wales Governmentrsquos response to the FIAB report

42 DP World Sydney is seeking to extend its rail sidings to 600metres in the near

future At the same time there are a number of issues with the rail infrastructure connecting these sidings to port rail we are seeking to resolve with RIC

43 The utilisation of the rail windows at DP World Sydney was 55 during 2006

This utilisation is measured on the basis of the total number of containers actually loaded and unloaded against what could be unloaded if all window were fully utilised at the current agreed performance levels on the part of the rail operators and DP World Sydney Few rail windows are south for Saturday and none for Sunday operations When demand justifies it DP World through the provision of additional resources has the capacity to more than double the volumes handled in

Page 7 of 48

any particular window The extensions of sidings will provide further opportunity to increase rail handlings capacity at the terminals

44 Figure 3 shows the trends in terminal rail window utilisation during 2005 and 2006

Although there is a small improvement in window utilisation during this period the utilisation is low and there is considerable capacity available to increase the number of containers that can be transported by rail

Figure 3 DP World Sydney ndash Weekly Terminal Rail Window Utilisation

DP World Sydney Weekly Rail Window Utilisation 2005-07

20

30

40

50

60

70

80

Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07

45 Contributing factors to the relatively low level of utilisation include

bull the late arrival of the rail operator at the terminal which reduces window

duration and the terminalrsquos inability to increase productivity to meet window capacity requirements without incurring extra costs We understand that the late arrivals by rail operators can be due to equipment breakdowns the passenger network restrictions and the inadequate rail infrastructure for freight

bull overestimation of the volumes rail window duration required by the rail operator

bull fluctuations in freight movements on a daily basis creating peaks and troughs

bull the drought and the decrease in rural export containers

bull train shunting operations

bull the AQIS inspection required for each import container before it leaves the terminal

bull the train and wagon inspection required before the train leaves the terminal

bull the use of labour intensive manual twistlocks instead of auto twistlocks on rail wagons

bull the necessity to break split trains in Botany Rail Yard

bull infrastructure limitations within the Botany Rail Yard and

bull rail operators using the Botany Rail Yard as a storage facility for their wagons and causing congestion

46 As indicated above DP World Sydney has plans to improve the infrastructure

within the terminal in order to meet predicted rail volumes in the future However

Page 8 of 48

unless improvements are made against the issues listed above then window utilisation and efficiency may not improve to levels required to meet the NSW Governmentrsquos 40 rail mode target

5 The Tribunal invites stakeholders to comment on any aspects of the operations of

the regulatory authorities that may be causing inefficiencies or extra costs to arise in the downstream supply chain 51 The Australian Customs Service (Customs) has introduced Container Examination

Facility (CEF) operations in most major ports around Australia Each of these facilities incorporates the use of modern technology such as container x-ray equipment and other examination tools to support Customs in their aim of identifying illegal activities through containerised trade Since the inception of the CEF in Sydney in February 2003 Customs has reported many successful interceptions of prohibited imports

52 The CEF in Sydney operates two shifts each week day (day and evening shifts)

and one shift on Saturdays (day shift) This operating arrangement has created more competition for terminal resources during the peak hours 0500-1700hrs Monday ndash Friday This has resulted in the terminal deploying more equipment and labour resources at the terminal to meet the obligations of contracts with Customs but at the same time has increased competition for resources depending where the container is place in the terminal and how the yard equipment is coping with the demands of industry

53 DP World Sydney has contracted performance KPIs to deliver along with following

factors to overcome that contributed to resource competition

bull Random arrival of Customs transport provider trucks (B Doubles) and random selection of containers due to weight constraints of the trucks

bull Multiple containers per truck relating to up to six different locations a truck has to visit within an RTG terminal and the potential to utilise six different resources

bull The requirement for DP World Sydney to block stack Customs targeted containers from a vessel in order to minimise the variability of locations a Customs truck has to visit This block stacking requirement has a negative impact on vessel performance and creates more competition for internal resources

bull DP World Sydney does not control the transport to and from the CEF Customs have appointed a carrier in each port and who under the contract is responsible for the effective co-ordination between the terminals of the movement of X-Ray containers DP World Sydney does liaise with the Carrier but the carrier has the final say as to how many trucks are allocated to each terminal and

bull DP World is of the view that the current operating hours of the CEF are contributing to resource competition within the terminal during the peak periods If the CEF opened midnight shifts rather than day shift this would reduce resource competition increase terminal resource utilisation in the non-peak hours and an improvement in efficiency would be gained by industry

Declaration of Cargo

54 The Australian Customs Service (ACS) has put in place a requirement for

importers to declare cargo at least 48 hours prior to a vesselrsquos first port of call in Australia This is an initiative that has the ability to increase the efficiency of import container movements and decrease the time containers remain in a stevedore terminal The on-time reporting performance in NSW during March 07 was 87

Page 9 of 48

The ACS should continue to put in place incentives to increase this clearance rate of containers in order to gain 100 compliance

55 The Australian Quarantine Inspection Service (AQIS) could assist by utilising an

electronic means of communicating the application and release of AQIS holds required on containers Currently AQIS operate a totally manual operation

6 The Tribunal specifically invites comments on the current role of the SPC and on

the role SPC might take in improving the efficiency of the supply chain

61 Sydney Ports Corporation has stated objectives which include

bull Enhancing and developing strategic assets to ensure efficient optimum utilisation

bull Continuing to build effective relationships with stakeholders that improve the competitive positioning of the ports and

bull Taking the lead in facilitating port related freight solutions

62 DP World in Sydney has participated in efforts by SPC to facilitate efforts to achieve mutual outcomes between both the stevedores and section of the road transport industry

63 In addition SPC has

bull Measured TTT at Port Botany and published these statistics since (2001)

bull Encouraged more use of rail with the support and investment by DP World

bull Requested more capital investment to improve road transport interface which has been supported by DP World through the acquisition of additional container handling equipment

bull Sought the elimination of truck queuing outside the container terminal with the support and implementation of a Vehicle Booking System by DP World

bull Sought the development of inland intermodal terminals with the support of DP World and

bull Sought the inclusion of suitable landside Key Performance Indicators within future lease terms

64 We consider that SPC has taken the leadership role appropriate for its position in

terms of seeking to facilitate improvements in overall port efficiency without interfering in the various commercial arrangements between stakeholders

7 The Tribunal invites stakeholders to comment on any aspects of the current work

practices of freight forwarders customs brokers and any remaining industry participants that may be causing inefficiencies or extra costs to arise in the downstream supply chain

Customs Brokers

71 It is the practise of some customs brokers to wait until the storage free period at

the terminal has almost expired before paying the duty to the Australian Customs This has the impact of retarding the stevedorersquos efforts to improve the velocity of container movement through the terminal Customs brokers should therefore be encouraged to pay duty as soon as possible

72 Customs brokers can also contribute to congestion at the terminal by not paying the Customs duty up to at least 2 hours prior to the carrierrsquos time slot This results in the truck waiting at the terminal for the information to flow through to the terminal operating system via EDI

Page 10 of 48

73 One way of achieving flow in (71) and (72) above is to disconnect the relationship between the payment of duty and the physical control of cargo movement To maximise the effect here the ACS could request the Customs brokers to also lodge the lsquoImport Declarationrsquo 24 hrs prior to arrival and collect duties on account after the event

74 An initiative at DP World Brisbanersquos terminal has been successful in obtaining early container information as part of their VBS (linking timeslot to the container number)

75 The system has been in place for almost 12 months now and the availability of information at DP World Brisbane has contributed to improved service levels at this terminal

Empty Container Depot Opening Times

76 A majority of Empty Container Depots reside within 10 km radius to the port

precinct Depot opening ties do not match container terminal operating hours The result is an inability for carriers to return and pick up an empty container 24hrs a day to depots This reduces the potential of utilising the existing vehicles on the road creating potential traffic congestion and therefore free up their trucks to collect import containers from the terminal Through tariff structures the shipping lines have the ability to influence the depots to increase their opening hours thus resulting in greater vehicle utilisation and subsequent reduction in transport charges The extended spread of hours will also have the effect of flattening the peak traffic periods and reducing road congestion and travelling times

8 The Tribunal invites stakeholders to comment on any aspects of the VBS

particularly in relation to the number of timeslots made available and on what basis and the process by which those slots are made available across the day(s) and to whom

81 The VBS is simply a means by which to communicate with the transport carrier

community What determine the number of slots made available are resource levels provided at the container terminal DP World Sydney provides more than sufficient resource levels to enable all containers to be delivered as required to road within the three free day period even accepting the industryrsquos current limited use of the available 247 terminal operation It is acknowledged that resource levels provided to road operations may be varied day to day as resources may need to be directed to ship operations but this follows from running the terminal as an integrated operation which is ultimately most efficient Providing further day time slots without addressing underlying market inefficiencies only risks service levels to shipping lines that are demanding higher performance levels and perpetuating the industryrsquos unwillingness to support 247 operations

82 DP World also notes that all carriers may and do from time to time contact the

terminal and request additional timeslots if there are none available on the VBS The terminal will endeavour to accommodate such requests where there is operational capacity to do so If there is capacity the Terminal will book the timeslot in the name of the carrier that has made the request

83 Further details of the VBS are provided in responses to subsequent questions

However we believe that the VBS at DP World Port Botany Terminal has delivered benefits including

bull No random queuing at the terminal which results in significant unplanned

delays to transport users due to the random arrival of trucks at any point in time to the terminal where the terminal is not resourced to handle the high peaking demand for landside resources whilst at the same time meeting contractual obligations with shipping lines

Page 11 of 48

bull The terminal is able to carry out bulk moves while maintaining service levels to other general carriers

bull Provides choice to carriers in terms of access as well as providing transparency to industry

bull States subscriptions fees in a public document which are transparent to industry

bull Increase slot allocation to road users based on irregular shipping schedules and

bull While not referred to in the Carrier Access Arrangements (see attachment 1) all B class carriers are allowed to engage in a process called ldquoexport taggingrdquo Export tagging involves a carrier booking an import timeslot in ePorts which will give them access to the terminal A carrier is then able to bring and export container on the truck that is arriving to collect the import container without booking a slot for that export container (during most timeslots in the day) The purpose of this flexibility to carriers is to increase two-way running which reduces costs to carriers and decreases the number of trucks in the port community

9 The Tribunal asks stakeholders to comment on the variability of average

turnaround times across the major ports and the variability of turnaround times faced by individual transport operators at Port Botany itself The Tribunal also invites comment on how important predictability of turnaround times is to transport operators relative to average turnaround times at Port Botany The Tribunal further invites comment on why turnaround times are higher for Port Botany compared to Melbourne Adelaide and Fremantle

91 The precise nature of operations differs between the ports and between the

terminals operated at those ports These differences arise because of the range of shipping lines that arrive at the various terminals and the volumes of containers and type of cargo going through each terminal There are also differences in the container yard handling equipment yard configurations at each terminal and hours of operation resulting in differences in the way each terminal operates These differences result in variations amongst each terminalrsquos service performance levels

92 During 2002 DP World Sydney management met with a representative group of

carriers to discuss the VBS and access arrangements at the terminal A common view of the carriers was that they would like consistency to truck turn times and that 60mins (carrier measurement) is acceptable The outcome from these meetings was that DP World introduced three internal KPIs

bull Truck processing to truck complete measurement ndash 38 mins average

bull TTTs of 60 mins or less to be 90 to total trucks

bull TTTs of 120 mins or more to be 1 or less

93 Figure 4 below shows the percentage of truck turn times that are 60 minutes or less at DP World Sydney There is a noted improvement in during mid 2005 from an average prior to this time of 73 to an average during 2006 of 85 This indicates that the predictability of the truck turn times has improved during the life of the VBS

Page 12 of 48

Figure 4 DP World Sydney ndash Percentage of Truck Turn Time under 60 mins

DP World Sydney - Percentage of Truck Turn Time under 60 mins

50

60

70

80

90

100

Jan-04

Mar-04

May-04

Jul-04

Sep-04

Nov-04

Jan-05

Mar-05

May-05

Jul-05

Sep-05

Nov-05

Jan-06

Mar-06

May-06

Jul-06

Sep-06

Nov-06

Jan-07

Mar-07

94 Figure 5 below shows the terminal truck turn time and the stevedoring volume since July 2003 at DP World Sydney Note that the volumes are hidden on the left Y axis for commercial reasons As a result of terminal improvements and putting in place the KPIs described above the average TTT performance has improved (right Y axis) whilst at the same time the terminal volume has increased (left Y axis)

Figure 5 DP World Sydney ndash Truck Turn Time and Container Volume

95 DP World operates in all five major ports in Australia and has three different modes of operation namely Straddles in Melbourne and Adelaide RTGrsquos in Sydney and Fremantle and Forklift and Reach-stacker in Brisbane The Variability in TTT between ports is attributed to a number of factors including but not limited to the site processes and physical constraints of each facility

96 The measurement of TTT differs mainly due to

a) the layouts of in-gates and its approaches and

Page 13 of 48

b) the measurement of the job steps which apply to a truck from arrival to departure due to (a)

97 All the above terminals have different truck parking arrangements within and

outside the terminal which impacts TTT Across the board TTT is measured from job processing to job complete (98c to 98e below) however the physical layout and mode can influence when processing commences

98 The process of truck management in simple terms is

a) Pre-arrival of trucks

b) Validation of time slots

c) Processing of job (Manual but if automated it takes effect in b above)

d) Enter the operational yard

e) Job transact and complete (by straddle RTG or Forklift Reach-stacker) and

f) AQIS check for full trucks and depart (gate-out)

99 Depending on the physical layout and provision of sufficient space to hold trucks within the terminal boundary or otherwise the distribution of trucks varies through steps 98a to 98c above

910 At DP World Sydney the equivalent hourly truck volume can be held in the

terminal entry marshalling area therefore multiple trucks can enter the terminal park and be processed by terminal staff Post processing all time spent in the marshalling area forms part of the TTT whilst the truck has not necessarily entered the operational yard (see Annexure 2)

911 At DP World Melbourne on the other hand due to restricted space within the

terminal trucks are normally held outside and a small number is constantly drip fed into the terminal (controlled rate of entry) These trucks then approach the processing points (6 lanes x processing booths) further which they directly enter the operational yard and the TTT is measured from this point

912 DP World Fremantle does not have a truck holding area within the terminal which

means the truck enter the terminal and queue at the Entry to Operational Yard Immediately after being processed the truck enters the terminal yard Therefore unlike Sydney time from Entry to Operational Yard is time historically not published Therefore TTT between DP World Sydney and DPW Fremantle are not comparable

913 DP World Fremantle is also an RTG operation similar to DP World Sydney

However the physical layout and the resulting entry arrangements differ Due to restricted space within the terminal the trucks are normally held outside and constantly drip fed into the terminal (controlled rate of entry) The trucks operate through 3 lanes within the terminal and truck turn time is measured at this processing point when the trucks actually enter the operational yard

914 DP World Adelaide is a straddle operation similar to DP World Melbourne

However its physical layout and resulting entry arrangement is different to that of DP World Melbourne and has some similarities with what takes place in Sydney The hourly truck volume can be held within the terminal and the TTT is measured from entry into the terminal main gate to departure from the terminal main gate The measure differs from the other facilities on both entry are exit gates

915 The benefits of this TTT data is not so much the raw data itself but more so the

long term trend in the data If TTT is constant or even improved during periods of volume growth then this reflects a firm commitment to the landside process Continuous improvement reflects a commitment to landside efficiencies

Page 14 of 48

916 TTT is influenced by the mode of operation the Gate In infrastructure and volume

of containers required to be handled

917 The RTG mode of operation requires the truck to travel to the yard stack where the container is located or assigned as opposed to the straddle operation where the straddle comes to the truck that is parked in a bay external to the stacking area The mode of operation at DP World Sydney generally results in a truck with multiple containers being serviced by multiple RTGs and also having to travel to multiple yard locations At each of these yard locations there will be a different level of demand on the particular RTG covering the area This will result in variations in the time it will take to service the truck in that particular area and therefore will influence the truck turnaround time

918 In comparison a terminal running a straddle operation could employ a different

straddle to handle each of the containers processed for the truck

919 The mode of operations employed by container terminals have various strength and weaknesses and need to be considered based on many factors in a Port (ie not just the landside interface) but both modes can contribute to variability

10 The Tribunal invites comment on how truck turnaround times are currently

measured by supply chain participants and how they should be measured The Tribunal further invites comment on the extent to which the stevedores provide access to their facilities at the specific times booked on the VBS

Truck Turn Time (TTT)

101 DP World Sydney currently measures truck turn times from the time the containers on a truck are processed to the time the last container is completely loaded onto the truck (import containers) or discharged from a truck and landed in the terminal (export containers)

102 TTT is directly influenced by the number of containers to be handled by an RTG

terminal on a truck run ie a higher number of containers results in a longer truck turn time on average This due to the truck having to potentially visit multiple locations within the RTG terminal

103 The reason the container Terminal does not measure the time following

completion of loadingdischarging container from truck is measure regulatory bodies (ie AGIS) have commenced inspection of containers on terminal exit gate which is beyond the control of the container terminal

104 The process time is used to measure the start of the truck turn time as this is the

closest time to the truck being in the terminalrsquos control

105 Trucks that take advantage of the autogate processing (currently 25 of trucks) actually start the truck turn time as they come through the terminal gate as this is where the transponder reader is located DP World Sydney support the increase of the autogate processing and the result that the truck turn time starts at the gate For trucks that do not use the autogate processing opportunity the terminal does not start the truck turn time at the gate as the truck driver may not move efficiently to have the container processed

106 Carriers often use TTT measured from the time the truck services at the standby

queue or the arrival of the truck at the zone queue which are waiting for the next time zone to open

107 In relation to standby queue the CAA clearly stipulates that the use of this system

does not guarantee immediate call-up to the terminal in priority to trucks that have booked a time slot

Page 15 of 48

108 In relation to TTT measured from arrival at the time zone queue the fact that the truck has arrived prior to the commencement of the zone opening is purely a decision of the transport carrier and is beyond the control of the Container Terminal and is not supported by DP World

Container Turn Times

109 DP World Sydney currently measures container turn time from the time the

container is processed to the time the container is loaded onto the truck (import container) or discharged from a truck and landed in the terminal (export container) Over the last 5 years the transport regulators have allowed truck operators to operate larger trucks thereby ultimately improving the efficiency of road transport As transport operators increase the use of larger trucks (capable of carrying multiple containers) the handling of these trucks produces a multiple handling of containers on the same truck at the terminals For example in the past one would handle one container per truck and in that case the CTT and TTT were almost identical With multiple containers on trucks the difference between the CTT and TTT is increasing To be able to benchmark this across a port and other ports becomes hard with TTT due to the ever changing ratio of containers per truck (depends on percentage of large truck operators) firstly within the same port and secondly between different ports Therefore CTT enables us to benchmark the measurement on common grounds across all our operations around the country

Access Times at DP World

1010 DP World Sydney divide the day into hourly time zones within the VBS The time

zones start on the house (eg 0700hrs) and complete at the end of the hour (eg 0759hrs) There is a time zone board located at Simblist Road which indicates which time zone is open Trucks queue at this point waiting for the board to change each hour During daylight hours on average there are 15 trucks waiting for the time zone to open The trucks then make their way to the terminal in gate located on Friendship Road once the zone is open

11 The Tribunal invites comment on the choice between a system where container

numbers are nominated in advance thereby offering the possibility of faster turnaround times or not providing container numbers which would provide road carriers with greater flexibility Or would industry participants prefer a system that allows the choice between both

Import Timeslots

111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the import container number in a timeslot booking up to the start of the time zone The disadvantage for the terminal and the carrier is that this flexible system arrangement does not allow the terminal the chance to reposition the container to a position that will minimise the number of containers that have to be moved (known as ldquoconsolidation movesrdquo) in order to access the container that is to be delivered to the truck once the truck has been processed and is in position for loading The more consolidation moves the terminal has to do to load an import container to a truck the longer the truck turn time will be

112 Undertaking consolidation moves prior to truck arrival would provide the opportunity

to decrease truck turn time

113 To achieve a further reduction in truck turn times and a reduction in cost of delivering a container the terminal would need to control the order in which the import containers are delivered This occurs in other ports in the world

Controlling the order of import deliveries

114 The current arrangement where the shipper controls the order of import containers

to be delivered from the terminals results in extra costs incurred by stevedores and also decreased efficiencies The longer a container remains in the terminal (an

Page 16 of 48

increase in the dwell time) results in increased consolidation (rehandles) undertaken by terminal equipment and an increase in the time taken to load a container to a truck or train

Matching of resources to meet demand

115 The terminal allocates the resources required based on the demand or the

number of timeslots released This occurs 24 hrs in advance

116 Carriers who book timeslots and do not meet their commitment (No Show) results in the terminal resources to be under utilised at certain times and creates an opportunity loss There is also an opportunity lost by another carrier to utilise the time slot for each No Show

117 Carrier who book timeslots and arrive late for their commitment (Wrong Zones)

results in terminal resources being under utilised at times and over utilised at other times The troughs in terminal resource utilisation result in an opportunity loss and the peaks result in a decrease in efficiency (increased truck turn time) or increased cost (increased resources applied) The increase in truck turn time has an impact on carriers who arrive on time for their time slot

118 The current VBS allows for carriers to arrive at the terminal to deliver or pick up a

container without committing to a time and container number thus not enabling the terminal to completely plan the required resources to meet the demand This is termed unplanned work The Standby Queue export tagging by B Carrier no advanced deadline for entering an import container number prior to the time zone and no requirement for an export container number being entered into a time slot booking results in an increase in unplanned work Unplanned work results in peaks in the work required by the planned resources and a decrease in efficiency

119 Rail also has similar problems

1110 By changing this arrangement and giving control to the stevedores to determine

the order of container delivery from the terminal will reduce the costs incurred by the terminal and decrease the turnaround time for trucks

Export Timeslots

1111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the export container number in a timeslot booking up to the start of the time zone It also allows an export time slot to be processed without a container number entered in the time slot booking The container number in then entered by the RampD Clerk at the terminal This often results in human error by the truck driver or the RampD Clerk resulting in delays to trucks This practice also eliminates the opportunity for the carrier to use the automatic processing described below in Question 12 To maximise the use of automation and eliminate human error the export container number needs to be a mandatory field to be updated in the time slot booking by a nominated time prior to the start of the time zone eg 2 hours prior to the start of the time zone

12 The Tribunal invites comments on the increased use of ICT and automation and

any other ways to reduce turnaround times and otherwise improve supply chain efficiency

121 DP World support and are driving the increased use of automation for the

processing of trucks DP World have developed and currently make available an automated truck processing system for carriers who use ePORTS to book and manage timeslots The percentage use of this system at DP World Sydney by carriers averages about 25 of total truck movements excluding stack run trucks

122 This system requires the purchase of a transponder unit from the terminal at the

cost that the terminal purchases the unit plus GST Currently the units are sold to

Page 17 of 48

the carrier for $12050 Also required is access to an eGATE screen in ePORTS The process for carriers wanting to move a number of containers on a transponder run involves

a) Booking through EPORTS the required number of time slots in a time zone

For example if a transport carrier wanted to deliver two export containers and collect one import container on a single truck run it needed to book three slots and

b) Setting up the transponder by inputting the slots truck number container numbers and whether they are import or export containers in the transponder booking screen in ePORTS

123 The benefits for carriers of using this automated processing include

a) The processing occurs earlier (ie at the gate as compared to in the RampD Office) therefore this decreases the chance of Wrong Zones being incurred

b) No need for the truck driver to present documentation at the RampD Office therefore reducing the truck turn time by avoiding any potential queues

c) No interaction between the truck driver and the RampD Clerk therefore decreasing human error during processing and causing further delays

d) As the processing occurs at the gate the trucks can skip ahead of other trucks where their drivers have to manually process in the RampD Office effectively jumping the queue

e) Allows reprogramming of trucks up to 15mins before the end of the time zone (eg 0645 for an 06 slot) without the truck driver needing the Delivery Order in his possession

f) Provides the carrier with the ability to educate their customers to provide the Delivery Orders in a timely manner in order to lodge them at the terminal

g) Electronic copies of the Delivery Orders (excluding scanned copies of originals) can be forwarded to the terminal via email therefore eliminating the need to physically lodge them

h) Enables the carrier to take all advantage of Electronic Import Delivery Orders (eIDOs) that are currently being used by Evergreen Marine at DP World Sydney Other shipping lines will move to the use of eIDOs in the future

13 The Tribunal invites stakeholders to comment on VBS capital and operating costs

and to assist it to distinguish between stand-alone VBS costs and those shared with other stevedoring activities

131 It is important to distinguish between the capital and operating costs of operating

the VBS and the costs of operating the landside interface ie delivering containers to and from trucks

132 The costs of a VBS comprise the following components

bull IT development and maintenance costs and

bull Management and administration time to manage and administer the system

These costs are low relative to the costs of actually providing the services within the terminal ndash loading and unloading the trucks

133 Having a system which requires the terminal to provide a guaranteed number of

slots per hours is to the disadvantage of the terminal Terminal operations are by their nature unpredictable due to the irregular arrival of ships Having to guarantee a number of slots which carry with it a high expectation of performance in terms of TTT tends to force the terminal to set the number of slots at a level which includes a risk mitigation factor against all things not going to plan The net result of this is

Page 18 of 48

that the terminal tends to effectively oversupply equipment and labour increasing its costs The impact of this is far more significant than the isolated costs of running the actual vehicle booking systems

134 Direct VBS costs have nothing to do with ship or rail operations

135 The container yard is run as a single operation servicing ship road and rail By

this means while there are practical limitations we seek to pool resources to maximise the overall efficiency of terminal operations particularly to absorb the peaks and troughs of demand across the operations as a whole This effective sharing of costs improves overall efficiency and results in lower costs to the benefits of users as a whole We anticipate that systems and technology improvements will see greater use of such pooling and greater overall efficiency as a result

14 The Tribunal invites stakeholders to comment on VBS access and penalty charges

and the level of transparency of access through the stevedoresrsquo VBSs

141 The VBS facilitates the provision of orderly access to DP World Sydney Terminal for over 200 individual carriers

142 DP World considers the achievement of orderly access to its terminals as a

primary objective of the VBS To achieve orderly access DP World considers it important to require carriers to pay a nominal subscription charge for the level and rights of access they require and to issue ldquono showrdquo and ldquolaterdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay lsquoon timersquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs

143 The VBS is essentially an ldquoappointment bookrdquo to assist transport carriers to

organise themselves more efficiently leading to a reduction in waiting times at the container terminal The VBS divides all working days into time periods containing a pre-determined number of timeslots The timeslots represent the number of import and export containers that can be handled in that period The number of timeslots in a day is determined by expected carrier demand and the availability of labour and equipment Carriers are then able to book timeslots for collection or delivery of containers

144 The alternative is random access to container terminals by carriers and significant

truck queues with associated demurrage costs which are ultimately paid for by the end user

145 At DP World Sydney the VBS offers transport carriers the ability to access an

internet based computer system or telephone bureau for the purpose of booking time slots for those carriers who do no wish to use the computer system The VBS in its present form offers access on a transparent and equitable basis to all carriers encourages the efficient movement of containers from the ship through the terminal and onto customers and vice-versa encourages innovative practices which are beneficial to terminal efficiency road congestion and the overall cost of the supply chain The ldquono showrdquo and ldquolaterdquo fees encourage these operational practices and efficiencies

146 DP World has adopted a class structure with an annual subscription for access

because this system allows carriers to determine what access is required for their business while providing the industry significant level of transparency in terms of access costs

147 All carriers have an equal opportunity to subscribe to any of the three classes of

access to the VBS (bearing in mind that smaller carriers are allowed to consolidate

Page 19 of 48

their subscriptions in order to share the cost of a B Class subscription) and equal access to timeslots amongst carriers of the same class

148 Annual fees are payable in advance Table 3 sets out the various carrier classes

currently in operation at each terminal and the applicable subscription fees for each class There are no annual limits on the number of slots carriers can book

Table 3 DP World Sydney ndash Current carrier classes and VBS deposit and registration fees for the year commencing 1 July 2005

Terminal Carrier Classes Price Number of active

carriers at Feb 06 Port Botany New South Wales

B Carrier ndash online internet access with high service levels

$2922150 (Non-refundable deposit) No fixed upper limit on annual time slots1

28

A Carrier ndash online internet access with standard service levels

$133400 (Annual registration fee) No fixed upper limit on annual time slots2

162

AB Carrier ndash access via the PampO Phone Booking Bureau with standard service levels

$66760 (Annual registration fee) No fixed upper limit on annual time slots3 39

149 Any carrier selecting the ldquoBrdquo classification is encouraged to also consider the ldquoArdquo

classification unless they are confident of utilising a high level of timeslots that would render the higher subscription fee as attractive per timeslot

1410 In addition to the VBS annual subscription fees the carrier access arrangements

provide for the levying of a no-show fee on carriers who fail to arrive for slots they have booked in the amount of $110 per time slot The terminal also charges carriers late fees of $55 per slot if they fail to arrive for a slot booking within the nominated time zone No fees are charged where a carrier is unable to meet the time slot due to delays caused and acknowledged by DP World Australia or where delays are caused by circumstances genuinely outside of the carrierrsquos control DP World Australia also has the discretion to and does waive ldquono showrdquo and ldquowrong zonerdquo fees in the interest of maintaining a good working relationship with carriers Failure by carriers to pay these ldquono showrdquo and ldquowrong zonerdquo fees may lead to them being prevented from making further bookings ldquoNo showrdquo and ldquowrong zonerdquo fees are the means by which DP World ensures that access to itrsquos terminals is provided in the most efficient manner to all 1carriers as late carriers cause delays for those carriers that are on time

1 No fixed upper limit on annual timeslots ndash Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 2 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 3 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release

Page 20 of 48

1411 The ldquono showrdquo and ldquowrong zonerdquo fee structure was introduced following

consultation with carriers It was originally $20 per late arrival (in Victoria where VBS first commenced) but this is proved to be ineffective in disciplining carrier conduct In response to requests from many carriers DP World increased the ldquono showrdquo fee to $110 The fees also discourage carriers from the practice of overbooking slots which they have no intention of using and preventing other carriers from using those slots

1412 The actual cost of a truck turning up late (Wrong Zone) or not turning up at all (No

Show) is the cost of planned resources (labour equipment etc) based on the VBS demand (number of containers expected to handle during a time period) not being utilised during the time period they are employed

1413 Adjacent to each time zone are grace periods one prior to the time zone and one

following the time zone These grace periods and the trucks arrival time for processing determine the status of the time slot ie arrived on time or arrived late (Wrong Zone) Currently the grace period following the time zone is set at 20 minutes which means that if a truck arrives later than one hour and 20 minutes after the start of the time zone then the time slot will be initially recorded as a Wrong Zone Following the completion of each VBS day Wrong Zones are reviewed and any penalty waived if any of the following determined

a) The terminal is aware that it has contributed to a truck arriving late for the time

slot ie the terminal has previously delayed the truck or carrier on an earlier time slot or

b) The carrier advises that they arrived late due to an unforeseen circumstance eg a break down of the truck

We request that the information in 1414 be kept confidential

1414 Omitted for reasons of confidentiality

1415 Officers at DP World Sydney have regular conversations with carriers in respect of

the waiver of No Show fees as well In certain instances DP World may agree to waive fees prior to an invoice being issued

1416 For both Wrong Zone and No Show fees the terminal provides a grievance

process for carriers who have been issued invoices and do not agree that the fee has been issued fairly The carrier has the opportunity to provide the terminal with an explanation and should officers at DP World Sydney agree that there has been an error in the issuing of the fee or an unforeseen circumstance is explained the terminal will credit the invoice

15 The Tribunal invites stakeholders to indicate the costs of providing the services of

rail windows and rail paths to rail operators

151 Rail windows are based allowance on a rail terminal performance KPI of 30 container moves per hour and charged at $360 per hour A shunting time allowance of 15 mins per window is not charged Additional lifts canare provided by increasing the lifts per hour by applying more machinery at no additional cost

152 The cost of providing terminal rail operations is higher than road operations at DP

World Sydney The RTG mode of operation requires a container to be moved to or from the container stack For road containers the truck takes the export container to the stack and travels to the stack to pick up an import container For a rail container a terminal internal transfer vehicle (ITV) is required to be used by the terminal to move the container from the train to the stack (export containers) or

Page 21 of 48

the stack to the train (import containers) This is not required for container being received or delivered by road

153 For import rail containers there is a loss of efficiency for the vessel discharge

operation in order to stack rail containers separately for delivery to the train For each discharge point in the terminal extra resources are required There is extra administration costs in having to make alternate arrangements to separate these import rail containers

154 Despite the fact that the delivery of containers to rail is higher than road the

terminal seeks only a partial recovery of costs in order to encourage the use of rail in the port in line with the NSW Government objectives

155 There is a management cost of setting up and operating the rail windows This is

similar to the cost of operating a VBS

156 There is additional security infrastructure costs for a rail operation to ensure the terminal meets their legislative security requirements The more terminal entry points created the higher the cost to replicate these security infrastructure requirements

16 The Tribunal invites comment from stakeholders on the planned or mooted

development and expansion of the various intermodal terminals in Sydney and the extent to which this is expected to ease congestion in the landside supply chain at Port Botany

161 DP World supports the development and expansion of an intermodal terminal

network to facilitate an increase in the use of rail as the means of container transport This has the potential flow on benefit of minimising the growth in the number of trucks requiring to access the Port Botany area as port volumes continue to grow

162 Transport between the Botany terminals and the inland intermodal terminals

should be by rail or trucks operating a stack (bulk) run road out during off peak periods eg night shifts or weekends The use of Super B Double trucks would assist with the efficiency of these off peak stack run outs

17 The Tribunal invites comment on the likely effect of the expansion plans at Port

Botany on access to the port terminal during peak periods and efficiency along the supply chain

171 Improving the two-way running or back-loading of trucks has to be a priority in

order to maximise access opportunity at the terminals and efficiency along the supply chain It is likely that a third and separate stevedoring facility will only increase the difficulty of improving truck utilisation over and above the current levels by the increased logistics complexity of coordinating timely access to three terminals rather than two

172 A third stevedore will lead to the same port volume being spread over three

operations While it is resource levels that determine available slots DP World has found that during periodic decreases in volumes carriers favour daytime runs to the terminal as opposed to night time

173 The expansion plans will have a negative impact on rail transport timeliness and

access requirements to DP World Sydney if the requirements to breaksplit trains and shunt sections of trains into multiple terminals continues This will undermine the overall rail effectiveness and the NSW Government rail objectives by the unnecessary increase of splitting trains

Page 22 of 48

18 The Tribunal invites comment on the likely effects of expansion of the intermodal network in Sydney on access to the port and efficiency along the supply chain

181 This is a similar issue to point 16 above

19 The Tribunal invites comment on the likely impact of a peak pricing system along

the lines of the FIC on access to the port terminals and the efficiency of the Port Botany supply chain

191 We understand for the NSW Governmentrsquos announcement (31 May 2007) that the

FIC is no longer being proposed

192 Table 4 shows the average percentage of road containers that are handled by shift at DP World Sydney based on a 6 day x 24 hour receival and delivery operation for the past 4 years The figures indicate that there is surplus capacity on both evening and midnight shifts when compared to day shift Note that the percentage of road containers handled has increased on day shift relative to the combination of evening and midnight shifts This has been due to terminal efficiencies creating increased capacity during day shifts and the road carriers utilising this capacity

193 This is further emphasised in Figure 4 which shows the trend over time for day

shift containers handled has increased from 2005 evening shift has decreased and midnight shift has not changed significantly

Table 4 DP World Sydney ndash Percentage of Daily Road Container Volume handled by Shift

Year Midnight Shift (2230 ndash 0630hrs)

Day Shift (0630 ndash 1430hrs)

Evening Shift (1430 ndash 2230hrs)

2007 YTD 21 47 32

2006 23 45 33

2005 22 43 36

2004 19 44 38

194 Year to date April 2007 figures may reflect the seasonal trend for lower volumes in this period

Figure6 DP World Sydney ndash Road Volume trendlines by shift 2005-07

Page 23 of 48

20 The Tribunal invites comment on the likely impact of the expansion of the freight

rail network in Sydney on the number of containers moved by rail and on congestion at the port

201 The importance of increasing the proportion of containers moved by rail is

recognised and supported by DP World Sydney

202 To complement the expansion of the rail freight network upgrade the terminal is developing plans to increase the length and the number of sidings within the terminal Over the next three years the terminal is planning to spend an estimated $20million on internal rail infrastructure machinery and systems The terminal upgrade will ensure DP World Sydney has the infrastructure in place to meet a target of 40 throughput by rail

203 The expansion of the freight rail network needs to take into account The access

to each of the terminals especially the access to DP World Sydney where by the terminal has a distinct disadvantage in relation to its competitor

21 The Tribunal invites comment on the impact on the supply chain on ARTC

managing the metropolitan freight rail network

211 Management of freight rail infrastructure is ARTCrsquos core business and will bring additional management expertise and focus to the task of reforming operations on the Port Botany rail infrastructure

212 For ARTC to control the MFN (Metropolitan Freight Network) makes sense from

the point of view they can make informed decisions for both inbound and outbound Port services based on the wider NSW Rail Freight Network operation

213 The ARTC proposal to co-ordinate services by performing the full Network Control

Function (both signalling and Train Control) from the one centralised centre for the Southern Sydney Freight Line (SSFL)MFN and Port Botany emphasises their commitment to ensure safety communications and network management is their primary objective

214 ARTC are focussed on improving the efficiencies at the Port and bring to the

industry fresh innovative ideas to improve the overall capacity on the rail network ARTCrsquos willingness to assist and eagerness to invest in the rail infrastructure brings a breath of fresh air to the industry and specifically the stevedore operations ARTC can integrate the Botany line into its overall investment program paving the way for additional investment to improve the efficiency of operations on the Botany rail line and at the port-rail interface

22 The Tribunal invites comment on the following questions in relation to costs of the

VBS

22a What costs underpin the VBS access charges levied by the two stevedores How are the VBS access charges set

22b1 Refer to Question 14 The revenue from VBS charges account for a very

small proportion of DP Worldrsquos total container terminal revenue For the year ended 31 December 2006 they accounted for 13 of total revenue Of that 13 approximately 30 was for No Shows and Wrong Zones

22b What costs are incurred by the stevedores in moving a container from the

wharf to a truck or train

22b1 DP World Sydney is operated as an integrated business servicing ships road and rail within the context of a national business We do no separately account for the costs of each discrete activity Information on

Page 24 of 48

overall costs is provided to the ACCC and published on an industry basis in the ACCCrsquos Container Stevedoring Monitoring Report

22b3 Wharf to truck activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the VBS to provide orderly access for road carriers

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal space to allow truck drivers to park their vehicles in order to unlockset up their twist locks and processing of containers

bull Processing of the container

bull System to manage the truck movement within the terminal

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the truck by RTG or forklift

bull Provision of terminal area for truck drivers to safely leave their vehicle to lock the twist locks on their trucks check the container seal number and check the container for damage

bull Provision of terminal area for AQIS operation and infrastructure

22b3 Wharf to train activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the Rail Windows to provide orderly access for operators

Page 25 of 48

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal area for rail lines associated rail infrastructure and train inspection requirements within the terminal

bull Processing of the container

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the ITV by RTG or forklift

bull Internal Transfer Vehicle (ITV) movement of the container from the yard stack to the rail line

bull Lift of the container from the ITV onto the rail wagon

22c What influences the nature and amount of these costs (for example are they influenced by the type of equipment used by a stevedore Do they fluctuate with the number of containers handled by the stevedores) and how have costs changed over time

22c1 DP World operates very similar Vehicle Booking Systems in Brisbane

Sydney Melbourne and Fremantle where there are differences in volume through the terminals The only difference in subscription between the terminals are the ldquoB Classrdquo carrier subscriptions The annual subscription is influenced by the number of carriers seeking this class and the hourly allocation of slots to their class given the number of subscriptions In addition Melbourne operates a straddle facility and Brisbane operates a forklift reachstacker Therefore the cost of the Vehicle Booking System is not dependant on or mode but the annual subscription to ldquoB Classrdquo carrier depends on competition for that carrier class

22c2 An annual subscription fee per class which is a characteristic of DP

Worldrsquos VBS does not normally increase with volume At DP World Sydney subscription fees have not been increased since 2003

22c3 Overall landside costs have increased with increases in wages and

salaries (4 pa) property costs (substantially ahead of cpi) fuel and other general costs These increases have been offset to some extent by increases in productivity Industry costs history is also available publicly in the ACCC Container Stevedoring Monitoring Reports

22d Where do the port landside costs stop and the VBS costs start

22d1 Prior to the Entry to Operational Yard (see Attachment 2) the truck is

under the influence of the VBS and also under the influence of the external environment which includes but is not limited to port and metropolitan road conditions container clearance issues truck arrival peaks and troughs truck preparedness processing of the container to the handled by the terminal and maritime security requirements

It is DP World Sydneyrsquos view that the port landside costs stop and the VBS costs start at the choke point

22e Do the VBSsrsquo penalty charges reflect the cost to stevedores What should

they reflect

22e1 The primary rationale for the penalty regime is to seek to modify carrier behaviour

Page 26 of 48

22e2 However it is also the case that a ldquono showrdquo or ldquowrong zonerdquo gives rise to a lost opportunity cost to the terminal Resources made available but not utilised may be wasted

22e3 DP World considers the achievement of orderly access to its terminal as

a primary objective of the VBS To achieve orderly access PampO considers it important to issue ldquono showrdquo and ldquowrong zonerdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay ldquoon timerdquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs The alternative is random access to container terminals by carriers and significant truck queues with associated demurrage costs which are ultimately paid for by the end consumer

22f Should there be different charging arrangements for empty containers that

are returned to the port as opposed to full export containers

22f1 DP World Sydney terminal handles a full container in a similar way to an empty container using purpose built container stacking equipment controlled by a DP World employee A container occupies the same amount of space whether it is full or empty This leads to the same cost for the handling of a single empty container as a single full container Single empty containers returned to the port should be charged a similar rate to full containers

22f2 To reduce the cost of handling empty containers in the terminal destined

for the same port on the one vessel and that are of the same size the terminal in conjunction with the shipping line and the shipping linersquos nominated carrier work together to create a bulk run of empty containers The bulk run maximises the number of empty containers that are handled in a specific time period The terminal dedicates resources to thee bulk runs and also provides priority access to the transport carrier in order to create efficiency and an economy of scale In this way the cost of returning an empty container via a bulk run is reduced

23 The Tribunal invites comment on the following questions in relation to the different

pricing regimes of the two stevedores

23a Why do the stevedores have different pricing schemes for their VBSs

23a1 We do not know why Toll-PatrickAsciano has adopted the pricing scheme it has

23a2 In order to improve earlier versions of its VBS in the mid-1990s DP

World (PampO) introduced categories of carriers and began charging differential subscription fees for carriers registering to use the VBS depending on the level of access required by the carrier Prior to this change some carriers were engaging multiple computer terminals to the detriment of other carriers and it had become clear that a level of differentiation would be in all carrierrsquos interests The different classes of carrier access were introduced to ensure the most balanced overall outcome The level of differentiation is an annual choice of access levels available to all carriers regardless of size Under this approach different subscription fees are charged for each category but all carriers registering in a particular category pay the same fee Our view remains that an annual subscription as opposed to a pay as you go is far less of an administrative burden on both the carriers and the terminal

Page 27 of 48

23a3 There are no restrictions upon carriers wishing to obtain a certain carrier category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for the same carrier categories as larger carriers Smaller carriers may also apply for consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst charging the burden of the cost of that subscription

23a4 Subscription fees based on differences in class are designed to

encourage choice whilst at the same time communicating a level of transparency with terminal pricing and service

23b Do the different pricing schemes influence the efficiency with which

transporters obtain access to the terminals

23b1 We do not believe this to be the case

23c Would standardisation of charges be more appropriate

23c1 It is our understanding that it would be unlawful for a supplier itself to standardise charges by reason of Section 45 of the Trade Practices Act This may be something that Government wishes to consider

24 The Tribunal invites comment on the following non-price access issues to consider

in relation to the operation of the VBSs

24a What effect do access rules and conditions and non price constraints have on booking a timeslot How to the stevedores use their discretion in determining access and charges and what impact does this have

24a1 The introduction of different categories of access stages the carriersrsquo

access to the VBS for the purposes of booking timeslots ldquoB classrdquo carriers are given exclusive access to a pool of slots between 0730-0820 During this period they are subject to zone limitations which restrict carriers to a maximum number of slots for any given hour The zone limit ensures all carriers within that carrier class are given fair and equitable access to the initial release of slots After the initial booking period the zone limit is lifted and carriers are permitted to book any number of unused slots per hour from those remaining in their pool Similar arrangements exist for A class carriers culminating in the cascading of all remaining slots from all segregated pools into a general pool at 1030 for access by all registered carriers

24a2 There are not restrictions upon carriers wishing to obtain a certain carrier

category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for a consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst sharing the burden of the cost of that subscription

24b What are the stevedoresrsquo obligations with regard to access to port facilities

and what should they be

24b1 Without providing an analysis of our obligations under law in general terms we are required to provide access to carriers on an equitable basis recognising the competitive environment we operate in

Page 28 of 48

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

commences Once a time zone commences it is no longer possible to book a time slot in that zone Transport carriers thus have the flexibility to select a different container slot at short notice This short notice advice of which container (number) is to be collected makes it impossible for the terminal to move the container to the best position to facilitate the best possible truck turn time This is discussed further under Question 11

36 Transport carriers do not always check that a container is released from all

impediments (ACS Holds AQIS Holds storage fees paid) before arriving at the terminal This can cause delays for the truck at the terminal and congestion within the terminal and congestion within the terminal truck marshalling area reducing the opportunity for other carriers to access the terminal which have ensured there are no impediments on the processing of their containers for collection This is seen as inefficient practice that contributes to further delays and costs in the logistics chain

37 Speculative booking of timeslots appears to occur within the VBS whereby

carriers book what they can during the initial booking period rather than what they need This is evidenced by the number of time slots released into the exchange pool The exchange pool is available for carriers to offer the time slots they have booked to another carrier

38 Table 2 below shows the number of time slots that were exchanged over a period

of 8 days Saturdays and Public holidays were not included and non-peak zones were not included The table indicates that during this period an average of 24 of time slots advertised for exchange which shows that carriers initially booked these time slots however in time before the time zone commenced they decided that they did not need the time slot This high number of time slots offered for exchange is due to speculative bookings or other circumstances including change of plans more time slots being made available by the terminal or timeslots becoming available within the exchange pool and thus better suited time slots become available to the carrier DP World is unable to determine how much each factor contributes to the high percentage of slots that are offered for exchange

Table 2 DP World Sydney Percentage of timeslots exchanged during the period of time zones 05-07

Total timeslots

Exchanged 05-17 zones

Total Time Slots available 05-17

zones

Percentage of time slots exchanged

23-Jan-06 48 585 8 24-Jan-06 167 675 25 25-Jan-06 253 770 33 27-Jan-06 206 585 35 30-Jan-06 217 605 36 31-Jan-06 195 720 27 1-Feb-06 52 485 11 2-Feb-06 56 590 9 Average 149 627 24

39 As illustrated in Figure 2 below the transport operators in Sydney have the lowest

containers per truck visit to Port Botany compared to all other ports in Australia

Page 6 of 48

Figure 2 DP World Terminals ndash Containers per Truck Ratio

]

Source DP World

310 Transport carrier operations are still heavily focused on the traditional daytime

period We understand that this reflects the carriers needs to maximise profit margin in a competitive market place However DP World Sydney comes under criticism for not releasing further slots during the traditional peak periods despite resources and slots being available in ldquonon-peakrdquo periods The net result appears to be that there has been very limited success in embracing 247 operations which ultimately we believe is generally accepted as being in the long term interests of the industry as a whole We also believe that it would be in the interests of the industry as a whole if a consolidation in the transport carrier sector occurred resulting in fewer higher volume carriers with the scale to operate with a wider spread of hours

311 Storage charges apply in the vast majority of marine container terminals around

the world Storage free days vary from port to port around the world however at least three free storage days is not unusual

4 The Tribunal invites stakeholders to comment on any aspects of access to rail

infrastructure or of the current work practices of rail transport operators the supply chain

41 There are a number of public reports and studies that outline the issues

associated with rail infrastructure intermodal terminals and rail access to the port In general the conclusions being drawn are that significant investment is required in this area This is most recently supported by the New South Wales Governmentrsquos response to the FIAB report

42 DP World Sydney is seeking to extend its rail sidings to 600metres in the near

future At the same time there are a number of issues with the rail infrastructure connecting these sidings to port rail we are seeking to resolve with RIC

43 The utilisation of the rail windows at DP World Sydney was 55 during 2006

This utilisation is measured on the basis of the total number of containers actually loaded and unloaded against what could be unloaded if all window were fully utilised at the current agreed performance levels on the part of the rail operators and DP World Sydney Few rail windows are south for Saturday and none for Sunday operations When demand justifies it DP World through the provision of additional resources has the capacity to more than double the volumes handled in

Page 7 of 48

any particular window The extensions of sidings will provide further opportunity to increase rail handlings capacity at the terminals

44 Figure 3 shows the trends in terminal rail window utilisation during 2005 and 2006

Although there is a small improvement in window utilisation during this period the utilisation is low and there is considerable capacity available to increase the number of containers that can be transported by rail

Figure 3 DP World Sydney ndash Weekly Terminal Rail Window Utilisation

DP World Sydney Weekly Rail Window Utilisation 2005-07

20

30

40

50

60

70

80

Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07

45 Contributing factors to the relatively low level of utilisation include

bull the late arrival of the rail operator at the terminal which reduces window

duration and the terminalrsquos inability to increase productivity to meet window capacity requirements without incurring extra costs We understand that the late arrivals by rail operators can be due to equipment breakdowns the passenger network restrictions and the inadequate rail infrastructure for freight

bull overestimation of the volumes rail window duration required by the rail operator

bull fluctuations in freight movements on a daily basis creating peaks and troughs

bull the drought and the decrease in rural export containers

bull train shunting operations

bull the AQIS inspection required for each import container before it leaves the terminal

bull the train and wagon inspection required before the train leaves the terminal

bull the use of labour intensive manual twistlocks instead of auto twistlocks on rail wagons

bull the necessity to break split trains in Botany Rail Yard

bull infrastructure limitations within the Botany Rail Yard and

bull rail operators using the Botany Rail Yard as a storage facility for their wagons and causing congestion

46 As indicated above DP World Sydney has plans to improve the infrastructure

within the terminal in order to meet predicted rail volumes in the future However

Page 8 of 48

unless improvements are made against the issues listed above then window utilisation and efficiency may not improve to levels required to meet the NSW Governmentrsquos 40 rail mode target

5 The Tribunal invites stakeholders to comment on any aspects of the operations of

the regulatory authorities that may be causing inefficiencies or extra costs to arise in the downstream supply chain 51 The Australian Customs Service (Customs) has introduced Container Examination

Facility (CEF) operations in most major ports around Australia Each of these facilities incorporates the use of modern technology such as container x-ray equipment and other examination tools to support Customs in their aim of identifying illegal activities through containerised trade Since the inception of the CEF in Sydney in February 2003 Customs has reported many successful interceptions of prohibited imports

52 The CEF in Sydney operates two shifts each week day (day and evening shifts)

and one shift on Saturdays (day shift) This operating arrangement has created more competition for terminal resources during the peak hours 0500-1700hrs Monday ndash Friday This has resulted in the terminal deploying more equipment and labour resources at the terminal to meet the obligations of contracts with Customs but at the same time has increased competition for resources depending where the container is place in the terminal and how the yard equipment is coping with the demands of industry

53 DP World Sydney has contracted performance KPIs to deliver along with following

factors to overcome that contributed to resource competition

bull Random arrival of Customs transport provider trucks (B Doubles) and random selection of containers due to weight constraints of the trucks

bull Multiple containers per truck relating to up to six different locations a truck has to visit within an RTG terminal and the potential to utilise six different resources

bull The requirement for DP World Sydney to block stack Customs targeted containers from a vessel in order to minimise the variability of locations a Customs truck has to visit This block stacking requirement has a negative impact on vessel performance and creates more competition for internal resources

bull DP World Sydney does not control the transport to and from the CEF Customs have appointed a carrier in each port and who under the contract is responsible for the effective co-ordination between the terminals of the movement of X-Ray containers DP World Sydney does liaise with the Carrier but the carrier has the final say as to how many trucks are allocated to each terminal and

bull DP World is of the view that the current operating hours of the CEF are contributing to resource competition within the terminal during the peak periods If the CEF opened midnight shifts rather than day shift this would reduce resource competition increase terminal resource utilisation in the non-peak hours and an improvement in efficiency would be gained by industry

Declaration of Cargo

54 The Australian Customs Service (ACS) has put in place a requirement for

importers to declare cargo at least 48 hours prior to a vesselrsquos first port of call in Australia This is an initiative that has the ability to increase the efficiency of import container movements and decrease the time containers remain in a stevedore terminal The on-time reporting performance in NSW during March 07 was 87

Page 9 of 48

The ACS should continue to put in place incentives to increase this clearance rate of containers in order to gain 100 compliance

55 The Australian Quarantine Inspection Service (AQIS) could assist by utilising an

electronic means of communicating the application and release of AQIS holds required on containers Currently AQIS operate a totally manual operation

6 The Tribunal specifically invites comments on the current role of the SPC and on

the role SPC might take in improving the efficiency of the supply chain

61 Sydney Ports Corporation has stated objectives which include

bull Enhancing and developing strategic assets to ensure efficient optimum utilisation

bull Continuing to build effective relationships with stakeholders that improve the competitive positioning of the ports and

bull Taking the lead in facilitating port related freight solutions

62 DP World in Sydney has participated in efforts by SPC to facilitate efforts to achieve mutual outcomes between both the stevedores and section of the road transport industry

63 In addition SPC has

bull Measured TTT at Port Botany and published these statistics since (2001)

bull Encouraged more use of rail with the support and investment by DP World

bull Requested more capital investment to improve road transport interface which has been supported by DP World through the acquisition of additional container handling equipment

bull Sought the elimination of truck queuing outside the container terminal with the support and implementation of a Vehicle Booking System by DP World

bull Sought the development of inland intermodal terminals with the support of DP World and

bull Sought the inclusion of suitable landside Key Performance Indicators within future lease terms

64 We consider that SPC has taken the leadership role appropriate for its position in

terms of seeking to facilitate improvements in overall port efficiency without interfering in the various commercial arrangements between stakeholders

7 The Tribunal invites stakeholders to comment on any aspects of the current work

practices of freight forwarders customs brokers and any remaining industry participants that may be causing inefficiencies or extra costs to arise in the downstream supply chain

Customs Brokers

71 It is the practise of some customs brokers to wait until the storage free period at

the terminal has almost expired before paying the duty to the Australian Customs This has the impact of retarding the stevedorersquos efforts to improve the velocity of container movement through the terminal Customs brokers should therefore be encouraged to pay duty as soon as possible

72 Customs brokers can also contribute to congestion at the terminal by not paying the Customs duty up to at least 2 hours prior to the carrierrsquos time slot This results in the truck waiting at the terminal for the information to flow through to the terminal operating system via EDI

Page 10 of 48

73 One way of achieving flow in (71) and (72) above is to disconnect the relationship between the payment of duty and the physical control of cargo movement To maximise the effect here the ACS could request the Customs brokers to also lodge the lsquoImport Declarationrsquo 24 hrs prior to arrival and collect duties on account after the event

74 An initiative at DP World Brisbanersquos terminal has been successful in obtaining early container information as part of their VBS (linking timeslot to the container number)

75 The system has been in place for almost 12 months now and the availability of information at DP World Brisbane has contributed to improved service levels at this terminal

Empty Container Depot Opening Times

76 A majority of Empty Container Depots reside within 10 km radius to the port

precinct Depot opening ties do not match container terminal operating hours The result is an inability for carriers to return and pick up an empty container 24hrs a day to depots This reduces the potential of utilising the existing vehicles on the road creating potential traffic congestion and therefore free up their trucks to collect import containers from the terminal Through tariff structures the shipping lines have the ability to influence the depots to increase their opening hours thus resulting in greater vehicle utilisation and subsequent reduction in transport charges The extended spread of hours will also have the effect of flattening the peak traffic periods and reducing road congestion and travelling times

8 The Tribunal invites stakeholders to comment on any aspects of the VBS

particularly in relation to the number of timeslots made available and on what basis and the process by which those slots are made available across the day(s) and to whom

81 The VBS is simply a means by which to communicate with the transport carrier

community What determine the number of slots made available are resource levels provided at the container terminal DP World Sydney provides more than sufficient resource levels to enable all containers to be delivered as required to road within the three free day period even accepting the industryrsquos current limited use of the available 247 terminal operation It is acknowledged that resource levels provided to road operations may be varied day to day as resources may need to be directed to ship operations but this follows from running the terminal as an integrated operation which is ultimately most efficient Providing further day time slots without addressing underlying market inefficiencies only risks service levels to shipping lines that are demanding higher performance levels and perpetuating the industryrsquos unwillingness to support 247 operations

82 DP World also notes that all carriers may and do from time to time contact the

terminal and request additional timeslots if there are none available on the VBS The terminal will endeavour to accommodate such requests where there is operational capacity to do so If there is capacity the Terminal will book the timeslot in the name of the carrier that has made the request

83 Further details of the VBS are provided in responses to subsequent questions

However we believe that the VBS at DP World Port Botany Terminal has delivered benefits including

bull No random queuing at the terminal which results in significant unplanned

delays to transport users due to the random arrival of trucks at any point in time to the terminal where the terminal is not resourced to handle the high peaking demand for landside resources whilst at the same time meeting contractual obligations with shipping lines

Page 11 of 48

bull The terminal is able to carry out bulk moves while maintaining service levels to other general carriers

bull Provides choice to carriers in terms of access as well as providing transparency to industry

bull States subscriptions fees in a public document which are transparent to industry

bull Increase slot allocation to road users based on irregular shipping schedules and

bull While not referred to in the Carrier Access Arrangements (see attachment 1) all B class carriers are allowed to engage in a process called ldquoexport taggingrdquo Export tagging involves a carrier booking an import timeslot in ePorts which will give them access to the terminal A carrier is then able to bring and export container on the truck that is arriving to collect the import container without booking a slot for that export container (during most timeslots in the day) The purpose of this flexibility to carriers is to increase two-way running which reduces costs to carriers and decreases the number of trucks in the port community

9 The Tribunal asks stakeholders to comment on the variability of average

turnaround times across the major ports and the variability of turnaround times faced by individual transport operators at Port Botany itself The Tribunal also invites comment on how important predictability of turnaround times is to transport operators relative to average turnaround times at Port Botany The Tribunal further invites comment on why turnaround times are higher for Port Botany compared to Melbourne Adelaide and Fremantle

91 The precise nature of operations differs between the ports and between the

terminals operated at those ports These differences arise because of the range of shipping lines that arrive at the various terminals and the volumes of containers and type of cargo going through each terminal There are also differences in the container yard handling equipment yard configurations at each terminal and hours of operation resulting in differences in the way each terminal operates These differences result in variations amongst each terminalrsquos service performance levels

92 During 2002 DP World Sydney management met with a representative group of

carriers to discuss the VBS and access arrangements at the terminal A common view of the carriers was that they would like consistency to truck turn times and that 60mins (carrier measurement) is acceptable The outcome from these meetings was that DP World introduced three internal KPIs

bull Truck processing to truck complete measurement ndash 38 mins average

bull TTTs of 60 mins or less to be 90 to total trucks

bull TTTs of 120 mins or more to be 1 or less

93 Figure 4 below shows the percentage of truck turn times that are 60 minutes or less at DP World Sydney There is a noted improvement in during mid 2005 from an average prior to this time of 73 to an average during 2006 of 85 This indicates that the predictability of the truck turn times has improved during the life of the VBS

Page 12 of 48

Figure 4 DP World Sydney ndash Percentage of Truck Turn Time under 60 mins

DP World Sydney - Percentage of Truck Turn Time under 60 mins

50

60

70

80

90

100

Jan-04

Mar-04

May-04

Jul-04

Sep-04

Nov-04

Jan-05

Mar-05

May-05

Jul-05

Sep-05

Nov-05

Jan-06

Mar-06

May-06

Jul-06

Sep-06

Nov-06

Jan-07

Mar-07

94 Figure 5 below shows the terminal truck turn time and the stevedoring volume since July 2003 at DP World Sydney Note that the volumes are hidden on the left Y axis for commercial reasons As a result of terminal improvements and putting in place the KPIs described above the average TTT performance has improved (right Y axis) whilst at the same time the terminal volume has increased (left Y axis)

Figure 5 DP World Sydney ndash Truck Turn Time and Container Volume

95 DP World operates in all five major ports in Australia and has three different modes of operation namely Straddles in Melbourne and Adelaide RTGrsquos in Sydney and Fremantle and Forklift and Reach-stacker in Brisbane The Variability in TTT between ports is attributed to a number of factors including but not limited to the site processes and physical constraints of each facility

96 The measurement of TTT differs mainly due to

a) the layouts of in-gates and its approaches and

Page 13 of 48

b) the measurement of the job steps which apply to a truck from arrival to departure due to (a)

97 All the above terminals have different truck parking arrangements within and

outside the terminal which impacts TTT Across the board TTT is measured from job processing to job complete (98c to 98e below) however the physical layout and mode can influence when processing commences

98 The process of truck management in simple terms is

a) Pre-arrival of trucks

b) Validation of time slots

c) Processing of job (Manual but if automated it takes effect in b above)

d) Enter the operational yard

e) Job transact and complete (by straddle RTG or Forklift Reach-stacker) and

f) AQIS check for full trucks and depart (gate-out)

99 Depending on the physical layout and provision of sufficient space to hold trucks within the terminal boundary or otherwise the distribution of trucks varies through steps 98a to 98c above

910 At DP World Sydney the equivalent hourly truck volume can be held in the

terminal entry marshalling area therefore multiple trucks can enter the terminal park and be processed by terminal staff Post processing all time spent in the marshalling area forms part of the TTT whilst the truck has not necessarily entered the operational yard (see Annexure 2)

911 At DP World Melbourne on the other hand due to restricted space within the

terminal trucks are normally held outside and a small number is constantly drip fed into the terminal (controlled rate of entry) These trucks then approach the processing points (6 lanes x processing booths) further which they directly enter the operational yard and the TTT is measured from this point

912 DP World Fremantle does not have a truck holding area within the terminal which

means the truck enter the terminal and queue at the Entry to Operational Yard Immediately after being processed the truck enters the terminal yard Therefore unlike Sydney time from Entry to Operational Yard is time historically not published Therefore TTT between DP World Sydney and DPW Fremantle are not comparable

913 DP World Fremantle is also an RTG operation similar to DP World Sydney

However the physical layout and the resulting entry arrangements differ Due to restricted space within the terminal the trucks are normally held outside and constantly drip fed into the terminal (controlled rate of entry) The trucks operate through 3 lanes within the terminal and truck turn time is measured at this processing point when the trucks actually enter the operational yard

914 DP World Adelaide is a straddle operation similar to DP World Melbourne

However its physical layout and resulting entry arrangement is different to that of DP World Melbourne and has some similarities with what takes place in Sydney The hourly truck volume can be held within the terminal and the TTT is measured from entry into the terminal main gate to departure from the terminal main gate The measure differs from the other facilities on both entry are exit gates

915 The benefits of this TTT data is not so much the raw data itself but more so the

long term trend in the data If TTT is constant or even improved during periods of volume growth then this reflects a firm commitment to the landside process Continuous improvement reflects a commitment to landside efficiencies

Page 14 of 48

916 TTT is influenced by the mode of operation the Gate In infrastructure and volume

of containers required to be handled

917 The RTG mode of operation requires the truck to travel to the yard stack where the container is located or assigned as opposed to the straddle operation where the straddle comes to the truck that is parked in a bay external to the stacking area The mode of operation at DP World Sydney generally results in a truck with multiple containers being serviced by multiple RTGs and also having to travel to multiple yard locations At each of these yard locations there will be a different level of demand on the particular RTG covering the area This will result in variations in the time it will take to service the truck in that particular area and therefore will influence the truck turnaround time

918 In comparison a terminal running a straddle operation could employ a different

straddle to handle each of the containers processed for the truck

919 The mode of operations employed by container terminals have various strength and weaknesses and need to be considered based on many factors in a Port (ie not just the landside interface) but both modes can contribute to variability

10 The Tribunal invites comment on how truck turnaround times are currently

measured by supply chain participants and how they should be measured The Tribunal further invites comment on the extent to which the stevedores provide access to their facilities at the specific times booked on the VBS

Truck Turn Time (TTT)

101 DP World Sydney currently measures truck turn times from the time the containers on a truck are processed to the time the last container is completely loaded onto the truck (import containers) or discharged from a truck and landed in the terminal (export containers)

102 TTT is directly influenced by the number of containers to be handled by an RTG

terminal on a truck run ie a higher number of containers results in a longer truck turn time on average This due to the truck having to potentially visit multiple locations within the RTG terminal

103 The reason the container Terminal does not measure the time following

completion of loadingdischarging container from truck is measure regulatory bodies (ie AGIS) have commenced inspection of containers on terminal exit gate which is beyond the control of the container terminal

104 The process time is used to measure the start of the truck turn time as this is the

closest time to the truck being in the terminalrsquos control

105 Trucks that take advantage of the autogate processing (currently 25 of trucks) actually start the truck turn time as they come through the terminal gate as this is where the transponder reader is located DP World Sydney support the increase of the autogate processing and the result that the truck turn time starts at the gate For trucks that do not use the autogate processing opportunity the terminal does not start the truck turn time at the gate as the truck driver may not move efficiently to have the container processed

106 Carriers often use TTT measured from the time the truck services at the standby

queue or the arrival of the truck at the zone queue which are waiting for the next time zone to open

107 In relation to standby queue the CAA clearly stipulates that the use of this system

does not guarantee immediate call-up to the terminal in priority to trucks that have booked a time slot

Page 15 of 48

108 In relation to TTT measured from arrival at the time zone queue the fact that the truck has arrived prior to the commencement of the zone opening is purely a decision of the transport carrier and is beyond the control of the Container Terminal and is not supported by DP World

Container Turn Times

109 DP World Sydney currently measures container turn time from the time the

container is processed to the time the container is loaded onto the truck (import container) or discharged from a truck and landed in the terminal (export container) Over the last 5 years the transport regulators have allowed truck operators to operate larger trucks thereby ultimately improving the efficiency of road transport As transport operators increase the use of larger trucks (capable of carrying multiple containers) the handling of these trucks produces a multiple handling of containers on the same truck at the terminals For example in the past one would handle one container per truck and in that case the CTT and TTT were almost identical With multiple containers on trucks the difference between the CTT and TTT is increasing To be able to benchmark this across a port and other ports becomes hard with TTT due to the ever changing ratio of containers per truck (depends on percentage of large truck operators) firstly within the same port and secondly between different ports Therefore CTT enables us to benchmark the measurement on common grounds across all our operations around the country

Access Times at DP World

1010 DP World Sydney divide the day into hourly time zones within the VBS The time

zones start on the house (eg 0700hrs) and complete at the end of the hour (eg 0759hrs) There is a time zone board located at Simblist Road which indicates which time zone is open Trucks queue at this point waiting for the board to change each hour During daylight hours on average there are 15 trucks waiting for the time zone to open The trucks then make their way to the terminal in gate located on Friendship Road once the zone is open

11 The Tribunal invites comment on the choice between a system where container

numbers are nominated in advance thereby offering the possibility of faster turnaround times or not providing container numbers which would provide road carriers with greater flexibility Or would industry participants prefer a system that allows the choice between both

Import Timeslots

111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the import container number in a timeslot booking up to the start of the time zone The disadvantage for the terminal and the carrier is that this flexible system arrangement does not allow the terminal the chance to reposition the container to a position that will minimise the number of containers that have to be moved (known as ldquoconsolidation movesrdquo) in order to access the container that is to be delivered to the truck once the truck has been processed and is in position for loading The more consolidation moves the terminal has to do to load an import container to a truck the longer the truck turn time will be

112 Undertaking consolidation moves prior to truck arrival would provide the opportunity

to decrease truck turn time

113 To achieve a further reduction in truck turn times and a reduction in cost of delivering a container the terminal would need to control the order in which the import containers are delivered This occurs in other ports in the world

Controlling the order of import deliveries

114 The current arrangement where the shipper controls the order of import containers

to be delivered from the terminals results in extra costs incurred by stevedores and also decreased efficiencies The longer a container remains in the terminal (an

Page 16 of 48

increase in the dwell time) results in increased consolidation (rehandles) undertaken by terminal equipment and an increase in the time taken to load a container to a truck or train

Matching of resources to meet demand

115 The terminal allocates the resources required based on the demand or the

number of timeslots released This occurs 24 hrs in advance

116 Carriers who book timeslots and do not meet their commitment (No Show) results in the terminal resources to be under utilised at certain times and creates an opportunity loss There is also an opportunity lost by another carrier to utilise the time slot for each No Show

117 Carrier who book timeslots and arrive late for their commitment (Wrong Zones)

results in terminal resources being under utilised at times and over utilised at other times The troughs in terminal resource utilisation result in an opportunity loss and the peaks result in a decrease in efficiency (increased truck turn time) or increased cost (increased resources applied) The increase in truck turn time has an impact on carriers who arrive on time for their time slot

118 The current VBS allows for carriers to arrive at the terminal to deliver or pick up a

container without committing to a time and container number thus not enabling the terminal to completely plan the required resources to meet the demand This is termed unplanned work The Standby Queue export tagging by B Carrier no advanced deadline for entering an import container number prior to the time zone and no requirement for an export container number being entered into a time slot booking results in an increase in unplanned work Unplanned work results in peaks in the work required by the planned resources and a decrease in efficiency

119 Rail also has similar problems

1110 By changing this arrangement and giving control to the stevedores to determine

the order of container delivery from the terminal will reduce the costs incurred by the terminal and decrease the turnaround time for trucks

Export Timeslots

1111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the export container number in a timeslot booking up to the start of the time zone It also allows an export time slot to be processed without a container number entered in the time slot booking The container number in then entered by the RampD Clerk at the terminal This often results in human error by the truck driver or the RampD Clerk resulting in delays to trucks This practice also eliminates the opportunity for the carrier to use the automatic processing described below in Question 12 To maximise the use of automation and eliminate human error the export container number needs to be a mandatory field to be updated in the time slot booking by a nominated time prior to the start of the time zone eg 2 hours prior to the start of the time zone

12 The Tribunal invites comments on the increased use of ICT and automation and

any other ways to reduce turnaround times and otherwise improve supply chain efficiency

121 DP World support and are driving the increased use of automation for the

processing of trucks DP World have developed and currently make available an automated truck processing system for carriers who use ePORTS to book and manage timeslots The percentage use of this system at DP World Sydney by carriers averages about 25 of total truck movements excluding stack run trucks

122 This system requires the purchase of a transponder unit from the terminal at the

cost that the terminal purchases the unit plus GST Currently the units are sold to

Page 17 of 48

the carrier for $12050 Also required is access to an eGATE screen in ePORTS The process for carriers wanting to move a number of containers on a transponder run involves

a) Booking through EPORTS the required number of time slots in a time zone

For example if a transport carrier wanted to deliver two export containers and collect one import container on a single truck run it needed to book three slots and

b) Setting up the transponder by inputting the slots truck number container numbers and whether they are import or export containers in the transponder booking screen in ePORTS

123 The benefits for carriers of using this automated processing include

a) The processing occurs earlier (ie at the gate as compared to in the RampD Office) therefore this decreases the chance of Wrong Zones being incurred

b) No need for the truck driver to present documentation at the RampD Office therefore reducing the truck turn time by avoiding any potential queues

c) No interaction between the truck driver and the RampD Clerk therefore decreasing human error during processing and causing further delays

d) As the processing occurs at the gate the trucks can skip ahead of other trucks where their drivers have to manually process in the RampD Office effectively jumping the queue

e) Allows reprogramming of trucks up to 15mins before the end of the time zone (eg 0645 for an 06 slot) without the truck driver needing the Delivery Order in his possession

f) Provides the carrier with the ability to educate their customers to provide the Delivery Orders in a timely manner in order to lodge them at the terminal

g) Electronic copies of the Delivery Orders (excluding scanned copies of originals) can be forwarded to the terminal via email therefore eliminating the need to physically lodge them

h) Enables the carrier to take all advantage of Electronic Import Delivery Orders (eIDOs) that are currently being used by Evergreen Marine at DP World Sydney Other shipping lines will move to the use of eIDOs in the future

13 The Tribunal invites stakeholders to comment on VBS capital and operating costs

and to assist it to distinguish between stand-alone VBS costs and those shared with other stevedoring activities

131 It is important to distinguish between the capital and operating costs of operating

the VBS and the costs of operating the landside interface ie delivering containers to and from trucks

132 The costs of a VBS comprise the following components

bull IT development and maintenance costs and

bull Management and administration time to manage and administer the system

These costs are low relative to the costs of actually providing the services within the terminal ndash loading and unloading the trucks

133 Having a system which requires the terminal to provide a guaranteed number of

slots per hours is to the disadvantage of the terminal Terminal operations are by their nature unpredictable due to the irregular arrival of ships Having to guarantee a number of slots which carry with it a high expectation of performance in terms of TTT tends to force the terminal to set the number of slots at a level which includes a risk mitigation factor against all things not going to plan The net result of this is

Page 18 of 48

that the terminal tends to effectively oversupply equipment and labour increasing its costs The impact of this is far more significant than the isolated costs of running the actual vehicle booking systems

134 Direct VBS costs have nothing to do with ship or rail operations

135 The container yard is run as a single operation servicing ship road and rail By

this means while there are practical limitations we seek to pool resources to maximise the overall efficiency of terminal operations particularly to absorb the peaks and troughs of demand across the operations as a whole This effective sharing of costs improves overall efficiency and results in lower costs to the benefits of users as a whole We anticipate that systems and technology improvements will see greater use of such pooling and greater overall efficiency as a result

14 The Tribunal invites stakeholders to comment on VBS access and penalty charges

and the level of transparency of access through the stevedoresrsquo VBSs

141 The VBS facilitates the provision of orderly access to DP World Sydney Terminal for over 200 individual carriers

142 DP World considers the achievement of orderly access to its terminals as a

primary objective of the VBS To achieve orderly access DP World considers it important to require carriers to pay a nominal subscription charge for the level and rights of access they require and to issue ldquono showrdquo and ldquolaterdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay lsquoon timersquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs

143 The VBS is essentially an ldquoappointment bookrdquo to assist transport carriers to

organise themselves more efficiently leading to a reduction in waiting times at the container terminal The VBS divides all working days into time periods containing a pre-determined number of timeslots The timeslots represent the number of import and export containers that can be handled in that period The number of timeslots in a day is determined by expected carrier demand and the availability of labour and equipment Carriers are then able to book timeslots for collection or delivery of containers

144 The alternative is random access to container terminals by carriers and significant

truck queues with associated demurrage costs which are ultimately paid for by the end user

145 At DP World Sydney the VBS offers transport carriers the ability to access an

internet based computer system or telephone bureau for the purpose of booking time slots for those carriers who do no wish to use the computer system The VBS in its present form offers access on a transparent and equitable basis to all carriers encourages the efficient movement of containers from the ship through the terminal and onto customers and vice-versa encourages innovative practices which are beneficial to terminal efficiency road congestion and the overall cost of the supply chain The ldquono showrdquo and ldquolaterdquo fees encourage these operational practices and efficiencies

146 DP World has adopted a class structure with an annual subscription for access

because this system allows carriers to determine what access is required for their business while providing the industry significant level of transparency in terms of access costs

147 All carriers have an equal opportunity to subscribe to any of the three classes of

access to the VBS (bearing in mind that smaller carriers are allowed to consolidate

Page 19 of 48

their subscriptions in order to share the cost of a B Class subscription) and equal access to timeslots amongst carriers of the same class

148 Annual fees are payable in advance Table 3 sets out the various carrier classes

currently in operation at each terminal and the applicable subscription fees for each class There are no annual limits on the number of slots carriers can book

Table 3 DP World Sydney ndash Current carrier classes and VBS deposit and registration fees for the year commencing 1 July 2005

Terminal Carrier Classes Price Number of active

carriers at Feb 06 Port Botany New South Wales

B Carrier ndash online internet access with high service levels

$2922150 (Non-refundable deposit) No fixed upper limit on annual time slots1

28

A Carrier ndash online internet access with standard service levels

$133400 (Annual registration fee) No fixed upper limit on annual time slots2

162

AB Carrier ndash access via the PampO Phone Booking Bureau with standard service levels

$66760 (Annual registration fee) No fixed upper limit on annual time slots3 39

149 Any carrier selecting the ldquoBrdquo classification is encouraged to also consider the ldquoArdquo

classification unless they are confident of utilising a high level of timeslots that would render the higher subscription fee as attractive per timeslot

1410 In addition to the VBS annual subscription fees the carrier access arrangements

provide for the levying of a no-show fee on carriers who fail to arrive for slots they have booked in the amount of $110 per time slot The terminal also charges carriers late fees of $55 per slot if they fail to arrive for a slot booking within the nominated time zone No fees are charged where a carrier is unable to meet the time slot due to delays caused and acknowledged by DP World Australia or where delays are caused by circumstances genuinely outside of the carrierrsquos control DP World Australia also has the discretion to and does waive ldquono showrdquo and ldquowrong zonerdquo fees in the interest of maintaining a good working relationship with carriers Failure by carriers to pay these ldquono showrdquo and ldquowrong zonerdquo fees may lead to them being prevented from making further bookings ldquoNo showrdquo and ldquowrong zonerdquo fees are the means by which DP World ensures that access to itrsquos terminals is provided in the most efficient manner to all 1carriers as late carriers cause delays for those carriers that are on time

1 No fixed upper limit on annual timeslots ndash Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 2 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 3 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release

Page 20 of 48

1411 The ldquono showrdquo and ldquowrong zonerdquo fee structure was introduced following

consultation with carriers It was originally $20 per late arrival (in Victoria where VBS first commenced) but this is proved to be ineffective in disciplining carrier conduct In response to requests from many carriers DP World increased the ldquono showrdquo fee to $110 The fees also discourage carriers from the practice of overbooking slots which they have no intention of using and preventing other carriers from using those slots

1412 The actual cost of a truck turning up late (Wrong Zone) or not turning up at all (No

Show) is the cost of planned resources (labour equipment etc) based on the VBS demand (number of containers expected to handle during a time period) not being utilised during the time period they are employed

1413 Adjacent to each time zone are grace periods one prior to the time zone and one

following the time zone These grace periods and the trucks arrival time for processing determine the status of the time slot ie arrived on time or arrived late (Wrong Zone) Currently the grace period following the time zone is set at 20 minutes which means that if a truck arrives later than one hour and 20 minutes after the start of the time zone then the time slot will be initially recorded as a Wrong Zone Following the completion of each VBS day Wrong Zones are reviewed and any penalty waived if any of the following determined

a) The terminal is aware that it has contributed to a truck arriving late for the time

slot ie the terminal has previously delayed the truck or carrier on an earlier time slot or

b) The carrier advises that they arrived late due to an unforeseen circumstance eg a break down of the truck

We request that the information in 1414 be kept confidential

1414 Omitted for reasons of confidentiality

1415 Officers at DP World Sydney have regular conversations with carriers in respect of

the waiver of No Show fees as well In certain instances DP World may agree to waive fees prior to an invoice being issued

1416 For both Wrong Zone and No Show fees the terminal provides a grievance

process for carriers who have been issued invoices and do not agree that the fee has been issued fairly The carrier has the opportunity to provide the terminal with an explanation and should officers at DP World Sydney agree that there has been an error in the issuing of the fee or an unforeseen circumstance is explained the terminal will credit the invoice

15 The Tribunal invites stakeholders to indicate the costs of providing the services of

rail windows and rail paths to rail operators

151 Rail windows are based allowance on a rail terminal performance KPI of 30 container moves per hour and charged at $360 per hour A shunting time allowance of 15 mins per window is not charged Additional lifts canare provided by increasing the lifts per hour by applying more machinery at no additional cost

152 The cost of providing terminal rail operations is higher than road operations at DP

World Sydney The RTG mode of operation requires a container to be moved to or from the container stack For road containers the truck takes the export container to the stack and travels to the stack to pick up an import container For a rail container a terminal internal transfer vehicle (ITV) is required to be used by the terminal to move the container from the train to the stack (export containers) or

Page 21 of 48

the stack to the train (import containers) This is not required for container being received or delivered by road

153 For import rail containers there is a loss of efficiency for the vessel discharge

operation in order to stack rail containers separately for delivery to the train For each discharge point in the terminal extra resources are required There is extra administration costs in having to make alternate arrangements to separate these import rail containers

154 Despite the fact that the delivery of containers to rail is higher than road the

terminal seeks only a partial recovery of costs in order to encourage the use of rail in the port in line with the NSW Government objectives

155 There is a management cost of setting up and operating the rail windows This is

similar to the cost of operating a VBS

156 There is additional security infrastructure costs for a rail operation to ensure the terminal meets their legislative security requirements The more terminal entry points created the higher the cost to replicate these security infrastructure requirements

16 The Tribunal invites comment from stakeholders on the planned or mooted

development and expansion of the various intermodal terminals in Sydney and the extent to which this is expected to ease congestion in the landside supply chain at Port Botany

161 DP World supports the development and expansion of an intermodal terminal

network to facilitate an increase in the use of rail as the means of container transport This has the potential flow on benefit of minimising the growth in the number of trucks requiring to access the Port Botany area as port volumes continue to grow

162 Transport between the Botany terminals and the inland intermodal terminals

should be by rail or trucks operating a stack (bulk) run road out during off peak periods eg night shifts or weekends The use of Super B Double trucks would assist with the efficiency of these off peak stack run outs

17 The Tribunal invites comment on the likely effect of the expansion plans at Port

Botany on access to the port terminal during peak periods and efficiency along the supply chain

171 Improving the two-way running or back-loading of trucks has to be a priority in

order to maximise access opportunity at the terminals and efficiency along the supply chain It is likely that a third and separate stevedoring facility will only increase the difficulty of improving truck utilisation over and above the current levels by the increased logistics complexity of coordinating timely access to three terminals rather than two

172 A third stevedore will lead to the same port volume being spread over three

operations While it is resource levels that determine available slots DP World has found that during periodic decreases in volumes carriers favour daytime runs to the terminal as opposed to night time

173 The expansion plans will have a negative impact on rail transport timeliness and

access requirements to DP World Sydney if the requirements to breaksplit trains and shunt sections of trains into multiple terminals continues This will undermine the overall rail effectiveness and the NSW Government rail objectives by the unnecessary increase of splitting trains

Page 22 of 48

18 The Tribunal invites comment on the likely effects of expansion of the intermodal network in Sydney on access to the port and efficiency along the supply chain

181 This is a similar issue to point 16 above

19 The Tribunal invites comment on the likely impact of a peak pricing system along

the lines of the FIC on access to the port terminals and the efficiency of the Port Botany supply chain

191 We understand for the NSW Governmentrsquos announcement (31 May 2007) that the

FIC is no longer being proposed

192 Table 4 shows the average percentage of road containers that are handled by shift at DP World Sydney based on a 6 day x 24 hour receival and delivery operation for the past 4 years The figures indicate that there is surplus capacity on both evening and midnight shifts when compared to day shift Note that the percentage of road containers handled has increased on day shift relative to the combination of evening and midnight shifts This has been due to terminal efficiencies creating increased capacity during day shifts and the road carriers utilising this capacity

193 This is further emphasised in Figure 4 which shows the trend over time for day

shift containers handled has increased from 2005 evening shift has decreased and midnight shift has not changed significantly

Table 4 DP World Sydney ndash Percentage of Daily Road Container Volume handled by Shift

Year Midnight Shift (2230 ndash 0630hrs)

Day Shift (0630 ndash 1430hrs)

Evening Shift (1430 ndash 2230hrs)

2007 YTD 21 47 32

2006 23 45 33

2005 22 43 36

2004 19 44 38

194 Year to date April 2007 figures may reflect the seasonal trend for lower volumes in this period

Figure6 DP World Sydney ndash Road Volume trendlines by shift 2005-07

Page 23 of 48

20 The Tribunal invites comment on the likely impact of the expansion of the freight

rail network in Sydney on the number of containers moved by rail and on congestion at the port

201 The importance of increasing the proportion of containers moved by rail is

recognised and supported by DP World Sydney

202 To complement the expansion of the rail freight network upgrade the terminal is developing plans to increase the length and the number of sidings within the terminal Over the next three years the terminal is planning to spend an estimated $20million on internal rail infrastructure machinery and systems The terminal upgrade will ensure DP World Sydney has the infrastructure in place to meet a target of 40 throughput by rail

203 The expansion of the freight rail network needs to take into account The access

to each of the terminals especially the access to DP World Sydney where by the terminal has a distinct disadvantage in relation to its competitor

21 The Tribunal invites comment on the impact on the supply chain on ARTC

managing the metropolitan freight rail network

211 Management of freight rail infrastructure is ARTCrsquos core business and will bring additional management expertise and focus to the task of reforming operations on the Port Botany rail infrastructure

212 For ARTC to control the MFN (Metropolitan Freight Network) makes sense from

the point of view they can make informed decisions for both inbound and outbound Port services based on the wider NSW Rail Freight Network operation

213 The ARTC proposal to co-ordinate services by performing the full Network Control

Function (both signalling and Train Control) from the one centralised centre for the Southern Sydney Freight Line (SSFL)MFN and Port Botany emphasises their commitment to ensure safety communications and network management is their primary objective

214 ARTC are focussed on improving the efficiencies at the Port and bring to the

industry fresh innovative ideas to improve the overall capacity on the rail network ARTCrsquos willingness to assist and eagerness to invest in the rail infrastructure brings a breath of fresh air to the industry and specifically the stevedore operations ARTC can integrate the Botany line into its overall investment program paving the way for additional investment to improve the efficiency of operations on the Botany rail line and at the port-rail interface

22 The Tribunal invites comment on the following questions in relation to costs of the

VBS

22a What costs underpin the VBS access charges levied by the two stevedores How are the VBS access charges set

22b1 Refer to Question 14 The revenue from VBS charges account for a very

small proportion of DP Worldrsquos total container terminal revenue For the year ended 31 December 2006 they accounted for 13 of total revenue Of that 13 approximately 30 was for No Shows and Wrong Zones

22b What costs are incurred by the stevedores in moving a container from the

wharf to a truck or train

22b1 DP World Sydney is operated as an integrated business servicing ships road and rail within the context of a national business We do no separately account for the costs of each discrete activity Information on

Page 24 of 48

overall costs is provided to the ACCC and published on an industry basis in the ACCCrsquos Container Stevedoring Monitoring Report

22b3 Wharf to truck activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the VBS to provide orderly access for road carriers

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal space to allow truck drivers to park their vehicles in order to unlockset up their twist locks and processing of containers

bull Processing of the container

bull System to manage the truck movement within the terminal

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the truck by RTG or forklift

bull Provision of terminal area for truck drivers to safely leave their vehicle to lock the twist locks on their trucks check the container seal number and check the container for damage

bull Provision of terminal area for AQIS operation and infrastructure

22b3 Wharf to train activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the Rail Windows to provide orderly access for operators

Page 25 of 48

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal area for rail lines associated rail infrastructure and train inspection requirements within the terminal

bull Processing of the container

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the ITV by RTG or forklift

bull Internal Transfer Vehicle (ITV) movement of the container from the yard stack to the rail line

bull Lift of the container from the ITV onto the rail wagon

22c What influences the nature and amount of these costs (for example are they influenced by the type of equipment used by a stevedore Do they fluctuate with the number of containers handled by the stevedores) and how have costs changed over time

22c1 DP World operates very similar Vehicle Booking Systems in Brisbane

Sydney Melbourne and Fremantle where there are differences in volume through the terminals The only difference in subscription between the terminals are the ldquoB Classrdquo carrier subscriptions The annual subscription is influenced by the number of carriers seeking this class and the hourly allocation of slots to their class given the number of subscriptions In addition Melbourne operates a straddle facility and Brisbane operates a forklift reachstacker Therefore the cost of the Vehicle Booking System is not dependant on or mode but the annual subscription to ldquoB Classrdquo carrier depends on competition for that carrier class

22c2 An annual subscription fee per class which is a characteristic of DP

Worldrsquos VBS does not normally increase with volume At DP World Sydney subscription fees have not been increased since 2003

22c3 Overall landside costs have increased with increases in wages and

salaries (4 pa) property costs (substantially ahead of cpi) fuel and other general costs These increases have been offset to some extent by increases in productivity Industry costs history is also available publicly in the ACCC Container Stevedoring Monitoring Reports

22d Where do the port landside costs stop and the VBS costs start

22d1 Prior to the Entry to Operational Yard (see Attachment 2) the truck is

under the influence of the VBS and also under the influence of the external environment which includes but is not limited to port and metropolitan road conditions container clearance issues truck arrival peaks and troughs truck preparedness processing of the container to the handled by the terminal and maritime security requirements

It is DP World Sydneyrsquos view that the port landside costs stop and the VBS costs start at the choke point

22e Do the VBSsrsquo penalty charges reflect the cost to stevedores What should

they reflect

22e1 The primary rationale for the penalty regime is to seek to modify carrier behaviour

Page 26 of 48

22e2 However it is also the case that a ldquono showrdquo or ldquowrong zonerdquo gives rise to a lost opportunity cost to the terminal Resources made available but not utilised may be wasted

22e3 DP World considers the achievement of orderly access to its terminal as

a primary objective of the VBS To achieve orderly access PampO considers it important to issue ldquono showrdquo and ldquowrong zonerdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay ldquoon timerdquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs The alternative is random access to container terminals by carriers and significant truck queues with associated demurrage costs which are ultimately paid for by the end consumer

22f Should there be different charging arrangements for empty containers that

are returned to the port as opposed to full export containers

22f1 DP World Sydney terminal handles a full container in a similar way to an empty container using purpose built container stacking equipment controlled by a DP World employee A container occupies the same amount of space whether it is full or empty This leads to the same cost for the handling of a single empty container as a single full container Single empty containers returned to the port should be charged a similar rate to full containers

22f2 To reduce the cost of handling empty containers in the terminal destined

for the same port on the one vessel and that are of the same size the terminal in conjunction with the shipping line and the shipping linersquos nominated carrier work together to create a bulk run of empty containers The bulk run maximises the number of empty containers that are handled in a specific time period The terminal dedicates resources to thee bulk runs and also provides priority access to the transport carrier in order to create efficiency and an economy of scale In this way the cost of returning an empty container via a bulk run is reduced

23 The Tribunal invites comment on the following questions in relation to the different

pricing regimes of the two stevedores

23a Why do the stevedores have different pricing schemes for their VBSs

23a1 We do not know why Toll-PatrickAsciano has adopted the pricing scheme it has

23a2 In order to improve earlier versions of its VBS in the mid-1990s DP

World (PampO) introduced categories of carriers and began charging differential subscription fees for carriers registering to use the VBS depending on the level of access required by the carrier Prior to this change some carriers were engaging multiple computer terminals to the detriment of other carriers and it had become clear that a level of differentiation would be in all carrierrsquos interests The different classes of carrier access were introduced to ensure the most balanced overall outcome The level of differentiation is an annual choice of access levels available to all carriers regardless of size Under this approach different subscription fees are charged for each category but all carriers registering in a particular category pay the same fee Our view remains that an annual subscription as opposed to a pay as you go is far less of an administrative burden on both the carriers and the terminal

Page 27 of 48

23a3 There are no restrictions upon carriers wishing to obtain a certain carrier category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for the same carrier categories as larger carriers Smaller carriers may also apply for consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst charging the burden of the cost of that subscription

23a4 Subscription fees based on differences in class are designed to

encourage choice whilst at the same time communicating a level of transparency with terminal pricing and service

23b Do the different pricing schemes influence the efficiency with which

transporters obtain access to the terminals

23b1 We do not believe this to be the case

23c Would standardisation of charges be more appropriate

23c1 It is our understanding that it would be unlawful for a supplier itself to standardise charges by reason of Section 45 of the Trade Practices Act This may be something that Government wishes to consider

24 The Tribunal invites comment on the following non-price access issues to consider

in relation to the operation of the VBSs

24a What effect do access rules and conditions and non price constraints have on booking a timeslot How to the stevedores use their discretion in determining access and charges and what impact does this have

24a1 The introduction of different categories of access stages the carriersrsquo

access to the VBS for the purposes of booking timeslots ldquoB classrdquo carriers are given exclusive access to a pool of slots between 0730-0820 During this period they are subject to zone limitations which restrict carriers to a maximum number of slots for any given hour The zone limit ensures all carriers within that carrier class are given fair and equitable access to the initial release of slots After the initial booking period the zone limit is lifted and carriers are permitted to book any number of unused slots per hour from those remaining in their pool Similar arrangements exist for A class carriers culminating in the cascading of all remaining slots from all segregated pools into a general pool at 1030 for access by all registered carriers

24a2 There are not restrictions upon carriers wishing to obtain a certain carrier

category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for a consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst sharing the burden of the cost of that subscription

24b What are the stevedoresrsquo obligations with regard to access to port facilities

and what should they be

24b1 Without providing an analysis of our obligations under law in general terms we are required to provide access to carriers on an equitable basis recognising the competitive environment we operate in

Page 28 of 48

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

Figure 2 DP World Terminals ndash Containers per Truck Ratio

]

Source DP World

310 Transport carrier operations are still heavily focused on the traditional daytime

period We understand that this reflects the carriers needs to maximise profit margin in a competitive market place However DP World Sydney comes under criticism for not releasing further slots during the traditional peak periods despite resources and slots being available in ldquonon-peakrdquo periods The net result appears to be that there has been very limited success in embracing 247 operations which ultimately we believe is generally accepted as being in the long term interests of the industry as a whole We also believe that it would be in the interests of the industry as a whole if a consolidation in the transport carrier sector occurred resulting in fewer higher volume carriers with the scale to operate with a wider spread of hours

311 Storage charges apply in the vast majority of marine container terminals around

the world Storage free days vary from port to port around the world however at least three free storage days is not unusual

4 The Tribunal invites stakeholders to comment on any aspects of access to rail

infrastructure or of the current work practices of rail transport operators the supply chain

41 There are a number of public reports and studies that outline the issues

associated with rail infrastructure intermodal terminals and rail access to the port In general the conclusions being drawn are that significant investment is required in this area This is most recently supported by the New South Wales Governmentrsquos response to the FIAB report

42 DP World Sydney is seeking to extend its rail sidings to 600metres in the near

future At the same time there are a number of issues with the rail infrastructure connecting these sidings to port rail we are seeking to resolve with RIC

43 The utilisation of the rail windows at DP World Sydney was 55 during 2006

This utilisation is measured on the basis of the total number of containers actually loaded and unloaded against what could be unloaded if all window were fully utilised at the current agreed performance levels on the part of the rail operators and DP World Sydney Few rail windows are south for Saturday and none for Sunday operations When demand justifies it DP World through the provision of additional resources has the capacity to more than double the volumes handled in

Page 7 of 48

any particular window The extensions of sidings will provide further opportunity to increase rail handlings capacity at the terminals

44 Figure 3 shows the trends in terminal rail window utilisation during 2005 and 2006

Although there is a small improvement in window utilisation during this period the utilisation is low and there is considerable capacity available to increase the number of containers that can be transported by rail

Figure 3 DP World Sydney ndash Weekly Terminal Rail Window Utilisation

DP World Sydney Weekly Rail Window Utilisation 2005-07

20

30

40

50

60

70

80

Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07

45 Contributing factors to the relatively low level of utilisation include

bull the late arrival of the rail operator at the terminal which reduces window

duration and the terminalrsquos inability to increase productivity to meet window capacity requirements without incurring extra costs We understand that the late arrivals by rail operators can be due to equipment breakdowns the passenger network restrictions and the inadequate rail infrastructure for freight

bull overestimation of the volumes rail window duration required by the rail operator

bull fluctuations in freight movements on a daily basis creating peaks and troughs

bull the drought and the decrease in rural export containers

bull train shunting operations

bull the AQIS inspection required for each import container before it leaves the terminal

bull the train and wagon inspection required before the train leaves the terminal

bull the use of labour intensive manual twistlocks instead of auto twistlocks on rail wagons

bull the necessity to break split trains in Botany Rail Yard

bull infrastructure limitations within the Botany Rail Yard and

bull rail operators using the Botany Rail Yard as a storage facility for their wagons and causing congestion

46 As indicated above DP World Sydney has plans to improve the infrastructure

within the terminal in order to meet predicted rail volumes in the future However

Page 8 of 48

unless improvements are made against the issues listed above then window utilisation and efficiency may not improve to levels required to meet the NSW Governmentrsquos 40 rail mode target

5 The Tribunal invites stakeholders to comment on any aspects of the operations of

the regulatory authorities that may be causing inefficiencies or extra costs to arise in the downstream supply chain 51 The Australian Customs Service (Customs) has introduced Container Examination

Facility (CEF) operations in most major ports around Australia Each of these facilities incorporates the use of modern technology such as container x-ray equipment and other examination tools to support Customs in their aim of identifying illegal activities through containerised trade Since the inception of the CEF in Sydney in February 2003 Customs has reported many successful interceptions of prohibited imports

52 The CEF in Sydney operates two shifts each week day (day and evening shifts)

and one shift on Saturdays (day shift) This operating arrangement has created more competition for terminal resources during the peak hours 0500-1700hrs Monday ndash Friday This has resulted in the terminal deploying more equipment and labour resources at the terminal to meet the obligations of contracts with Customs but at the same time has increased competition for resources depending where the container is place in the terminal and how the yard equipment is coping with the demands of industry

53 DP World Sydney has contracted performance KPIs to deliver along with following

factors to overcome that contributed to resource competition

bull Random arrival of Customs transport provider trucks (B Doubles) and random selection of containers due to weight constraints of the trucks

bull Multiple containers per truck relating to up to six different locations a truck has to visit within an RTG terminal and the potential to utilise six different resources

bull The requirement for DP World Sydney to block stack Customs targeted containers from a vessel in order to minimise the variability of locations a Customs truck has to visit This block stacking requirement has a negative impact on vessel performance and creates more competition for internal resources

bull DP World Sydney does not control the transport to and from the CEF Customs have appointed a carrier in each port and who under the contract is responsible for the effective co-ordination between the terminals of the movement of X-Ray containers DP World Sydney does liaise with the Carrier but the carrier has the final say as to how many trucks are allocated to each terminal and

bull DP World is of the view that the current operating hours of the CEF are contributing to resource competition within the terminal during the peak periods If the CEF opened midnight shifts rather than day shift this would reduce resource competition increase terminal resource utilisation in the non-peak hours and an improvement in efficiency would be gained by industry

Declaration of Cargo

54 The Australian Customs Service (ACS) has put in place a requirement for

importers to declare cargo at least 48 hours prior to a vesselrsquos first port of call in Australia This is an initiative that has the ability to increase the efficiency of import container movements and decrease the time containers remain in a stevedore terminal The on-time reporting performance in NSW during March 07 was 87

Page 9 of 48

The ACS should continue to put in place incentives to increase this clearance rate of containers in order to gain 100 compliance

55 The Australian Quarantine Inspection Service (AQIS) could assist by utilising an

electronic means of communicating the application and release of AQIS holds required on containers Currently AQIS operate a totally manual operation

6 The Tribunal specifically invites comments on the current role of the SPC and on

the role SPC might take in improving the efficiency of the supply chain

61 Sydney Ports Corporation has stated objectives which include

bull Enhancing and developing strategic assets to ensure efficient optimum utilisation

bull Continuing to build effective relationships with stakeholders that improve the competitive positioning of the ports and

bull Taking the lead in facilitating port related freight solutions

62 DP World in Sydney has participated in efforts by SPC to facilitate efforts to achieve mutual outcomes between both the stevedores and section of the road transport industry

63 In addition SPC has

bull Measured TTT at Port Botany and published these statistics since (2001)

bull Encouraged more use of rail with the support and investment by DP World

bull Requested more capital investment to improve road transport interface which has been supported by DP World through the acquisition of additional container handling equipment

bull Sought the elimination of truck queuing outside the container terminal with the support and implementation of a Vehicle Booking System by DP World

bull Sought the development of inland intermodal terminals with the support of DP World and

bull Sought the inclusion of suitable landside Key Performance Indicators within future lease terms

64 We consider that SPC has taken the leadership role appropriate for its position in

terms of seeking to facilitate improvements in overall port efficiency without interfering in the various commercial arrangements between stakeholders

7 The Tribunal invites stakeholders to comment on any aspects of the current work

practices of freight forwarders customs brokers and any remaining industry participants that may be causing inefficiencies or extra costs to arise in the downstream supply chain

Customs Brokers

71 It is the practise of some customs brokers to wait until the storage free period at

the terminal has almost expired before paying the duty to the Australian Customs This has the impact of retarding the stevedorersquos efforts to improve the velocity of container movement through the terminal Customs brokers should therefore be encouraged to pay duty as soon as possible

72 Customs brokers can also contribute to congestion at the terminal by not paying the Customs duty up to at least 2 hours prior to the carrierrsquos time slot This results in the truck waiting at the terminal for the information to flow through to the terminal operating system via EDI

Page 10 of 48

73 One way of achieving flow in (71) and (72) above is to disconnect the relationship between the payment of duty and the physical control of cargo movement To maximise the effect here the ACS could request the Customs brokers to also lodge the lsquoImport Declarationrsquo 24 hrs prior to arrival and collect duties on account after the event

74 An initiative at DP World Brisbanersquos terminal has been successful in obtaining early container information as part of their VBS (linking timeslot to the container number)

75 The system has been in place for almost 12 months now and the availability of information at DP World Brisbane has contributed to improved service levels at this terminal

Empty Container Depot Opening Times

76 A majority of Empty Container Depots reside within 10 km radius to the port

precinct Depot opening ties do not match container terminal operating hours The result is an inability for carriers to return and pick up an empty container 24hrs a day to depots This reduces the potential of utilising the existing vehicles on the road creating potential traffic congestion and therefore free up their trucks to collect import containers from the terminal Through tariff structures the shipping lines have the ability to influence the depots to increase their opening hours thus resulting in greater vehicle utilisation and subsequent reduction in transport charges The extended spread of hours will also have the effect of flattening the peak traffic periods and reducing road congestion and travelling times

8 The Tribunal invites stakeholders to comment on any aspects of the VBS

particularly in relation to the number of timeslots made available and on what basis and the process by which those slots are made available across the day(s) and to whom

81 The VBS is simply a means by which to communicate with the transport carrier

community What determine the number of slots made available are resource levels provided at the container terminal DP World Sydney provides more than sufficient resource levels to enable all containers to be delivered as required to road within the three free day period even accepting the industryrsquos current limited use of the available 247 terminal operation It is acknowledged that resource levels provided to road operations may be varied day to day as resources may need to be directed to ship operations but this follows from running the terminal as an integrated operation which is ultimately most efficient Providing further day time slots without addressing underlying market inefficiencies only risks service levels to shipping lines that are demanding higher performance levels and perpetuating the industryrsquos unwillingness to support 247 operations

82 DP World also notes that all carriers may and do from time to time contact the

terminal and request additional timeslots if there are none available on the VBS The terminal will endeavour to accommodate such requests where there is operational capacity to do so If there is capacity the Terminal will book the timeslot in the name of the carrier that has made the request

83 Further details of the VBS are provided in responses to subsequent questions

However we believe that the VBS at DP World Port Botany Terminal has delivered benefits including

bull No random queuing at the terminal which results in significant unplanned

delays to transport users due to the random arrival of trucks at any point in time to the terminal where the terminal is not resourced to handle the high peaking demand for landside resources whilst at the same time meeting contractual obligations with shipping lines

Page 11 of 48

bull The terminal is able to carry out bulk moves while maintaining service levels to other general carriers

bull Provides choice to carriers in terms of access as well as providing transparency to industry

bull States subscriptions fees in a public document which are transparent to industry

bull Increase slot allocation to road users based on irregular shipping schedules and

bull While not referred to in the Carrier Access Arrangements (see attachment 1) all B class carriers are allowed to engage in a process called ldquoexport taggingrdquo Export tagging involves a carrier booking an import timeslot in ePorts which will give them access to the terminal A carrier is then able to bring and export container on the truck that is arriving to collect the import container without booking a slot for that export container (during most timeslots in the day) The purpose of this flexibility to carriers is to increase two-way running which reduces costs to carriers and decreases the number of trucks in the port community

9 The Tribunal asks stakeholders to comment on the variability of average

turnaround times across the major ports and the variability of turnaround times faced by individual transport operators at Port Botany itself The Tribunal also invites comment on how important predictability of turnaround times is to transport operators relative to average turnaround times at Port Botany The Tribunal further invites comment on why turnaround times are higher for Port Botany compared to Melbourne Adelaide and Fremantle

91 The precise nature of operations differs between the ports and between the

terminals operated at those ports These differences arise because of the range of shipping lines that arrive at the various terminals and the volumes of containers and type of cargo going through each terminal There are also differences in the container yard handling equipment yard configurations at each terminal and hours of operation resulting in differences in the way each terminal operates These differences result in variations amongst each terminalrsquos service performance levels

92 During 2002 DP World Sydney management met with a representative group of

carriers to discuss the VBS and access arrangements at the terminal A common view of the carriers was that they would like consistency to truck turn times and that 60mins (carrier measurement) is acceptable The outcome from these meetings was that DP World introduced three internal KPIs

bull Truck processing to truck complete measurement ndash 38 mins average

bull TTTs of 60 mins or less to be 90 to total trucks

bull TTTs of 120 mins or more to be 1 or less

93 Figure 4 below shows the percentage of truck turn times that are 60 minutes or less at DP World Sydney There is a noted improvement in during mid 2005 from an average prior to this time of 73 to an average during 2006 of 85 This indicates that the predictability of the truck turn times has improved during the life of the VBS

Page 12 of 48

Figure 4 DP World Sydney ndash Percentage of Truck Turn Time under 60 mins

DP World Sydney - Percentage of Truck Turn Time under 60 mins

50

60

70

80

90

100

Jan-04

Mar-04

May-04

Jul-04

Sep-04

Nov-04

Jan-05

Mar-05

May-05

Jul-05

Sep-05

Nov-05

Jan-06

Mar-06

May-06

Jul-06

Sep-06

Nov-06

Jan-07

Mar-07

94 Figure 5 below shows the terminal truck turn time and the stevedoring volume since July 2003 at DP World Sydney Note that the volumes are hidden on the left Y axis for commercial reasons As a result of terminal improvements and putting in place the KPIs described above the average TTT performance has improved (right Y axis) whilst at the same time the terminal volume has increased (left Y axis)

Figure 5 DP World Sydney ndash Truck Turn Time and Container Volume

95 DP World operates in all five major ports in Australia and has three different modes of operation namely Straddles in Melbourne and Adelaide RTGrsquos in Sydney and Fremantle and Forklift and Reach-stacker in Brisbane The Variability in TTT between ports is attributed to a number of factors including but not limited to the site processes and physical constraints of each facility

96 The measurement of TTT differs mainly due to

a) the layouts of in-gates and its approaches and

Page 13 of 48

b) the measurement of the job steps which apply to a truck from arrival to departure due to (a)

97 All the above terminals have different truck parking arrangements within and

outside the terminal which impacts TTT Across the board TTT is measured from job processing to job complete (98c to 98e below) however the physical layout and mode can influence when processing commences

98 The process of truck management in simple terms is

a) Pre-arrival of trucks

b) Validation of time slots

c) Processing of job (Manual but if automated it takes effect in b above)

d) Enter the operational yard

e) Job transact and complete (by straddle RTG or Forklift Reach-stacker) and

f) AQIS check for full trucks and depart (gate-out)

99 Depending on the physical layout and provision of sufficient space to hold trucks within the terminal boundary or otherwise the distribution of trucks varies through steps 98a to 98c above

910 At DP World Sydney the equivalent hourly truck volume can be held in the

terminal entry marshalling area therefore multiple trucks can enter the terminal park and be processed by terminal staff Post processing all time spent in the marshalling area forms part of the TTT whilst the truck has not necessarily entered the operational yard (see Annexure 2)

911 At DP World Melbourne on the other hand due to restricted space within the

terminal trucks are normally held outside and a small number is constantly drip fed into the terminal (controlled rate of entry) These trucks then approach the processing points (6 lanes x processing booths) further which they directly enter the operational yard and the TTT is measured from this point

912 DP World Fremantle does not have a truck holding area within the terminal which

means the truck enter the terminal and queue at the Entry to Operational Yard Immediately after being processed the truck enters the terminal yard Therefore unlike Sydney time from Entry to Operational Yard is time historically not published Therefore TTT between DP World Sydney and DPW Fremantle are not comparable

913 DP World Fremantle is also an RTG operation similar to DP World Sydney

However the physical layout and the resulting entry arrangements differ Due to restricted space within the terminal the trucks are normally held outside and constantly drip fed into the terminal (controlled rate of entry) The trucks operate through 3 lanes within the terminal and truck turn time is measured at this processing point when the trucks actually enter the operational yard

914 DP World Adelaide is a straddle operation similar to DP World Melbourne

However its physical layout and resulting entry arrangement is different to that of DP World Melbourne and has some similarities with what takes place in Sydney The hourly truck volume can be held within the terminal and the TTT is measured from entry into the terminal main gate to departure from the terminal main gate The measure differs from the other facilities on both entry are exit gates

915 The benefits of this TTT data is not so much the raw data itself but more so the

long term trend in the data If TTT is constant or even improved during periods of volume growth then this reflects a firm commitment to the landside process Continuous improvement reflects a commitment to landside efficiencies

Page 14 of 48

916 TTT is influenced by the mode of operation the Gate In infrastructure and volume

of containers required to be handled

917 The RTG mode of operation requires the truck to travel to the yard stack where the container is located or assigned as opposed to the straddle operation where the straddle comes to the truck that is parked in a bay external to the stacking area The mode of operation at DP World Sydney generally results in a truck with multiple containers being serviced by multiple RTGs and also having to travel to multiple yard locations At each of these yard locations there will be a different level of demand on the particular RTG covering the area This will result in variations in the time it will take to service the truck in that particular area and therefore will influence the truck turnaround time

918 In comparison a terminal running a straddle operation could employ a different

straddle to handle each of the containers processed for the truck

919 The mode of operations employed by container terminals have various strength and weaknesses and need to be considered based on many factors in a Port (ie not just the landside interface) but both modes can contribute to variability

10 The Tribunal invites comment on how truck turnaround times are currently

measured by supply chain participants and how they should be measured The Tribunal further invites comment on the extent to which the stevedores provide access to their facilities at the specific times booked on the VBS

Truck Turn Time (TTT)

101 DP World Sydney currently measures truck turn times from the time the containers on a truck are processed to the time the last container is completely loaded onto the truck (import containers) or discharged from a truck and landed in the terminal (export containers)

102 TTT is directly influenced by the number of containers to be handled by an RTG

terminal on a truck run ie a higher number of containers results in a longer truck turn time on average This due to the truck having to potentially visit multiple locations within the RTG terminal

103 The reason the container Terminal does not measure the time following

completion of loadingdischarging container from truck is measure regulatory bodies (ie AGIS) have commenced inspection of containers on terminal exit gate which is beyond the control of the container terminal

104 The process time is used to measure the start of the truck turn time as this is the

closest time to the truck being in the terminalrsquos control

105 Trucks that take advantage of the autogate processing (currently 25 of trucks) actually start the truck turn time as they come through the terminal gate as this is where the transponder reader is located DP World Sydney support the increase of the autogate processing and the result that the truck turn time starts at the gate For trucks that do not use the autogate processing opportunity the terminal does not start the truck turn time at the gate as the truck driver may not move efficiently to have the container processed

106 Carriers often use TTT measured from the time the truck services at the standby

queue or the arrival of the truck at the zone queue which are waiting for the next time zone to open

107 In relation to standby queue the CAA clearly stipulates that the use of this system

does not guarantee immediate call-up to the terminal in priority to trucks that have booked a time slot

Page 15 of 48

108 In relation to TTT measured from arrival at the time zone queue the fact that the truck has arrived prior to the commencement of the zone opening is purely a decision of the transport carrier and is beyond the control of the Container Terminal and is not supported by DP World

Container Turn Times

109 DP World Sydney currently measures container turn time from the time the

container is processed to the time the container is loaded onto the truck (import container) or discharged from a truck and landed in the terminal (export container) Over the last 5 years the transport regulators have allowed truck operators to operate larger trucks thereby ultimately improving the efficiency of road transport As transport operators increase the use of larger trucks (capable of carrying multiple containers) the handling of these trucks produces a multiple handling of containers on the same truck at the terminals For example in the past one would handle one container per truck and in that case the CTT and TTT were almost identical With multiple containers on trucks the difference between the CTT and TTT is increasing To be able to benchmark this across a port and other ports becomes hard with TTT due to the ever changing ratio of containers per truck (depends on percentage of large truck operators) firstly within the same port and secondly between different ports Therefore CTT enables us to benchmark the measurement on common grounds across all our operations around the country

Access Times at DP World

1010 DP World Sydney divide the day into hourly time zones within the VBS The time

zones start on the house (eg 0700hrs) and complete at the end of the hour (eg 0759hrs) There is a time zone board located at Simblist Road which indicates which time zone is open Trucks queue at this point waiting for the board to change each hour During daylight hours on average there are 15 trucks waiting for the time zone to open The trucks then make their way to the terminal in gate located on Friendship Road once the zone is open

11 The Tribunal invites comment on the choice between a system where container

numbers are nominated in advance thereby offering the possibility of faster turnaround times or not providing container numbers which would provide road carriers with greater flexibility Or would industry participants prefer a system that allows the choice between both

Import Timeslots

111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the import container number in a timeslot booking up to the start of the time zone The disadvantage for the terminal and the carrier is that this flexible system arrangement does not allow the terminal the chance to reposition the container to a position that will minimise the number of containers that have to be moved (known as ldquoconsolidation movesrdquo) in order to access the container that is to be delivered to the truck once the truck has been processed and is in position for loading The more consolidation moves the terminal has to do to load an import container to a truck the longer the truck turn time will be

112 Undertaking consolidation moves prior to truck arrival would provide the opportunity

to decrease truck turn time

113 To achieve a further reduction in truck turn times and a reduction in cost of delivering a container the terminal would need to control the order in which the import containers are delivered This occurs in other ports in the world

Controlling the order of import deliveries

114 The current arrangement where the shipper controls the order of import containers

to be delivered from the terminals results in extra costs incurred by stevedores and also decreased efficiencies The longer a container remains in the terminal (an

Page 16 of 48

increase in the dwell time) results in increased consolidation (rehandles) undertaken by terminal equipment and an increase in the time taken to load a container to a truck or train

Matching of resources to meet demand

115 The terminal allocates the resources required based on the demand or the

number of timeslots released This occurs 24 hrs in advance

116 Carriers who book timeslots and do not meet their commitment (No Show) results in the terminal resources to be under utilised at certain times and creates an opportunity loss There is also an opportunity lost by another carrier to utilise the time slot for each No Show

117 Carrier who book timeslots and arrive late for their commitment (Wrong Zones)

results in terminal resources being under utilised at times and over utilised at other times The troughs in terminal resource utilisation result in an opportunity loss and the peaks result in a decrease in efficiency (increased truck turn time) or increased cost (increased resources applied) The increase in truck turn time has an impact on carriers who arrive on time for their time slot

118 The current VBS allows for carriers to arrive at the terminal to deliver or pick up a

container without committing to a time and container number thus not enabling the terminal to completely plan the required resources to meet the demand This is termed unplanned work The Standby Queue export tagging by B Carrier no advanced deadline for entering an import container number prior to the time zone and no requirement for an export container number being entered into a time slot booking results in an increase in unplanned work Unplanned work results in peaks in the work required by the planned resources and a decrease in efficiency

119 Rail also has similar problems

1110 By changing this arrangement and giving control to the stevedores to determine

the order of container delivery from the terminal will reduce the costs incurred by the terminal and decrease the turnaround time for trucks

Export Timeslots

1111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the export container number in a timeslot booking up to the start of the time zone It also allows an export time slot to be processed without a container number entered in the time slot booking The container number in then entered by the RampD Clerk at the terminal This often results in human error by the truck driver or the RampD Clerk resulting in delays to trucks This practice also eliminates the opportunity for the carrier to use the automatic processing described below in Question 12 To maximise the use of automation and eliminate human error the export container number needs to be a mandatory field to be updated in the time slot booking by a nominated time prior to the start of the time zone eg 2 hours prior to the start of the time zone

12 The Tribunal invites comments on the increased use of ICT and automation and

any other ways to reduce turnaround times and otherwise improve supply chain efficiency

121 DP World support and are driving the increased use of automation for the

processing of trucks DP World have developed and currently make available an automated truck processing system for carriers who use ePORTS to book and manage timeslots The percentage use of this system at DP World Sydney by carriers averages about 25 of total truck movements excluding stack run trucks

122 This system requires the purchase of a transponder unit from the terminal at the

cost that the terminal purchases the unit plus GST Currently the units are sold to

Page 17 of 48

the carrier for $12050 Also required is access to an eGATE screen in ePORTS The process for carriers wanting to move a number of containers on a transponder run involves

a) Booking through EPORTS the required number of time slots in a time zone

For example if a transport carrier wanted to deliver two export containers and collect one import container on a single truck run it needed to book three slots and

b) Setting up the transponder by inputting the slots truck number container numbers and whether they are import or export containers in the transponder booking screen in ePORTS

123 The benefits for carriers of using this automated processing include

a) The processing occurs earlier (ie at the gate as compared to in the RampD Office) therefore this decreases the chance of Wrong Zones being incurred

b) No need for the truck driver to present documentation at the RampD Office therefore reducing the truck turn time by avoiding any potential queues

c) No interaction between the truck driver and the RampD Clerk therefore decreasing human error during processing and causing further delays

d) As the processing occurs at the gate the trucks can skip ahead of other trucks where their drivers have to manually process in the RampD Office effectively jumping the queue

e) Allows reprogramming of trucks up to 15mins before the end of the time zone (eg 0645 for an 06 slot) without the truck driver needing the Delivery Order in his possession

f) Provides the carrier with the ability to educate their customers to provide the Delivery Orders in a timely manner in order to lodge them at the terminal

g) Electronic copies of the Delivery Orders (excluding scanned copies of originals) can be forwarded to the terminal via email therefore eliminating the need to physically lodge them

h) Enables the carrier to take all advantage of Electronic Import Delivery Orders (eIDOs) that are currently being used by Evergreen Marine at DP World Sydney Other shipping lines will move to the use of eIDOs in the future

13 The Tribunal invites stakeholders to comment on VBS capital and operating costs

and to assist it to distinguish between stand-alone VBS costs and those shared with other stevedoring activities

131 It is important to distinguish between the capital and operating costs of operating

the VBS and the costs of operating the landside interface ie delivering containers to and from trucks

132 The costs of a VBS comprise the following components

bull IT development and maintenance costs and

bull Management and administration time to manage and administer the system

These costs are low relative to the costs of actually providing the services within the terminal ndash loading and unloading the trucks

133 Having a system which requires the terminal to provide a guaranteed number of

slots per hours is to the disadvantage of the terminal Terminal operations are by their nature unpredictable due to the irregular arrival of ships Having to guarantee a number of slots which carry with it a high expectation of performance in terms of TTT tends to force the terminal to set the number of slots at a level which includes a risk mitigation factor against all things not going to plan The net result of this is

Page 18 of 48

that the terminal tends to effectively oversupply equipment and labour increasing its costs The impact of this is far more significant than the isolated costs of running the actual vehicle booking systems

134 Direct VBS costs have nothing to do with ship or rail operations

135 The container yard is run as a single operation servicing ship road and rail By

this means while there are practical limitations we seek to pool resources to maximise the overall efficiency of terminal operations particularly to absorb the peaks and troughs of demand across the operations as a whole This effective sharing of costs improves overall efficiency and results in lower costs to the benefits of users as a whole We anticipate that systems and technology improvements will see greater use of such pooling and greater overall efficiency as a result

14 The Tribunal invites stakeholders to comment on VBS access and penalty charges

and the level of transparency of access through the stevedoresrsquo VBSs

141 The VBS facilitates the provision of orderly access to DP World Sydney Terminal for over 200 individual carriers

142 DP World considers the achievement of orderly access to its terminals as a

primary objective of the VBS To achieve orderly access DP World considers it important to require carriers to pay a nominal subscription charge for the level and rights of access they require and to issue ldquono showrdquo and ldquolaterdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay lsquoon timersquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs

143 The VBS is essentially an ldquoappointment bookrdquo to assist transport carriers to

organise themselves more efficiently leading to a reduction in waiting times at the container terminal The VBS divides all working days into time periods containing a pre-determined number of timeslots The timeslots represent the number of import and export containers that can be handled in that period The number of timeslots in a day is determined by expected carrier demand and the availability of labour and equipment Carriers are then able to book timeslots for collection or delivery of containers

144 The alternative is random access to container terminals by carriers and significant

truck queues with associated demurrage costs which are ultimately paid for by the end user

145 At DP World Sydney the VBS offers transport carriers the ability to access an

internet based computer system or telephone bureau for the purpose of booking time slots for those carriers who do no wish to use the computer system The VBS in its present form offers access on a transparent and equitable basis to all carriers encourages the efficient movement of containers from the ship through the terminal and onto customers and vice-versa encourages innovative practices which are beneficial to terminal efficiency road congestion and the overall cost of the supply chain The ldquono showrdquo and ldquolaterdquo fees encourage these operational practices and efficiencies

146 DP World has adopted a class structure with an annual subscription for access

because this system allows carriers to determine what access is required for their business while providing the industry significant level of transparency in terms of access costs

147 All carriers have an equal opportunity to subscribe to any of the three classes of

access to the VBS (bearing in mind that smaller carriers are allowed to consolidate

Page 19 of 48

their subscriptions in order to share the cost of a B Class subscription) and equal access to timeslots amongst carriers of the same class

148 Annual fees are payable in advance Table 3 sets out the various carrier classes

currently in operation at each terminal and the applicable subscription fees for each class There are no annual limits on the number of slots carriers can book

Table 3 DP World Sydney ndash Current carrier classes and VBS deposit and registration fees for the year commencing 1 July 2005

Terminal Carrier Classes Price Number of active

carriers at Feb 06 Port Botany New South Wales

B Carrier ndash online internet access with high service levels

$2922150 (Non-refundable deposit) No fixed upper limit on annual time slots1

28

A Carrier ndash online internet access with standard service levels

$133400 (Annual registration fee) No fixed upper limit on annual time slots2

162

AB Carrier ndash access via the PampO Phone Booking Bureau with standard service levels

$66760 (Annual registration fee) No fixed upper limit on annual time slots3 39

149 Any carrier selecting the ldquoBrdquo classification is encouraged to also consider the ldquoArdquo

classification unless they are confident of utilising a high level of timeslots that would render the higher subscription fee as attractive per timeslot

1410 In addition to the VBS annual subscription fees the carrier access arrangements

provide for the levying of a no-show fee on carriers who fail to arrive for slots they have booked in the amount of $110 per time slot The terminal also charges carriers late fees of $55 per slot if they fail to arrive for a slot booking within the nominated time zone No fees are charged where a carrier is unable to meet the time slot due to delays caused and acknowledged by DP World Australia or where delays are caused by circumstances genuinely outside of the carrierrsquos control DP World Australia also has the discretion to and does waive ldquono showrdquo and ldquowrong zonerdquo fees in the interest of maintaining a good working relationship with carriers Failure by carriers to pay these ldquono showrdquo and ldquowrong zonerdquo fees may lead to them being prevented from making further bookings ldquoNo showrdquo and ldquowrong zonerdquo fees are the means by which DP World ensures that access to itrsquos terminals is provided in the most efficient manner to all 1carriers as late carriers cause delays for those carriers that are on time

1 No fixed upper limit on annual timeslots ndash Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 2 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 3 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release

Page 20 of 48

1411 The ldquono showrdquo and ldquowrong zonerdquo fee structure was introduced following

consultation with carriers It was originally $20 per late arrival (in Victoria where VBS first commenced) but this is proved to be ineffective in disciplining carrier conduct In response to requests from many carriers DP World increased the ldquono showrdquo fee to $110 The fees also discourage carriers from the practice of overbooking slots which they have no intention of using and preventing other carriers from using those slots

1412 The actual cost of a truck turning up late (Wrong Zone) or not turning up at all (No

Show) is the cost of planned resources (labour equipment etc) based on the VBS demand (number of containers expected to handle during a time period) not being utilised during the time period they are employed

1413 Adjacent to each time zone are grace periods one prior to the time zone and one

following the time zone These grace periods and the trucks arrival time for processing determine the status of the time slot ie arrived on time or arrived late (Wrong Zone) Currently the grace period following the time zone is set at 20 minutes which means that if a truck arrives later than one hour and 20 minutes after the start of the time zone then the time slot will be initially recorded as a Wrong Zone Following the completion of each VBS day Wrong Zones are reviewed and any penalty waived if any of the following determined

a) The terminal is aware that it has contributed to a truck arriving late for the time

slot ie the terminal has previously delayed the truck or carrier on an earlier time slot or

b) The carrier advises that they arrived late due to an unforeseen circumstance eg a break down of the truck

We request that the information in 1414 be kept confidential

1414 Omitted for reasons of confidentiality

1415 Officers at DP World Sydney have regular conversations with carriers in respect of

the waiver of No Show fees as well In certain instances DP World may agree to waive fees prior to an invoice being issued

1416 For both Wrong Zone and No Show fees the terminal provides a grievance

process for carriers who have been issued invoices and do not agree that the fee has been issued fairly The carrier has the opportunity to provide the terminal with an explanation and should officers at DP World Sydney agree that there has been an error in the issuing of the fee or an unforeseen circumstance is explained the terminal will credit the invoice

15 The Tribunal invites stakeholders to indicate the costs of providing the services of

rail windows and rail paths to rail operators

151 Rail windows are based allowance on a rail terminal performance KPI of 30 container moves per hour and charged at $360 per hour A shunting time allowance of 15 mins per window is not charged Additional lifts canare provided by increasing the lifts per hour by applying more machinery at no additional cost

152 The cost of providing terminal rail operations is higher than road operations at DP

World Sydney The RTG mode of operation requires a container to be moved to or from the container stack For road containers the truck takes the export container to the stack and travels to the stack to pick up an import container For a rail container a terminal internal transfer vehicle (ITV) is required to be used by the terminal to move the container from the train to the stack (export containers) or

Page 21 of 48

the stack to the train (import containers) This is not required for container being received or delivered by road

153 For import rail containers there is a loss of efficiency for the vessel discharge

operation in order to stack rail containers separately for delivery to the train For each discharge point in the terminal extra resources are required There is extra administration costs in having to make alternate arrangements to separate these import rail containers

154 Despite the fact that the delivery of containers to rail is higher than road the

terminal seeks only a partial recovery of costs in order to encourage the use of rail in the port in line with the NSW Government objectives

155 There is a management cost of setting up and operating the rail windows This is

similar to the cost of operating a VBS

156 There is additional security infrastructure costs for a rail operation to ensure the terminal meets their legislative security requirements The more terminal entry points created the higher the cost to replicate these security infrastructure requirements

16 The Tribunal invites comment from stakeholders on the planned or mooted

development and expansion of the various intermodal terminals in Sydney and the extent to which this is expected to ease congestion in the landside supply chain at Port Botany

161 DP World supports the development and expansion of an intermodal terminal

network to facilitate an increase in the use of rail as the means of container transport This has the potential flow on benefit of minimising the growth in the number of trucks requiring to access the Port Botany area as port volumes continue to grow

162 Transport between the Botany terminals and the inland intermodal terminals

should be by rail or trucks operating a stack (bulk) run road out during off peak periods eg night shifts or weekends The use of Super B Double trucks would assist with the efficiency of these off peak stack run outs

17 The Tribunal invites comment on the likely effect of the expansion plans at Port

Botany on access to the port terminal during peak periods and efficiency along the supply chain

171 Improving the two-way running or back-loading of trucks has to be a priority in

order to maximise access opportunity at the terminals and efficiency along the supply chain It is likely that a third and separate stevedoring facility will only increase the difficulty of improving truck utilisation over and above the current levels by the increased logistics complexity of coordinating timely access to three terminals rather than two

172 A third stevedore will lead to the same port volume being spread over three

operations While it is resource levels that determine available slots DP World has found that during periodic decreases in volumes carriers favour daytime runs to the terminal as opposed to night time

173 The expansion plans will have a negative impact on rail transport timeliness and

access requirements to DP World Sydney if the requirements to breaksplit trains and shunt sections of trains into multiple terminals continues This will undermine the overall rail effectiveness and the NSW Government rail objectives by the unnecessary increase of splitting trains

Page 22 of 48

18 The Tribunal invites comment on the likely effects of expansion of the intermodal network in Sydney on access to the port and efficiency along the supply chain

181 This is a similar issue to point 16 above

19 The Tribunal invites comment on the likely impact of a peak pricing system along

the lines of the FIC on access to the port terminals and the efficiency of the Port Botany supply chain

191 We understand for the NSW Governmentrsquos announcement (31 May 2007) that the

FIC is no longer being proposed

192 Table 4 shows the average percentage of road containers that are handled by shift at DP World Sydney based on a 6 day x 24 hour receival and delivery operation for the past 4 years The figures indicate that there is surplus capacity on both evening and midnight shifts when compared to day shift Note that the percentage of road containers handled has increased on day shift relative to the combination of evening and midnight shifts This has been due to terminal efficiencies creating increased capacity during day shifts and the road carriers utilising this capacity

193 This is further emphasised in Figure 4 which shows the trend over time for day

shift containers handled has increased from 2005 evening shift has decreased and midnight shift has not changed significantly

Table 4 DP World Sydney ndash Percentage of Daily Road Container Volume handled by Shift

Year Midnight Shift (2230 ndash 0630hrs)

Day Shift (0630 ndash 1430hrs)

Evening Shift (1430 ndash 2230hrs)

2007 YTD 21 47 32

2006 23 45 33

2005 22 43 36

2004 19 44 38

194 Year to date April 2007 figures may reflect the seasonal trend for lower volumes in this period

Figure6 DP World Sydney ndash Road Volume trendlines by shift 2005-07

Page 23 of 48

20 The Tribunal invites comment on the likely impact of the expansion of the freight

rail network in Sydney on the number of containers moved by rail and on congestion at the port

201 The importance of increasing the proportion of containers moved by rail is

recognised and supported by DP World Sydney

202 To complement the expansion of the rail freight network upgrade the terminal is developing plans to increase the length and the number of sidings within the terminal Over the next three years the terminal is planning to spend an estimated $20million on internal rail infrastructure machinery and systems The terminal upgrade will ensure DP World Sydney has the infrastructure in place to meet a target of 40 throughput by rail

203 The expansion of the freight rail network needs to take into account The access

to each of the terminals especially the access to DP World Sydney where by the terminal has a distinct disadvantage in relation to its competitor

21 The Tribunal invites comment on the impact on the supply chain on ARTC

managing the metropolitan freight rail network

211 Management of freight rail infrastructure is ARTCrsquos core business and will bring additional management expertise and focus to the task of reforming operations on the Port Botany rail infrastructure

212 For ARTC to control the MFN (Metropolitan Freight Network) makes sense from

the point of view they can make informed decisions for both inbound and outbound Port services based on the wider NSW Rail Freight Network operation

213 The ARTC proposal to co-ordinate services by performing the full Network Control

Function (both signalling and Train Control) from the one centralised centre for the Southern Sydney Freight Line (SSFL)MFN and Port Botany emphasises their commitment to ensure safety communications and network management is their primary objective

214 ARTC are focussed on improving the efficiencies at the Port and bring to the

industry fresh innovative ideas to improve the overall capacity on the rail network ARTCrsquos willingness to assist and eagerness to invest in the rail infrastructure brings a breath of fresh air to the industry and specifically the stevedore operations ARTC can integrate the Botany line into its overall investment program paving the way for additional investment to improve the efficiency of operations on the Botany rail line and at the port-rail interface

22 The Tribunal invites comment on the following questions in relation to costs of the

VBS

22a What costs underpin the VBS access charges levied by the two stevedores How are the VBS access charges set

22b1 Refer to Question 14 The revenue from VBS charges account for a very

small proportion of DP Worldrsquos total container terminal revenue For the year ended 31 December 2006 they accounted for 13 of total revenue Of that 13 approximately 30 was for No Shows and Wrong Zones

22b What costs are incurred by the stevedores in moving a container from the

wharf to a truck or train

22b1 DP World Sydney is operated as an integrated business servicing ships road and rail within the context of a national business We do no separately account for the costs of each discrete activity Information on

Page 24 of 48

overall costs is provided to the ACCC and published on an industry basis in the ACCCrsquos Container Stevedoring Monitoring Report

22b3 Wharf to truck activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the VBS to provide orderly access for road carriers

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal space to allow truck drivers to park their vehicles in order to unlockset up their twist locks and processing of containers

bull Processing of the container

bull System to manage the truck movement within the terminal

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the truck by RTG or forklift

bull Provision of terminal area for truck drivers to safely leave their vehicle to lock the twist locks on their trucks check the container seal number and check the container for damage

bull Provision of terminal area for AQIS operation and infrastructure

22b3 Wharf to train activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the Rail Windows to provide orderly access for operators

Page 25 of 48

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal area for rail lines associated rail infrastructure and train inspection requirements within the terminal

bull Processing of the container

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the ITV by RTG or forklift

bull Internal Transfer Vehicle (ITV) movement of the container from the yard stack to the rail line

bull Lift of the container from the ITV onto the rail wagon

22c What influences the nature and amount of these costs (for example are they influenced by the type of equipment used by a stevedore Do they fluctuate with the number of containers handled by the stevedores) and how have costs changed over time

22c1 DP World operates very similar Vehicle Booking Systems in Brisbane

Sydney Melbourne and Fremantle where there are differences in volume through the terminals The only difference in subscription between the terminals are the ldquoB Classrdquo carrier subscriptions The annual subscription is influenced by the number of carriers seeking this class and the hourly allocation of slots to their class given the number of subscriptions In addition Melbourne operates a straddle facility and Brisbane operates a forklift reachstacker Therefore the cost of the Vehicle Booking System is not dependant on or mode but the annual subscription to ldquoB Classrdquo carrier depends on competition for that carrier class

22c2 An annual subscription fee per class which is a characteristic of DP

Worldrsquos VBS does not normally increase with volume At DP World Sydney subscription fees have not been increased since 2003

22c3 Overall landside costs have increased with increases in wages and

salaries (4 pa) property costs (substantially ahead of cpi) fuel and other general costs These increases have been offset to some extent by increases in productivity Industry costs history is also available publicly in the ACCC Container Stevedoring Monitoring Reports

22d Where do the port landside costs stop and the VBS costs start

22d1 Prior to the Entry to Operational Yard (see Attachment 2) the truck is

under the influence of the VBS and also under the influence of the external environment which includes but is not limited to port and metropolitan road conditions container clearance issues truck arrival peaks and troughs truck preparedness processing of the container to the handled by the terminal and maritime security requirements

It is DP World Sydneyrsquos view that the port landside costs stop and the VBS costs start at the choke point

22e Do the VBSsrsquo penalty charges reflect the cost to stevedores What should

they reflect

22e1 The primary rationale for the penalty regime is to seek to modify carrier behaviour

Page 26 of 48

22e2 However it is also the case that a ldquono showrdquo or ldquowrong zonerdquo gives rise to a lost opportunity cost to the terminal Resources made available but not utilised may be wasted

22e3 DP World considers the achievement of orderly access to its terminal as

a primary objective of the VBS To achieve orderly access PampO considers it important to issue ldquono showrdquo and ldquowrong zonerdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay ldquoon timerdquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs The alternative is random access to container terminals by carriers and significant truck queues with associated demurrage costs which are ultimately paid for by the end consumer

22f Should there be different charging arrangements for empty containers that

are returned to the port as opposed to full export containers

22f1 DP World Sydney terminal handles a full container in a similar way to an empty container using purpose built container stacking equipment controlled by a DP World employee A container occupies the same amount of space whether it is full or empty This leads to the same cost for the handling of a single empty container as a single full container Single empty containers returned to the port should be charged a similar rate to full containers

22f2 To reduce the cost of handling empty containers in the terminal destined

for the same port on the one vessel and that are of the same size the terminal in conjunction with the shipping line and the shipping linersquos nominated carrier work together to create a bulk run of empty containers The bulk run maximises the number of empty containers that are handled in a specific time period The terminal dedicates resources to thee bulk runs and also provides priority access to the transport carrier in order to create efficiency and an economy of scale In this way the cost of returning an empty container via a bulk run is reduced

23 The Tribunal invites comment on the following questions in relation to the different

pricing regimes of the two stevedores

23a Why do the stevedores have different pricing schemes for their VBSs

23a1 We do not know why Toll-PatrickAsciano has adopted the pricing scheme it has

23a2 In order to improve earlier versions of its VBS in the mid-1990s DP

World (PampO) introduced categories of carriers and began charging differential subscription fees for carriers registering to use the VBS depending on the level of access required by the carrier Prior to this change some carriers were engaging multiple computer terminals to the detriment of other carriers and it had become clear that a level of differentiation would be in all carrierrsquos interests The different classes of carrier access were introduced to ensure the most balanced overall outcome The level of differentiation is an annual choice of access levels available to all carriers regardless of size Under this approach different subscription fees are charged for each category but all carriers registering in a particular category pay the same fee Our view remains that an annual subscription as opposed to a pay as you go is far less of an administrative burden on both the carriers and the terminal

Page 27 of 48

23a3 There are no restrictions upon carriers wishing to obtain a certain carrier category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for the same carrier categories as larger carriers Smaller carriers may also apply for consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst charging the burden of the cost of that subscription

23a4 Subscription fees based on differences in class are designed to

encourage choice whilst at the same time communicating a level of transparency with terminal pricing and service

23b Do the different pricing schemes influence the efficiency with which

transporters obtain access to the terminals

23b1 We do not believe this to be the case

23c Would standardisation of charges be more appropriate

23c1 It is our understanding that it would be unlawful for a supplier itself to standardise charges by reason of Section 45 of the Trade Practices Act This may be something that Government wishes to consider

24 The Tribunal invites comment on the following non-price access issues to consider

in relation to the operation of the VBSs

24a What effect do access rules and conditions and non price constraints have on booking a timeslot How to the stevedores use their discretion in determining access and charges and what impact does this have

24a1 The introduction of different categories of access stages the carriersrsquo

access to the VBS for the purposes of booking timeslots ldquoB classrdquo carriers are given exclusive access to a pool of slots between 0730-0820 During this period they are subject to zone limitations which restrict carriers to a maximum number of slots for any given hour The zone limit ensures all carriers within that carrier class are given fair and equitable access to the initial release of slots After the initial booking period the zone limit is lifted and carriers are permitted to book any number of unused slots per hour from those remaining in their pool Similar arrangements exist for A class carriers culminating in the cascading of all remaining slots from all segregated pools into a general pool at 1030 for access by all registered carriers

24a2 There are not restrictions upon carriers wishing to obtain a certain carrier

category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for a consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst sharing the burden of the cost of that subscription

24b What are the stevedoresrsquo obligations with regard to access to port facilities

and what should they be

24b1 Without providing an analysis of our obligations under law in general terms we are required to provide access to carriers on an equitable basis recognising the competitive environment we operate in

Page 28 of 48

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

any particular window The extensions of sidings will provide further opportunity to increase rail handlings capacity at the terminals

44 Figure 3 shows the trends in terminal rail window utilisation during 2005 and 2006

Although there is a small improvement in window utilisation during this period the utilisation is low and there is considerable capacity available to increase the number of containers that can be transported by rail

Figure 3 DP World Sydney ndash Weekly Terminal Rail Window Utilisation

DP World Sydney Weekly Rail Window Utilisation 2005-07

20

30

40

50

60

70

80

Jan-05 Mar-05 May-05 Jul-05 Sep-05 Nov-05 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07

45 Contributing factors to the relatively low level of utilisation include

bull the late arrival of the rail operator at the terminal which reduces window

duration and the terminalrsquos inability to increase productivity to meet window capacity requirements without incurring extra costs We understand that the late arrivals by rail operators can be due to equipment breakdowns the passenger network restrictions and the inadequate rail infrastructure for freight

bull overestimation of the volumes rail window duration required by the rail operator

bull fluctuations in freight movements on a daily basis creating peaks and troughs

bull the drought and the decrease in rural export containers

bull train shunting operations

bull the AQIS inspection required for each import container before it leaves the terminal

bull the train and wagon inspection required before the train leaves the terminal

bull the use of labour intensive manual twistlocks instead of auto twistlocks on rail wagons

bull the necessity to break split trains in Botany Rail Yard

bull infrastructure limitations within the Botany Rail Yard and

bull rail operators using the Botany Rail Yard as a storage facility for their wagons and causing congestion

46 As indicated above DP World Sydney has plans to improve the infrastructure

within the terminal in order to meet predicted rail volumes in the future However

Page 8 of 48

unless improvements are made against the issues listed above then window utilisation and efficiency may not improve to levels required to meet the NSW Governmentrsquos 40 rail mode target

5 The Tribunal invites stakeholders to comment on any aspects of the operations of

the regulatory authorities that may be causing inefficiencies or extra costs to arise in the downstream supply chain 51 The Australian Customs Service (Customs) has introduced Container Examination

Facility (CEF) operations in most major ports around Australia Each of these facilities incorporates the use of modern technology such as container x-ray equipment and other examination tools to support Customs in their aim of identifying illegal activities through containerised trade Since the inception of the CEF in Sydney in February 2003 Customs has reported many successful interceptions of prohibited imports

52 The CEF in Sydney operates two shifts each week day (day and evening shifts)

and one shift on Saturdays (day shift) This operating arrangement has created more competition for terminal resources during the peak hours 0500-1700hrs Monday ndash Friday This has resulted in the terminal deploying more equipment and labour resources at the terminal to meet the obligations of contracts with Customs but at the same time has increased competition for resources depending where the container is place in the terminal and how the yard equipment is coping with the demands of industry

53 DP World Sydney has contracted performance KPIs to deliver along with following

factors to overcome that contributed to resource competition

bull Random arrival of Customs transport provider trucks (B Doubles) and random selection of containers due to weight constraints of the trucks

bull Multiple containers per truck relating to up to six different locations a truck has to visit within an RTG terminal and the potential to utilise six different resources

bull The requirement for DP World Sydney to block stack Customs targeted containers from a vessel in order to minimise the variability of locations a Customs truck has to visit This block stacking requirement has a negative impact on vessel performance and creates more competition for internal resources

bull DP World Sydney does not control the transport to and from the CEF Customs have appointed a carrier in each port and who under the contract is responsible for the effective co-ordination between the terminals of the movement of X-Ray containers DP World Sydney does liaise with the Carrier but the carrier has the final say as to how many trucks are allocated to each terminal and

bull DP World is of the view that the current operating hours of the CEF are contributing to resource competition within the terminal during the peak periods If the CEF opened midnight shifts rather than day shift this would reduce resource competition increase terminal resource utilisation in the non-peak hours and an improvement in efficiency would be gained by industry

Declaration of Cargo

54 The Australian Customs Service (ACS) has put in place a requirement for

importers to declare cargo at least 48 hours prior to a vesselrsquos first port of call in Australia This is an initiative that has the ability to increase the efficiency of import container movements and decrease the time containers remain in a stevedore terminal The on-time reporting performance in NSW during March 07 was 87

Page 9 of 48

The ACS should continue to put in place incentives to increase this clearance rate of containers in order to gain 100 compliance

55 The Australian Quarantine Inspection Service (AQIS) could assist by utilising an

electronic means of communicating the application and release of AQIS holds required on containers Currently AQIS operate a totally manual operation

6 The Tribunal specifically invites comments on the current role of the SPC and on

the role SPC might take in improving the efficiency of the supply chain

61 Sydney Ports Corporation has stated objectives which include

bull Enhancing and developing strategic assets to ensure efficient optimum utilisation

bull Continuing to build effective relationships with stakeholders that improve the competitive positioning of the ports and

bull Taking the lead in facilitating port related freight solutions

62 DP World in Sydney has participated in efforts by SPC to facilitate efforts to achieve mutual outcomes between both the stevedores and section of the road transport industry

63 In addition SPC has

bull Measured TTT at Port Botany and published these statistics since (2001)

bull Encouraged more use of rail with the support and investment by DP World

bull Requested more capital investment to improve road transport interface which has been supported by DP World through the acquisition of additional container handling equipment

bull Sought the elimination of truck queuing outside the container terminal with the support and implementation of a Vehicle Booking System by DP World

bull Sought the development of inland intermodal terminals with the support of DP World and

bull Sought the inclusion of suitable landside Key Performance Indicators within future lease terms

64 We consider that SPC has taken the leadership role appropriate for its position in

terms of seeking to facilitate improvements in overall port efficiency without interfering in the various commercial arrangements between stakeholders

7 The Tribunal invites stakeholders to comment on any aspects of the current work

practices of freight forwarders customs brokers and any remaining industry participants that may be causing inefficiencies or extra costs to arise in the downstream supply chain

Customs Brokers

71 It is the practise of some customs brokers to wait until the storage free period at

the terminal has almost expired before paying the duty to the Australian Customs This has the impact of retarding the stevedorersquos efforts to improve the velocity of container movement through the terminal Customs brokers should therefore be encouraged to pay duty as soon as possible

72 Customs brokers can also contribute to congestion at the terminal by not paying the Customs duty up to at least 2 hours prior to the carrierrsquos time slot This results in the truck waiting at the terminal for the information to flow through to the terminal operating system via EDI

Page 10 of 48

73 One way of achieving flow in (71) and (72) above is to disconnect the relationship between the payment of duty and the physical control of cargo movement To maximise the effect here the ACS could request the Customs brokers to also lodge the lsquoImport Declarationrsquo 24 hrs prior to arrival and collect duties on account after the event

74 An initiative at DP World Brisbanersquos terminal has been successful in obtaining early container information as part of their VBS (linking timeslot to the container number)

75 The system has been in place for almost 12 months now and the availability of information at DP World Brisbane has contributed to improved service levels at this terminal

Empty Container Depot Opening Times

76 A majority of Empty Container Depots reside within 10 km radius to the port

precinct Depot opening ties do not match container terminal operating hours The result is an inability for carriers to return and pick up an empty container 24hrs a day to depots This reduces the potential of utilising the existing vehicles on the road creating potential traffic congestion and therefore free up their trucks to collect import containers from the terminal Through tariff structures the shipping lines have the ability to influence the depots to increase their opening hours thus resulting in greater vehicle utilisation and subsequent reduction in transport charges The extended spread of hours will also have the effect of flattening the peak traffic periods and reducing road congestion and travelling times

8 The Tribunal invites stakeholders to comment on any aspects of the VBS

particularly in relation to the number of timeslots made available and on what basis and the process by which those slots are made available across the day(s) and to whom

81 The VBS is simply a means by which to communicate with the transport carrier

community What determine the number of slots made available are resource levels provided at the container terminal DP World Sydney provides more than sufficient resource levels to enable all containers to be delivered as required to road within the three free day period even accepting the industryrsquos current limited use of the available 247 terminal operation It is acknowledged that resource levels provided to road operations may be varied day to day as resources may need to be directed to ship operations but this follows from running the terminal as an integrated operation which is ultimately most efficient Providing further day time slots without addressing underlying market inefficiencies only risks service levels to shipping lines that are demanding higher performance levels and perpetuating the industryrsquos unwillingness to support 247 operations

82 DP World also notes that all carriers may and do from time to time contact the

terminal and request additional timeslots if there are none available on the VBS The terminal will endeavour to accommodate such requests where there is operational capacity to do so If there is capacity the Terminal will book the timeslot in the name of the carrier that has made the request

83 Further details of the VBS are provided in responses to subsequent questions

However we believe that the VBS at DP World Port Botany Terminal has delivered benefits including

bull No random queuing at the terminal which results in significant unplanned

delays to transport users due to the random arrival of trucks at any point in time to the terminal where the terminal is not resourced to handle the high peaking demand for landside resources whilst at the same time meeting contractual obligations with shipping lines

Page 11 of 48

bull The terminal is able to carry out bulk moves while maintaining service levels to other general carriers

bull Provides choice to carriers in terms of access as well as providing transparency to industry

bull States subscriptions fees in a public document which are transparent to industry

bull Increase slot allocation to road users based on irregular shipping schedules and

bull While not referred to in the Carrier Access Arrangements (see attachment 1) all B class carriers are allowed to engage in a process called ldquoexport taggingrdquo Export tagging involves a carrier booking an import timeslot in ePorts which will give them access to the terminal A carrier is then able to bring and export container on the truck that is arriving to collect the import container without booking a slot for that export container (during most timeslots in the day) The purpose of this flexibility to carriers is to increase two-way running which reduces costs to carriers and decreases the number of trucks in the port community

9 The Tribunal asks stakeholders to comment on the variability of average

turnaround times across the major ports and the variability of turnaround times faced by individual transport operators at Port Botany itself The Tribunal also invites comment on how important predictability of turnaround times is to transport operators relative to average turnaround times at Port Botany The Tribunal further invites comment on why turnaround times are higher for Port Botany compared to Melbourne Adelaide and Fremantle

91 The precise nature of operations differs between the ports and between the

terminals operated at those ports These differences arise because of the range of shipping lines that arrive at the various terminals and the volumes of containers and type of cargo going through each terminal There are also differences in the container yard handling equipment yard configurations at each terminal and hours of operation resulting in differences in the way each terminal operates These differences result in variations amongst each terminalrsquos service performance levels

92 During 2002 DP World Sydney management met with a representative group of

carriers to discuss the VBS and access arrangements at the terminal A common view of the carriers was that they would like consistency to truck turn times and that 60mins (carrier measurement) is acceptable The outcome from these meetings was that DP World introduced three internal KPIs

bull Truck processing to truck complete measurement ndash 38 mins average

bull TTTs of 60 mins or less to be 90 to total trucks

bull TTTs of 120 mins or more to be 1 or less

93 Figure 4 below shows the percentage of truck turn times that are 60 minutes or less at DP World Sydney There is a noted improvement in during mid 2005 from an average prior to this time of 73 to an average during 2006 of 85 This indicates that the predictability of the truck turn times has improved during the life of the VBS

Page 12 of 48

Figure 4 DP World Sydney ndash Percentage of Truck Turn Time under 60 mins

DP World Sydney - Percentage of Truck Turn Time under 60 mins

50

60

70

80

90

100

Jan-04

Mar-04

May-04

Jul-04

Sep-04

Nov-04

Jan-05

Mar-05

May-05

Jul-05

Sep-05

Nov-05

Jan-06

Mar-06

May-06

Jul-06

Sep-06

Nov-06

Jan-07

Mar-07

94 Figure 5 below shows the terminal truck turn time and the stevedoring volume since July 2003 at DP World Sydney Note that the volumes are hidden on the left Y axis for commercial reasons As a result of terminal improvements and putting in place the KPIs described above the average TTT performance has improved (right Y axis) whilst at the same time the terminal volume has increased (left Y axis)

Figure 5 DP World Sydney ndash Truck Turn Time and Container Volume

95 DP World operates in all five major ports in Australia and has three different modes of operation namely Straddles in Melbourne and Adelaide RTGrsquos in Sydney and Fremantle and Forklift and Reach-stacker in Brisbane The Variability in TTT between ports is attributed to a number of factors including but not limited to the site processes and physical constraints of each facility

96 The measurement of TTT differs mainly due to

a) the layouts of in-gates and its approaches and

Page 13 of 48

b) the measurement of the job steps which apply to a truck from arrival to departure due to (a)

97 All the above terminals have different truck parking arrangements within and

outside the terminal which impacts TTT Across the board TTT is measured from job processing to job complete (98c to 98e below) however the physical layout and mode can influence when processing commences

98 The process of truck management in simple terms is

a) Pre-arrival of trucks

b) Validation of time slots

c) Processing of job (Manual but if automated it takes effect in b above)

d) Enter the operational yard

e) Job transact and complete (by straddle RTG or Forklift Reach-stacker) and

f) AQIS check for full trucks and depart (gate-out)

99 Depending on the physical layout and provision of sufficient space to hold trucks within the terminal boundary or otherwise the distribution of trucks varies through steps 98a to 98c above

910 At DP World Sydney the equivalent hourly truck volume can be held in the

terminal entry marshalling area therefore multiple trucks can enter the terminal park and be processed by terminal staff Post processing all time spent in the marshalling area forms part of the TTT whilst the truck has not necessarily entered the operational yard (see Annexure 2)

911 At DP World Melbourne on the other hand due to restricted space within the

terminal trucks are normally held outside and a small number is constantly drip fed into the terminal (controlled rate of entry) These trucks then approach the processing points (6 lanes x processing booths) further which they directly enter the operational yard and the TTT is measured from this point

912 DP World Fremantle does not have a truck holding area within the terminal which

means the truck enter the terminal and queue at the Entry to Operational Yard Immediately after being processed the truck enters the terminal yard Therefore unlike Sydney time from Entry to Operational Yard is time historically not published Therefore TTT between DP World Sydney and DPW Fremantle are not comparable

913 DP World Fremantle is also an RTG operation similar to DP World Sydney

However the physical layout and the resulting entry arrangements differ Due to restricted space within the terminal the trucks are normally held outside and constantly drip fed into the terminal (controlled rate of entry) The trucks operate through 3 lanes within the terminal and truck turn time is measured at this processing point when the trucks actually enter the operational yard

914 DP World Adelaide is a straddle operation similar to DP World Melbourne

However its physical layout and resulting entry arrangement is different to that of DP World Melbourne and has some similarities with what takes place in Sydney The hourly truck volume can be held within the terminal and the TTT is measured from entry into the terminal main gate to departure from the terminal main gate The measure differs from the other facilities on both entry are exit gates

915 The benefits of this TTT data is not so much the raw data itself but more so the

long term trend in the data If TTT is constant or even improved during periods of volume growth then this reflects a firm commitment to the landside process Continuous improvement reflects a commitment to landside efficiencies

Page 14 of 48

916 TTT is influenced by the mode of operation the Gate In infrastructure and volume

of containers required to be handled

917 The RTG mode of operation requires the truck to travel to the yard stack where the container is located or assigned as opposed to the straddle operation where the straddle comes to the truck that is parked in a bay external to the stacking area The mode of operation at DP World Sydney generally results in a truck with multiple containers being serviced by multiple RTGs and also having to travel to multiple yard locations At each of these yard locations there will be a different level of demand on the particular RTG covering the area This will result in variations in the time it will take to service the truck in that particular area and therefore will influence the truck turnaround time

918 In comparison a terminal running a straddle operation could employ a different

straddle to handle each of the containers processed for the truck

919 The mode of operations employed by container terminals have various strength and weaknesses and need to be considered based on many factors in a Port (ie not just the landside interface) but both modes can contribute to variability

10 The Tribunal invites comment on how truck turnaround times are currently

measured by supply chain participants and how they should be measured The Tribunal further invites comment on the extent to which the stevedores provide access to their facilities at the specific times booked on the VBS

Truck Turn Time (TTT)

101 DP World Sydney currently measures truck turn times from the time the containers on a truck are processed to the time the last container is completely loaded onto the truck (import containers) or discharged from a truck and landed in the terminal (export containers)

102 TTT is directly influenced by the number of containers to be handled by an RTG

terminal on a truck run ie a higher number of containers results in a longer truck turn time on average This due to the truck having to potentially visit multiple locations within the RTG terminal

103 The reason the container Terminal does not measure the time following

completion of loadingdischarging container from truck is measure regulatory bodies (ie AGIS) have commenced inspection of containers on terminal exit gate which is beyond the control of the container terminal

104 The process time is used to measure the start of the truck turn time as this is the

closest time to the truck being in the terminalrsquos control

105 Trucks that take advantage of the autogate processing (currently 25 of trucks) actually start the truck turn time as they come through the terminal gate as this is where the transponder reader is located DP World Sydney support the increase of the autogate processing and the result that the truck turn time starts at the gate For trucks that do not use the autogate processing opportunity the terminal does not start the truck turn time at the gate as the truck driver may not move efficiently to have the container processed

106 Carriers often use TTT measured from the time the truck services at the standby

queue or the arrival of the truck at the zone queue which are waiting for the next time zone to open

107 In relation to standby queue the CAA clearly stipulates that the use of this system

does not guarantee immediate call-up to the terminal in priority to trucks that have booked a time slot

Page 15 of 48

108 In relation to TTT measured from arrival at the time zone queue the fact that the truck has arrived prior to the commencement of the zone opening is purely a decision of the transport carrier and is beyond the control of the Container Terminal and is not supported by DP World

Container Turn Times

109 DP World Sydney currently measures container turn time from the time the

container is processed to the time the container is loaded onto the truck (import container) or discharged from a truck and landed in the terminal (export container) Over the last 5 years the transport regulators have allowed truck operators to operate larger trucks thereby ultimately improving the efficiency of road transport As transport operators increase the use of larger trucks (capable of carrying multiple containers) the handling of these trucks produces a multiple handling of containers on the same truck at the terminals For example in the past one would handle one container per truck and in that case the CTT and TTT were almost identical With multiple containers on trucks the difference between the CTT and TTT is increasing To be able to benchmark this across a port and other ports becomes hard with TTT due to the ever changing ratio of containers per truck (depends on percentage of large truck operators) firstly within the same port and secondly between different ports Therefore CTT enables us to benchmark the measurement on common grounds across all our operations around the country

Access Times at DP World

1010 DP World Sydney divide the day into hourly time zones within the VBS The time

zones start on the house (eg 0700hrs) and complete at the end of the hour (eg 0759hrs) There is a time zone board located at Simblist Road which indicates which time zone is open Trucks queue at this point waiting for the board to change each hour During daylight hours on average there are 15 trucks waiting for the time zone to open The trucks then make their way to the terminal in gate located on Friendship Road once the zone is open

11 The Tribunal invites comment on the choice between a system where container

numbers are nominated in advance thereby offering the possibility of faster turnaround times or not providing container numbers which would provide road carriers with greater flexibility Or would industry participants prefer a system that allows the choice between both

Import Timeslots

111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the import container number in a timeslot booking up to the start of the time zone The disadvantage for the terminal and the carrier is that this flexible system arrangement does not allow the terminal the chance to reposition the container to a position that will minimise the number of containers that have to be moved (known as ldquoconsolidation movesrdquo) in order to access the container that is to be delivered to the truck once the truck has been processed and is in position for loading The more consolidation moves the terminal has to do to load an import container to a truck the longer the truck turn time will be

112 Undertaking consolidation moves prior to truck arrival would provide the opportunity

to decrease truck turn time

113 To achieve a further reduction in truck turn times and a reduction in cost of delivering a container the terminal would need to control the order in which the import containers are delivered This occurs in other ports in the world

Controlling the order of import deliveries

114 The current arrangement where the shipper controls the order of import containers

to be delivered from the terminals results in extra costs incurred by stevedores and also decreased efficiencies The longer a container remains in the terminal (an

Page 16 of 48

increase in the dwell time) results in increased consolidation (rehandles) undertaken by terminal equipment and an increase in the time taken to load a container to a truck or train

Matching of resources to meet demand

115 The terminal allocates the resources required based on the demand or the

number of timeslots released This occurs 24 hrs in advance

116 Carriers who book timeslots and do not meet their commitment (No Show) results in the terminal resources to be under utilised at certain times and creates an opportunity loss There is also an opportunity lost by another carrier to utilise the time slot for each No Show

117 Carrier who book timeslots and arrive late for their commitment (Wrong Zones)

results in terminal resources being under utilised at times and over utilised at other times The troughs in terminal resource utilisation result in an opportunity loss and the peaks result in a decrease in efficiency (increased truck turn time) or increased cost (increased resources applied) The increase in truck turn time has an impact on carriers who arrive on time for their time slot

118 The current VBS allows for carriers to arrive at the terminal to deliver or pick up a

container without committing to a time and container number thus not enabling the terminal to completely plan the required resources to meet the demand This is termed unplanned work The Standby Queue export tagging by B Carrier no advanced deadline for entering an import container number prior to the time zone and no requirement for an export container number being entered into a time slot booking results in an increase in unplanned work Unplanned work results in peaks in the work required by the planned resources and a decrease in efficiency

119 Rail also has similar problems

1110 By changing this arrangement and giving control to the stevedores to determine

the order of container delivery from the terminal will reduce the costs incurred by the terminal and decrease the turnaround time for trucks

Export Timeslots

1111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the export container number in a timeslot booking up to the start of the time zone It also allows an export time slot to be processed without a container number entered in the time slot booking The container number in then entered by the RampD Clerk at the terminal This often results in human error by the truck driver or the RampD Clerk resulting in delays to trucks This practice also eliminates the opportunity for the carrier to use the automatic processing described below in Question 12 To maximise the use of automation and eliminate human error the export container number needs to be a mandatory field to be updated in the time slot booking by a nominated time prior to the start of the time zone eg 2 hours prior to the start of the time zone

12 The Tribunal invites comments on the increased use of ICT and automation and

any other ways to reduce turnaround times and otherwise improve supply chain efficiency

121 DP World support and are driving the increased use of automation for the

processing of trucks DP World have developed and currently make available an automated truck processing system for carriers who use ePORTS to book and manage timeslots The percentage use of this system at DP World Sydney by carriers averages about 25 of total truck movements excluding stack run trucks

122 This system requires the purchase of a transponder unit from the terminal at the

cost that the terminal purchases the unit plus GST Currently the units are sold to

Page 17 of 48

the carrier for $12050 Also required is access to an eGATE screen in ePORTS The process for carriers wanting to move a number of containers on a transponder run involves

a) Booking through EPORTS the required number of time slots in a time zone

For example if a transport carrier wanted to deliver two export containers and collect one import container on a single truck run it needed to book three slots and

b) Setting up the transponder by inputting the slots truck number container numbers and whether they are import or export containers in the transponder booking screen in ePORTS

123 The benefits for carriers of using this automated processing include

a) The processing occurs earlier (ie at the gate as compared to in the RampD Office) therefore this decreases the chance of Wrong Zones being incurred

b) No need for the truck driver to present documentation at the RampD Office therefore reducing the truck turn time by avoiding any potential queues

c) No interaction between the truck driver and the RampD Clerk therefore decreasing human error during processing and causing further delays

d) As the processing occurs at the gate the trucks can skip ahead of other trucks where their drivers have to manually process in the RampD Office effectively jumping the queue

e) Allows reprogramming of trucks up to 15mins before the end of the time zone (eg 0645 for an 06 slot) without the truck driver needing the Delivery Order in his possession

f) Provides the carrier with the ability to educate their customers to provide the Delivery Orders in a timely manner in order to lodge them at the terminal

g) Electronic copies of the Delivery Orders (excluding scanned copies of originals) can be forwarded to the terminal via email therefore eliminating the need to physically lodge them

h) Enables the carrier to take all advantage of Electronic Import Delivery Orders (eIDOs) that are currently being used by Evergreen Marine at DP World Sydney Other shipping lines will move to the use of eIDOs in the future

13 The Tribunal invites stakeholders to comment on VBS capital and operating costs

and to assist it to distinguish between stand-alone VBS costs and those shared with other stevedoring activities

131 It is important to distinguish between the capital and operating costs of operating

the VBS and the costs of operating the landside interface ie delivering containers to and from trucks

132 The costs of a VBS comprise the following components

bull IT development and maintenance costs and

bull Management and administration time to manage and administer the system

These costs are low relative to the costs of actually providing the services within the terminal ndash loading and unloading the trucks

133 Having a system which requires the terminal to provide a guaranteed number of

slots per hours is to the disadvantage of the terminal Terminal operations are by their nature unpredictable due to the irregular arrival of ships Having to guarantee a number of slots which carry with it a high expectation of performance in terms of TTT tends to force the terminal to set the number of slots at a level which includes a risk mitigation factor against all things not going to plan The net result of this is

Page 18 of 48

that the terminal tends to effectively oversupply equipment and labour increasing its costs The impact of this is far more significant than the isolated costs of running the actual vehicle booking systems

134 Direct VBS costs have nothing to do with ship or rail operations

135 The container yard is run as a single operation servicing ship road and rail By

this means while there are practical limitations we seek to pool resources to maximise the overall efficiency of terminal operations particularly to absorb the peaks and troughs of demand across the operations as a whole This effective sharing of costs improves overall efficiency and results in lower costs to the benefits of users as a whole We anticipate that systems and technology improvements will see greater use of such pooling and greater overall efficiency as a result

14 The Tribunal invites stakeholders to comment on VBS access and penalty charges

and the level of transparency of access through the stevedoresrsquo VBSs

141 The VBS facilitates the provision of orderly access to DP World Sydney Terminal for over 200 individual carriers

142 DP World considers the achievement of orderly access to its terminals as a

primary objective of the VBS To achieve orderly access DP World considers it important to require carriers to pay a nominal subscription charge for the level and rights of access they require and to issue ldquono showrdquo and ldquolaterdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay lsquoon timersquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs

143 The VBS is essentially an ldquoappointment bookrdquo to assist transport carriers to

organise themselves more efficiently leading to a reduction in waiting times at the container terminal The VBS divides all working days into time periods containing a pre-determined number of timeslots The timeslots represent the number of import and export containers that can be handled in that period The number of timeslots in a day is determined by expected carrier demand and the availability of labour and equipment Carriers are then able to book timeslots for collection or delivery of containers

144 The alternative is random access to container terminals by carriers and significant

truck queues with associated demurrage costs which are ultimately paid for by the end user

145 At DP World Sydney the VBS offers transport carriers the ability to access an

internet based computer system or telephone bureau for the purpose of booking time slots for those carriers who do no wish to use the computer system The VBS in its present form offers access on a transparent and equitable basis to all carriers encourages the efficient movement of containers from the ship through the terminal and onto customers and vice-versa encourages innovative practices which are beneficial to terminal efficiency road congestion and the overall cost of the supply chain The ldquono showrdquo and ldquolaterdquo fees encourage these operational practices and efficiencies

146 DP World has adopted a class structure with an annual subscription for access

because this system allows carriers to determine what access is required for their business while providing the industry significant level of transparency in terms of access costs

147 All carriers have an equal opportunity to subscribe to any of the three classes of

access to the VBS (bearing in mind that smaller carriers are allowed to consolidate

Page 19 of 48

their subscriptions in order to share the cost of a B Class subscription) and equal access to timeslots amongst carriers of the same class

148 Annual fees are payable in advance Table 3 sets out the various carrier classes

currently in operation at each terminal and the applicable subscription fees for each class There are no annual limits on the number of slots carriers can book

Table 3 DP World Sydney ndash Current carrier classes and VBS deposit and registration fees for the year commencing 1 July 2005

Terminal Carrier Classes Price Number of active

carriers at Feb 06 Port Botany New South Wales

B Carrier ndash online internet access with high service levels

$2922150 (Non-refundable deposit) No fixed upper limit on annual time slots1

28

A Carrier ndash online internet access with standard service levels

$133400 (Annual registration fee) No fixed upper limit on annual time slots2

162

AB Carrier ndash access via the PampO Phone Booking Bureau with standard service levels

$66760 (Annual registration fee) No fixed upper limit on annual time slots3 39

149 Any carrier selecting the ldquoBrdquo classification is encouraged to also consider the ldquoArdquo

classification unless they are confident of utilising a high level of timeslots that would render the higher subscription fee as attractive per timeslot

1410 In addition to the VBS annual subscription fees the carrier access arrangements

provide for the levying of a no-show fee on carriers who fail to arrive for slots they have booked in the amount of $110 per time slot The terminal also charges carriers late fees of $55 per slot if they fail to arrive for a slot booking within the nominated time zone No fees are charged where a carrier is unable to meet the time slot due to delays caused and acknowledged by DP World Australia or where delays are caused by circumstances genuinely outside of the carrierrsquos control DP World Australia also has the discretion to and does waive ldquono showrdquo and ldquowrong zonerdquo fees in the interest of maintaining a good working relationship with carriers Failure by carriers to pay these ldquono showrdquo and ldquowrong zonerdquo fees may lead to them being prevented from making further bookings ldquoNo showrdquo and ldquowrong zonerdquo fees are the means by which DP World ensures that access to itrsquos terminals is provided in the most efficient manner to all 1carriers as late carriers cause delays for those carriers that are on time

1 No fixed upper limit on annual timeslots ndash Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 2 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 3 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release

Page 20 of 48

1411 The ldquono showrdquo and ldquowrong zonerdquo fee structure was introduced following

consultation with carriers It was originally $20 per late arrival (in Victoria where VBS first commenced) but this is proved to be ineffective in disciplining carrier conduct In response to requests from many carriers DP World increased the ldquono showrdquo fee to $110 The fees also discourage carriers from the practice of overbooking slots which they have no intention of using and preventing other carriers from using those slots

1412 The actual cost of a truck turning up late (Wrong Zone) or not turning up at all (No

Show) is the cost of planned resources (labour equipment etc) based on the VBS demand (number of containers expected to handle during a time period) not being utilised during the time period they are employed

1413 Adjacent to each time zone are grace periods one prior to the time zone and one

following the time zone These grace periods and the trucks arrival time for processing determine the status of the time slot ie arrived on time or arrived late (Wrong Zone) Currently the grace period following the time zone is set at 20 minutes which means that if a truck arrives later than one hour and 20 minutes after the start of the time zone then the time slot will be initially recorded as a Wrong Zone Following the completion of each VBS day Wrong Zones are reviewed and any penalty waived if any of the following determined

a) The terminal is aware that it has contributed to a truck arriving late for the time

slot ie the terminal has previously delayed the truck or carrier on an earlier time slot or

b) The carrier advises that they arrived late due to an unforeseen circumstance eg a break down of the truck

We request that the information in 1414 be kept confidential

1414 Omitted for reasons of confidentiality

1415 Officers at DP World Sydney have regular conversations with carriers in respect of

the waiver of No Show fees as well In certain instances DP World may agree to waive fees prior to an invoice being issued

1416 For both Wrong Zone and No Show fees the terminal provides a grievance

process for carriers who have been issued invoices and do not agree that the fee has been issued fairly The carrier has the opportunity to provide the terminal with an explanation and should officers at DP World Sydney agree that there has been an error in the issuing of the fee or an unforeseen circumstance is explained the terminal will credit the invoice

15 The Tribunal invites stakeholders to indicate the costs of providing the services of

rail windows and rail paths to rail operators

151 Rail windows are based allowance on a rail terminal performance KPI of 30 container moves per hour and charged at $360 per hour A shunting time allowance of 15 mins per window is not charged Additional lifts canare provided by increasing the lifts per hour by applying more machinery at no additional cost

152 The cost of providing terminal rail operations is higher than road operations at DP

World Sydney The RTG mode of operation requires a container to be moved to or from the container stack For road containers the truck takes the export container to the stack and travels to the stack to pick up an import container For a rail container a terminal internal transfer vehicle (ITV) is required to be used by the terminal to move the container from the train to the stack (export containers) or

Page 21 of 48

the stack to the train (import containers) This is not required for container being received or delivered by road

153 For import rail containers there is a loss of efficiency for the vessel discharge

operation in order to stack rail containers separately for delivery to the train For each discharge point in the terminal extra resources are required There is extra administration costs in having to make alternate arrangements to separate these import rail containers

154 Despite the fact that the delivery of containers to rail is higher than road the

terminal seeks only a partial recovery of costs in order to encourage the use of rail in the port in line with the NSW Government objectives

155 There is a management cost of setting up and operating the rail windows This is

similar to the cost of operating a VBS

156 There is additional security infrastructure costs for a rail operation to ensure the terminal meets their legislative security requirements The more terminal entry points created the higher the cost to replicate these security infrastructure requirements

16 The Tribunal invites comment from stakeholders on the planned or mooted

development and expansion of the various intermodal terminals in Sydney and the extent to which this is expected to ease congestion in the landside supply chain at Port Botany

161 DP World supports the development and expansion of an intermodal terminal

network to facilitate an increase in the use of rail as the means of container transport This has the potential flow on benefit of minimising the growth in the number of trucks requiring to access the Port Botany area as port volumes continue to grow

162 Transport between the Botany terminals and the inland intermodal terminals

should be by rail or trucks operating a stack (bulk) run road out during off peak periods eg night shifts or weekends The use of Super B Double trucks would assist with the efficiency of these off peak stack run outs

17 The Tribunal invites comment on the likely effect of the expansion plans at Port

Botany on access to the port terminal during peak periods and efficiency along the supply chain

171 Improving the two-way running or back-loading of trucks has to be a priority in

order to maximise access opportunity at the terminals and efficiency along the supply chain It is likely that a third and separate stevedoring facility will only increase the difficulty of improving truck utilisation over and above the current levels by the increased logistics complexity of coordinating timely access to three terminals rather than two

172 A third stevedore will lead to the same port volume being spread over three

operations While it is resource levels that determine available slots DP World has found that during periodic decreases in volumes carriers favour daytime runs to the terminal as opposed to night time

173 The expansion plans will have a negative impact on rail transport timeliness and

access requirements to DP World Sydney if the requirements to breaksplit trains and shunt sections of trains into multiple terminals continues This will undermine the overall rail effectiveness and the NSW Government rail objectives by the unnecessary increase of splitting trains

Page 22 of 48

18 The Tribunal invites comment on the likely effects of expansion of the intermodal network in Sydney on access to the port and efficiency along the supply chain

181 This is a similar issue to point 16 above

19 The Tribunal invites comment on the likely impact of a peak pricing system along

the lines of the FIC on access to the port terminals and the efficiency of the Port Botany supply chain

191 We understand for the NSW Governmentrsquos announcement (31 May 2007) that the

FIC is no longer being proposed

192 Table 4 shows the average percentage of road containers that are handled by shift at DP World Sydney based on a 6 day x 24 hour receival and delivery operation for the past 4 years The figures indicate that there is surplus capacity on both evening and midnight shifts when compared to day shift Note that the percentage of road containers handled has increased on day shift relative to the combination of evening and midnight shifts This has been due to terminal efficiencies creating increased capacity during day shifts and the road carriers utilising this capacity

193 This is further emphasised in Figure 4 which shows the trend over time for day

shift containers handled has increased from 2005 evening shift has decreased and midnight shift has not changed significantly

Table 4 DP World Sydney ndash Percentage of Daily Road Container Volume handled by Shift

Year Midnight Shift (2230 ndash 0630hrs)

Day Shift (0630 ndash 1430hrs)

Evening Shift (1430 ndash 2230hrs)

2007 YTD 21 47 32

2006 23 45 33

2005 22 43 36

2004 19 44 38

194 Year to date April 2007 figures may reflect the seasonal trend for lower volumes in this period

Figure6 DP World Sydney ndash Road Volume trendlines by shift 2005-07

Page 23 of 48

20 The Tribunal invites comment on the likely impact of the expansion of the freight

rail network in Sydney on the number of containers moved by rail and on congestion at the port

201 The importance of increasing the proportion of containers moved by rail is

recognised and supported by DP World Sydney

202 To complement the expansion of the rail freight network upgrade the terminal is developing plans to increase the length and the number of sidings within the terminal Over the next three years the terminal is planning to spend an estimated $20million on internal rail infrastructure machinery and systems The terminal upgrade will ensure DP World Sydney has the infrastructure in place to meet a target of 40 throughput by rail

203 The expansion of the freight rail network needs to take into account The access

to each of the terminals especially the access to DP World Sydney where by the terminal has a distinct disadvantage in relation to its competitor

21 The Tribunal invites comment on the impact on the supply chain on ARTC

managing the metropolitan freight rail network

211 Management of freight rail infrastructure is ARTCrsquos core business and will bring additional management expertise and focus to the task of reforming operations on the Port Botany rail infrastructure

212 For ARTC to control the MFN (Metropolitan Freight Network) makes sense from

the point of view they can make informed decisions for both inbound and outbound Port services based on the wider NSW Rail Freight Network operation

213 The ARTC proposal to co-ordinate services by performing the full Network Control

Function (both signalling and Train Control) from the one centralised centre for the Southern Sydney Freight Line (SSFL)MFN and Port Botany emphasises their commitment to ensure safety communications and network management is their primary objective

214 ARTC are focussed on improving the efficiencies at the Port and bring to the

industry fresh innovative ideas to improve the overall capacity on the rail network ARTCrsquos willingness to assist and eagerness to invest in the rail infrastructure brings a breath of fresh air to the industry and specifically the stevedore operations ARTC can integrate the Botany line into its overall investment program paving the way for additional investment to improve the efficiency of operations on the Botany rail line and at the port-rail interface

22 The Tribunal invites comment on the following questions in relation to costs of the

VBS

22a What costs underpin the VBS access charges levied by the two stevedores How are the VBS access charges set

22b1 Refer to Question 14 The revenue from VBS charges account for a very

small proportion of DP Worldrsquos total container terminal revenue For the year ended 31 December 2006 they accounted for 13 of total revenue Of that 13 approximately 30 was for No Shows and Wrong Zones

22b What costs are incurred by the stevedores in moving a container from the

wharf to a truck or train

22b1 DP World Sydney is operated as an integrated business servicing ships road and rail within the context of a national business We do no separately account for the costs of each discrete activity Information on

Page 24 of 48

overall costs is provided to the ACCC and published on an industry basis in the ACCCrsquos Container Stevedoring Monitoring Report

22b3 Wharf to truck activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the VBS to provide orderly access for road carriers

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal space to allow truck drivers to park their vehicles in order to unlockset up their twist locks and processing of containers

bull Processing of the container

bull System to manage the truck movement within the terminal

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the truck by RTG or forklift

bull Provision of terminal area for truck drivers to safely leave their vehicle to lock the twist locks on their trucks check the container seal number and check the container for damage

bull Provision of terminal area for AQIS operation and infrastructure

22b3 Wharf to train activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the Rail Windows to provide orderly access for operators

Page 25 of 48

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal area for rail lines associated rail infrastructure and train inspection requirements within the terminal

bull Processing of the container

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the ITV by RTG or forklift

bull Internal Transfer Vehicle (ITV) movement of the container from the yard stack to the rail line

bull Lift of the container from the ITV onto the rail wagon

22c What influences the nature and amount of these costs (for example are they influenced by the type of equipment used by a stevedore Do they fluctuate with the number of containers handled by the stevedores) and how have costs changed over time

22c1 DP World operates very similar Vehicle Booking Systems in Brisbane

Sydney Melbourne and Fremantle where there are differences in volume through the terminals The only difference in subscription between the terminals are the ldquoB Classrdquo carrier subscriptions The annual subscription is influenced by the number of carriers seeking this class and the hourly allocation of slots to their class given the number of subscriptions In addition Melbourne operates a straddle facility and Brisbane operates a forklift reachstacker Therefore the cost of the Vehicle Booking System is not dependant on or mode but the annual subscription to ldquoB Classrdquo carrier depends on competition for that carrier class

22c2 An annual subscription fee per class which is a characteristic of DP

Worldrsquos VBS does not normally increase with volume At DP World Sydney subscription fees have not been increased since 2003

22c3 Overall landside costs have increased with increases in wages and

salaries (4 pa) property costs (substantially ahead of cpi) fuel and other general costs These increases have been offset to some extent by increases in productivity Industry costs history is also available publicly in the ACCC Container Stevedoring Monitoring Reports

22d Where do the port landside costs stop and the VBS costs start

22d1 Prior to the Entry to Operational Yard (see Attachment 2) the truck is

under the influence of the VBS and also under the influence of the external environment which includes but is not limited to port and metropolitan road conditions container clearance issues truck arrival peaks and troughs truck preparedness processing of the container to the handled by the terminal and maritime security requirements

It is DP World Sydneyrsquos view that the port landside costs stop and the VBS costs start at the choke point

22e Do the VBSsrsquo penalty charges reflect the cost to stevedores What should

they reflect

22e1 The primary rationale for the penalty regime is to seek to modify carrier behaviour

Page 26 of 48

22e2 However it is also the case that a ldquono showrdquo or ldquowrong zonerdquo gives rise to a lost opportunity cost to the terminal Resources made available but not utilised may be wasted

22e3 DP World considers the achievement of orderly access to its terminal as

a primary objective of the VBS To achieve orderly access PampO considers it important to issue ldquono showrdquo and ldquowrong zonerdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay ldquoon timerdquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs The alternative is random access to container terminals by carriers and significant truck queues with associated demurrage costs which are ultimately paid for by the end consumer

22f Should there be different charging arrangements for empty containers that

are returned to the port as opposed to full export containers

22f1 DP World Sydney terminal handles a full container in a similar way to an empty container using purpose built container stacking equipment controlled by a DP World employee A container occupies the same amount of space whether it is full or empty This leads to the same cost for the handling of a single empty container as a single full container Single empty containers returned to the port should be charged a similar rate to full containers

22f2 To reduce the cost of handling empty containers in the terminal destined

for the same port on the one vessel and that are of the same size the terminal in conjunction with the shipping line and the shipping linersquos nominated carrier work together to create a bulk run of empty containers The bulk run maximises the number of empty containers that are handled in a specific time period The terminal dedicates resources to thee bulk runs and also provides priority access to the transport carrier in order to create efficiency and an economy of scale In this way the cost of returning an empty container via a bulk run is reduced

23 The Tribunal invites comment on the following questions in relation to the different

pricing regimes of the two stevedores

23a Why do the stevedores have different pricing schemes for their VBSs

23a1 We do not know why Toll-PatrickAsciano has adopted the pricing scheme it has

23a2 In order to improve earlier versions of its VBS in the mid-1990s DP

World (PampO) introduced categories of carriers and began charging differential subscription fees for carriers registering to use the VBS depending on the level of access required by the carrier Prior to this change some carriers were engaging multiple computer terminals to the detriment of other carriers and it had become clear that a level of differentiation would be in all carrierrsquos interests The different classes of carrier access were introduced to ensure the most balanced overall outcome The level of differentiation is an annual choice of access levels available to all carriers regardless of size Under this approach different subscription fees are charged for each category but all carriers registering in a particular category pay the same fee Our view remains that an annual subscription as opposed to a pay as you go is far less of an administrative burden on both the carriers and the terminal

Page 27 of 48

23a3 There are no restrictions upon carriers wishing to obtain a certain carrier category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for the same carrier categories as larger carriers Smaller carriers may also apply for consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst charging the burden of the cost of that subscription

23a4 Subscription fees based on differences in class are designed to

encourage choice whilst at the same time communicating a level of transparency with terminal pricing and service

23b Do the different pricing schemes influence the efficiency with which

transporters obtain access to the terminals

23b1 We do not believe this to be the case

23c Would standardisation of charges be more appropriate

23c1 It is our understanding that it would be unlawful for a supplier itself to standardise charges by reason of Section 45 of the Trade Practices Act This may be something that Government wishes to consider

24 The Tribunal invites comment on the following non-price access issues to consider

in relation to the operation of the VBSs

24a What effect do access rules and conditions and non price constraints have on booking a timeslot How to the stevedores use their discretion in determining access and charges and what impact does this have

24a1 The introduction of different categories of access stages the carriersrsquo

access to the VBS for the purposes of booking timeslots ldquoB classrdquo carriers are given exclusive access to a pool of slots between 0730-0820 During this period they are subject to zone limitations which restrict carriers to a maximum number of slots for any given hour The zone limit ensures all carriers within that carrier class are given fair and equitable access to the initial release of slots After the initial booking period the zone limit is lifted and carriers are permitted to book any number of unused slots per hour from those remaining in their pool Similar arrangements exist for A class carriers culminating in the cascading of all remaining slots from all segregated pools into a general pool at 1030 for access by all registered carriers

24a2 There are not restrictions upon carriers wishing to obtain a certain carrier

category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for a consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst sharing the burden of the cost of that subscription

24b What are the stevedoresrsquo obligations with regard to access to port facilities

and what should they be

24b1 Without providing an analysis of our obligations under law in general terms we are required to provide access to carriers on an equitable basis recognising the competitive environment we operate in

Page 28 of 48

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

unless improvements are made against the issues listed above then window utilisation and efficiency may not improve to levels required to meet the NSW Governmentrsquos 40 rail mode target

5 The Tribunal invites stakeholders to comment on any aspects of the operations of

the regulatory authorities that may be causing inefficiencies or extra costs to arise in the downstream supply chain 51 The Australian Customs Service (Customs) has introduced Container Examination

Facility (CEF) operations in most major ports around Australia Each of these facilities incorporates the use of modern technology such as container x-ray equipment and other examination tools to support Customs in their aim of identifying illegal activities through containerised trade Since the inception of the CEF in Sydney in February 2003 Customs has reported many successful interceptions of prohibited imports

52 The CEF in Sydney operates two shifts each week day (day and evening shifts)

and one shift on Saturdays (day shift) This operating arrangement has created more competition for terminal resources during the peak hours 0500-1700hrs Monday ndash Friday This has resulted in the terminal deploying more equipment and labour resources at the terminal to meet the obligations of contracts with Customs but at the same time has increased competition for resources depending where the container is place in the terminal and how the yard equipment is coping with the demands of industry

53 DP World Sydney has contracted performance KPIs to deliver along with following

factors to overcome that contributed to resource competition

bull Random arrival of Customs transport provider trucks (B Doubles) and random selection of containers due to weight constraints of the trucks

bull Multiple containers per truck relating to up to six different locations a truck has to visit within an RTG terminal and the potential to utilise six different resources

bull The requirement for DP World Sydney to block stack Customs targeted containers from a vessel in order to minimise the variability of locations a Customs truck has to visit This block stacking requirement has a negative impact on vessel performance and creates more competition for internal resources

bull DP World Sydney does not control the transport to and from the CEF Customs have appointed a carrier in each port and who under the contract is responsible for the effective co-ordination between the terminals of the movement of X-Ray containers DP World Sydney does liaise with the Carrier but the carrier has the final say as to how many trucks are allocated to each terminal and

bull DP World is of the view that the current operating hours of the CEF are contributing to resource competition within the terminal during the peak periods If the CEF opened midnight shifts rather than day shift this would reduce resource competition increase terminal resource utilisation in the non-peak hours and an improvement in efficiency would be gained by industry

Declaration of Cargo

54 The Australian Customs Service (ACS) has put in place a requirement for

importers to declare cargo at least 48 hours prior to a vesselrsquos first port of call in Australia This is an initiative that has the ability to increase the efficiency of import container movements and decrease the time containers remain in a stevedore terminal The on-time reporting performance in NSW during March 07 was 87

Page 9 of 48

The ACS should continue to put in place incentives to increase this clearance rate of containers in order to gain 100 compliance

55 The Australian Quarantine Inspection Service (AQIS) could assist by utilising an

electronic means of communicating the application and release of AQIS holds required on containers Currently AQIS operate a totally manual operation

6 The Tribunal specifically invites comments on the current role of the SPC and on

the role SPC might take in improving the efficiency of the supply chain

61 Sydney Ports Corporation has stated objectives which include

bull Enhancing and developing strategic assets to ensure efficient optimum utilisation

bull Continuing to build effective relationships with stakeholders that improve the competitive positioning of the ports and

bull Taking the lead in facilitating port related freight solutions

62 DP World in Sydney has participated in efforts by SPC to facilitate efforts to achieve mutual outcomes between both the stevedores and section of the road transport industry

63 In addition SPC has

bull Measured TTT at Port Botany and published these statistics since (2001)

bull Encouraged more use of rail with the support and investment by DP World

bull Requested more capital investment to improve road transport interface which has been supported by DP World through the acquisition of additional container handling equipment

bull Sought the elimination of truck queuing outside the container terminal with the support and implementation of a Vehicle Booking System by DP World

bull Sought the development of inland intermodal terminals with the support of DP World and

bull Sought the inclusion of suitable landside Key Performance Indicators within future lease terms

64 We consider that SPC has taken the leadership role appropriate for its position in

terms of seeking to facilitate improvements in overall port efficiency without interfering in the various commercial arrangements between stakeholders

7 The Tribunal invites stakeholders to comment on any aspects of the current work

practices of freight forwarders customs brokers and any remaining industry participants that may be causing inefficiencies or extra costs to arise in the downstream supply chain

Customs Brokers

71 It is the practise of some customs brokers to wait until the storage free period at

the terminal has almost expired before paying the duty to the Australian Customs This has the impact of retarding the stevedorersquos efforts to improve the velocity of container movement through the terminal Customs brokers should therefore be encouraged to pay duty as soon as possible

72 Customs brokers can also contribute to congestion at the terminal by not paying the Customs duty up to at least 2 hours prior to the carrierrsquos time slot This results in the truck waiting at the terminal for the information to flow through to the terminal operating system via EDI

Page 10 of 48

73 One way of achieving flow in (71) and (72) above is to disconnect the relationship between the payment of duty and the physical control of cargo movement To maximise the effect here the ACS could request the Customs brokers to also lodge the lsquoImport Declarationrsquo 24 hrs prior to arrival and collect duties on account after the event

74 An initiative at DP World Brisbanersquos terminal has been successful in obtaining early container information as part of their VBS (linking timeslot to the container number)

75 The system has been in place for almost 12 months now and the availability of information at DP World Brisbane has contributed to improved service levels at this terminal

Empty Container Depot Opening Times

76 A majority of Empty Container Depots reside within 10 km radius to the port

precinct Depot opening ties do not match container terminal operating hours The result is an inability for carriers to return and pick up an empty container 24hrs a day to depots This reduces the potential of utilising the existing vehicles on the road creating potential traffic congestion and therefore free up their trucks to collect import containers from the terminal Through tariff structures the shipping lines have the ability to influence the depots to increase their opening hours thus resulting in greater vehicle utilisation and subsequent reduction in transport charges The extended spread of hours will also have the effect of flattening the peak traffic periods and reducing road congestion and travelling times

8 The Tribunal invites stakeholders to comment on any aspects of the VBS

particularly in relation to the number of timeslots made available and on what basis and the process by which those slots are made available across the day(s) and to whom

81 The VBS is simply a means by which to communicate with the transport carrier

community What determine the number of slots made available are resource levels provided at the container terminal DP World Sydney provides more than sufficient resource levels to enable all containers to be delivered as required to road within the three free day period even accepting the industryrsquos current limited use of the available 247 terminal operation It is acknowledged that resource levels provided to road operations may be varied day to day as resources may need to be directed to ship operations but this follows from running the terminal as an integrated operation which is ultimately most efficient Providing further day time slots without addressing underlying market inefficiencies only risks service levels to shipping lines that are demanding higher performance levels and perpetuating the industryrsquos unwillingness to support 247 operations

82 DP World also notes that all carriers may and do from time to time contact the

terminal and request additional timeslots if there are none available on the VBS The terminal will endeavour to accommodate such requests where there is operational capacity to do so If there is capacity the Terminal will book the timeslot in the name of the carrier that has made the request

83 Further details of the VBS are provided in responses to subsequent questions

However we believe that the VBS at DP World Port Botany Terminal has delivered benefits including

bull No random queuing at the terminal which results in significant unplanned

delays to transport users due to the random arrival of trucks at any point in time to the terminal where the terminal is not resourced to handle the high peaking demand for landside resources whilst at the same time meeting contractual obligations with shipping lines

Page 11 of 48

bull The terminal is able to carry out bulk moves while maintaining service levels to other general carriers

bull Provides choice to carriers in terms of access as well as providing transparency to industry

bull States subscriptions fees in a public document which are transparent to industry

bull Increase slot allocation to road users based on irregular shipping schedules and

bull While not referred to in the Carrier Access Arrangements (see attachment 1) all B class carriers are allowed to engage in a process called ldquoexport taggingrdquo Export tagging involves a carrier booking an import timeslot in ePorts which will give them access to the terminal A carrier is then able to bring and export container on the truck that is arriving to collect the import container without booking a slot for that export container (during most timeslots in the day) The purpose of this flexibility to carriers is to increase two-way running which reduces costs to carriers and decreases the number of trucks in the port community

9 The Tribunal asks stakeholders to comment on the variability of average

turnaround times across the major ports and the variability of turnaround times faced by individual transport operators at Port Botany itself The Tribunal also invites comment on how important predictability of turnaround times is to transport operators relative to average turnaround times at Port Botany The Tribunal further invites comment on why turnaround times are higher for Port Botany compared to Melbourne Adelaide and Fremantle

91 The precise nature of operations differs between the ports and between the

terminals operated at those ports These differences arise because of the range of shipping lines that arrive at the various terminals and the volumes of containers and type of cargo going through each terminal There are also differences in the container yard handling equipment yard configurations at each terminal and hours of operation resulting in differences in the way each terminal operates These differences result in variations amongst each terminalrsquos service performance levels

92 During 2002 DP World Sydney management met with a representative group of

carriers to discuss the VBS and access arrangements at the terminal A common view of the carriers was that they would like consistency to truck turn times and that 60mins (carrier measurement) is acceptable The outcome from these meetings was that DP World introduced three internal KPIs

bull Truck processing to truck complete measurement ndash 38 mins average

bull TTTs of 60 mins or less to be 90 to total trucks

bull TTTs of 120 mins or more to be 1 or less

93 Figure 4 below shows the percentage of truck turn times that are 60 minutes or less at DP World Sydney There is a noted improvement in during mid 2005 from an average prior to this time of 73 to an average during 2006 of 85 This indicates that the predictability of the truck turn times has improved during the life of the VBS

Page 12 of 48

Figure 4 DP World Sydney ndash Percentage of Truck Turn Time under 60 mins

DP World Sydney - Percentage of Truck Turn Time under 60 mins

50

60

70

80

90

100

Jan-04

Mar-04

May-04

Jul-04

Sep-04

Nov-04

Jan-05

Mar-05

May-05

Jul-05

Sep-05

Nov-05

Jan-06

Mar-06

May-06

Jul-06

Sep-06

Nov-06

Jan-07

Mar-07

94 Figure 5 below shows the terminal truck turn time and the stevedoring volume since July 2003 at DP World Sydney Note that the volumes are hidden on the left Y axis for commercial reasons As a result of terminal improvements and putting in place the KPIs described above the average TTT performance has improved (right Y axis) whilst at the same time the terminal volume has increased (left Y axis)

Figure 5 DP World Sydney ndash Truck Turn Time and Container Volume

95 DP World operates in all five major ports in Australia and has three different modes of operation namely Straddles in Melbourne and Adelaide RTGrsquos in Sydney and Fremantle and Forklift and Reach-stacker in Brisbane The Variability in TTT between ports is attributed to a number of factors including but not limited to the site processes and physical constraints of each facility

96 The measurement of TTT differs mainly due to

a) the layouts of in-gates and its approaches and

Page 13 of 48

b) the measurement of the job steps which apply to a truck from arrival to departure due to (a)

97 All the above terminals have different truck parking arrangements within and

outside the terminal which impacts TTT Across the board TTT is measured from job processing to job complete (98c to 98e below) however the physical layout and mode can influence when processing commences

98 The process of truck management in simple terms is

a) Pre-arrival of trucks

b) Validation of time slots

c) Processing of job (Manual but if automated it takes effect in b above)

d) Enter the operational yard

e) Job transact and complete (by straddle RTG or Forklift Reach-stacker) and

f) AQIS check for full trucks and depart (gate-out)

99 Depending on the physical layout and provision of sufficient space to hold trucks within the terminal boundary or otherwise the distribution of trucks varies through steps 98a to 98c above

910 At DP World Sydney the equivalent hourly truck volume can be held in the

terminal entry marshalling area therefore multiple trucks can enter the terminal park and be processed by terminal staff Post processing all time spent in the marshalling area forms part of the TTT whilst the truck has not necessarily entered the operational yard (see Annexure 2)

911 At DP World Melbourne on the other hand due to restricted space within the

terminal trucks are normally held outside and a small number is constantly drip fed into the terminal (controlled rate of entry) These trucks then approach the processing points (6 lanes x processing booths) further which they directly enter the operational yard and the TTT is measured from this point

912 DP World Fremantle does not have a truck holding area within the terminal which

means the truck enter the terminal and queue at the Entry to Operational Yard Immediately after being processed the truck enters the terminal yard Therefore unlike Sydney time from Entry to Operational Yard is time historically not published Therefore TTT between DP World Sydney and DPW Fremantle are not comparable

913 DP World Fremantle is also an RTG operation similar to DP World Sydney

However the physical layout and the resulting entry arrangements differ Due to restricted space within the terminal the trucks are normally held outside and constantly drip fed into the terminal (controlled rate of entry) The trucks operate through 3 lanes within the terminal and truck turn time is measured at this processing point when the trucks actually enter the operational yard

914 DP World Adelaide is a straddle operation similar to DP World Melbourne

However its physical layout and resulting entry arrangement is different to that of DP World Melbourne and has some similarities with what takes place in Sydney The hourly truck volume can be held within the terminal and the TTT is measured from entry into the terminal main gate to departure from the terminal main gate The measure differs from the other facilities on both entry are exit gates

915 The benefits of this TTT data is not so much the raw data itself but more so the

long term trend in the data If TTT is constant or even improved during periods of volume growth then this reflects a firm commitment to the landside process Continuous improvement reflects a commitment to landside efficiencies

Page 14 of 48

916 TTT is influenced by the mode of operation the Gate In infrastructure and volume

of containers required to be handled

917 The RTG mode of operation requires the truck to travel to the yard stack where the container is located or assigned as opposed to the straddle operation where the straddle comes to the truck that is parked in a bay external to the stacking area The mode of operation at DP World Sydney generally results in a truck with multiple containers being serviced by multiple RTGs and also having to travel to multiple yard locations At each of these yard locations there will be a different level of demand on the particular RTG covering the area This will result in variations in the time it will take to service the truck in that particular area and therefore will influence the truck turnaround time

918 In comparison a terminal running a straddle operation could employ a different

straddle to handle each of the containers processed for the truck

919 The mode of operations employed by container terminals have various strength and weaknesses and need to be considered based on many factors in a Port (ie not just the landside interface) but both modes can contribute to variability

10 The Tribunal invites comment on how truck turnaround times are currently

measured by supply chain participants and how they should be measured The Tribunal further invites comment on the extent to which the stevedores provide access to their facilities at the specific times booked on the VBS

Truck Turn Time (TTT)

101 DP World Sydney currently measures truck turn times from the time the containers on a truck are processed to the time the last container is completely loaded onto the truck (import containers) or discharged from a truck and landed in the terminal (export containers)

102 TTT is directly influenced by the number of containers to be handled by an RTG

terminal on a truck run ie a higher number of containers results in a longer truck turn time on average This due to the truck having to potentially visit multiple locations within the RTG terminal

103 The reason the container Terminal does not measure the time following

completion of loadingdischarging container from truck is measure regulatory bodies (ie AGIS) have commenced inspection of containers on terminal exit gate which is beyond the control of the container terminal

104 The process time is used to measure the start of the truck turn time as this is the

closest time to the truck being in the terminalrsquos control

105 Trucks that take advantage of the autogate processing (currently 25 of trucks) actually start the truck turn time as they come through the terminal gate as this is where the transponder reader is located DP World Sydney support the increase of the autogate processing and the result that the truck turn time starts at the gate For trucks that do not use the autogate processing opportunity the terminal does not start the truck turn time at the gate as the truck driver may not move efficiently to have the container processed

106 Carriers often use TTT measured from the time the truck services at the standby

queue or the arrival of the truck at the zone queue which are waiting for the next time zone to open

107 In relation to standby queue the CAA clearly stipulates that the use of this system

does not guarantee immediate call-up to the terminal in priority to trucks that have booked a time slot

Page 15 of 48

108 In relation to TTT measured from arrival at the time zone queue the fact that the truck has arrived prior to the commencement of the zone opening is purely a decision of the transport carrier and is beyond the control of the Container Terminal and is not supported by DP World

Container Turn Times

109 DP World Sydney currently measures container turn time from the time the

container is processed to the time the container is loaded onto the truck (import container) or discharged from a truck and landed in the terminal (export container) Over the last 5 years the transport regulators have allowed truck operators to operate larger trucks thereby ultimately improving the efficiency of road transport As transport operators increase the use of larger trucks (capable of carrying multiple containers) the handling of these trucks produces a multiple handling of containers on the same truck at the terminals For example in the past one would handle one container per truck and in that case the CTT and TTT were almost identical With multiple containers on trucks the difference between the CTT and TTT is increasing To be able to benchmark this across a port and other ports becomes hard with TTT due to the ever changing ratio of containers per truck (depends on percentage of large truck operators) firstly within the same port and secondly between different ports Therefore CTT enables us to benchmark the measurement on common grounds across all our operations around the country

Access Times at DP World

1010 DP World Sydney divide the day into hourly time zones within the VBS The time

zones start on the house (eg 0700hrs) and complete at the end of the hour (eg 0759hrs) There is a time zone board located at Simblist Road which indicates which time zone is open Trucks queue at this point waiting for the board to change each hour During daylight hours on average there are 15 trucks waiting for the time zone to open The trucks then make their way to the terminal in gate located on Friendship Road once the zone is open

11 The Tribunal invites comment on the choice between a system where container

numbers are nominated in advance thereby offering the possibility of faster turnaround times or not providing container numbers which would provide road carriers with greater flexibility Or would industry participants prefer a system that allows the choice between both

Import Timeslots

111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the import container number in a timeslot booking up to the start of the time zone The disadvantage for the terminal and the carrier is that this flexible system arrangement does not allow the terminal the chance to reposition the container to a position that will minimise the number of containers that have to be moved (known as ldquoconsolidation movesrdquo) in order to access the container that is to be delivered to the truck once the truck has been processed and is in position for loading The more consolidation moves the terminal has to do to load an import container to a truck the longer the truck turn time will be

112 Undertaking consolidation moves prior to truck arrival would provide the opportunity

to decrease truck turn time

113 To achieve a further reduction in truck turn times and a reduction in cost of delivering a container the terminal would need to control the order in which the import containers are delivered This occurs in other ports in the world

Controlling the order of import deliveries

114 The current arrangement where the shipper controls the order of import containers

to be delivered from the terminals results in extra costs incurred by stevedores and also decreased efficiencies The longer a container remains in the terminal (an

Page 16 of 48

increase in the dwell time) results in increased consolidation (rehandles) undertaken by terminal equipment and an increase in the time taken to load a container to a truck or train

Matching of resources to meet demand

115 The terminal allocates the resources required based on the demand or the

number of timeslots released This occurs 24 hrs in advance

116 Carriers who book timeslots and do not meet their commitment (No Show) results in the terminal resources to be under utilised at certain times and creates an opportunity loss There is also an opportunity lost by another carrier to utilise the time slot for each No Show

117 Carrier who book timeslots and arrive late for their commitment (Wrong Zones)

results in terminal resources being under utilised at times and over utilised at other times The troughs in terminal resource utilisation result in an opportunity loss and the peaks result in a decrease in efficiency (increased truck turn time) or increased cost (increased resources applied) The increase in truck turn time has an impact on carriers who arrive on time for their time slot

118 The current VBS allows for carriers to arrive at the terminal to deliver or pick up a

container without committing to a time and container number thus not enabling the terminal to completely plan the required resources to meet the demand This is termed unplanned work The Standby Queue export tagging by B Carrier no advanced deadline for entering an import container number prior to the time zone and no requirement for an export container number being entered into a time slot booking results in an increase in unplanned work Unplanned work results in peaks in the work required by the planned resources and a decrease in efficiency

119 Rail also has similar problems

1110 By changing this arrangement and giving control to the stevedores to determine

the order of container delivery from the terminal will reduce the costs incurred by the terminal and decrease the turnaround time for trucks

Export Timeslots

1111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the export container number in a timeslot booking up to the start of the time zone It also allows an export time slot to be processed without a container number entered in the time slot booking The container number in then entered by the RampD Clerk at the terminal This often results in human error by the truck driver or the RampD Clerk resulting in delays to trucks This practice also eliminates the opportunity for the carrier to use the automatic processing described below in Question 12 To maximise the use of automation and eliminate human error the export container number needs to be a mandatory field to be updated in the time slot booking by a nominated time prior to the start of the time zone eg 2 hours prior to the start of the time zone

12 The Tribunal invites comments on the increased use of ICT and automation and

any other ways to reduce turnaround times and otherwise improve supply chain efficiency

121 DP World support and are driving the increased use of automation for the

processing of trucks DP World have developed and currently make available an automated truck processing system for carriers who use ePORTS to book and manage timeslots The percentage use of this system at DP World Sydney by carriers averages about 25 of total truck movements excluding stack run trucks

122 This system requires the purchase of a transponder unit from the terminal at the

cost that the terminal purchases the unit plus GST Currently the units are sold to

Page 17 of 48

the carrier for $12050 Also required is access to an eGATE screen in ePORTS The process for carriers wanting to move a number of containers on a transponder run involves

a) Booking through EPORTS the required number of time slots in a time zone

For example if a transport carrier wanted to deliver two export containers and collect one import container on a single truck run it needed to book three slots and

b) Setting up the transponder by inputting the slots truck number container numbers and whether they are import or export containers in the transponder booking screen in ePORTS

123 The benefits for carriers of using this automated processing include

a) The processing occurs earlier (ie at the gate as compared to in the RampD Office) therefore this decreases the chance of Wrong Zones being incurred

b) No need for the truck driver to present documentation at the RampD Office therefore reducing the truck turn time by avoiding any potential queues

c) No interaction between the truck driver and the RampD Clerk therefore decreasing human error during processing and causing further delays

d) As the processing occurs at the gate the trucks can skip ahead of other trucks where their drivers have to manually process in the RampD Office effectively jumping the queue

e) Allows reprogramming of trucks up to 15mins before the end of the time zone (eg 0645 for an 06 slot) without the truck driver needing the Delivery Order in his possession

f) Provides the carrier with the ability to educate their customers to provide the Delivery Orders in a timely manner in order to lodge them at the terminal

g) Electronic copies of the Delivery Orders (excluding scanned copies of originals) can be forwarded to the terminal via email therefore eliminating the need to physically lodge them

h) Enables the carrier to take all advantage of Electronic Import Delivery Orders (eIDOs) that are currently being used by Evergreen Marine at DP World Sydney Other shipping lines will move to the use of eIDOs in the future

13 The Tribunal invites stakeholders to comment on VBS capital and operating costs

and to assist it to distinguish between stand-alone VBS costs and those shared with other stevedoring activities

131 It is important to distinguish between the capital and operating costs of operating

the VBS and the costs of operating the landside interface ie delivering containers to and from trucks

132 The costs of a VBS comprise the following components

bull IT development and maintenance costs and

bull Management and administration time to manage and administer the system

These costs are low relative to the costs of actually providing the services within the terminal ndash loading and unloading the trucks

133 Having a system which requires the terminal to provide a guaranteed number of

slots per hours is to the disadvantage of the terminal Terminal operations are by their nature unpredictable due to the irregular arrival of ships Having to guarantee a number of slots which carry with it a high expectation of performance in terms of TTT tends to force the terminal to set the number of slots at a level which includes a risk mitigation factor against all things not going to plan The net result of this is

Page 18 of 48

that the terminal tends to effectively oversupply equipment and labour increasing its costs The impact of this is far more significant than the isolated costs of running the actual vehicle booking systems

134 Direct VBS costs have nothing to do with ship or rail operations

135 The container yard is run as a single operation servicing ship road and rail By

this means while there are practical limitations we seek to pool resources to maximise the overall efficiency of terminal operations particularly to absorb the peaks and troughs of demand across the operations as a whole This effective sharing of costs improves overall efficiency and results in lower costs to the benefits of users as a whole We anticipate that systems and technology improvements will see greater use of such pooling and greater overall efficiency as a result

14 The Tribunal invites stakeholders to comment on VBS access and penalty charges

and the level of transparency of access through the stevedoresrsquo VBSs

141 The VBS facilitates the provision of orderly access to DP World Sydney Terminal for over 200 individual carriers

142 DP World considers the achievement of orderly access to its terminals as a

primary objective of the VBS To achieve orderly access DP World considers it important to require carriers to pay a nominal subscription charge for the level and rights of access they require and to issue ldquono showrdquo and ldquolaterdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay lsquoon timersquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs

143 The VBS is essentially an ldquoappointment bookrdquo to assist transport carriers to

organise themselves more efficiently leading to a reduction in waiting times at the container terminal The VBS divides all working days into time periods containing a pre-determined number of timeslots The timeslots represent the number of import and export containers that can be handled in that period The number of timeslots in a day is determined by expected carrier demand and the availability of labour and equipment Carriers are then able to book timeslots for collection or delivery of containers

144 The alternative is random access to container terminals by carriers and significant

truck queues with associated demurrage costs which are ultimately paid for by the end user

145 At DP World Sydney the VBS offers transport carriers the ability to access an

internet based computer system or telephone bureau for the purpose of booking time slots for those carriers who do no wish to use the computer system The VBS in its present form offers access on a transparent and equitable basis to all carriers encourages the efficient movement of containers from the ship through the terminal and onto customers and vice-versa encourages innovative practices which are beneficial to terminal efficiency road congestion and the overall cost of the supply chain The ldquono showrdquo and ldquolaterdquo fees encourage these operational practices and efficiencies

146 DP World has adopted a class structure with an annual subscription for access

because this system allows carriers to determine what access is required for their business while providing the industry significant level of transparency in terms of access costs

147 All carriers have an equal opportunity to subscribe to any of the three classes of

access to the VBS (bearing in mind that smaller carriers are allowed to consolidate

Page 19 of 48

their subscriptions in order to share the cost of a B Class subscription) and equal access to timeslots amongst carriers of the same class

148 Annual fees are payable in advance Table 3 sets out the various carrier classes

currently in operation at each terminal and the applicable subscription fees for each class There are no annual limits on the number of slots carriers can book

Table 3 DP World Sydney ndash Current carrier classes and VBS deposit and registration fees for the year commencing 1 July 2005

Terminal Carrier Classes Price Number of active

carriers at Feb 06 Port Botany New South Wales

B Carrier ndash online internet access with high service levels

$2922150 (Non-refundable deposit) No fixed upper limit on annual time slots1

28

A Carrier ndash online internet access with standard service levels

$133400 (Annual registration fee) No fixed upper limit on annual time slots2

162

AB Carrier ndash access via the PampO Phone Booking Bureau with standard service levels

$66760 (Annual registration fee) No fixed upper limit on annual time slots3 39

149 Any carrier selecting the ldquoBrdquo classification is encouraged to also consider the ldquoArdquo

classification unless they are confident of utilising a high level of timeslots that would render the higher subscription fee as attractive per timeslot

1410 In addition to the VBS annual subscription fees the carrier access arrangements

provide for the levying of a no-show fee on carriers who fail to arrive for slots they have booked in the amount of $110 per time slot The terminal also charges carriers late fees of $55 per slot if they fail to arrive for a slot booking within the nominated time zone No fees are charged where a carrier is unable to meet the time slot due to delays caused and acknowledged by DP World Australia or where delays are caused by circumstances genuinely outside of the carrierrsquos control DP World Australia also has the discretion to and does waive ldquono showrdquo and ldquowrong zonerdquo fees in the interest of maintaining a good working relationship with carriers Failure by carriers to pay these ldquono showrdquo and ldquowrong zonerdquo fees may lead to them being prevented from making further bookings ldquoNo showrdquo and ldquowrong zonerdquo fees are the means by which DP World ensures that access to itrsquos terminals is provided in the most efficient manner to all 1carriers as late carriers cause delays for those carriers that are on time

1 No fixed upper limit on annual timeslots ndash Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 2 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 3 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release

Page 20 of 48

1411 The ldquono showrdquo and ldquowrong zonerdquo fee structure was introduced following

consultation with carriers It was originally $20 per late arrival (in Victoria where VBS first commenced) but this is proved to be ineffective in disciplining carrier conduct In response to requests from many carriers DP World increased the ldquono showrdquo fee to $110 The fees also discourage carriers from the practice of overbooking slots which they have no intention of using and preventing other carriers from using those slots

1412 The actual cost of a truck turning up late (Wrong Zone) or not turning up at all (No

Show) is the cost of planned resources (labour equipment etc) based on the VBS demand (number of containers expected to handle during a time period) not being utilised during the time period they are employed

1413 Adjacent to each time zone are grace periods one prior to the time zone and one

following the time zone These grace periods and the trucks arrival time for processing determine the status of the time slot ie arrived on time or arrived late (Wrong Zone) Currently the grace period following the time zone is set at 20 minutes which means that if a truck arrives later than one hour and 20 minutes after the start of the time zone then the time slot will be initially recorded as a Wrong Zone Following the completion of each VBS day Wrong Zones are reviewed and any penalty waived if any of the following determined

a) The terminal is aware that it has contributed to a truck arriving late for the time

slot ie the terminal has previously delayed the truck or carrier on an earlier time slot or

b) The carrier advises that they arrived late due to an unforeseen circumstance eg a break down of the truck

We request that the information in 1414 be kept confidential

1414 Omitted for reasons of confidentiality

1415 Officers at DP World Sydney have regular conversations with carriers in respect of

the waiver of No Show fees as well In certain instances DP World may agree to waive fees prior to an invoice being issued

1416 For both Wrong Zone and No Show fees the terminal provides a grievance

process for carriers who have been issued invoices and do not agree that the fee has been issued fairly The carrier has the opportunity to provide the terminal with an explanation and should officers at DP World Sydney agree that there has been an error in the issuing of the fee or an unforeseen circumstance is explained the terminal will credit the invoice

15 The Tribunal invites stakeholders to indicate the costs of providing the services of

rail windows and rail paths to rail operators

151 Rail windows are based allowance on a rail terminal performance KPI of 30 container moves per hour and charged at $360 per hour A shunting time allowance of 15 mins per window is not charged Additional lifts canare provided by increasing the lifts per hour by applying more machinery at no additional cost

152 The cost of providing terminal rail operations is higher than road operations at DP

World Sydney The RTG mode of operation requires a container to be moved to or from the container stack For road containers the truck takes the export container to the stack and travels to the stack to pick up an import container For a rail container a terminal internal transfer vehicle (ITV) is required to be used by the terminal to move the container from the train to the stack (export containers) or

Page 21 of 48

the stack to the train (import containers) This is not required for container being received or delivered by road

153 For import rail containers there is a loss of efficiency for the vessel discharge

operation in order to stack rail containers separately for delivery to the train For each discharge point in the terminal extra resources are required There is extra administration costs in having to make alternate arrangements to separate these import rail containers

154 Despite the fact that the delivery of containers to rail is higher than road the

terminal seeks only a partial recovery of costs in order to encourage the use of rail in the port in line with the NSW Government objectives

155 There is a management cost of setting up and operating the rail windows This is

similar to the cost of operating a VBS

156 There is additional security infrastructure costs for a rail operation to ensure the terminal meets their legislative security requirements The more terminal entry points created the higher the cost to replicate these security infrastructure requirements

16 The Tribunal invites comment from stakeholders on the planned or mooted

development and expansion of the various intermodal terminals in Sydney and the extent to which this is expected to ease congestion in the landside supply chain at Port Botany

161 DP World supports the development and expansion of an intermodal terminal

network to facilitate an increase in the use of rail as the means of container transport This has the potential flow on benefit of minimising the growth in the number of trucks requiring to access the Port Botany area as port volumes continue to grow

162 Transport between the Botany terminals and the inland intermodal terminals

should be by rail or trucks operating a stack (bulk) run road out during off peak periods eg night shifts or weekends The use of Super B Double trucks would assist with the efficiency of these off peak stack run outs

17 The Tribunal invites comment on the likely effect of the expansion plans at Port

Botany on access to the port terminal during peak periods and efficiency along the supply chain

171 Improving the two-way running or back-loading of trucks has to be a priority in

order to maximise access opportunity at the terminals and efficiency along the supply chain It is likely that a third and separate stevedoring facility will only increase the difficulty of improving truck utilisation over and above the current levels by the increased logistics complexity of coordinating timely access to three terminals rather than two

172 A third stevedore will lead to the same port volume being spread over three

operations While it is resource levels that determine available slots DP World has found that during periodic decreases in volumes carriers favour daytime runs to the terminal as opposed to night time

173 The expansion plans will have a negative impact on rail transport timeliness and

access requirements to DP World Sydney if the requirements to breaksplit trains and shunt sections of trains into multiple terminals continues This will undermine the overall rail effectiveness and the NSW Government rail objectives by the unnecessary increase of splitting trains

Page 22 of 48

18 The Tribunal invites comment on the likely effects of expansion of the intermodal network in Sydney on access to the port and efficiency along the supply chain

181 This is a similar issue to point 16 above

19 The Tribunal invites comment on the likely impact of a peak pricing system along

the lines of the FIC on access to the port terminals and the efficiency of the Port Botany supply chain

191 We understand for the NSW Governmentrsquos announcement (31 May 2007) that the

FIC is no longer being proposed

192 Table 4 shows the average percentage of road containers that are handled by shift at DP World Sydney based on a 6 day x 24 hour receival and delivery operation for the past 4 years The figures indicate that there is surplus capacity on both evening and midnight shifts when compared to day shift Note that the percentage of road containers handled has increased on day shift relative to the combination of evening and midnight shifts This has been due to terminal efficiencies creating increased capacity during day shifts and the road carriers utilising this capacity

193 This is further emphasised in Figure 4 which shows the trend over time for day

shift containers handled has increased from 2005 evening shift has decreased and midnight shift has not changed significantly

Table 4 DP World Sydney ndash Percentage of Daily Road Container Volume handled by Shift

Year Midnight Shift (2230 ndash 0630hrs)

Day Shift (0630 ndash 1430hrs)

Evening Shift (1430 ndash 2230hrs)

2007 YTD 21 47 32

2006 23 45 33

2005 22 43 36

2004 19 44 38

194 Year to date April 2007 figures may reflect the seasonal trend for lower volumes in this period

Figure6 DP World Sydney ndash Road Volume trendlines by shift 2005-07

Page 23 of 48

20 The Tribunal invites comment on the likely impact of the expansion of the freight

rail network in Sydney on the number of containers moved by rail and on congestion at the port

201 The importance of increasing the proportion of containers moved by rail is

recognised and supported by DP World Sydney

202 To complement the expansion of the rail freight network upgrade the terminal is developing plans to increase the length and the number of sidings within the terminal Over the next three years the terminal is planning to spend an estimated $20million on internal rail infrastructure machinery and systems The terminal upgrade will ensure DP World Sydney has the infrastructure in place to meet a target of 40 throughput by rail

203 The expansion of the freight rail network needs to take into account The access

to each of the terminals especially the access to DP World Sydney where by the terminal has a distinct disadvantage in relation to its competitor

21 The Tribunal invites comment on the impact on the supply chain on ARTC

managing the metropolitan freight rail network

211 Management of freight rail infrastructure is ARTCrsquos core business and will bring additional management expertise and focus to the task of reforming operations on the Port Botany rail infrastructure

212 For ARTC to control the MFN (Metropolitan Freight Network) makes sense from

the point of view they can make informed decisions for both inbound and outbound Port services based on the wider NSW Rail Freight Network operation

213 The ARTC proposal to co-ordinate services by performing the full Network Control

Function (both signalling and Train Control) from the one centralised centre for the Southern Sydney Freight Line (SSFL)MFN and Port Botany emphasises their commitment to ensure safety communications and network management is their primary objective

214 ARTC are focussed on improving the efficiencies at the Port and bring to the

industry fresh innovative ideas to improve the overall capacity on the rail network ARTCrsquos willingness to assist and eagerness to invest in the rail infrastructure brings a breath of fresh air to the industry and specifically the stevedore operations ARTC can integrate the Botany line into its overall investment program paving the way for additional investment to improve the efficiency of operations on the Botany rail line and at the port-rail interface

22 The Tribunal invites comment on the following questions in relation to costs of the

VBS

22a What costs underpin the VBS access charges levied by the two stevedores How are the VBS access charges set

22b1 Refer to Question 14 The revenue from VBS charges account for a very

small proportion of DP Worldrsquos total container terminal revenue For the year ended 31 December 2006 they accounted for 13 of total revenue Of that 13 approximately 30 was for No Shows and Wrong Zones

22b What costs are incurred by the stevedores in moving a container from the

wharf to a truck or train

22b1 DP World Sydney is operated as an integrated business servicing ships road and rail within the context of a national business We do no separately account for the costs of each discrete activity Information on

Page 24 of 48

overall costs is provided to the ACCC and published on an industry basis in the ACCCrsquos Container Stevedoring Monitoring Report

22b3 Wharf to truck activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the VBS to provide orderly access for road carriers

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal space to allow truck drivers to park their vehicles in order to unlockset up their twist locks and processing of containers

bull Processing of the container

bull System to manage the truck movement within the terminal

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the truck by RTG or forklift

bull Provision of terminal area for truck drivers to safely leave their vehicle to lock the twist locks on their trucks check the container seal number and check the container for damage

bull Provision of terminal area for AQIS operation and infrastructure

22b3 Wharf to train activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the Rail Windows to provide orderly access for operators

Page 25 of 48

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal area for rail lines associated rail infrastructure and train inspection requirements within the terminal

bull Processing of the container

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the ITV by RTG or forklift

bull Internal Transfer Vehicle (ITV) movement of the container from the yard stack to the rail line

bull Lift of the container from the ITV onto the rail wagon

22c What influences the nature and amount of these costs (for example are they influenced by the type of equipment used by a stevedore Do they fluctuate with the number of containers handled by the stevedores) and how have costs changed over time

22c1 DP World operates very similar Vehicle Booking Systems in Brisbane

Sydney Melbourne and Fremantle where there are differences in volume through the terminals The only difference in subscription between the terminals are the ldquoB Classrdquo carrier subscriptions The annual subscription is influenced by the number of carriers seeking this class and the hourly allocation of slots to their class given the number of subscriptions In addition Melbourne operates a straddle facility and Brisbane operates a forklift reachstacker Therefore the cost of the Vehicle Booking System is not dependant on or mode but the annual subscription to ldquoB Classrdquo carrier depends on competition for that carrier class

22c2 An annual subscription fee per class which is a characteristic of DP

Worldrsquos VBS does not normally increase with volume At DP World Sydney subscription fees have not been increased since 2003

22c3 Overall landside costs have increased with increases in wages and

salaries (4 pa) property costs (substantially ahead of cpi) fuel and other general costs These increases have been offset to some extent by increases in productivity Industry costs history is also available publicly in the ACCC Container Stevedoring Monitoring Reports

22d Where do the port landside costs stop and the VBS costs start

22d1 Prior to the Entry to Operational Yard (see Attachment 2) the truck is

under the influence of the VBS and also under the influence of the external environment which includes but is not limited to port and metropolitan road conditions container clearance issues truck arrival peaks and troughs truck preparedness processing of the container to the handled by the terminal and maritime security requirements

It is DP World Sydneyrsquos view that the port landside costs stop and the VBS costs start at the choke point

22e Do the VBSsrsquo penalty charges reflect the cost to stevedores What should

they reflect

22e1 The primary rationale for the penalty regime is to seek to modify carrier behaviour

Page 26 of 48

22e2 However it is also the case that a ldquono showrdquo or ldquowrong zonerdquo gives rise to a lost opportunity cost to the terminal Resources made available but not utilised may be wasted

22e3 DP World considers the achievement of orderly access to its terminal as

a primary objective of the VBS To achieve orderly access PampO considers it important to issue ldquono showrdquo and ldquowrong zonerdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay ldquoon timerdquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs The alternative is random access to container terminals by carriers and significant truck queues with associated demurrage costs which are ultimately paid for by the end consumer

22f Should there be different charging arrangements for empty containers that

are returned to the port as opposed to full export containers

22f1 DP World Sydney terminal handles a full container in a similar way to an empty container using purpose built container stacking equipment controlled by a DP World employee A container occupies the same amount of space whether it is full or empty This leads to the same cost for the handling of a single empty container as a single full container Single empty containers returned to the port should be charged a similar rate to full containers

22f2 To reduce the cost of handling empty containers in the terminal destined

for the same port on the one vessel and that are of the same size the terminal in conjunction with the shipping line and the shipping linersquos nominated carrier work together to create a bulk run of empty containers The bulk run maximises the number of empty containers that are handled in a specific time period The terminal dedicates resources to thee bulk runs and also provides priority access to the transport carrier in order to create efficiency and an economy of scale In this way the cost of returning an empty container via a bulk run is reduced

23 The Tribunal invites comment on the following questions in relation to the different

pricing regimes of the two stevedores

23a Why do the stevedores have different pricing schemes for their VBSs

23a1 We do not know why Toll-PatrickAsciano has adopted the pricing scheme it has

23a2 In order to improve earlier versions of its VBS in the mid-1990s DP

World (PampO) introduced categories of carriers and began charging differential subscription fees for carriers registering to use the VBS depending on the level of access required by the carrier Prior to this change some carriers were engaging multiple computer terminals to the detriment of other carriers and it had become clear that a level of differentiation would be in all carrierrsquos interests The different classes of carrier access were introduced to ensure the most balanced overall outcome The level of differentiation is an annual choice of access levels available to all carriers regardless of size Under this approach different subscription fees are charged for each category but all carriers registering in a particular category pay the same fee Our view remains that an annual subscription as opposed to a pay as you go is far less of an administrative burden on both the carriers and the terminal

Page 27 of 48

23a3 There are no restrictions upon carriers wishing to obtain a certain carrier category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for the same carrier categories as larger carriers Smaller carriers may also apply for consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst charging the burden of the cost of that subscription

23a4 Subscription fees based on differences in class are designed to

encourage choice whilst at the same time communicating a level of transparency with terminal pricing and service

23b Do the different pricing schemes influence the efficiency with which

transporters obtain access to the terminals

23b1 We do not believe this to be the case

23c Would standardisation of charges be more appropriate

23c1 It is our understanding that it would be unlawful for a supplier itself to standardise charges by reason of Section 45 of the Trade Practices Act This may be something that Government wishes to consider

24 The Tribunal invites comment on the following non-price access issues to consider

in relation to the operation of the VBSs

24a What effect do access rules and conditions and non price constraints have on booking a timeslot How to the stevedores use their discretion in determining access and charges and what impact does this have

24a1 The introduction of different categories of access stages the carriersrsquo

access to the VBS for the purposes of booking timeslots ldquoB classrdquo carriers are given exclusive access to a pool of slots between 0730-0820 During this period they are subject to zone limitations which restrict carriers to a maximum number of slots for any given hour The zone limit ensures all carriers within that carrier class are given fair and equitable access to the initial release of slots After the initial booking period the zone limit is lifted and carriers are permitted to book any number of unused slots per hour from those remaining in their pool Similar arrangements exist for A class carriers culminating in the cascading of all remaining slots from all segregated pools into a general pool at 1030 for access by all registered carriers

24a2 There are not restrictions upon carriers wishing to obtain a certain carrier

category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for a consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst sharing the burden of the cost of that subscription

24b What are the stevedoresrsquo obligations with regard to access to port facilities

and what should they be

24b1 Without providing an analysis of our obligations under law in general terms we are required to provide access to carriers on an equitable basis recognising the competitive environment we operate in

Page 28 of 48

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

The ACS should continue to put in place incentives to increase this clearance rate of containers in order to gain 100 compliance

55 The Australian Quarantine Inspection Service (AQIS) could assist by utilising an

electronic means of communicating the application and release of AQIS holds required on containers Currently AQIS operate a totally manual operation

6 The Tribunal specifically invites comments on the current role of the SPC and on

the role SPC might take in improving the efficiency of the supply chain

61 Sydney Ports Corporation has stated objectives which include

bull Enhancing and developing strategic assets to ensure efficient optimum utilisation

bull Continuing to build effective relationships with stakeholders that improve the competitive positioning of the ports and

bull Taking the lead in facilitating port related freight solutions

62 DP World in Sydney has participated in efforts by SPC to facilitate efforts to achieve mutual outcomes between both the stevedores and section of the road transport industry

63 In addition SPC has

bull Measured TTT at Port Botany and published these statistics since (2001)

bull Encouraged more use of rail with the support and investment by DP World

bull Requested more capital investment to improve road transport interface which has been supported by DP World through the acquisition of additional container handling equipment

bull Sought the elimination of truck queuing outside the container terminal with the support and implementation of a Vehicle Booking System by DP World

bull Sought the development of inland intermodal terminals with the support of DP World and

bull Sought the inclusion of suitable landside Key Performance Indicators within future lease terms

64 We consider that SPC has taken the leadership role appropriate for its position in

terms of seeking to facilitate improvements in overall port efficiency without interfering in the various commercial arrangements between stakeholders

7 The Tribunal invites stakeholders to comment on any aspects of the current work

practices of freight forwarders customs brokers and any remaining industry participants that may be causing inefficiencies or extra costs to arise in the downstream supply chain

Customs Brokers

71 It is the practise of some customs brokers to wait until the storage free period at

the terminal has almost expired before paying the duty to the Australian Customs This has the impact of retarding the stevedorersquos efforts to improve the velocity of container movement through the terminal Customs brokers should therefore be encouraged to pay duty as soon as possible

72 Customs brokers can also contribute to congestion at the terminal by not paying the Customs duty up to at least 2 hours prior to the carrierrsquos time slot This results in the truck waiting at the terminal for the information to flow through to the terminal operating system via EDI

Page 10 of 48

73 One way of achieving flow in (71) and (72) above is to disconnect the relationship between the payment of duty and the physical control of cargo movement To maximise the effect here the ACS could request the Customs brokers to also lodge the lsquoImport Declarationrsquo 24 hrs prior to arrival and collect duties on account after the event

74 An initiative at DP World Brisbanersquos terminal has been successful in obtaining early container information as part of their VBS (linking timeslot to the container number)

75 The system has been in place for almost 12 months now and the availability of information at DP World Brisbane has contributed to improved service levels at this terminal

Empty Container Depot Opening Times

76 A majority of Empty Container Depots reside within 10 km radius to the port

precinct Depot opening ties do not match container terminal operating hours The result is an inability for carriers to return and pick up an empty container 24hrs a day to depots This reduces the potential of utilising the existing vehicles on the road creating potential traffic congestion and therefore free up their trucks to collect import containers from the terminal Through tariff structures the shipping lines have the ability to influence the depots to increase their opening hours thus resulting in greater vehicle utilisation and subsequent reduction in transport charges The extended spread of hours will also have the effect of flattening the peak traffic periods and reducing road congestion and travelling times

8 The Tribunal invites stakeholders to comment on any aspects of the VBS

particularly in relation to the number of timeslots made available and on what basis and the process by which those slots are made available across the day(s) and to whom

81 The VBS is simply a means by which to communicate with the transport carrier

community What determine the number of slots made available are resource levels provided at the container terminal DP World Sydney provides more than sufficient resource levels to enable all containers to be delivered as required to road within the three free day period even accepting the industryrsquos current limited use of the available 247 terminal operation It is acknowledged that resource levels provided to road operations may be varied day to day as resources may need to be directed to ship operations but this follows from running the terminal as an integrated operation which is ultimately most efficient Providing further day time slots without addressing underlying market inefficiencies only risks service levels to shipping lines that are demanding higher performance levels and perpetuating the industryrsquos unwillingness to support 247 operations

82 DP World also notes that all carriers may and do from time to time contact the

terminal and request additional timeslots if there are none available on the VBS The terminal will endeavour to accommodate such requests where there is operational capacity to do so If there is capacity the Terminal will book the timeslot in the name of the carrier that has made the request

83 Further details of the VBS are provided in responses to subsequent questions

However we believe that the VBS at DP World Port Botany Terminal has delivered benefits including

bull No random queuing at the terminal which results in significant unplanned

delays to transport users due to the random arrival of trucks at any point in time to the terminal where the terminal is not resourced to handle the high peaking demand for landside resources whilst at the same time meeting contractual obligations with shipping lines

Page 11 of 48

bull The terminal is able to carry out bulk moves while maintaining service levels to other general carriers

bull Provides choice to carriers in terms of access as well as providing transparency to industry

bull States subscriptions fees in a public document which are transparent to industry

bull Increase slot allocation to road users based on irregular shipping schedules and

bull While not referred to in the Carrier Access Arrangements (see attachment 1) all B class carriers are allowed to engage in a process called ldquoexport taggingrdquo Export tagging involves a carrier booking an import timeslot in ePorts which will give them access to the terminal A carrier is then able to bring and export container on the truck that is arriving to collect the import container without booking a slot for that export container (during most timeslots in the day) The purpose of this flexibility to carriers is to increase two-way running which reduces costs to carriers and decreases the number of trucks in the port community

9 The Tribunal asks stakeholders to comment on the variability of average

turnaround times across the major ports and the variability of turnaround times faced by individual transport operators at Port Botany itself The Tribunal also invites comment on how important predictability of turnaround times is to transport operators relative to average turnaround times at Port Botany The Tribunal further invites comment on why turnaround times are higher for Port Botany compared to Melbourne Adelaide and Fremantle

91 The precise nature of operations differs between the ports and between the

terminals operated at those ports These differences arise because of the range of shipping lines that arrive at the various terminals and the volumes of containers and type of cargo going through each terminal There are also differences in the container yard handling equipment yard configurations at each terminal and hours of operation resulting in differences in the way each terminal operates These differences result in variations amongst each terminalrsquos service performance levels

92 During 2002 DP World Sydney management met with a representative group of

carriers to discuss the VBS and access arrangements at the terminal A common view of the carriers was that they would like consistency to truck turn times and that 60mins (carrier measurement) is acceptable The outcome from these meetings was that DP World introduced three internal KPIs

bull Truck processing to truck complete measurement ndash 38 mins average

bull TTTs of 60 mins or less to be 90 to total trucks

bull TTTs of 120 mins or more to be 1 or less

93 Figure 4 below shows the percentage of truck turn times that are 60 minutes or less at DP World Sydney There is a noted improvement in during mid 2005 from an average prior to this time of 73 to an average during 2006 of 85 This indicates that the predictability of the truck turn times has improved during the life of the VBS

Page 12 of 48

Figure 4 DP World Sydney ndash Percentage of Truck Turn Time under 60 mins

DP World Sydney - Percentage of Truck Turn Time under 60 mins

50

60

70

80

90

100

Jan-04

Mar-04

May-04

Jul-04

Sep-04

Nov-04

Jan-05

Mar-05

May-05

Jul-05

Sep-05

Nov-05

Jan-06

Mar-06

May-06

Jul-06

Sep-06

Nov-06

Jan-07

Mar-07

94 Figure 5 below shows the terminal truck turn time and the stevedoring volume since July 2003 at DP World Sydney Note that the volumes are hidden on the left Y axis for commercial reasons As a result of terminal improvements and putting in place the KPIs described above the average TTT performance has improved (right Y axis) whilst at the same time the terminal volume has increased (left Y axis)

Figure 5 DP World Sydney ndash Truck Turn Time and Container Volume

95 DP World operates in all five major ports in Australia and has three different modes of operation namely Straddles in Melbourne and Adelaide RTGrsquos in Sydney and Fremantle and Forklift and Reach-stacker in Brisbane The Variability in TTT between ports is attributed to a number of factors including but not limited to the site processes and physical constraints of each facility

96 The measurement of TTT differs mainly due to

a) the layouts of in-gates and its approaches and

Page 13 of 48

b) the measurement of the job steps which apply to a truck from arrival to departure due to (a)

97 All the above terminals have different truck parking arrangements within and

outside the terminal which impacts TTT Across the board TTT is measured from job processing to job complete (98c to 98e below) however the physical layout and mode can influence when processing commences

98 The process of truck management in simple terms is

a) Pre-arrival of trucks

b) Validation of time slots

c) Processing of job (Manual but if automated it takes effect in b above)

d) Enter the operational yard

e) Job transact and complete (by straddle RTG or Forklift Reach-stacker) and

f) AQIS check for full trucks and depart (gate-out)

99 Depending on the physical layout and provision of sufficient space to hold trucks within the terminal boundary or otherwise the distribution of trucks varies through steps 98a to 98c above

910 At DP World Sydney the equivalent hourly truck volume can be held in the

terminal entry marshalling area therefore multiple trucks can enter the terminal park and be processed by terminal staff Post processing all time spent in the marshalling area forms part of the TTT whilst the truck has not necessarily entered the operational yard (see Annexure 2)

911 At DP World Melbourne on the other hand due to restricted space within the

terminal trucks are normally held outside and a small number is constantly drip fed into the terminal (controlled rate of entry) These trucks then approach the processing points (6 lanes x processing booths) further which they directly enter the operational yard and the TTT is measured from this point

912 DP World Fremantle does not have a truck holding area within the terminal which

means the truck enter the terminal and queue at the Entry to Operational Yard Immediately after being processed the truck enters the terminal yard Therefore unlike Sydney time from Entry to Operational Yard is time historically not published Therefore TTT between DP World Sydney and DPW Fremantle are not comparable

913 DP World Fremantle is also an RTG operation similar to DP World Sydney

However the physical layout and the resulting entry arrangements differ Due to restricted space within the terminal the trucks are normally held outside and constantly drip fed into the terminal (controlled rate of entry) The trucks operate through 3 lanes within the terminal and truck turn time is measured at this processing point when the trucks actually enter the operational yard

914 DP World Adelaide is a straddle operation similar to DP World Melbourne

However its physical layout and resulting entry arrangement is different to that of DP World Melbourne and has some similarities with what takes place in Sydney The hourly truck volume can be held within the terminal and the TTT is measured from entry into the terminal main gate to departure from the terminal main gate The measure differs from the other facilities on both entry are exit gates

915 The benefits of this TTT data is not so much the raw data itself but more so the

long term trend in the data If TTT is constant or even improved during periods of volume growth then this reflects a firm commitment to the landside process Continuous improvement reflects a commitment to landside efficiencies

Page 14 of 48

916 TTT is influenced by the mode of operation the Gate In infrastructure and volume

of containers required to be handled

917 The RTG mode of operation requires the truck to travel to the yard stack where the container is located or assigned as opposed to the straddle operation where the straddle comes to the truck that is parked in a bay external to the stacking area The mode of operation at DP World Sydney generally results in a truck with multiple containers being serviced by multiple RTGs and also having to travel to multiple yard locations At each of these yard locations there will be a different level of demand on the particular RTG covering the area This will result in variations in the time it will take to service the truck in that particular area and therefore will influence the truck turnaround time

918 In comparison a terminal running a straddle operation could employ a different

straddle to handle each of the containers processed for the truck

919 The mode of operations employed by container terminals have various strength and weaknesses and need to be considered based on many factors in a Port (ie not just the landside interface) but both modes can contribute to variability

10 The Tribunal invites comment on how truck turnaround times are currently

measured by supply chain participants and how they should be measured The Tribunal further invites comment on the extent to which the stevedores provide access to their facilities at the specific times booked on the VBS

Truck Turn Time (TTT)

101 DP World Sydney currently measures truck turn times from the time the containers on a truck are processed to the time the last container is completely loaded onto the truck (import containers) or discharged from a truck and landed in the terminal (export containers)

102 TTT is directly influenced by the number of containers to be handled by an RTG

terminal on a truck run ie a higher number of containers results in a longer truck turn time on average This due to the truck having to potentially visit multiple locations within the RTG terminal

103 The reason the container Terminal does not measure the time following

completion of loadingdischarging container from truck is measure regulatory bodies (ie AGIS) have commenced inspection of containers on terminal exit gate which is beyond the control of the container terminal

104 The process time is used to measure the start of the truck turn time as this is the

closest time to the truck being in the terminalrsquos control

105 Trucks that take advantage of the autogate processing (currently 25 of trucks) actually start the truck turn time as they come through the terminal gate as this is where the transponder reader is located DP World Sydney support the increase of the autogate processing and the result that the truck turn time starts at the gate For trucks that do not use the autogate processing opportunity the terminal does not start the truck turn time at the gate as the truck driver may not move efficiently to have the container processed

106 Carriers often use TTT measured from the time the truck services at the standby

queue or the arrival of the truck at the zone queue which are waiting for the next time zone to open

107 In relation to standby queue the CAA clearly stipulates that the use of this system

does not guarantee immediate call-up to the terminal in priority to trucks that have booked a time slot

Page 15 of 48

108 In relation to TTT measured from arrival at the time zone queue the fact that the truck has arrived prior to the commencement of the zone opening is purely a decision of the transport carrier and is beyond the control of the Container Terminal and is not supported by DP World

Container Turn Times

109 DP World Sydney currently measures container turn time from the time the

container is processed to the time the container is loaded onto the truck (import container) or discharged from a truck and landed in the terminal (export container) Over the last 5 years the transport regulators have allowed truck operators to operate larger trucks thereby ultimately improving the efficiency of road transport As transport operators increase the use of larger trucks (capable of carrying multiple containers) the handling of these trucks produces a multiple handling of containers on the same truck at the terminals For example in the past one would handle one container per truck and in that case the CTT and TTT were almost identical With multiple containers on trucks the difference between the CTT and TTT is increasing To be able to benchmark this across a port and other ports becomes hard with TTT due to the ever changing ratio of containers per truck (depends on percentage of large truck operators) firstly within the same port and secondly between different ports Therefore CTT enables us to benchmark the measurement on common grounds across all our operations around the country

Access Times at DP World

1010 DP World Sydney divide the day into hourly time zones within the VBS The time

zones start on the house (eg 0700hrs) and complete at the end of the hour (eg 0759hrs) There is a time zone board located at Simblist Road which indicates which time zone is open Trucks queue at this point waiting for the board to change each hour During daylight hours on average there are 15 trucks waiting for the time zone to open The trucks then make their way to the terminal in gate located on Friendship Road once the zone is open

11 The Tribunal invites comment on the choice between a system where container

numbers are nominated in advance thereby offering the possibility of faster turnaround times or not providing container numbers which would provide road carriers with greater flexibility Or would industry participants prefer a system that allows the choice between both

Import Timeslots

111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the import container number in a timeslot booking up to the start of the time zone The disadvantage for the terminal and the carrier is that this flexible system arrangement does not allow the terminal the chance to reposition the container to a position that will minimise the number of containers that have to be moved (known as ldquoconsolidation movesrdquo) in order to access the container that is to be delivered to the truck once the truck has been processed and is in position for loading The more consolidation moves the terminal has to do to load an import container to a truck the longer the truck turn time will be

112 Undertaking consolidation moves prior to truck arrival would provide the opportunity

to decrease truck turn time

113 To achieve a further reduction in truck turn times and a reduction in cost of delivering a container the terminal would need to control the order in which the import containers are delivered This occurs in other ports in the world

Controlling the order of import deliveries

114 The current arrangement where the shipper controls the order of import containers

to be delivered from the terminals results in extra costs incurred by stevedores and also decreased efficiencies The longer a container remains in the terminal (an

Page 16 of 48

increase in the dwell time) results in increased consolidation (rehandles) undertaken by terminal equipment and an increase in the time taken to load a container to a truck or train

Matching of resources to meet demand

115 The terminal allocates the resources required based on the demand or the

number of timeslots released This occurs 24 hrs in advance

116 Carriers who book timeslots and do not meet their commitment (No Show) results in the terminal resources to be under utilised at certain times and creates an opportunity loss There is also an opportunity lost by another carrier to utilise the time slot for each No Show

117 Carrier who book timeslots and arrive late for their commitment (Wrong Zones)

results in terminal resources being under utilised at times and over utilised at other times The troughs in terminal resource utilisation result in an opportunity loss and the peaks result in a decrease in efficiency (increased truck turn time) or increased cost (increased resources applied) The increase in truck turn time has an impact on carriers who arrive on time for their time slot

118 The current VBS allows for carriers to arrive at the terminal to deliver or pick up a

container without committing to a time and container number thus not enabling the terminal to completely plan the required resources to meet the demand This is termed unplanned work The Standby Queue export tagging by B Carrier no advanced deadline for entering an import container number prior to the time zone and no requirement for an export container number being entered into a time slot booking results in an increase in unplanned work Unplanned work results in peaks in the work required by the planned resources and a decrease in efficiency

119 Rail also has similar problems

1110 By changing this arrangement and giving control to the stevedores to determine

the order of container delivery from the terminal will reduce the costs incurred by the terminal and decrease the turnaround time for trucks

Export Timeslots

1111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the export container number in a timeslot booking up to the start of the time zone It also allows an export time slot to be processed without a container number entered in the time slot booking The container number in then entered by the RampD Clerk at the terminal This often results in human error by the truck driver or the RampD Clerk resulting in delays to trucks This practice also eliminates the opportunity for the carrier to use the automatic processing described below in Question 12 To maximise the use of automation and eliminate human error the export container number needs to be a mandatory field to be updated in the time slot booking by a nominated time prior to the start of the time zone eg 2 hours prior to the start of the time zone

12 The Tribunal invites comments on the increased use of ICT and automation and

any other ways to reduce turnaround times and otherwise improve supply chain efficiency

121 DP World support and are driving the increased use of automation for the

processing of trucks DP World have developed and currently make available an automated truck processing system for carriers who use ePORTS to book and manage timeslots The percentage use of this system at DP World Sydney by carriers averages about 25 of total truck movements excluding stack run trucks

122 This system requires the purchase of a transponder unit from the terminal at the

cost that the terminal purchases the unit plus GST Currently the units are sold to

Page 17 of 48

the carrier for $12050 Also required is access to an eGATE screen in ePORTS The process for carriers wanting to move a number of containers on a transponder run involves

a) Booking through EPORTS the required number of time slots in a time zone

For example if a transport carrier wanted to deliver two export containers and collect one import container on a single truck run it needed to book three slots and

b) Setting up the transponder by inputting the slots truck number container numbers and whether they are import or export containers in the transponder booking screen in ePORTS

123 The benefits for carriers of using this automated processing include

a) The processing occurs earlier (ie at the gate as compared to in the RampD Office) therefore this decreases the chance of Wrong Zones being incurred

b) No need for the truck driver to present documentation at the RampD Office therefore reducing the truck turn time by avoiding any potential queues

c) No interaction between the truck driver and the RampD Clerk therefore decreasing human error during processing and causing further delays

d) As the processing occurs at the gate the trucks can skip ahead of other trucks where their drivers have to manually process in the RampD Office effectively jumping the queue

e) Allows reprogramming of trucks up to 15mins before the end of the time zone (eg 0645 for an 06 slot) without the truck driver needing the Delivery Order in his possession

f) Provides the carrier with the ability to educate their customers to provide the Delivery Orders in a timely manner in order to lodge them at the terminal

g) Electronic copies of the Delivery Orders (excluding scanned copies of originals) can be forwarded to the terminal via email therefore eliminating the need to physically lodge them

h) Enables the carrier to take all advantage of Electronic Import Delivery Orders (eIDOs) that are currently being used by Evergreen Marine at DP World Sydney Other shipping lines will move to the use of eIDOs in the future

13 The Tribunal invites stakeholders to comment on VBS capital and operating costs

and to assist it to distinguish between stand-alone VBS costs and those shared with other stevedoring activities

131 It is important to distinguish between the capital and operating costs of operating

the VBS and the costs of operating the landside interface ie delivering containers to and from trucks

132 The costs of a VBS comprise the following components

bull IT development and maintenance costs and

bull Management and administration time to manage and administer the system

These costs are low relative to the costs of actually providing the services within the terminal ndash loading and unloading the trucks

133 Having a system which requires the terminal to provide a guaranteed number of

slots per hours is to the disadvantage of the terminal Terminal operations are by their nature unpredictable due to the irregular arrival of ships Having to guarantee a number of slots which carry with it a high expectation of performance in terms of TTT tends to force the terminal to set the number of slots at a level which includes a risk mitigation factor against all things not going to plan The net result of this is

Page 18 of 48

that the terminal tends to effectively oversupply equipment and labour increasing its costs The impact of this is far more significant than the isolated costs of running the actual vehicle booking systems

134 Direct VBS costs have nothing to do with ship or rail operations

135 The container yard is run as a single operation servicing ship road and rail By

this means while there are practical limitations we seek to pool resources to maximise the overall efficiency of terminal operations particularly to absorb the peaks and troughs of demand across the operations as a whole This effective sharing of costs improves overall efficiency and results in lower costs to the benefits of users as a whole We anticipate that systems and technology improvements will see greater use of such pooling and greater overall efficiency as a result

14 The Tribunal invites stakeholders to comment on VBS access and penalty charges

and the level of transparency of access through the stevedoresrsquo VBSs

141 The VBS facilitates the provision of orderly access to DP World Sydney Terminal for over 200 individual carriers

142 DP World considers the achievement of orderly access to its terminals as a

primary objective of the VBS To achieve orderly access DP World considers it important to require carriers to pay a nominal subscription charge for the level and rights of access they require and to issue ldquono showrdquo and ldquolaterdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay lsquoon timersquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs

143 The VBS is essentially an ldquoappointment bookrdquo to assist transport carriers to

organise themselves more efficiently leading to a reduction in waiting times at the container terminal The VBS divides all working days into time periods containing a pre-determined number of timeslots The timeslots represent the number of import and export containers that can be handled in that period The number of timeslots in a day is determined by expected carrier demand and the availability of labour and equipment Carriers are then able to book timeslots for collection or delivery of containers

144 The alternative is random access to container terminals by carriers and significant

truck queues with associated demurrage costs which are ultimately paid for by the end user

145 At DP World Sydney the VBS offers transport carriers the ability to access an

internet based computer system or telephone bureau for the purpose of booking time slots for those carriers who do no wish to use the computer system The VBS in its present form offers access on a transparent and equitable basis to all carriers encourages the efficient movement of containers from the ship through the terminal and onto customers and vice-versa encourages innovative practices which are beneficial to terminal efficiency road congestion and the overall cost of the supply chain The ldquono showrdquo and ldquolaterdquo fees encourage these operational practices and efficiencies

146 DP World has adopted a class structure with an annual subscription for access

because this system allows carriers to determine what access is required for their business while providing the industry significant level of transparency in terms of access costs

147 All carriers have an equal opportunity to subscribe to any of the three classes of

access to the VBS (bearing in mind that smaller carriers are allowed to consolidate

Page 19 of 48

their subscriptions in order to share the cost of a B Class subscription) and equal access to timeslots amongst carriers of the same class

148 Annual fees are payable in advance Table 3 sets out the various carrier classes

currently in operation at each terminal and the applicable subscription fees for each class There are no annual limits on the number of slots carriers can book

Table 3 DP World Sydney ndash Current carrier classes and VBS deposit and registration fees for the year commencing 1 July 2005

Terminal Carrier Classes Price Number of active

carriers at Feb 06 Port Botany New South Wales

B Carrier ndash online internet access with high service levels

$2922150 (Non-refundable deposit) No fixed upper limit on annual time slots1

28

A Carrier ndash online internet access with standard service levels

$133400 (Annual registration fee) No fixed upper limit on annual time slots2

162

AB Carrier ndash access via the PampO Phone Booking Bureau with standard service levels

$66760 (Annual registration fee) No fixed upper limit on annual time slots3 39

149 Any carrier selecting the ldquoBrdquo classification is encouraged to also consider the ldquoArdquo

classification unless they are confident of utilising a high level of timeslots that would render the higher subscription fee as attractive per timeslot

1410 In addition to the VBS annual subscription fees the carrier access arrangements

provide for the levying of a no-show fee on carriers who fail to arrive for slots they have booked in the amount of $110 per time slot The terminal also charges carriers late fees of $55 per slot if they fail to arrive for a slot booking within the nominated time zone No fees are charged where a carrier is unable to meet the time slot due to delays caused and acknowledged by DP World Australia or where delays are caused by circumstances genuinely outside of the carrierrsquos control DP World Australia also has the discretion to and does waive ldquono showrdquo and ldquowrong zonerdquo fees in the interest of maintaining a good working relationship with carriers Failure by carriers to pay these ldquono showrdquo and ldquowrong zonerdquo fees may lead to them being prevented from making further bookings ldquoNo showrdquo and ldquowrong zonerdquo fees are the means by which DP World ensures that access to itrsquos terminals is provided in the most efficient manner to all 1carriers as late carriers cause delays for those carriers that are on time

1 No fixed upper limit on annual timeslots ndash Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 2 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 3 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release

Page 20 of 48

1411 The ldquono showrdquo and ldquowrong zonerdquo fee structure was introduced following

consultation with carriers It was originally $20 per late arrival (in Victoria where VBS first commenced) but this is proved to be ineffective in disciplining carrier conduct In response to requests from many carriers DP World increased the ldquono showrdquo fee to $110 The fees also discourage carriers from the practice of overbooking slots which they have no intention of using and preventing other carriers from using those slots

1412 The actual cost of a truck turning up late (Wrong Zone) or not turning up at all (No

Show) is the cost of planned resources (labour equipment etc) based on the VBS demand (number of containers expected to handle during a time period) not being utilised during the time period they are employed

1413 Adjacent to each time zone are grace periods one prior to the time zone and one

following the time zone These grace periods and the trucks arrival time for processing determine the status of the time slot ie arrived on time or arrived late (Wrong Zone) Currently the grace period following the time zone is set at 20 minutes which means that if a truck arrives later than one hour and 20 minutes after the start of the time zone then the time slot will be initially recorded as a Wrong Zone Following the completion of each VBS day Wrong Zones are reviewed and any penalty waived if any of the following determined

a) The terminal is aware that it has contributed to a truck arriving late for the time

slot ie the terminal has previously delayed the truck or carrier on an earlier time slot or

b) The carrier advises that they arrived late due to an unforeseen circumstance eg a break down of the truck

We request that the information in 1414 be kept confidential

1414 Omitted for reasons of confidentiality

1415 Officers at DP World Sydney have regular conversations with carriers in respect of

the waiver of No Show fees as well In certain instances DP World may agree to waive fees prior to an invoice being issued

1416 For both Wrong Zone and No Show fees the terminal provides a grievance

process for carriers who have been issued invoices and do not agree that the fee has been issued fairly The carrier has the opportunity to provide the terminal with an explanation and should officers at DP World Sydney agree that there has been an error in the issuing of the fee or an unforeseen circumstance is explained the terminal will credit the invoice

15 The Tribunal invites stakeholders to indicate the costs of providing the services of

rail windows and rail paths to rail operators

151 Rail windows are based allowance on a rail terminal performance KPI of 30 container moves per hour and charged at $360 per hour A shunting time allowance of 15 mins per window is not charged Additional lifts canare provided by increasing the lifts per hour by applying more machinery at no additional cost

152 The cost of providing terminal rail operations is higher than road operations at DP

World Sydney The RTG mode of operation requires a container to be moved to or from the container stack For road containers the truck takes the export container to the stack and travels to the stack to pick up an import container For a rail container a terminal internal transfer vehicle (ITV) is required to be used by the terminal to move the container from the train to the stack (export containers) or

Page 21 of 48

the stack to the train (import containers) This is not required for container being received or delivered by road

153 For import rail containers there is a loss of efficiency for the vessel discharge

operation in order to stack rail containers separately for delivery to the train For each discharge point in the terminal extra resources are required There is extra administration costs in having to make alternate arrangements to separate these import rail containers

154 Despite the fact that the delivery of containers to rail is higher than road the

terminal seeks only a partial recovery of costs in order to encourage the use of rail in the port in line with the NSW Government objectives

155 There is a management cost of setting up and operating the rail windows This is

similar to the cost of operating a VBS

156 There is additional security infrastructure costs for a rail operation to ensure the terminal meets their legislative security requirements The more terminal entry points created the higher the cost to replicate these security infrastructure requirements

16 The Tribunal invites comment from stakeholders on the planned or mooted

development and expansion of the various intermodal terminals in Sydney and the extent to which this is expected to ease congestion in the landside supply chain at Port Botany

161 DP World supports the development and expansion of an intermodal terminal

network to facilitate an increase in the use of rail as the means of container transport This has the potential flow on benefit of minimising the growth in the number of trucks requiring to access the Port Botany area as port volumes continue to grow

162 Transport between the Botany terminals and the inland intermodal terminals

should be by rail or trucks operating a stack (bulk) run road out during off peak periods eg night shifts or weekends The use of Super B Double trucks would assist with the efficiency of these off peak stack run outs

17 The Tribunal invites comment on the likely effect of the expansion plans at Port

Botany on access to the port terminal during peak periods and efficiency along the supply chain

171 Improving the two-way running or back-loading of trucks has to be a priority in

order to maximise access opportunity at the terminals and efficiency along the supply chain It is likely that a third and separate stevedoring facility will only increase the difficulty of improving truck utilisation over and above the current levels by the increased logistics complexity of coordinating timely access to three terminals rather than two

172 A third stevedore will lead to the same port volume being spread over three

operations While it is resource levels that determine available slots DP World has found that during periodic decreases in volumes carriers favour daytime runs to the terminal as opposed to night time

173 The expansion plans will have a negative impact on rail transport timeliness and

access requirements to DP World Sydney if the requirements to breaksplit trains and shunt sections of trains into multiple terminals continues This will undermine the overall rail effectiveness and the NSW Government rail objectives by the unnecessary increase of splitting trains

Page 22 of 48

18 The Tribunal invites comment on the likely effects of expansion of the intermodal network in Sydney on access to the port and efficiency along the supply chain

181 This is a similar issue to point 16 above

19 The Tribunal invites comment on the likely impact of a peak pricing system along

the lines of the FIC on access to the port terminals and the efficiency of the Port Botany supply chain

191 We understand for the NSW Governmentrsquos announcement (31 May 2007) that the

FIC is no longer being proposed

192 Table 4 shows the average percentage of road containers that are handled by shift at DP World Sydney based on a 6 day x 24 hour receival and delivery operation for the past 4 years The figures indicate that there is surplus capacity on both evening and midnight shifts when compared to day shift Note that the percentage of road containers handled has increased on day shift relative to the combination of evening and midnight shifts This has been due to terminal efficiencies creating increased capacity during day shifts and the road carriers utilising this capacity

193 This is further emphasised in Figure 4 which shows the trend over time for day

shift containers handled has increased from 2005 evening shift has decreased and midnight shift has not changed significantly

Table 4 DP World Sydney ndash Percentage of Daily Road Container Volume handled by Shift

Year Midnight Shift (2230 ndash 0630hrs)

Day Shift (0630 ndash 1430hrs)

Evening Shift (1430 ndash 2230hrs)

2007 YTD 21 47 32

2006 23 45 33

2005 22 43 36

2004 19 44 38

194 Year to date April 2007 figures may reflect the seasonal trend for lower volumes in this period

Figure6 DP World Sydney ndash Road Volume trendlines by shift 2005-07

Page 23 of 48

20 The Tribunal invites comment on the likely impact of the expansion of the freight

rail network in Sydney on the number of containers moved by rail and on congestion at the port

201 The importance of increasing the proportion of containers moved by rail is

recognised and supported by DP World Sydney

202 To complement the expansion of the rail freight network upgrade the terminal is developing plans to increase the length and the number of sidings within the terminal Over the next three years the terminal is planning to spend an estimated $20million on internal rail infrastructure machinery and systems The terminal upgrade will ensure DP World Sydney has the infrastructure in place to meet a target of 40 throughput by rail

203 The expansion of the freight rail network needs to take into account The access

to each of the terminals especially the access to DP World Sydney where by the terminal has a distinct disadvantage in relation to its competitor

21 The Tribunal invites comment on the impact on the supply chain on ARTC

managing the metropolitan freight rail network

211 Management of freight rail infrastructure is ARTCrsquos core business and will bring additional management expertise and focus to the task of reforming operations on the Port Botany rail infrastructure

212 For ARTC to control the MFN (Metropolitan Freight Network) makes sense from

the point of view they can make informed decisions for both inbound and outbound Port services based on the wider NSW Rail Freight Network operation

213 The ARTC proposal to co-ordinate services by performing the full Network Control

Function (both signalling and Train Control) from the one centralised centre for the Southern Sydney Freight Line (SSFL)MFN and Port Botany emphasises their commitment to ensure safety communications and network management is their primary objective

214 ARTC are focussed on improving the efficiencies at the Port and bring to the

industry fresh innovative ideas to improve the overall capacity on the rail network ARTCrsquos willingness to assist and eagerness to invest in the rail infrastructure brings a breath of fresh air to the industry and specifically the stevedore operations ARTC can integrate the Botany line into its overall investment program paving the way for additional investment to improve the efficiency of operations on the Botany rail line and at the port-rail interface

22 The Tribunal invites comment on the following questions in relation to costs of the

VBS

22a What costs underpin the VBS access charges levied by the two stevedores How are the VBS access charges set

22b1 Refer to Question 14 The revenue from VBS charges account for a very

small proportion of DP Worldrsquos total container terminal revenue For the year ended 31 December 2006 they accounted for 13 of total revenue Of that 13 approximately 30 was for No Shows and Wrong Zones

22b What costs are incurred by the stevedores in moving a container from the

wharf to a truck or train

22b1 DP World Sydney is operated as an integrated business servicing ships road and rail within the context of a national business We do no separately account for the costs of each discrete activity Information on

Page 24 of 48

overall costs is provided to the ACCC and published on an industry basis in the ACCCrsquos Container Stevedoring Monitoring Report

22b3 Wharf to truck activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the VBS to provide orderly access for road carriers

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal space to allow truck drivers to park their vehicles in order to unlockset up their twist locks and processing of containers

bull Processing of the container

bull System to manage the truck movement within the terminal

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the truck by RTG or forklift

bull Provision of terminal area for truck drivers to safely leave their vehicle to lock the twist locks on their trucks check the container seal number and check the container for damage

bull Provision of terminal area for AQIS operation and infrastructure

22b3 Wharf to train activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the Rail Windows to provide orderly access for operators

Page 25 of 48

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal area for rail lines associated rail infrastructure and train inspection requirements within the terminal

bull Processing of the container

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the ITV by RTG or forklift

bull Internal Transfer Vehicle (ITV) movement of the container from the yard stack to the rail line

bull Lift of the container from the ITV onto the rail wagon

22c What influences the nature and amount of these costs (for example are they influenced by the type of equipment used by a stevedore Do they fluctuate with the number of containers handled by the stevedores) and how have costs changed over time

22c1 DP World operates very similar Vehicle Booking Systems in Brisbane

Sydney Melbourne and Fremantle where there are differences in volume through the terminals The only difference in subscription between the terminals are the ldquoB Classrdquo carrier subscriptions The annual subscription is influenced by the number of carriers seeking this class and the hourly allocation of slots to their class given the number of subscriptions In addition Melbourne operates a straddle facility and Brisbane operates a forklift reachstacker Therefore the cost of the Vehicle Booking System is not dependant on or mode but the annual subscription to ldquoB Classrdquo carrier depends on competition for that carrier class

22c2 An annual subscription fee per class which is a characteristic of DP

Worldrsquos VBS does not normally increase with volume At DP World Sydney subscription fees have not been increased since 2003

22c3 Overall landside costs have increased with increases in wages and

salaries (4 pa) property costs (substantially ahead of cpi) fuel and other general costs These increases have been offset to some extent by increases in productivity Industry costs history is also available publicly in the ACCC Container Stevedoring Monitoring Reports

22d Where do the port landside costs stop and the VBS costs start

22d1 Prior to the Entry to Operational Yard (see Attachment 2) the truck is

under the influence of the VBS and also under the influence of the external environment which includes but is not limited to port and metropolitan road conditions container clearance issues truck arrival peaks and troughs truck preparedness processing of the container to the handled by the terminal and maritime security requirements

It is DP World Sydneyrsquos view that the port landside costs stop and the VBS costs start at the choke point

22e Do the VBSsrsquo penalty charges reflect the cost to stevedores What should

they reflect

22e1 The primary rationale for the penalty regime is to seek to modify carrier behaviour

Page 26 of 48

22e2 However it is also the case that a ldquono showrdquo or ldquowrong zonerdquo gives rise to a lost opportunity cost to the terminal Resources made available but not utilised may be wasted

22e3 DP World considers the achievement of orderly access to its terminal as

a primary objective of the VBS To achieve orderly access PampO considers it important to issue ldquono showrdquo and ldquowrong zonerdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay ldquoon timerdquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs The alternative is random access to container terminals by carriers and significant truck queues with associated demurrage costs which are ultimately paid for by the end consumer

22f Should there be different charging arrangements for empty containers that

are returned to the port as opposed to full export containers

22f1 DP World Sydney terminal handles a full container in a similar way to an empty container using purpose built container stacking equipment controlled by a DP World employee A container occupies the same amount of space whether it is full or empty This leads to the same cost for the handling of a single empty container as a single full container Single empty containers returned to the port should be charged a similar rate to full containers

22f2 To reduce the cost of handling empty containers in the terminal destined

for the same port on the one vessel and that are of the same size the terminal in conjunction with the shipping line and the shipping linersquos nominated carrier work together to create a bulk run of empty containers The bulk run maximises the number of empty containers that are handled in a specific time period The terminal dedicates resources to thee bulk runs and also provides priority access to the transport carrier in order to create efficiency and an economy of scale In this way the cost of returning an empty container via a bulk run is reduced

23 The Tribunal invites comment on the following questions in relation to the different

pricing regimes of the two stevedores

23a Why do the stevedores have different pricing schemes for their VBSs

23a1 We do not know why Toll-PatrickAsciano has adopted the pricing scheme it has

23a2 In order to improve earlier versions of its VBS in the mid-1990s DP

World (PampO) introduced categories of carriers and began charging differential subscription fees for carriers registering to use the VBS depending on the level of access required by the carrier Prior to this change some carriers were engaging multiple computer terminals to the detriment of other carriers and it had become clear that a level of differentiation would be in all carrierrsquos interests The different classes of carrier access were introduced to ensure the most balanced overall outcome The level of differentiation is an annual choice of access levels available to all carriers regardless of size Under this approach different subscription fees are charged for each category but all carriers registering in a particular category pay the same fee Our view remains that an annual subscription as opposed to a pay as you go is far less of an administrative burden on both the carriers and the terminal

Page 27 of 48

23a3 There are no restrictions upon carriers wishing to obtain a certain carrier category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for the same carrier categories as larger carriers Smaller carriers may also apply for consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst charging the burden of the cost of that subscription

23a4 Subscription fees based on differences in class are designed to

encourage choice whilst at the same time communicating a level of transparency with terminal pricing and service

23b Do the different pricing schemes influence the efficiency with which

transporters obtain access to the terminals

23b1 We do not believe this to be the case

23c Would standardisation of charges be more appropriate

23c1 It is our understanding that it would be unlawful for a supplier itself to standardise charges by reason of Section 45 of the Trade Practices Act This may be something that Government wishes to consider

24 The Tribunal invites comment on the following non-price access issues to consider

in relation to the operation of the VBSs

24a What effect do access rules and conditions and non price constraints have on booking a timeslot How to the stevedores use their discretion in determining access and charges and what impact does this have

24a1 The introduction of different categories of access stages the carriersrsquo

access to the VBS for the purposes of booking timeslots ldquoB classrdquo carriers are given exclusive access to a pool of slots between 0730-0820 During this period they are subject to zone limitations which restrict carriers to a maximum number of slots for any given hour The zone limit ensures all carriers within that carrier class are given fair and equitable access to the initial release of slots After the initial booking period the zone limit is lifted and carriers are permitted to book any number of unused slots per hour from those remaining in their pool Similar arrangements exist for A class carriers culminating in the cascading of all remaining slots from all segregated pools into a general pool at 1030 for access by all registered carriers

24a2 There are not restrictions upon carriers wishing to obtain a certain carrier

category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for a consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst sharing the burden of the cost of that subscription

24b What are the stevedoresrsquo obligations with regard to access to port facilities

and what should they be

24b1 Without providing an analysis of our obligations under law in general terms we are required to provide access to carriers on an equitable basis recognising the competitive environment we operate in

Page 28 of 48

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

73 One way of achieving flow in (71) and (72) above is to disconnect the relationship between the payment of duty and the physical control of cargo movement To maximise the effect here the ACS could request the Customs brokers to also lodge the lsquoImport Declarationrsquo 24 hrs prior to arrival and collect duties on account after the event

74 An initiative at DP World Brisbanersquos terminal has been successful in obtaining early container information as part of their VBS (linking timeslot to the container number)

75 The system has been in place for almost 12 months now and the availability of information at DP World Brisbane has contributed to improved service levels at this terminal

Empty Container Depot Opening Times

76 A majority of Empty Container Depots reside within 10 km radius to the port

precinct Depot opening ties do not match container terminal operating hours The result is an inability for carriers to return and pick up an empty container 24hrs a day to depots This reduces the potential of utilising the existing vehicles on the road creating potential traffic congestion and therefore free up their trucks to collect import containers from the terminal Through tariff structures the shipping lines have the ability to influence the depots to increase their opening hours thus resulting in greater vehicle utilisation and subsequent reduction in transport charges The extended spread of hours will also have the effect of flattening the peak traffic periods and reducing road congestion and travelling times

8 The Tribunal invites stakeholders to comment on any aspects of the VBS

particularly in relation to the number of timeslots made available and on what basis and the process by which those slots are made available across the day(s) and to whom

81 The VBS is simply a means by which to communicate with the transport carrier

community What determine the number of slots made available are resource levels provided at the container terminal DP World Sydney provides more than sufficient resource levels to enable all containers to be delivered as required to road within the three free day period even accepting the industryrsquos current limited use of the available 247 terminal operation It is acknowledged that resource levels provided to road operations may be varied day to day as resources may need to be directed to ship operations but this follows from running the terminal as an integrated operation which is ultimately most efficient Providing further day time slots without addressing underlying market inefficiencies only risks service levels to shipping lines that are demanding higher performance levels and perpetuating the industryrsquos unwillingness to support 247 operations

82 DP World also notes that all carriers may and do from time to time contact the

terminal and request additional timeslots if there are none available on the VBS The terminal will endeavour to accommodate such requests where there is operational capacity to do so If there is capacity the Terminal will book the timeslot in the name of the carrier that has made the request

83 Further details of the VBS are provided in responses to subsequent questions

However we believe that the VBS at DP World Port Botany Terminal has delivered benefits including

bull No random queuing at the terminal which results in significant unplanned

delays to transport users due to the random arrival of trucks at any point in time to the terminal where the terminal is not resourced to handle the high peaking demand for landside resources whilst at the same time meeting contractual obligations with shipping lines

Page 11 of 48

bull The terminal is able to carry out bulk moves while maintaining service levels to other general carriers

bull Provides choice to carriers in terms of access as well as providing transparency to industry

bull States subscriptions fees in a public document which are transparent to industry

bull Increase slot allocation to road users based on irregular shipping schedules and

bull While not referred to in the Carrier Access Arrangements (see attachment 1) all B class carriers are allowed to engage in a process called ldquoexport taggingrdquo Export tagging involves a carrier booking an import timeslot in ePorts which will give them access to the terminal A carrier is then able to bring and export container on the truck that is arriving to collect the import container without booking a slot for that export container (during most timeslots in the day) The purpose of this flexibility to carriers is to increase two-way running which reduces costs to carriers and decreases the number of trucks in the port community

9 The Tribunal asks stakeholders to comment on the variability of average

turnaround times across the major ports and the variability of turnaround times faced by individual transport operators at Port Botany itself The Tribunal also invites comment on how important predictability of turnaround times is to transport operators relative to average turnaround times at Port Botany The Tribunal further invites comment on why turnaround times are higher for Port Botany compared to Melbourne Adelaide and Fremantle

91 The precise nature of operations differs between the ports and between the

terminals operated at those ports These differences arise because of the range of shipping lines that arrive at the various terminals and the volumes of containers and type of cargo going through each terminal There are also differences in the container yard handling equipment yard configurations at each terminal and hours of operation resulting in differences in the way each terminal operates These differences result in variations amongst each terminalrsquos service performance levels

92 During 2002 DP World Sydney management met with a representative group of

carriers to discuss the VBS and access arrangements at the terminal A common view of the carriers was that they would like consistency to truck turn times and that 60mins (carrier measurement) is acceptable The outcome from these meetings was that DP World introduced three internal KPIs

bull Truck processing to truck complete measurement ndash 38 mins average

bull TTTs of 60 mins or less to be 90 to total trucks

bull TTTs of 120 mins or more to be 1 or less

93 Figure 4 below shows the percentage of truck turn times that are 60 minutes or less at DP World Sydney There is a noted improvement in during mid 2005 from an average prior to this time of 73 to an average during 2006 of 85 This indicates that the predictability of the truck turn times has improved during the life of the VBS

Page 12 of 48

Figure 4 DP World Sydney ndash Percentage of Truck Turn Time under 60 mins

DP World Sydney - Percentage of Truck Turn Time under 60 mins

50

60

70

80

90

100

Jan-04

Mar-04

May-04

Jul-04

Sep-04

Nov-04

Jan-05

Mar-05

May-05

Jul-05

Sep-05

Nov-05

Jan-06

Mar-06

May-06

Jul-06

Sep-06

Nov-06

Jan-07

Mar-07

94 Figure 5 below shows the terminal truck turn time and the stevedoring volume since July 2003 at DP World Sydney Note that the volumes are hidden on the left Y axis for commercial reasons As a result of terminal improvements and putting in place the KPIs described above the average TTT performance has improved (right Y axis) whilst at the same time the terminal volume has increased (left Y axis)

Figure 5 DP World Sydney ndash Truck Turn Time and Container Volume

95 DP World operates in all five major ports in Australia and has three different modes of operation namely Straddles in Melbourne and Adelaide RTGrsquos in Sydney and Fremantle and Forklift and Reach-stacker in Brisbane The Variability in TTT between ports is attributed to a number of factors including but not limited to the site processes and physical constraints of each facility

96 The measurement of TTT differs mainly due to

a) the layouts of in-gates and its approaches and

Page 13 of 48

b) the measurement of the job steps which apply to a truck from arrival to departure due to (a)

97 All the above terminals have different truck parking arrangements within and

outside the terminal which impacts TTT Across the board TTT is measured from job processing to job complete (98c to 98e below) however the physical layout and mode can influence when processing commences

98 The process of truck management in simple terms is

a) Pre-arrival of trucks

b) Validation of time slots

c) Processing of job (Manual but if automated it takes effect in b above)

d) Enter the operational yard

e) Job transact and complete (by straddle RTG or Forklift Reach-stacker) and

f) AQIS check for full trucks and depart (gate-out)

99 Depending on the physical layout and provision of sufficient space to hold trucks within the terminal boundary or otherwise the distribution of trucks varies through steps 98a to 98c above

910 At DP World Sydney the equivalent hourly truck volume can be held in the

terminal entry marshalling area therefore multiple trucks can enter the terminal park and be processed by terminal staff Post processing all time spent in the marshalling area forms part of the TTT whilst the truck has not necessarily entered the operational yard (see Annexure 2)

911 At DP World Melbourne on the other hand due to restricted space within the

terminal trucks are normally held outside and a small number is constantly drip fed into the terminal (controlled rate of entry) These trucks then approach the processing points (6 lanes x processing booths) further which they directly enter the operational yard and the TTT is measured from this point

912 DP World Fremantle does not have a truck holding area within the terminal which

means the truck enter the terminal and queue at the Entry to Operational Yard Immediately after being processed the truck enters the terminal yard Therefore unlike Sydney time from Entry to Operational Yard is time historically not published Therefore TTT between DP World Sydney and DPW Fremantle are not comparable

913 DP World Fremantle is also an RTG operation similar to DP World Sydney

However the physical layout and the resulting entry arrangements differ Due to restricted space within the terminal the trucks are normally held outside and constantly drip fed into the terminal (controlled rate of entry) The trucks operate through 3 lanes within the terminal and truck turn time is measured at this processing point when the trucks actually enter the operational yard

914 DP World Adelaide is a straddle operation similar to DP World Melbourne

However its physical layout and resulting entry arrangement is different to that of DP World Melbourne and has some similarities with what takes place in Sydney The hourly truck volume can be held within the terminal and the TTT is measured from entry into the terminal main gate to departure from the terminal main gate The measure differs from the other facilities on both entry are exit gates

915 The benefits of this TTT data is not so much the raw data itself but more so the

long term trend in the data If TTT is constant or even improved during periods of volume growth then this reflects a firm commitment to the landside process Continuous improvement reflects a commitment to landside efficiencies

Page 14 of 48

916 TTT is influenced by the mode of operation the Gate In infrastructure and volume

of containers required to be handled

917 The RTG mode of operation requires the truck to travel to the yard stack where the container is located or assigned as opposed to the straddle operation where the straddle comes to the truck that is parked in a bay external to the stacking area The mode of operation at DP World Sydney generally results in a truck with multiple containers being serviced by multiple RTGs and also having to travel to multiple yard locations At each of these yard locations there will be a different level of demand on the particular RTG covering the area This will result in variations in the time it will take to service the truck in that particular area and therefore will influence the truck turnaround time

918 In comparison a terminal running a straddle operation could employ a different

straddle to handle each of the containers processed for the truck

919 The mode of operations employed by container terminals have various strength and weaknesses and need to be considered based on many factors in a Port (ie not just the landside interface) but both modes can contribute to variability

10 The Tribunal invites comment on how truck turnaround times are currently

measured by supply chain participants and how they should be measured The Tribunal further invites comment on the extent to which the stevedores provide access to their facilities at the specific times booked on the VBS

Truck Turn Time (TTT)

101 DP World Sydney currently measures truck turn times from the time the containers on a truck are processed to the time the last container is completely loaded onto the truck (import containers) or discharged from a truck and landed in the terminal (export containers)

102 TTT is directly influenced by the number of containers to be handled by an RTG

terminal on a truck run ie a higher number of containers results in a longer truck turn time on average This due to the truck having to potentially visit multiple locations within the RTG terminal

103 The reason the container Terminal does not measure the time following

completion of loadingdischarging container from truck is measure regulatory bodies (ie AGIS) have commenced inspection of containers on terminal exit gate which is beyond the control of the container terminal

104 The process time is used to measure the start of the truck turn time as this is the

closest time to the truck being in the terminalrsquos control

105 Trucks that take advantage of the autogate processing (currently 25 of trucks) actually start the truck turn time as they come through the terminal gate as this is where the transponder reader is located DP World Sydney support the increase of the autogate processing and the result that the truck turn time starts at the gate For trucks that do not use the autogate processing opportunity the terminal does not start the truck turn time at the gate as the truck driver may not move efficiently to have the container processed

106 Carriers often use TTT measured from the time the truck services at the standby

queue or the arrival of the truck at the zone queue which are waiting for the next time zone to open

107 In relation to standby queue the CAA clearly stipulates that the use of this system

does not guarantee immediate call-up to the terminal in priority to trucks that have booked a time slot

Page 15 of 48

108 In relation to TTT measured from arrival at the time zone queue the fact that the truck has arrived prior to the commencement of the zone opening is purely a decision of the transport carrier and is beyond the control of the Container Terminal and is not supported by DP World

Container Turn Times

109 DP World Sydney currently measures container turn time from the time the

container is processed to the time the container is loaded onto the truck (import container) or discharged from a truck and landed in the terminal (export container) Over the last 5 years the transport regulators have allowed truck operators to operate larger trucks thereby ultimately improving the efficiency of road transport As transport operators increase the use of larger trucks (capable of carrying multiple containers) the handling of these trucks produces a multiple handling of containers on the same truck at the terminals For example in the past one would handle one container per truck and in that case the CTT and TTT were almost identical With multiple containers on trucks the difference between the CTT and TTT is increasing To be able to benchmark this across a port and other ports becomes hard with TTT due to the ever changing ratio of containers per truck (depends on percentage of large truck operators) firstly within the same port and secondly between different ports Therefore CTT enables us to benchmark the measurement on common grounds across all our operations around the country

Access Times at DP World

1010 DP World Sydney divide the day into hourly time zones within the VBS The time

zones start on the house (eg 0700hrs) and complete at the end of the hour (eg 0759hrs) There is a time zone board located at Simblist Road which indicates which time zone is open Trucks queue at this point waiting for the board to change each hour During daylight hours on average there are 15 trucks waiting for the time zone to open The trucks then make their way to the terminal in gate located on Friendship Road once the zone is open

11 The Tribunal invites comment on the choice between a system where container

numbers are nominated in advance thereby offering the possibility of faster turnaround times or not providing container numbers which would provide road carriers with greater flexibility Or would industry participants prefer a system that allows the choice between both

Import Timeslots

111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the import container number in a timeslot booking up to the start of the time zone The disadvantage for the terminal and the carrier is that this flexible system arrangement does not allow the terminal the chance to reposition the container to a position that will minimise the number of containers that have to be moved (known as ldquoconsolidation movesrdquo) in order to access the container that is to be delivered to the truck once the truck has been processed and is in position for loading The more consolidation moves the terminal has to do to load an import container to a truck the longer the truck turn time will be

112 Undertaking consolidation moves prior to truck arrival would provide the opportunity

to decrease truck turn time

113 To achieve a further reduction in truck turn times and a reduction in cost of delivering a container the terminal would need to control the order in which the import containers are delivered This occurs in other ports in the world

Controlling the order of import deliveries

114 The current arrangement where the shipper controls the order of import containers

to be delivered from the terminals results in extra costs incurred by stevedores and also decreased efficiencies The longer a container remains in the terminal (an

Page 16 of 48

increase in the dwell time) results in increased consolidation (rehandles) undertaken by terminal equipment and an increase in the time taken to load a container to a truck or train

Matching of resources to meet demand

115 The terminal allocates the resources required based on the demand or the

number of timeslots released This occurs 24 hrs in advance

116 Carriers who book timeslots and do not meet their commitment (No Show) results in the terminal resources to be under utilised at certain times and creates an opportunity loss There is also an opportunity lost by another carrier to utilise the time slot for each No Show

117 Carrier who book timeslots and arrive late for their commitment (Wrong Zones)

results in terminal resources being under utilised at times and over utilised at other times The troughs in terminal resource utilisation result in an opportunity loss and the peaks result in a decrease in efficiency (increased truck turn time) or increased cost (increased resources applied) The increase in truck turn time has an impact on carriers who arrive on time for their time slot

118 The current VBS allows for carriers to arrive at the terminal to deliver or pick up a

container without committing to a time and container number thus not enabling the terminal to completely plan the required resources to meet the demand This is termed unplanned work The Standby Queue export tagging by B Carrier no advanced deadline for entering an import container number prior to the time zone and no requirement for an export container number being entered into a time slot booking results in an increase in unplanned work Unplanned work results in peaks in the work required by the planned resources and a decrease in efficiency

119 Rail also has similar problems

1110 By changing this arrangement and giving control to the stevedores to determine

the order of container delivery from the terminal will reduce the costs incurred by the terminal and decrease the turnaround time for trucks

Export Timeslots

1111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the export container number in a timeslot booking up to the start of the time zone It also allows an export time slot to be processed without a container number entered in the time slot booking The container number in then entered by the RampD Clerk at the terminal This often results in human error by the truck driver or the RampD Clerk resulting in delays to trucks This practice also eliminates the opportunity for the carrier to use the automatic processing described below in Question 12 To maximise the use of automation and eliminate human error the export container number needs to be a mandatory field to be updated in the time slot booking by a nominated time prior to the start of the time zone eg 2 hours prior to the start of the time zone

12 The Tribunal invites comments on the increased use of ICT and automation and

any other ways to reduce turnaround times and otherwise improve supply chain efficiency

121 DP World support and are driving the increased use of automation for the

processing of trucks DP World have developed and currently make available an automated truck processing system for carriers who use ePORTS to book and manage timeslots The percentage use of this system at DP World Sydney by carriers averages about 25 of total truck movements excluding stack run trucks

122 This system requires the purchase of a transponder unit from the terminal at the

cost that the terminal purchases the unit plus GST Currently the units are sold to

Page 17 of 48

the carrier for $12050 Also required is access to an eGATE screen in ePORTS The process for carriers wanting to move a number of containers on a transponder run involves

a) Booking through EPORTS the required number of time slots in a time zone

For example if a transport carrier wanted to deliver two export containers and collect one import container on a single truck run it needed to book three slots and

b) Setting up the transponder by inputting the slots truck number container numbers and whether they are import or export containers in the transponder booking screen in ePORTS

123 The benefits for carriers of using this automated processing include

a) The processing occurs earlier (ie at the gate as compared to in the RampD Office) therefore this decreases the chance of Wrong Zones being incurred

b) No need for the truck driver to present documentation at the RampD Office therefore reducing the truck turn time by avoiding any potential queues

c) No interaction between the truck driver and the RampD Clerk therefore decreasing human error during processing and causing further delays

d) As the processing occurs at the gate the trucks can skip ahead of other trucks where their drivers have to manually process in the RampD Office effectively jumping the queue

e) Allows reprogramming of trucks up to 15mins before the end of the time zone (eg 0645 for an 06 slot) without the truck driver needing the Delivery Order in his possession

f) Provides the carrier with the ability to educate their customers to provide the Delivery Orders in a timely manner in order to lodge them at the terminal

g) Electronic copies of the Delivery Orders (excluding scanned copies of originals) can be forwarded to the terminal via email therefore eliminating the need to physically lodge them

h) Enables the carrier to take all advantage of Electronic Import Delivery Orders (eIDOs) that are currently being used by Evergreen Marine at DP World Sydney Other shipping lines will move to the use of eIDOs in the future

13 The Tribunal invites stakeholders to comment on VBS capital and operating costs

and to assist it to distinguish between stand-alone VBS costs and those shared with other stevedoring activities

131 It is important to distinguish between the capital and operating costs of operating

the VBS and the costs of operating the landside interface ie delivering containers to and from trucks

132 The costs of a VBS comprise the following components

bull IT development and maintenance costs and

bull Management and administration time to manage and administer the system

These costs are low relative to the costs of actually providing the services within the terminal ndash loading and unloading the trucks

133 Having a system which requires the terminal to provide a guaranteed number of

slots per hours is to the disadvantage of the terminal Terminal operations are by their nature unpredictable due to the irregular arrival of ships Having to guarantee a number of slots which carry with it a high expectation of performance in terms of TTT tends to force the terminal to set the number of slots at a level which includes a risk mitigation factor against all things not going to plan The net result of this is

Page 18 of 48

that the terminal tends to effectively oversupply equipment and labour increasing its costs The impact of this is far more significant than the isolated costs of running the actual vehicle booking systems

134 Direct VBS costs have nothing to do with ship or rail operations

135 The container yard is run as a single operation servicing ship road and rail By

this means while there are practical limitations we seek to pool resources to maximise the overall efficiency of terminal operations particularly to absorb the peaks and troughs of demand across the operations as a whole This effective sharing of costs improves overall efficiency and results in lower costs to the benefits of users as a whole We anticipate that systems and technology improvements will see greater use of such pooling and greater overall efficiency as a result

14 The Tribunal invites stakeholders to comment on VBS access and penalty charges

and the level of transparency of access through the stevedoresrsquo VBSs

141 The VBS facilitates the provision of orderly access to DP World Sydney Terminal for over 200 individual carriers

142 DP World considers the achievement of orderly access to its terminals as a

primary objective of the VBS To achieve orderly access DP World considers it important to require carriers to pay a nominal subscription charge for the level and rights of access they require and to issue ldquono showrdquo and ldquolaterdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay lsquoon timersquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs

143 The VBS is essentially an ldquoappointment bookrdquo to assist transport carriers to

organise themselves more efficiently leading to a reduction in waiting times at the container terminal The VBS divides all working days into time periods containing a pre-determined number of timeslots The timeslots represent the number of import and export containers that can be handled in that period The number of timeslots in a day is determined by expected carrier demand and the availability of labour and equipment Carriers are then able to book timeslots for collection or delivery of containers

144 The alternative is random access to container terminals by carriers and significant

truck queues with associated demurrage costs which are ultimately paid for by the end user

145 At DP World Sydney the VBS offers transport carriers the ability to access an

internet based computer system or telephone bureau for the purpose of booking time slots for those carriers who do no wish to use the computer system The VBS in its present form offers access on a transparent and equitable basis to all carriers encourages the efficient movement of containers from the ship through the terminal and onto customers and vice-versa encourages innovative practices which are beneficial to terminal efficiency road congestion and the overall cost of the supply chain The ldquono showrdquo and ldquolaterdquo fees encourage these operational practices and efficiencies

146 DP World has adopted a class structure with an annual subscription for access

because this system allows carriers to determine what access is required for their business while providing the industry significant level of transparency in terms of access costs

147 All carriers have an equal opportunity to subscribe to any of the three classes of

access to the VBS (bearing in mind that smaller carriers are allowed to consolidate

Page 19 of 48

their subscriptions in order to share the cost of a B Class subscription) and equal access to timeslots amongst carriers of the same class

148 Annual fees are payable in advance Table 3 sets out the various carrier classes

currently in operation at each terminal and the applicable subscription fees for each class There are no annual limits on the number of slots carriers can book

Table 3 DP World Sydney ndash Current carrier classes and VBS deposit and registration fees for the year commencing 1 July 2005

Terminal Carrier Classes Price Number of active

carriers at Feb 06 Port Botany New South Wales

B Carrier ndash online internet access with high service levels

$2922150 (Non-refundable deposit) No fixed upper limit on annual time slots1

28

A Carrier ndash online internet access with standard service levels

$133400 (Annual registration fee) No fixed upper limit on annual time slots2

162

AB Carrier ndash access via the PampO Phone Booking Bureau with standard service levels

$66760 (Annual registration fee) No fixed upper limit on annual time slots3 39

149 Any carrier selecting the ldquoBrdquo classification is encouraged to also consider the ldquoArdquo

classification unless they are confident of utilising a high level of timeslots that would render the higher subscription fee as attractive per timeslot

1410 In addition to the VBS annual subscription fees the carrier access arrangements

provide for the levying of a no-show fee on carriers who fail to arrive for slots they have booked in the amount of $110 per time slot The terminal also charges carriers late fees of $55 per slot if they fail to arrive for a slot booking within the nominated time zone No fees are charged where a carrier is unable to meet the time slot due to delays caused and acknowledged by DP World Australia or where delays are caused by circumstances genuinely outside of the carrierrsquos control DP World Australia also has the discretion to and does waive ldquono showrdquo and ldquowrong zonerdquo fees in the interest of maintaining a good working relationship with carriers Failure by carriers to pay these ldquono showrdquo and ldquowrong zonerdquo fees may lead to them being prevented from making further bookings ldquoNo showrdquo and ldquowrong zonerdquo fees are the means by which DP World ensures that access to itrsquos terminals is provided in the most efficient manner to all 1carriers as late carriers cause delays for those carriers that are on time

1 No fixed upper limit on annual timeslots ndash Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 2 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 3 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release

Page 20 of 48

1411 The ldquono showrdquo and ldquowrong zonerdquo fee structure was introduced following

consultation with carriers It was originally $20 per late arrival (in Victoria where VBS first commenced) but this is proved to be ineffective in disciplining carrier conduct In response to requests from many carriers DP World increased the ldquono showrdquo fee to $110 The fees also discourage carriers from the practice of overbooking slots which they have no intention of using and preventing other carriers from using those slots

1412 The actual cost of a truck turning up late (Wrong Zone) or not turning up at all (No

Show) is the cost of planned resources (labour equipment etc) based on the VBS demand (number of containers expected to handle during a time period) not being utilised during the time period they are employed

1413 Adjacent to each time zone are grace periods one prior to the time zone and one

following the time zone These grace periods and the trucks arrival time for processing determine the status of the time slot ie arrived on time or arrived late (Wrong Zone) Currently the grace period following the time zone is set at 20 minutes which means that if a truck arrives later than one hour and 20 minutes after the start of the time zone then the time slot will be initially recorded as a Wrong Zone Following the completion of each VBS day Wrong Zones are reviewed and any penalty waived if any of the following determined

a) The terminal is aware that it has contributed to a truck arriving late for the time

slot ie the terminal has previously delayed the truck or carrier on an earlier time slot or

b) The carrier advises that they arrived late due to an unforeseen circumstance eg a break down of the truck

We request that the information in 1414 be kept confidential

1414 Omitted for reasons of confidentiality

1415 Officers at DP World Sydney have regular conversations with carriers in respect of

the waiver of No Show fees as well In certain instances DP World may agree to waive fees prior to an invoice being issued

1416 For both Wrong Zone and No Show fees the terminal provides a grievance

process for carriers who have been issued invoices and do not agree that the fee has been issued fairly The carrier has the opportunity to provide the terminal with an explanation and should officers at DP World Sydney agree that there has been an error in the issuing of the fee or an unforeseen circumstance is explained the terminal will credit the invoice

15 The Tribunal invites stakeholders to indicate the costs of providing the services of

rail windows and rail paths to rail operators

151 Rail windows are based allowance on a rail terminal performance KPI of 30 container moves per hour and charged at $360 per hour A shunting time allowance of 15 mins per window is not charged Additional lifts canare provided by increasing the lifts per hour by applying more machinery at no additional cost

152 The cost of providing terminal rail operations is higher than road operations at DP

World Sydney The RTG mode of operation requires a container to be moved to or from the container stack For road containers the truck takes the export container to the stack and travels to the stack to pick up an import container For a rail container a terminal internal transfer vehicle (ITV) is required to be used by the terminal to move the container from the train to the stack (export containers) or

Page 21 of 48

the stack to the train (import containers) This is not required for container being received or delivered by road

153 For import rail containers there is a loss of efficiency for the vessel discharge

operation in order to stack rail containers separately for delivery to the train For each discharge point in the terminal extra resources are required There is extra administration costs in having to make alternate arrangements to separate these import rail containers

154 Despite the fact that the delivery of containers to rail is higher than road the

terminal seeks only a partial recovery of costs in order to encourage the use of rail in the port in line with the NSW Government objectives

155 There is a management cost of setting up and operating the rail windows This is

similar to the cost of operating a VBS

156 There is additional security infrastructure costs for a rail operation to ensure the terminal meets their legislative security requirements The more terminal entry points created the higher the cost to replicate these security infrastructure requirements

16 The Tribunal invites comment from stakeholders on the planned or mooted

development and expansion of the various intermodal terminals in Sydney and the extent to which this is expected to ease congestion in the landside supply chain at Port Botany

161 DP World supports the development and expansion of an intermodal terminal

network to facilitate an increase in the use of rail as the means of container transport This has the potential flow on benefit of minimising the growth in the number of trucks requiring to access the Port Botany area as port volumes continue to grow

162 Transport between the Botany terminals and the inland intermodal terminals

should be by rail or trucks operating a stack (bulk) run road out during off peak periods eg night shifts or weekends The use of Super B Double trucks would assist with the efficiency of these off peak stack run outs

17 The Tribunal invites comment on the likely effect of the expansion plans at Port

Botany on access to the port terminal during peak periods and efficiency along the supply chain

171 Improving the two-way running or back-loading of trucks has to be a priority in

order to maximise access opportunity at the terminals and efficiency along the supply chain It is likely that a third and separate stevedoring facility will only increase the difficulty of improving truck utilisation over and above the current levels by the increased logistics complexity of coordinating timely access to three terminals rather than two

172 A third stevedore will lead to the same port volume being spread over three

operations While it is resource levels that determine available slots DP World has found that during periodic decreases in volumes carriers favour daytime runs to the terminal as opposed to night time

173 The expansion plans will have a negative impact on rail transport timeliness and

access requirements to DP World Sydney if the requirements to breaksplit trains and shunt sections of trains into multiple terminals continues This will undermine the overall rail effectiveness and the NSW Government rail objectives by the unnecessary increase of splitting trains

Page 22 of 48

18 The Tribunal invites comment on the likely effects of expansion of the intermodal network in Sydney on access to the port and efficiency along the supply chain

181 This is a similar issue to point 16 above

19 The Tribunal invites comment on the likely impact of a peak pricing system along

the lines of the FIC on access to the port terminals and the efficiency of the Port Botany supply chain

191 We understand for the NSW Governmentrsquos announcement (31 May 2007) that the

FIC is no longer being proposed

192 Table 4 shows the average percentage of road containers that are handled by shift at DP World Sydney based on a 6 day x 24 hour receival and delivery operation for the past 4 years The figures indicate that there is surplus capacity on both evening and midnight shifts when compared to day shift Note that the percentage of road containers handled has increased on day shift relative to the combination of evening and midnight shifts This has been due to terminal efficiencies creating increased capacity during day shifts and the road carriers utilising this capacity

193 This is further emphasised in Figure 4 which shows the trend over time for day

shift containers handled has increased from 2005 evening shift has decreased and midnight shift has not changed significantly

Table 4 DP World Sydney ndash Percentage of Daily Road Container Volume handled by Shift

Year Midnight Shift (2230 ndash 0630hrs)

Day Shift (0630 ndash 1430hrs)

Evening Shift (1430 ndash 2230hrs)

2007 YTD 21 47 32

2006 23 45 33

2005 22 43 36

2004 19 44 38

194 Year to date April 2007 figures may reflect the seasonal trend for lower volumes in this period

Figure6 DP World Sydney ndash Road Volume trendlines by shift 2005-07

Page 23 of 48

20 The Tribunal invites comment on the likely impact of the expansion of the freight

rail network in Sydney on the number of containers moved by rail and on congestion at the port

201 The importance of increasing the proportion of containers moved by rail is

recognised and supported by DP World Sydney

202 To complement the expansion of the rail freight network upgrade the terminal is developing plans to increase the length and the number of sidings within the terminal Over the next three years the terminal is planning to spend an estimated $20million on internal rail infrastructure machinery and systems The terminal upgrade will ensure DP World Sydney has the infrastructure in place to meet a target of 40 throughput by rail

203 The expansion of the freight rail network needs to take into account The access

to each of the terminals especially the access to DP World Sydney where by the terminal has a distinct disadvantage in relation to its competitor

21 The Tribunal invites comment on the impact on the supply chain on ARTC

managing the metropolitan freight rail network

211 Management of freight rail infrastructure is ARTCrsquos core business and will bring additional management expertise and focus to the task of reforming operations on the Port Botany rail infrastructure

212 For ARTC to control the MFN (Metropolitan Freight Network) makes sense from

the point of view they can make informed decisions for both inbound and outbound Port services based on the wider NSW Rail Freight Network operation

213 The ARTC proposal to co-ordinate services by performing the full Network Control

Function (both signalling and Train Control) from the one centralised centre for the Southern Sydney Freight Line (SSFL)MFN and Port Botany emphasises their commitment to ensure safety communications and network management is their primary objective

214 ARTC are focussed on improving the efficiencies at the Port and bring to the

industry fresh innovative ideas to improve the overall capacity on the rail network ARTCrsquos willingness to assist and eagerness to invest in the rail infrastructure brings a breath of fresh air to the industry and specifically the stevedore operations ARTC can integrate the Botany line into its overall investment program paving the way for additional investment to improve the efficiency of operations on the Botany rail line and at the port-rail interface

22 The Tribunal invites comment on the following questions in relation to costs of the

VBS

22a What costs underpin the VBS access charges levied by the two stevedores How are the VBS access charges set

22b1 Refer to Question 14 The revenue from VBS charges account for a very

small proportion of DP Worldrsquos total container terminal revenue For the year ended 31 December 2006 they accounted for 13 of total revenue Of that 13 approximately 30 was for No Shows and Wrong Zones

22b What costs are incurred by the stevedores in moving a container from the

wharf to a truck or train

22b1 DP World Sydney is operated as an integrated business servicing ships road and rail within the context of a national business We do no separately account for the costs of each discrete activity Information on

Page 24 of 48

overall costs is provided to the ACCC and published on an industry basis in the ACCCrsquos Container Stevedoring Monitoring Report

22b3 Wharf to truck activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the VBS to provide orderly access for road carriers

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal space to allow truck drivers to park their vehicles in order to unlockset up their twist locks and processing of containers

bull Processing of the container

bull System to manage the truck movement within the terminal

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the truck by RTG or forklift

bull Provision of terminal area for truck drivers to safely leave their vehicle to lock the twist locks on their trucks check the container seal number and check the container for damage

bull Provision of terminal area for AQIS operation and infrastructure

22b3 Wharf to train activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the Rail Windows to provide orderly access for operators

Page 25 of 48

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal area for rail lines associated rail infrastructure and train inspection requirements within the terminal

bull Processing of the container

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the ITV by RTG or forklift

bull Internal Transfer Vehicle (ITV) movement of the container from the yard stack to the rail line

bull Lift of the container from the ITV onto the rail wagon

22c What influences the nature and amount of these costs (for example are they influenced by the type of equipment used by a stevedore Do they fluctuate with the number of containers handled by the stevedores) and how have costs changed over time

22c1 DP World operates very similar Vehicle Booking Systems in Brisbane

Sydney Melbourne and Fremantle where there are differences in volume through the terminals The only difference in subscription between the terminals are the ldquoB Classrdquo carrier subscriptions The annual subscription is influenced by the number of carriers seeking this class and the hourly allocation of slots to their class given the number of subscriptions In addition Melbourne operates a straddle facility and Brisbane operates a forklift reachstacker Therefore the cost of the Vehicle Booking System is not dependant on or mode but the annual subscription to ldquoB Classrdquo carrier depends on competition for that carrier class

22c2 An annual subscription fee per class which is a characteristic of DP

Worldrsquos VBS does not normally increase with volume At DP World Sydney subscription fees have not been increased since 2003

22c3 Overall landside costs have increased with increases in wages and

salaries (4 pa) property costs (substantially ahead of cpi) fuel and other general costs These increases have been offset to some extent by increases in productivity Industry costs history is also available publicly in the ACCC Container Stevedoring Monitoring Reports

22d Where do the port landside costs stop and the VBS costs start

22d1 Prior to the Entry to Operational Yard (see Attachment 2) the truck is

under the influence of the VBS and also under the influence of the external environment which includes but is not limited to port and metropolitan road conditions container clearance issues truck arrival peaks and troughs truck preparedness processing of the container to the handled by the terminal and maritime security requirements

It is DP World Sydneyrsquos view that the port landside costs stop and the VBS costs start at the choke point

22e Do the VBSsrsquo penalty charges reflect the cost to stevedores What should

they reflect

22e1 The primary rationale for the penalty regime is to seek to modify carrier behaviour

Page 26 of 48

22e2 However it is also the case that a ldquono showrdquo or ldquowrong zonerdquo gives rise to a lost opportunity cost to the terminal Resources made available but not utilised may be wasted

22e3 DP World considers the achievement of orderly access to its terminal as

a primary objective of the VBS To achieve orderly access PampO considers it important to issue ldquono showrdquo and ldquowrong zonerdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay ldquoon timerdquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs The alternative is random access to container terminals by carriers and significant truck queues with associated demurrage costs which are ultimately paid for by the end consumer

22f Should there be different charging arrangements for empty containers that

are returned to the port as opposed to full export containers

22f1 DP World Sydney terminal handles a full container in a similar way to an empty container using purpose built container stacking equipment controlled by a DP World employee A container occupies the same amount of space whether it is full or empty This leads to the same cost for the handling of a single empty container as a single full container Single empty containers returned to the port should be charged a similar rate to full containers

22f2 To reduce the cost of handling empty containers in the terminal destined

for the same port on the one vessel and that are of the same size the terminal in conjunction with the shipping line and the shipping linersquos nominated carrier work together to create a bulk run of empty containers The bulk run maximises the number of empty containers that are handled in a specific time period The terminal dedicates resources to thee bulk runs and also provides priority access to the transport carrier in order to create efficiency and an economy of scale In this way the cost of returning an empty container via a bulk run is reduced

23 The Tribunal invites comment on the following questions in relation to the different

pricing regimes of the two stevedores

23a Why do the stevedores have different pricing schemes for their VBSs

23a1 We do not know why Toll-PatrickAsciano has adopted the pricing scheme it has

23a2 In order to improve earlier versions of its VBS in the mid-1990s DP

World (PampO) introduced categories of carriers and began charging differential subscription fees for carriers registering to use the VBS depending on the level of access required by the carrier Prior to this change some carriers were engaging multiple computer terminals to the detriment of other carriers and it had become clear that a level of differentiation would be in all carrierrsquos interests The different classes of carrier access were introduced to ensure the most balanced overall outcome The level of differentiation is an annual choice of access levels available to all carriers regardless of size Under this approach different subscription fees are charged for each category but all carriers registering in a particular category pay the same fee Our view remains that an annual subscription as opposed to a pay as you go is far less of an administrative burden on both the carriers and the terminal

Page 27 of 48

23a3 There are no restrictions upon carriers wishing to obtain a certain carrier category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for the same carrier categories as larger carriers Smaller carriers may also apply for consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst charging the burden of the cost of that subscription

23a4 Subscription fees based on differences in class are designed to

encourage choice whilst at the same time communicating a level of transparency with terminal pricing and service

23b Do the different pricing schemes influence the efficiency with which

transporters obtain access to the terminals

23b1 We do not believe this to be the case

23c Would standardisation of charges be more appropriate

23c1 It is our understanding that it would be unlawful for a supplier itself to standardise charges by reason of Section 45 of the Trade Practices Act This may be something that Government wishes to consider

24 The Tribunal invites comment on the following non-price access issues to consider

in relation to the operation of the VBSs

24a What effect do access rules and conditions and non price constraints have on booking a timeslot How to the stevedores use their discretion in determining access and charges and what impact does this have

24a1 The introduction of different categories of access stages the carriersrsquo

access to the VBS for the purposes of booking timeslots ldquoB classrdquo carriers are given exclusive access to a pool of slots between 0730-0820 During this period they are subject to zone limitations which restrict carriers to a maximum number of slots for any given hour The zone limit ensures all carriers within that carrier class are given fair and equitable access to the initial release of slots After the initial booking period the zone limit is lifted and carriers are permitted to book any number of unused slots per hour from those remaining in their pool Similar arrangements exist for A class carriers culminating in the cascading of all remaining slots from all segregated pools into a general pool at 1030 for access by all registered carriers

24a2 There are not restrictions upon carriers wishing to obtain a certain carrier

category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for a consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst sharing the burden of the cost of that subscription

24b What are the stevedoresrsquo obligations with regard to access to port facilities

and what should they be

24b1 Without providing an analysis of our obligations under law in general terms we are required to provide access to carriers on an equitable basis recognising the competitive environment we operate in

Page 28 of 48

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

bull The terminal is able to carry out bulk moves while maintaining service levels to other general carriers

bull Provides choice to carriers in terms of access as well as providing transparency to industry

bull States subscriptions fees in a public document which are transparent to industry

bull Increase slot allocation to road users based on irregular shipping schedules and

bull While not referred to in the Carrier Access Arrangements (see attachment 1) all B class carriers are allowed to engage in a process called ldquoexport taggingrdquo Export tagging involves a carrier booking an import timeslot in ePorts which will give them access to the terminal A carrier is then able to bring and export container on the truck that is arriving to collect the import container without booking a slot for that export container (during most timeslots in the day) The purpose of this flexibility to carriers is to increase two-way running which reduces costs to carriers and decreases the number of trucks in the port community

9 The Tribunal asks stakeholders to comment on the variability of average

turnaround times across the major ports and the variability of turnaround times faced by individual transport operators at Port Botany itself The Tribunal also invites comment on how important predictability of turnaround times is to transport operators relative to average turnaround times at Port Botany The Tribunal further invites comment on why turnaround times are higher for Port Botany compared to Melbourne Adelaide and Fremantle

91 The precise nature of operations differs between the ports and between the

terminals operated at those ports These differences arise because of the range of shipping lines that arrive at the various terminals and the volumes of containers and type of cargo going through each terminal There are also differences in the container yard handling equipment yard configurations at each terminal and hours of operation resulting in differences in the way each terminal operates These differences result in variations amongst each terminalrsquos service performance levels

92 During 2002 DP World Sydney management met with a representative group of

carriers to discuss the VBS and access arrangements at the terminal A common view of the carriers was that they would like consistency to truck turn times and that 60mins (carrier measurement) is acceptable The outcome from these meetings was that DP World introduced three internal KPIs

bull Truck processing to truck complete measurement ndash 38 mins average

bull TTTs of 60 mins or less to be 90 to total trucks

bull TTTs of 120 mins or more to be 1 or less

93 Figure 4 below shows the percentage of truck turn times that are 60 minutes or less at DP World Sydney There is a noted improvement in during mid 2005 from an average prior to this time of 73 to an average during 2006 of 85 This indicates that the predictability of the truck turn times has improved during the life of the VBS

Page 12 of 48

Figure 4 DP World Sydney ndash Percentage of Truck Turn Time under 60 mins

DP World Sydney - Percentage of Truck Turn Time under 60 mins

50

60

70

80

90

100

Jan-04

Mar-04

May-04

Jul-04

Sep-04

Nov-04

Jan-05

Mar-05

May-05

Jul-05

Sep-05

Nov-05

Jan-06

Mar-06

May-06

Jul-06

Sep-06

Nov-06

Jan-07

Mar-07

94 Figure 5 below shows the terminal truck turn time and the stevedoring volume since July 2003 at DP World Sydney Note that the volumes are hidden on the left Y axis for commercial reasons As a result of terminal improvements and putting in place the KPIs described above the average TTT performance has improved (right Y axis) whilst at the same time the terminal volume has increased (left Y axis)

Figure 5 DP World Sydney ndash Truck Turn Time and Container Volume

95 DP World operates in all five major ports in Australia and has three different modes of operation namely Straddles in Melbourne and Adelaide RTGrsquos in Sydney and Fremantle and Forklift and Reach-stacker in Brisbane The Variability in TTT between ports is attributed to a number of factors including but not limited to the site processes and physical constraints of each facility

96 The measurement of TTT differs mainly due to

a) the layouts of in-gates and its approaches and

Page 13 of 48

b) the measurement of the job steps which apply to a truck from arrival to departure due to (a)

97 All the above terminals have different truck parking arrangements within and

outside the terminal which impacts TTT Across the board TTT is measured from job processing to job complete (98c to 98e below) however the physical layout and mode can influence when processing commences

98 The process of truck management in simple terms is

a) Pre-arrival of trucks

b) Validation of time slots

c) Processing of job (Manual but if automated it takes effect in b above)

d) Enter the operational yard

e) Job transact and complete (by straddle RTG or Forklift Reach-stacker) and

f) AQIS check for full trucks and depart (gate-out)

99 Depending on the physical layout and provision of sufficient space to hold trucks within the terminal boundary or otherwise the distribution of trucks varies through steps 98a to 98c above

910 At DP World Sydney the equivalent hourly truck volume can be held in the

terminal entry marshalling area therefore multiple trucks can enter the terminal park and be processed by terminal staff Post processing all time spent in the marshalling area forms part of the TTT whilst the truck has not necessarily entered the operational yard (see Annexure 2)

911 At DP World Melbourne on the other hand due to restricted space within the

terminal trucks are normally held outside and a small number is constantly drip fed into the terminal (controlled rate of entry) These trucks then approach the processing points (6 lanes x processing booths) further which they directly enter the operational yard and the TTT is measured from this point

912 DP World Fremantle does not have a truck holding area within the terminal which

means the truck enter the terminal and queue at the Entry to Operational Yard Immediately after being processed the truck enters the terminal yard Therefore unlike Sydney time from Entry to Operational Yard is time historically not published Therefore TTT between DP World Sydney and DPW Fremantle are not comparable

913 DP World Fremantle is also an RTG operation similar to DP World Sydney

However the physical layout and the resulting entry arrangements differ Due to restricted space within the terminal the trucks are normally held outside and constantly drip fed into the terminal (controlled rate of entry) The trucks operate through 3 lanes within the terminal and truck turn time is measured at this processing point when the trucks actually enter the operational yard

914 DP World Adelaide is a straddle operation similar to DP World Melbourne

However its physical layout and resulting entry arrangement is different to that of DP World Melbourne and has some similarities with what takes place in Sydney The hourly truck volume can be held within the terminal and the TTT is measured from entry into the terminal main gate to departure from the terminal main gate The measure differs from the other facilities on both entry are exit gates

915 The benefits of this TTT data is not so much the raw data itself but more so the

long term trend in the data If TTT is constant or even improved during periods of volume growth then this reflects a firm commitment to the landside process Continuous improvement reflects a commitment to landside efficiencies

Page 14 of 48

916 TTT is influenced by the mode of operation the Gate In infrastructure and volume

of containers required to be handled

917 The RTG mode of operation requires the truck to travel to the yard stack where the container is located or assigned as opposed to the straddle operation where the straddle comes to the truck that is parked in a bay external to the stacking area The mode of operation at DP World Sydney generally results in a truck with multiple containers being serviced by multiple RTGs and also having to travel to multiple yard locations At each of these yard locations there will be a different level of demand on the particular RTG covering the area This will result in variations in the time it will take to service the truck in that particular area and therefore will influence the truck turnaround time

918 In comparison a terminal running a straddle operation could employ a different

straddle to handle each of the containers processed for the truck

919 The mode of operations employed by container terminals have various strength and weaknesses and need to be considered based on many factors in a Port (ie not just the landside interface) but both modes can contribute to variability

10 The Tribunal invites comment on how truck turnaround times are currently

measured by supply chain participants and how they should be measured The Tribunal further invites comment on the extent to which the stevedores provide access to their facilities at the specific times booked on the VBS

Truck Turn Time (TTT)

101 DP World Sydney currently measures truck turn times from the time the containers on a truck are processed to the time the last container is completely loaded onto the truck (import containers) or discharged from a truck and landed in the terminal (export containers)

102 TTT is directly influenced by the number of containers to be handled by an RTG

terminal on a truck run ie a higher number of containers results in a longer truck turn time on average This due to the truck having to potentially visit multiple locations within the RTG terminal

103 The reason the container Terminal does not measure the time following

completion of loadingdischarging container from truck is measure regulatory bodies (ie AGIS) have commenced inspection of containers on terminal exit gate which is beyond the control of the container terminal

104 The process time is used to measure the start of the truck turn time as this is the

closest time to the truck being in the terminalrsquos control

105 Trucks that take advantage of the autogate processing (currently 25 of trucks) actually start the truck turn time as they come through the terminal gate as this is where the transponder reader is located DP World Sydney support the increase of the autogate processing and the result that the truck turn time starts at the gate For trucks that do not use the autogate processing opportunity the terminal does not start the truck turn time at the gate as the truck driver may not move efficiently to have the container processed

106 Carriers often use TTT measured from the time the truck services at the standby

queue or the arrival of the truck at the zone queue which are waiting for the next time zone to open

107 In relation to standby queue the CAA clearly stipulates that the use of this system

does not guarantee immediate call-up to the terminal in priority to trucks that have booked a time slot

Page 15 of 48

108 In relation to TTT measured from arrival at the time zone queue the fact that the truck has arrived prior to the commencement of the zone opening is purely a decision of the transport carrier and is beyond the control of the Container Terminal and is not supported by DP World

Container Turn Times

109 DP World Sydney currently measures container turn time from the time the

container is processed to the time the container is loaded onto the truck (import container) or discharged from a truck and landed in the terminal (export container) Over the last 5 years the transport regulators have allowed truck operators to operate larger trucks thereby ultimately improving the efficiency of road transport As transport operators increase the use of larger trucks (capable of carrying multiple containers) the handling of these trucks produces a multiple handling of containers on the same truck at the terminals For example in the past one would handle one container per truck and in that case the CTT and TTT were almost identical With multiple containers on trucks the difference between the CTT and TTT is increasing To be able to benchmark this across a port and other ports becomes hard with TTT due to the ever changing ratio of containers per truck (depends on percentage of large truck operators) firstly within the same port and secondly between different ports Therefore CTT enables us to benchmark the measurement on common grounds across all our operations around the country

Access Times at DP World

1010 DP World Sydney divide the day into hourly time zones within the VBS The time

zones start on the house (eg 0700hrs) and complete at the end of the hour (eg 0759hrs) There is a time zone board located at Simblist Road which indicates which time zone is open Trucks queue at this point waiting for the board to change each hour During daylight hours on average there are 15 trucks waiting for the time zone to open The trucks then make their way to the terminal in gate located on Friendship Road once the zone is open

11 The Tribunal invites comment on the choice between a system where container

numbers are nominated in advance thereby offering the possibility of faster turnaround times or not providing container numbers which would provide road carriers with greater flexibility Or would industry participants prefer a system that allows the choice between both

Import Timeslots

111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the import container number in a timeslot booking up to the start of the time zone The disadvantage for the terminal and the carrier is that this flexible system arrangement does not allow the terminal the chance to reposition the container to a position that will minimise the number of containers that have to be moved (known as ldquoconsolidation movesrdquo) in order to access the container that is to be delivered to the truck once the truck has been processed and is in position for loading The more consolidation moves the terminal has to do to load an import container to a truck the longer the truck turn time will be

112 Undertaking consolidation moves prior to truck arrival would provide the opportunity

to decrease truck turn time

113 To achieve a further reduction in truck turn times and a reduction in cost of delivering a container the terminal would need to control the order in which the import containers are delivered This occurs in other ports in the world

Controlling the order of import deliveries

114 The current arrangement where the shipper controls the order of import containers

to be delivered from the terminals results in extra costs incurred by stevedores and also decreased efficiencies The longer a container remains in the terminal (an

Page 16 of 48

increase in the dwell time) results in increased consolidation (rehandles) undertaken by terminal equipment and an increase in the time taken to load a container to a truck or train

Matching of resources to meet demand

115 The terminal allocates the resources required based on the demand or the

number of timeslots released This occurs 24 hrs in advance

116 Carriers who book timeslots and do not meet their commitment (No Show) results in the terminal resources to be under utilised at certain times and creates an opportunity loss There is also an opportunity lost by another carrier to utilise the time slot for each No Show

117 Carrier who book timeslots and arrive late for their commitment (Wrong Zones)

results in terminal resources being under utilised at times and over utilised at other times The troughs in terminal resource utilisation result in an opportunity loss and the peaks result in a decrease in efficiency (increased truck turn time) or increased cost (increased resources applied) The increase in truck turn time has an impact on carriers who arrive on time for their time slot

118 The current VBS allows for carriers to arrive at the terminal to deliver or pick up a

container without committing to a time and container number thus not enabling the terminal to completely plan the required resources to meet the demand This is termed unplanned work The Standby Queue export tagging by B Carrier no advanced deadline for entering an import container number prior to the time zone and no requirement for an export container number being entered into a time slot booking results in an increase in unplanned work Unplanned work results in peaks in the work required by the planned resources and a decrease in efficiency

119 Rail also has similar problems

1110 By changing this arrangement and giving control to the stevedores to determine

the order of container delivery from the terminal will reduce the costs incurred by the terminal and decrease the turnaround time for trucks

Export Timeslots

1111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the export container number in a timeslot booking up to the start of the time zone It also allows an export time slot to be processed without a container number entered in the time slot booking The container number in then entered by the RampD Clerk at the terminal This often results in human error by the truck driver or the RampD Clerk resulting in delays to trucks This practice also eliminates the opportunity for the carrier to use the automatic processing described below in Question 12 To maximise the use of automation and eliminate human error the export container number needs to be a mandatory field to be updated in the time slot booking by a nominated time prior to the start of the time zone eg 2 hours prior to the start of the time zone

12 The Tribunal invites comments on the increased use of ICT and automation and

any other ways to reduce turnaround times and otherwise improve supply chain efficiency

121 DP World support and are driving the increased use of automation for the

processing of trucks DP World have developed and currently make available an automated truck processing system for carriers who use ePORTS to book and manage timeslots The percentage use of this system at DP World Sydney by carriers averages about 25 of total truck movements excluding stack run trucks

122 This system requires the purchase of a transponder unit from the terminal at the

cost that the terminal purchases the unit plus GST Currently the units are sold to

Page 17 of 48

the carrier for $12050 Also required is access to an eGATE screen in ePORTS The process for carriers wanting to move a number of containers on a transponder run involves

a) Booking through EPORTS the required number of time slots in a time zone

For example if a transport carrier wanted to deliver two export containers and collect one import container on a single truck run it needed to book three slots and

b) Setting up the transponder by inputting the slots truck number container numbers and whether they are import or export containers in the transponder booking screen in ePORTS

123 The benefits for carriers of using this automated processing include

a) The processing occurs earlier (ie at the gate as compared to in the RampD Office) therefore this decreases the chance of Wrong Zones being incurred

b) No need for the truck driver to present documentation at the RampD Office therefore reducing the truck turn time by avoiding any potential queues

c) No interaction between the truck driver and the RampD Clerk therefore decreasing human error during processing and causing further delays

d) As the processing occurs at the gate the trucks can skip ahead of other trucks where their drivers have to manually process in the RampD Office effectively jumping the queue

e) Allows reprogramming of trucks up to 15mins before the end of the time zone (eg 0645 for an 06 slot) without the truck driver needing the Delivery Order in his possession

f) Provides the carrier with the ability to educate their customers to provide the Delivery Orders in a timely manner in order to lodge them at the terminal

g) Electronic copies of the Delivery Orders (excluding scanned copies of originals) can be forwarded to the terminal via email therefore eliminating the need to physically lodge them

h) Enables the carrier to take all advantage of Electronic Import Delivery Orders (eIDOs) that are currently being used by Evergreen Marine at DP World Sydney Other shipping lines will move to the use of eIDOs in the future

13 The Tribunal invites stakeholders to comment on VBS capital and operating costs

and to assist it to distinguish between stand-alone VBS costs and those shared with other stevedoring activities

131 It is important to distinguish between the capital and operating costs of operating

the VBS and the costs of operating the landside interface ie delivering containers to and from trucks

132 The costs of a VBS comprise the following components

bull IT development and maintenance costs and

bull Management and administration time to manage and administer the system

These costs are low relative to the costs of actually providing the services within the terminal ndash loading and unloading the trucks

133 Having a system which requires the terminal to provide a guaranteed number of

slots per hours is to the disadvantage of the terminal Terminal operations are by their nature unpredictable due to the irregular arrival of ships Having to guarantee a number of slots which carry with it a high expectation of performance in terms of TTT tends to force the terminal to set the number of slots at a level which includes a risk mitigation factor against all things not going to plan The net result of this is

Page 18 of 48

that the terminal tends to effectively oversupply equipment and labour increasing its costs The impact of this is far more significant than the isolated costs of running the actual vehicle booking systems

134 Direct VBS costs have nothing to do with ship or rail operations

135 The container yard is run as a single operation servicing ship road and rail By

this means while there are practical limitations we seek to pool resources to maximise the overall efficiency of terminal operations particularly to absorb the peaks and troughs of demand across the operations as a whole This effective sharing of costs improves overall efficiency and results in lower costs to the benefits of users as a whole We anticipate that systems and technology improvements will see greater use of such pooling and greater overall efficiency as a result

14 The Tribunal invites stakeholders to comment on VBS access and penalty charges

and the level of transparency of access through the stevedoresrsquo VBSs

141 The VBS facilitates the provision of orderly access to DP World Sydney Terminal for over 200 individual carriers

142 DP World considers the achievement of orderly access to its terminals as a

primary objective of the VBS To achieve orderly access DP World considers it important to require carriers to pay a nominal subscription charge for the level and rights of access they require and to issue ldquono showrdquo and ldquolaterdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay lsquoon timersquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs

143 The VBS is essentially an ldquoappointment bookrdquo to assist transport carriers to

organise themselves more efficiently leading to a reduction in waiting times at the container terminal The VBS divides all working days into time periods containing a pre-determined number of timeslots The timeslots represent the number of import and export containers that can be handled in that period The number of timeslots in a day is determined by expected carrier demand and the availability of labour and equipment Carriers are then able to book timeslots for collection or delivery of containers

144 The alternative is random access to container terminals by carriers and significant

truck queues with associated demurrage costs which are ultimately paid for by the end user

145 At DP World Sydney the VBS offers transport carriers the ability to access an

internet based computer system or telephone bureau for the purpose of booking time slots for those carriers who do no wish to use the computer system The VBS in its present form offers access on a transparent and equitable basis to all carriers encourages the efficient movement of containers from the ship through the terminal and onto customers and vice-versa encourages innovative practices which are beneficial to terminal efficiency road congestion and the overall cost of the supply chain The ldquono showrdquo and ldquolaterdquo fees encourage these operational practices and efficiencies

146 DP World has adopted a class structure with an annual subscription for access

because this system allows carriers to determine what access is required for their business while providing the industry significant level of transparency in terms of access costs

147 All carriers have an equal opportunity to subscribe to any of the three classes of

access to the VBS (bearing in mind that smaller carriers are allowed to consolidate

Page 19 of 48

their subscriptions in order to share the cost of a B Class subscription) and equal access to timeslots amongst carriers of the same class

148 Annual fees are payable in advance Table 3 sets out the various carrier classes

currently in operation at each terminal and the applicable subscription fees for each class There are no annual limits on the number of slots carriers can book

Table 3 DP World Sydney ndash Current carrier classes and VBS deposit and registration fees for the year commencing 1 July 2005

Terminal Carrier Classes Price Number of active

carriers at Feb 06 Port Botany New South Wales

B Carrier ndash online internet access with high service levels

$2922150 (Non-refundable deposit) No fixed upper limit on annual time slots1

28

A Carrier ndash online internet access with standard service levels

$133400 (Annual registration fee) No fixed upper limit on annual time slots2

162

AB Carrier ndash access via the PampO Phone Booking Bureau with standard service levels

$66760 (Annual registration fee) No fixed upper limit on annual time slots3 39

149 Any carrier selecting the ldquoBrdquo classification is encouraged to also consider the ldquoArdquo

classification unless they are confident of utilising a high level of timeslots that would render the higher subscription fee as attractive per timeslot

1410 In addition to the VBS annual subscription fees the carrier access arrangements

provide for the levying of a no-show fee on carriers who fail to arrive for slots they have booked in the amount of $110 per time slot The terminal also charges carriers late fees of $55 per slot if they fail to arrive for a slot booking within the nominated time zone No fees are charged where a carrier is unable to meet the time slot due to delays caused and acknowledged by DP World Australia or where delays are caused by circumstances genuinely outside of the carrierrsquos control DP World Australia also has the discretion to and does waive ldquono showrdquo and ldquowrong zonerdquo fees in the interest of maintaining a good working relationship with carriers Failure by carriers to pay these ldquono showrdquo and ldquowrong zonerdquo fees may lead to them being prevented from making further bookings ldquoNo showrdquo and ldquowrong zonerdquo fees are the means by which DP World ensures that access to itrsquos terminals is provided in the most efficient manner to all 1carriers as late carriers cause delays for those carriers that are on time

1 No fixed upper limit on annual timeslots ndash Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 2 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 3 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release

Page 20 of 48

1411 The ldquono showrdquo and ldquowrong zonerdquo fee structure was introduced following

consultation with carriers It was originally $20 per late arrival (in Victoria where VBS first commenced) but this is proved to be ineffective in disciplining carrier conduct In response to requests from many carriers DP World increased the ldquono showrdquo fee to $110 The fees also discourage carriers from the practice of overbooking slots which they have no intention of using and preventing other carriers from using those slots

1412 The actual cost of a truck turning up late (Wrong Zone) or not turning up at all (No

Show) is the cost of planned resources (labour equipment etc) based on the VBS demand (number of containers expected to handle during a time period) not being utilised during the time period they are employed

1413 Adjacent to each time zone are grace periods one prior to the time zone and one

following the time zone These grace periods and the trucks arrival time for processing determine the status of the time slot ie arrived on time or arrived late (Wrong Zone) Currently the grace period following the time zone is set at 20 minutes which means that if a truck arrives later than one hour and 20 minutes after the start of the time zone then the time slot will be initially recorded as a Wrong Zone Following the completion of each VBS day Wrong Zones are reviewed and any penalty waived if any of the following determined

a) The terminal is aware that it has contributed to a truck arriving late for the time

slot ie the terminal has previously delayed the truck or carrier on an earlier time slot or

b) The carrier advises that they arrived late due to an unforeseen circumstance eg a break down of the truck

We request that the information in 1414 be kept confidential

1414 Omitted for reasons of confidentiality

1415 Officers at DP World Sydney have regular conversations with carriers in respect of

the waiver of No Show fees as well In certain instances DP World may agree to waive fees prior to an invoice being issued

1416 For both Wrong Zone and No Show fees the terminal provides a grievance

process for carriers who have been issued invoices and do not agree that the fee has been issued fairly The carrier has the opportunity to provide the terminal with an explanation and should officers at DP World Sydney agree that there has been an error in the issuing of the fee or an unforeseen circumstance is explained the terminal will credit the invoice

15 The Tribunal invites stakeholders to indicate the costs of providing the services of

rail windows and rail paths to rail operators

151 Rail windows are based allowance on a rail terminal performance KPI of 30 container moves per hour and charged at $360 per hour A shunting time allowance of 15 mins per window is not charged Additional lifts canare provided by increasing the lifts per hour by applying more machinery at no additional cost

152 The cost of providing terminal rail operations is higher than road operations at DP

World Sydney The RTG mode of operation requires a container to be moved to or from the container stack For road containers the truck takes the export container to the stack and travels to the stack to pick up an import container For a rail container a terminal internal transfer vehicle (ITV) is required to be used by the terminal to move the container from the train to the stack (export containers) or

Page 21 of 48

the stack to the train (import containers) This is not required for container being received or delivered by road

153 For import rail containers there is a loss of efficiency for the vessel discharge

operation in order to stack rail containers separately for delivery to the train For each discharge point in the terminal extra resources are required There is extra administration costs in having to make alternate arrangements to separate these import rail containers

154 Despite the fact that the delivery of containers to rail is higher than road the

terminal seeks only a partial recovery of costs in order to encourage the use of rail in the port in line with the NSW Government objectives

155 There is a management cost of setting up and operating the rail windows This is

similar to the cost of operating a VBS

156 There is additional security infrastructure costs for a rail operation to ensure the terminal meets their legislative security requirements The more terminal entry points created the higher the cost to replicate these security infrastructure requirements

16 The Tribunal invites comment from stakeholders on the planned or mooted

development and expansion of the various intermodal terminals in Sydney and the extent to which this is expected to ease congestion in the landside supply chain at Port Botany

161 DP World supports the development and expansion of an intermodal terminal

network to facilitate an increase in the use of rail as the means of container transport This has the potential flow on benefit of minimising the growth in the number of trucks requiring to access the Port Botany area as port volumes continue to grow

162 Transport between the Botany terminals and the inland intermodal terminals

should be by rail or trucks operating a stack (bulk) run road out during off peak periods eg night shifts or weekends The use of Super B Double trucks would assist with the efficiency of these off peak stack run outs

17 The Tribunal invites comment on the likely effect of the expansion plans at Port

Botany on access to the port terminal during peak periods and efficiency along the supply chain

171 Improving the two-way running or back-loading of trucks has to be a priority in

order to maximise access opportunity at the terminals and efficiency along the supply chain It is likely that a third and separate stevedoring facility will only increase the difficulty of improving truck utilisation over and above the current levels by the increased logistics complexity of coordinating timely access to three terminals rather than two

172 A third stevedore will lead to the same port volume being spread over three

operations While it is resource levels that determine available slots DP World has found that during periodic decreases in volumes carriers favour daytime runs to the terminal as opposed to night time

173 The expansion plans will have a negative impact on rail transport timeliness and

access requirements to DP World Sydney if the requirements to breaksplit trains and shunt sections of trains into multiple terminals continues This will undermine the overall rail effectiveness and the NSW Government rail objectives by the unnecessary increase of splitting trains

Page 22 of 48

18 The Tribunal invites comment on the likely effects of expansion of the intermodal network in Sydney on access to the port and efficiency along the supply chain

181 This is a similar issue to point 16 above

19 The Tribunal invites comment on the likely impact of a peak pricing system along

the lines of the FIC on access to the port terminals and the efficiency of the Port Botany supply chain

191 We understand for the NSW Governmentrsquos announcement (31 May 2007) that the

FIC is no longer being proposed

192 Table 4 shows the average percentage of road containers that are handled by shift at DP World Sydney based on a 6 day x 24 hour receival and delivery operation for the past 4 years The figures indicate that there is surplus capacity on both evening and midnight shifts when compared to day shift Note that the percentage of road containers handled has increased on day shift relative to the combination of evening and midnight shifts This has been due to terminal efficiencies creating increased capacity during day shifts and the road carriers utilising this capacity

193 This is further emphasised in Figure 4 which shows the trend over time for day

shift containers handled has increased from 2005 evening shift has decreased and midnight shift has not changed significantly

Table 4 DP World Sydney ndash Percentage of Daily Road Container Volume handled by Shift

Year Midnight Shift (2230 ndash 0630hrs)

Day Shift (0630 ndash 1430hrs)

Evening Shift (1430 ndash 2230hrs)

2007 YTD 21 47 32

2006 23 45 33

2005 22 43 36

2004 19 44 38

194 Year to date April 2007 figures may reflect the seasonal trend for lower volumes in this period

Figure6 DP World Sydney ndash Road Volume trendlines by shift 2005-07

Page 23 of 48

20 The Tribunal invites comment on the likely impact of the expansion of the freight

rail network in Sydney on the number of containers moved by rail and on congestion at the port

201 The importance of increasing the proportion of containers moved by rail is

recognised and supported by DP World Sydney

202 To complement the expansion of the rail freight network upgrade the terminal is developing plans to increase the length and the number of sidings within the terminal Over the next three years the terminal is planning to spend an estimated $20million on internal rail infrastructure machinery and systems The terminal upgrade will ensure DP World Sydney has the infrastructure in place to meet a target of 40 throughput by rail

203 The expansion of the freight rail network needs to take into account The access

to each of the terminals especially the access to DP World Sydney where by the terminal has a distinct disadvantage in relation to its competitor

21 The Tribunal invites comment on the impact on the supply chain on ARTC

managing the metropolitan freight rail network

211 Management of freight rail infrastructure is ARTCrsquos core business and will bring additional management expertise and focus to the task of reforming operations on the Port Botany rail infrastructure

212 For ARTC to control the MFN (Metropolitan Freight Network) makes sense from

the point of view they can make informed decisions for both inbound and outbound Port services based on the wider NSW Rail Freight Network operation

213 The ARTC proposal to co-ordinate services by performing the full Network Control

Function (both signalling and Train Control) from the one centralised centre for the Southern Sydney Freight Line (SSFL)MFN and Port Botany emphasises their commitment to ensure safety communications and network management is their primary objective

214 ARTC are focussed on improving the efficiencies at the Port and bring to the

industry fresh innovative ideas to improve the overall capacity on the rail network ARTCrsquos willingness to assist and eagerness to invest in the rail infrastructure brings a breath of fresh air to the industry and specifically the stevedore operations ARTC can integrate the Botany line into its overall investment program paving the way for additional investment to improve the efficiency of operations on the Botany rail line and at the port-rail interface

22 The Tribunal invites comment on the following questions in relation to costs of the

VBS

22a What costs underpin the VBS access charges levied by the two stevedores How are the VBS access charges set

22b1 Refer to Question 14 The revenue from VBS charges account for a very

small proportion of DP Worldrsquos total container terminal revenue For the year ended 31 December 2006 they accounted for 13 of total revenue Of that 13 approximately 30 was for No Shows and Wrong Zones

22b What costs are incurred by the stevedores in moving a container from the

wharf to a truck or train

22b1 DP World Sydney is operated as an integrated business servicing ships road and rail within the context of a national business We do no separately account for the costs of each discrete activity Information on

Page 24 of 48

overall costs is provided to the ACCC and published on an industry basis in the ACCCrsquos Container Stevedoring Monitoring Report

22b3 Wharf to truck activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the VBS to provide orderly access for road carriers

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal space to allow truck drivers to park their vehicles in order to unlockset up their twist locks and processing of containers

bull Processing of the container

bull System to manage the truck movement within the terminal

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the truck by RTG or forklift

bull Provision of terminal area for truck drivers to safely leave their vehicle to lock the twist locks on their trucks check the container seal number and check the container for damage

bull Provision of terminal area for AQIS operation and infrastructure

22b3 Wharf to train activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the Rail Windows to provide orderly access for operators

Page 25 of 48

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal area for rail lines associated rail infrastructure and train inspection requirements within the terminal

bull Processing of the container

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the ITV by RTG or forklift

bull Internal Transfer Vehicle (ITV) movement of the container from the yard stack to the rail line

bull Lift of the container from the ITV onto the rail wagon

22c What influences the nature and amount of these costs (for example are they influenced by the type of equipment used by a stevedore Do they fluctuate with the number of containers handled by the stevedores) and how have costs changed over time

22c1 DP World operates very similar Vehicle Booking Systems in Brisbane

Sydney Melbourne and Fremantle where there are differences in volume through the terminals The only difference in subscription between the terminals are the ldquoB Classrdquo carrier subscriptions The annual subscription is influenced by the number of carriers seeking this class and the hourly allocation of slots to their class given the number of subscriptions In addition Melbourne operates a straddle facility and Brisbane operates a forklift reachstacker Therefore the cost of the Vehicle Booking System is not dependant on or mode but the annual subscription to ldquoB Classrdquo carrier depends on competition for that carrier class

22c2 An annual subscription fee per class which is a characteristic of DP

Worldrsquos VBS does not normally increase with volume At DP World Sydney subscription fees have not been increased since 2003

22c3 Overall landside costs have increased with increases in wages and

salaries (4 pa) property costs (substantially ahead of cpi) fuel and other general costs These increases have been offset to some extent by increases in productivity Industry costs history is also available publicly in the ACCC Container Stevedoring Monitoring Reports

22d Where do the port landside costs stop and the VBS costs start

22d1 Prior to the Entry to Operational Yard (see Attachment 2) the truck is

under the influence of the VBS and also under the influence of the external environment which includes but is not limited to port and metropolitan road conditions container clearance issues truck arrival peaks and troughs truck preparedness processing of the container to the handled by the terminal and maritime security requirements

It is DP World Sydneyrsquos view that the port landside costs stop and the VBS costs start at the choke point

22e Do the VBSsrsquo penalty charges reflect the cost to stevedores What should

they reflect

22e1 The primary rationale for the penalty regime is to seek to modify carrier behaviour

Page 26 of 48

22e2 However it is also the case that a ldquono showrdquo or ldquowrong zonerdquo gives rise to a lost opportunity cost to the terminal Resources made available but not utilised may be wasted

22e3 DP World considers the achievement of orderly access to its terminal as

a primary objective of the VBS To achieve orderly access PampO considers it important to issue ldquono showrdquo and ldquowrong zonerdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay ldquoon timerdquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs The alternative is random access to container terminals by carriers and significant truck queues with associated demurrage costs which are ultimately paid for by the end consumer

22f Should there be different charging arrangements for empty containers that

are returned to the port as opposed to full export containers

22f1 DP World Sydney terminal handles a full container in a similar way to an empty container using purpose built container stacking equipment controlled by a DP World employee A container occupies the same amount of space whether it is full or empty This leads to the same cost for the handling of a single empty container as a single full container Single empty containers returned to the port should be charged a similar rate to full containers

22f2 To reduce the cost of handling empty containers in the terminal destined

for the same port on the one vessel and that are of the same size the terminal in conjunction with the shipping line and the shipping linersquos nominated carrier work together to create a bulk run of empty containers The bulk run maximises the number of empty containers that are handled in a specific time period The terminal dedicates resources to thee bulk runs and also provides priority access to the transport carrier in order to create efficiency and an economy of scale In this way the cost of returning an empty container via a bulk run is reduced

23 The Tribunal invites comment on the following questions in relation to the different

pricing regimes of the two stevedores

23a Why do the stevedores have different pricing schemes for their VBSs

23a1 We do not know why Toll-PatrickAsciano has adopted the pricing scheme it has

23a2 In order to improve earlier versions of its VBS in the mid-1990s DP

World (PampO) introduced categories of carriers and began charging differential subscription fees for carriers registering to use the VBS depending on the level of access required by the carrier Prior to this change some carriers were engaging multiple computer terminals to the detriment of other carriers and it had become clear that a level of differentiation would be in all carrierrsquos interests The different classes of carrier access were introduced to ensure the most balanced overall outcome The level of differentiation is an annual choice of access levels available to all carriers regardless of size Under this approach different subscription fees are charged for each category but all carriers registering in a particular category pay the same fee Our view remains that an annual subscription as opposed to a pay as you go is far less of an administrative burden on both the carriers and the terminal

Page 27 of 48

23a3 There are no restrictions upon carriers wishing to obtain a certain carrier category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for the same carrier categories as larger carriers Smaller carriers may also apply for consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst charging the burden of the cost of that subscription

23a4 Subscription fees based on differences in class are designed to

encourage choice whilst at the same time communicating a level of transparency with terminal pricing and service

23b Do the different pricing schemes influence the efficiency with which

transporters obtain access to the terminals

23b1 We do not believe this to be the case

23c Would standardisation of charges be more appropriate

23c1 It is our understanding that it would be unlawful for a supplier itself to standardise charges by reason of Section 45 of the Trade Practices Act This may be something that Government wishes to consider

24 The Tribunal invites comment on the following non-price access issues to consider

in relation to the operation of the VBSs

24a What effect do access rules and conditions and non price constraints have on booking a timeslot How to the stevedores use their discretion in determining access and charges and what impact does this have

24a1 The introduction of different categories of access stages the carriersrsquo

access to the VBS for the purposes of booking timeslots ldquoB classrdquo carriers are given exclusive access to a pool of slots between 0730-0820 During this period they are subject to zone limitations which restrict carriers to a maximum number of slots for any given hour The zone limit ensures all carriers within that carrier class are given fair and equitable access to the initial release of slots After the initial booking period the zone limit is lifted and carriers are permitted to book any number of unused slots per hour from those remaining in their pool Similar arrangements exist for A class carriers culminating in the cascading of all remaining slots from all segregated pools into a general pool at 1030 for access by all registered carriers

24a2 There are not restrictions upon carriers wishing to obtain a certain carrier

category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for a consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst sharing the burden of the cost of that subscription

24b What are the stevedoresrsquo obligations with regard to access to port facilities

and what should they be

24b1 Without providing an analysis of our obligations under law in general terms we are required to provide access to carriers on an equitable basis recognising the competitive environment we operate in

Page 28 of 48

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

Figure 4 DP World Sydney ndash Percentage of Truck Turn Time under 60 mins

DP World Sydney - Percentage of Truck Turn Time under 60 mins

50

60

70

80

90

100

Jan-04

Mar-04

May-04

Jul-04

Sep-04

Nov-04

Jan-05

Mar-05

May-05

Jul-05

Sep-05

Nov-05

Jan-06

Mar-06

May-06

Jul-06

Sep-06

Nov-06

Jan-07

Mar-07

94 Figure 5 below shows the terminal truck turn time and the stevedoring volume since July 2003 at DP World Sydney Note that the volumes are hidden on the left Y axis for commercial reasons As a result of terminal improvements and putting in place the KPIs described above the average TTT performance has improved (right Y axis) whilst at the same time the terminal volume has increased (left Y axis)

Figure 5 DP World Sydney ndash Truck Turn Time and Container Volume

95 DP World operates in all five major ports in Australia and has three different modes of operation namely Straddles in Melbourne and Adelaide RTGrsquos in Sydney and Fremantle and Forklift and Reach-stacker in Brisbane The Variability in TTT between ports is attributed to a number of factors including but not limited to the site processes and physical constraints of each facility

96 The measurement of TTT differs mainly due to

a) the layouts of in-gates and its approaches and

Page 13 of 48

b) the measurement of the job steps which apply to a truck from arrival to departure due to (a)

97 All the above terminals have different truck parking arrangements within and

outside the terminal which impacts TTT Across the board TTT is measured from job processing to job complete (98c to 98e below) however the physical layout and mode can influence when processing commences

98 The process of truck management in simple terms is

a) Pre-arrival of trucks

b) Validation of time slots

c) Processing of job (Manual but if automated it takes effect in b above)

d) Enter the operational yard

e) Job transact and complete (by straddle RTG or Forklift Reach-stacker) and

f) AQIS check for full trucks and depart (gate-out)

99 Depending on the physical layout and provision of sufficient space to hold trucks within the terminal boundary or otherwise the distribution of trucks varies through steps 98a to 98c above

910 At DP World Sydney the equivalent hourly truck volume can be held in the

terminal entry marshalling area therefore multiple trucks can enter the terminal park and be processed by terminal staff Post processing all time spent in the marshalling area forms part of the TTT whilst the truck has not necessarily entered the operational yard (see Annexure 2)

911 At DP World Melbourne on the other hand due to restricted space within the

terminal trucks are normally held outside and a small number is constantly drip fed into the terminal (controlled rate of entry) These trucks then approach the processing points (6 lanes x processing booths) further which they directly enter the operational yard and the TTT is measured from this point

912 DP World Fremantle does not have a truck holding area within the terminal which

means the truck enter the terminal and queue at the Entry to Operational Yard Immediately after being processed the truck enters the terminal yard Therefore unlike Sydney time from Entry to Operational Yard is time historically not published Therefore TTT between DP World Sydney and DPW Fremantle are not comparable

913 DP World Fremantle is also an RTG operation similar to DP World Sydney

However the physical layout and the resulting entry arrangements differ Due to restricted space within the terminal the trucks are normally held outside and constantly drip fed into the terminal (controlled rate of entry) The trucks operate through 3 lanes within the terminal and truck turn time is measured at this processing point when the trucks actually enter the operational yard

914 DP World Adelaide is a straddle operation similar to DP World Melbourne

However its physical layout and resulting entry arrangement is different to that of DP World Melbourne and has some similarities with what takes place in Sydney The hourly truck volume can be held within the terminal and the TTT is measured from entry into the terminal main gate to departure from the terminal main gate The measure differs from the other facilities on both entry are exit gates

915 The benefits of this TTT data is not so much the raw data itself but more so the

long term trend in the data If TTT is constant or even improved during periods of volume growth then this reflects a firm commitment to the landside process Continuous improvement reflects a commitment to landside efficiencies

Page 14 of 48

916 TTT is influenced by the mode of operation the Gate In infrastructure and volume

of containers required to be handled

917 The RTG mode of operation requires the truck to travel to the yard stack where the container is located or assigned as opposed to the straddle operation where the straddle comes to the truck that is parked in a bay external to the stacking area The mode of operation at DP World Sydney generally results in a truck with multiple containers being serviced by multiple RTGs and also having to travel to multiple yard locations At each of these yard locations there will be a different level of demand on the particular RTG covering the area This will result in variations in the time it will take to service the truck in that particular area and therefore will influence the truck turnaround time

918 In comparison a terminal running a straddle operation could employ a different

straddle to handle each of the containers processed for the truck

919 The mode of operations employed by container terminals have various strength and weaknesses and need to be considered based on many factors in a Port (ie not just the landside interface) but both modes can contribute to variability

10 The Tribunal invites comment on how truck turnaround times are currently

measured by supply chain participants and how they should be measured The Tribunal further invites comment on the extent to which the stevedores provide access to their facilities at the specific times booked on the VBS

Truck Turn Time (TTT)

101 DP World Sydney currently measures truck turn times from the time the containers on a truck are processed to the time the last container is completely loaded onto the truck (import containers) or discharged from a truck and landed in the terminal (export containers)

102 TTT is directly influenced by the number of containers to be handled by an RTG

terminal on a truck run ie a higher number of containers results in a longer truck turn time on average This due to the truck having to potentially visit multiple locations within the RTG terminal

103 The reason the container Terminal does not measure the time following

completion of loadingdischarging container from truck is measure regulatory bodies (ie AGIS) have commenced inspection of containers on terminal exit gate which is beyond the control of the container terminal

104 The process time is used to measure the start of the truck turn time as this is the

closest time to the truck being in the terminalrsquos control

105 Trucks that take advantage of the autogate processing (currently 25 of trucks) actually start the truck turn time as they come through the terminal gate as this is where the transponder reader is located DP World Sydney support the increase of the autogate processing and the result that the truck turn time starts at the gate For trucks that do not use the autogate processing opportunity the terminal does not start the truck turn time at the gate as the truck driver may not move efficiently to have the container processed

106 Carriers often use TTT measured from the time the truck services at the standby

queue or the arrival of the truck at the zone queue which are waiting for the next time zone to open

107 In relation to standby queue the CAA clearly stipulates that the use of this system

does not guarantee immediate call-up to the terminal in priority to trucks that have booked a time slot

Page 15 of 48

108 In relation to TTT measured from arrival at the time zone queue the fact that the truck has arrived prior to the commencement of the zone opening is purely a decision of the transport carrier and is beyond the control of the Container Terminal and is not supported by DP World

Container Turn Times

109 DP World Sydney currently measures container turn time from the time the

container is processed to the time the container is loaded onto the truck (import container) or discharged from a truck and landed in the terminal (export container) Over the last 5 years the transport regulators have allowed truck operators to operate larger trucks thereby ultimately improving the efficiency of road transport As transport operators increase the use of larger trucks (capable of carrying multiple containers) the handling of these trucks produces a multiple handling of containers on the same truck at the terminals For example in the past one would handle one container per truck and in that case the CTT and TTT were almost identical With multiple containers on trucks the difference between the CTT and TTT is increasing To be able to benchmark this across a port and other ports becomes hard with TTT due to the ever changing ratio of containers per truck (depends on percentage of large truck operators) firstly within the same port and secondly between different ports Therefore CTT enables us to benchmark the measurement on common grounds across all our operations around the country

Access Times at DP World

1010 DP World Sydney divide the day into hourly time zones within the VBS The time

zones start on the house (eg 0700hrs) and complete at the end of the hour (eg 0759hrs) There is a time zone board located at Simblist Road which indicates which time zone is open Trucks queue at this point waiting for the board to change each hour During daylight hours on average there are 15 trucks waiting for the time zone to open The trucks then make their way to the terminal in gate located on Friendship Road once the zone is open

11 The Tribunal invites comment on the choice between a system where container

numbers are nominated in advance thereby offering the possibility of faster turnaround times or not providing container numbers which would provide road carriers with greater flexibility Or would industry participants prefer a system that allows the choice between both

Import Timeslots

111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the import container number in a timeslot booking up to the start of the time zone The disadvantage for the terminal and the carrier is that this flexible system arrangement does not allow the terminal the chance to reposition the container to a position that will minimise the number of containers that have to be moved (known as ldquoconsolidation movesrdquo) in order to access the container that is to be delivered to the truck once the truck has been processed and is in position for loading The more consolidation moves the terminal has to do to load an import container to a truck the longer the truck turn time will be

112 Undertaking consolidation moves prior to truck arrival would provide the opportunity

to decrease truck turn time

113 To achieve a further reduction in truck turn times and a reduction in cost of delivering a container the terminal would need to control the order in which the import containers are delivered This occurs in other ports in the world

Controlling the order of import deliveries

114 The current arrangement where the shipper controls the order of import containers

to be delivered from the terminals results in extra costs incurred by stevedores and also decreased efficiencies The longer a container remains in the terminal (an

Page 16 of 48

increase in the dwell time) results in increased consolidation (rehandles) undertaken by terminal equipment and an increase in the time taken to load a container to a truck or train

Matching of resources to meet demand

115 The terminal allocates the resources required based on the demand or the

number of timeslots released This occurs 24 hrs in advance

116 Carriers who book timeslots and do not meet their commitment (No Show) results in the terminal resources to be under utilised at certain times and creates an opportunity loss There is also an opportunity lost by another carrier to utilise the time slot for each No Show

117 Carrier who book timeslots and arrive late for their commitment (Wrong Zones)

results in terminal resources being under utilised at times and over utilised at other times The troughs in terminal resource utilisation result in an opportunity loss and the peaks result in a decrease in efficiency (increased truck turn time) or increased cost (increased resources applied) The increase in truck turn time has an impact on carriers who arrive on time for their time slot

118 The current VBS allows for carriers to arrive at the terminal to deliver or pick up a

container without committing to a time and container number thus not enabling the terminal to completely plan the required resources to meet the demand This is termed unplanned work The Standby Queue export tagging by B Carrier no advanced deadline for entering an import container number prior to the time zone and no requirement for an export container number being entered into a time slot booking results in an increase in unplanned work Unplanned work results in peaks in the work required by the planned resources and a decrease in efficiency

119 Rail also has similar problems

1110 By changing this arrangement and giving control to the stevedores to determine

the order of container delivery from the terminal will reduce the costs incurred by the terminal and decrease the turnaround time for trucks

Export Timeslots

1111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the export container number in a timeslot booking up to the start of the time zone It also allows an export time slot to be processed without a container number entered in the time slot booking The container number in then entered by the RampD Clerk at the terminal This often results in human error by the truck driver or the RampD Clerk resulting in delays to trucks This practice also eliminates the opportunity for the carrier to use the automatic processing described below in Question 12 To maximise the use of automation and eliminate human error the export container number needs to be a mandatory field to be updated in the time slot booking by a nominated time prior to the start of the time zone eg 2 hours prior to the start of the time zone

12 The Tribunal invites comments on the increased use of ICT and automation and

any other ways to reduce turnaround times and otherwise improve supply chain efficiency

121 DP World support and are driving the increased use of automation for the

processing of trucks DP World have developed and currently make available an automated truck processing system for carriers who use ePORTS to book and manage timeslots The percentage use of this system at DP World Sydney by carriers averages about 25 of total truck movements excluding stack run trucks

122 This system requires the purchase of a transponder unit from the terminal at the

cost that the terminal purchases the unit plus GST Currently the units are sold to

Page 17 of 48

the carrier for $12050 Also required is access to an eGATE screen in ePORTS The process for carriers wanting to move a number of containers on a transponder run involves

a) Booking through EPORTS the required number of time slots in a time zone

For example if a transport carrier wanted to deliver two export containers and collect one import container on a single truck run it needed to book three slots and

b) Setting up the transponder by inputting the slots truck number container numbers and whether they are import or export containers in the transponder booking screen in ePORTS

123 The benefits for carriers of using this automated processing include

a) The processing occurs earlier (ie at the gate as compared to in the RampD Office) therefore this decreases the chance of Wrong Zones being incurred

b) No need for the truck driver to present documentation at the RampD Office therefore reducing the truck turn time by avoiding any potential queues

c) No interaction between the truck driver and the RampD Clerk therefore decreasing human error during processing and causing further delays

d) As the processing occurs at the gate the trucks can skip ahead of other trucks where their drivers have to manually process in the RampD Office effectively jumping the queue

e) Allows reprogramming of trucks up to 15mins before the end of the time zone (eg 0645 for an 06 slot) without the truck driver needing the Delivery Order in his possession

f) Provides the carrier with the ability to educate their customers to provide the Delivery Orders in a timely manner in order to lodge them at the terminal

g) Electronic copies of the Delivery Orders (excluding scanned copies of originals) can be forwarded to the terminal via email therefore eliminating the need to physically lodge them

h) Enables the carrier to take all advantage of Electronic Import Delivery Orders (eIDOs) that are currently being used by Evergreen Marine at DP World Sydney Other shipping lines will move to the use of eIDOs in the future

13 The Tribunal invites stakeholders to comment on VBS capital and operating costs

and to assist it to distinguish between stand-alone VBS costs and those shared with other stevedoring activities

131 It is important to distinguish between the capital and operating costs of operating

the VBS and the costs of operating the landside interface ie delivering containers to and from trucks

132 The costs of a VBS comprise the following components

bull IT development and maintenance costs and

bull Management and administration time to manage and administer the system

These costs are low relative to the costs of actually providing the services within the terminal ndash loading and unloading the trucks

133 Having a system which requires the terminal to provide a guaranteed number of

slots per hours is to the disadvantage of the terminal Terminal operations are by their nature unpredictable due to the irregular arrival of ships Having to guarantee a number of slots which carry with it a high expectation of performance in terms of TTT tends to force the terminal to set the number of slots at a level which includes a risk mitigation factor against all things not going to plan The net result of this is

Page 18 of 48

that the terminal tends to effectively oversupply equipment and labour increasing its costs The impact of this is far more significant than the isolated costs of running the actual vehicle booking systems

134 Direct VBS costs have nothing to do with ship or rail operations

135 The container yard is run as a single operation servicing ship road and rail By

this means while there are practical limitations we seek to pool resources to maximise the overall efficiency of terminal operations particularly to absorb the peaks and troughs of demand across the operations as a whole This effective sharing of costs improves overall efficiency and results in lower costs to the benefits of users as a whole We anticipate that systems and technology improvements will see greater use of such pooling and greater overall efficiency as a result

14 The Tribunal invites stakeholders to comment on VBS access and penalty charges

and the level of transparency of access through the stevedoresrsquo VBSs

141 The VBS facilitates the provision of orderly access to DP World Sydney Terminal for over 200 individual carriers

142 DP World considers the achievement of orderly access to its terminals as a

primary objective of the VBS To achieve orderly access DP World considers it important to require carriers to pay a nominal subscription charge for the level and rights of access they require and to issue ldquono showrdquo and ldquolaterdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay lsquoon timersquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs

143 The VBS is essentially an ldquoappointment bookrdquo to assist transport carriers to

organise themselves more efficiently leading to a reduction in waiting times at the container terminal The VBS divides all working days into time periods containing a pre-determined number of timeslots The timeslots represent the number of import and export containers that can be handled in that period The number of timeslots in a day is determined by expected carrier demand and the availability of labour and equipment Carriers are then able to book timeslots for collection or delivery of containers

144 The alternative is random access to container terminals by carriers and significant

truck queues with associated demurrage costs which are ultimately paid for by the end user

145 At DP World Sydney the VBS offers transport carriers the ability to access an

internet based computer system or telephone bureau for the purpose of booking time slots for those carriers who do no wish to use the computer system The VBS in its present form offers access on a transparent and equitable basis to all carriers encourages the efficient movement of containers from the ship through the terminal and onto customers and vice-versa encourages innovative practices which are beneficial to terminal efficiency road congestion and the overall cost of the supply chain The ldquono showrdquo and ldquolaterdquo fees encourage these operational practices and efficiencies

146 DP World has adopted a class structure with an annual subscription for access

because this system allows carriers to determine what access is required for their business while providing the industry significant level of transparency in terms of access costs

147 All carriers have an equal opportunity to subscribe to any of the three classes of

access to the VBS (bearing in mind that smaller carriers are allowed to consolidate

Page 19 of 48

their subscriptions in order to share the cost of a B Class subscription) and equal access to timeslots amongst carriers of the same class

148 Annual fees are payable in advance Table 3 sets out the various carrier classes

currently in operation at each terminal and the applicable subscription fees for each class There are no annual limits on the number of slots carriers can book

Table 3 DP World Sydney ndash Current carrier classes and VBS deposit and registration fees for the year commencing 1 July 2005

Terminal Carrier Classes Price Number of active

carriers at Feb 06 Port Botany New South Wales

B Carrier ndash online internet access with high service levels

$2922150 (Non-refundable deposit) No fixed upper limit on annual time slots1

28

A Carrier ndash online internet access with standard service levels

$133400 (Annual registration fee) No fixed upper limit on annual time slots2

162

AB Carrier ndash access via the PampO Phone Booking Bureau with standard service levels

$66760 (Annual registration fee) No fixed upper limit on annual time slots3 39

149 Any carrier selecting the ldquoBrdquo classification is encouraged to also consider the ldquoArdquo

classification unless they are confident of utilising a high level of timeslots that would render the higher subscription fee as attractive per timeslot

1410 In addition to the VBS annual subscription fees the carrier access arrangements

provide for the levying of a no-show fee on carriers who fail to arrive for slots they have booked in the amount of $110 per time slot The terminal also charges carriers late fees of $55 per slot if they fail to arrive for a slot booking within the nominated time zone No fees are charged where a carrier is unable to meet the time slot due to delays caused and acknowledged by DP World Australia or where delays are caused by circumstances genuinely outside of the carrierrsquos control DP World Australia also has the discretion to and does waive ldquono showrdquo and ldquowrong zonerdquo fees in the interest of maintaining a good working relationship with carriers Failure by carriers to pay these ldquono showrdquo and ldquowrong zonerdquo fees may lead to them being prevented from making further bookings ldquoNo showrdquo and ldquowrong zonerdquo fees are the means by which DP World ensures that access to itrsquos terminals is provided in the most efficient manner to all 1carriers as late carriers cause delays for those carriers that are on time

1 No fixed upper limit on annual timeslots ndash Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 2 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 3 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release

Page 20 of 48

1411 The ldquono showrdquo and ldquowrong zonerdquo fee structure was introduced following

consultation with carriers It was originally $20 per late arrival (in Victoria where VBS first commenced) but this is proved to be ineffective in disciplining carrier conduct In response to requests from many carriers DP World increased the ldquono showrdquo fee to $110 The fees also discourage carriers from the practice of overbooking slots which they have no intention of using and preventing other carriers from using those slots

1412 The actual cost of a truck turning up late (Wrong Zone) or not turning up at all (No

Show) is the cost of planned resources (labour equipment etc) based on the VBS demand (number of containers expected to handle during a time period) not being utilised during the time period they are employed

1413 Adjacent to each time zone are grace periods one prior to the time zone and one

following the time zone These grace periods and the trucks arrival time for processing determine the status of the time slot ie arrived on time or arrived late (Wrong Zone) Currently the grace period following the time zone is set at 20 minutes which means that if a truck arrives later than one hour and 20 minutes after the start of the time zone then the time slot will be initially recorded as a Wrong Zone Following the completion of each VBS day Wrong Zones are reviewed and any penalty waived if any of the following determined

a) The terminal is aware that it has contributed to a truck arriving late for the time

slot ie the terminal has previously delayed the truck or carrier on an earlier time slot or

b) The carrier advises that they arrived late due to an unforeseen circumstance eg a break down of the truck

We request that the information in 1414 be kept confidential

1414 Omitted for reasons of confidentiality

1415 Officers at DP World Sydney have regular conversations with carriers in respect of

the waiver of No Show fees as well In certain instances DP World may agree to waive fees prior to an invoice being issued

1416 For both Wrong Zone and No Show fees the terminal provides a grievance

process for carriers who have been issued invoices and do not agree that the fee has been issued fairly The carrier has the opportunity to provide the terminal with an explanation and should officers at DP World Sydney agree that there has been an error in the issuing of the fee or an unforeseen circumstance is explained the terminal will credit the invoice

15 The Tribunal invites stakeholders to indicate the costs of providing the services of

rail windows and rail paths to rail operators

151 Rail windows are based allowance on a rail terminal performance KPI of 30 container moves per hour and charged at $360 per hour A shunting time allowance of 15 mins per window is not charged Additional lifts canare provided by increasing the lifts per hour by applying more machinery at no additional cost

152 The cost of providing terminal rail operations is higher than road operations at DP

World Sydney The RTG mode of operation requires a container to be moved to or from the container stack For road containers the truck takes the export container to the stack and travels to the stack to pick up an import container For a rail container a terminal internal transfer vehicle (ITV) is required to be used by the terminal to move the container from the train to the stack (export containers) or

Page 21 of 48

the stack to the train (import containers) This is not required for container being received or delivered by road

153 For import rail containers there is a loss of efficiency for the vessel discharge

operation in order to stack rail containers separately for delivery to the train For each discharge point in the terminal extra resources are required There is extra administration costs in having to make alternate arrangements to separate these import rail containers

154 Despite the fact that the delivery of containers to rail is higher than road the

terminal seeks only a partial recovery of costs in order to encourage the use of rail in the port in line with the NSW Government objectives

155 There is a management cost of setting up and operating the rail windows This is

similar to the cost of operating a VBS

156 There is additional security infrastructure costs for a rail operation to ensure the terminal meets their legislative security requirements The more terminal entry points created the higher the cost to replicate these security infrastructure requirements

16 The Tribunal invites comment from stakeholders on the planned or mooted

development and expansion of the various intermodal terminals in Sydney and the extent to which this is expected to ease congestion in the landside supply chain at Port Botany

161 DP World supports the development and expansion of an intermodal terminal

network to facilitate an increase in the use of rail as the means of container transport This has the potential flow on benefit of minimising the growth in the number of trucks requiring to access the Port Botany area as port volumes continue to grow

162 Transport between the Botany terminals and the inland intermodal terminals

should be by rail or trucks operating a stack (bulk) run road out during off peak periods eg night shifts or weekends The use of Super B Double trucks would assist with the efficiency of these off peak stack run outs

17 The Tribunal invites comment on the likely effect of the expansion plans at Port

Botany on access to the port terminal during peak periods and efficiency along the supply chain

171 Improving the two-way running or back-loading of trucks has to be a priority in

order to maximise access opportunity at the terminals and efficiency along the supply chain It is likely that a third and separate stevedoring facility will only increase the difficulty of improving truck utilisation over and above the current levels by the increased logistics complexity of coordinating timely access to three terminals rather than two

172 A third stevedore will lead to the same port volume being spread over three

operations While it is resource levels that determine available slots DP World has found that during periodic decreases in volumes carriers favour daytime runs to the terminal as opposed to night time

173 The expansion plans will have a negative impact on rail transport timeliness and

access requirements to DP World Sydney if the requirements to breaksplit trains and shunt sections of trains into multiple terminals continues This will undermine the overall rail effectiveness and the NSW Government rail objectives by the unnecessary increase of splitting trains

Page 22 of 48

18 The Tribunal invites comment on the likely effects of expansion of the intermodal network in Sydney on access to the port and efficiency along the supply chain

181 This is a similar issue to point 16 above

19 The Tribunal invites comment on the likely impact of a peak pricing system along

the lines of the FIC on access to the port terminals and the efficiency of the Port Botany supply chain

191 We understand for the NSW Governmentrsquos announcement (31 May 2007) that the

FIC is no longer being proposed

192 Table 4 shows the average percentage of road containers that are handled by shift at DP World Sydney based on a 6 day x 24 hour receival and delivery operation for the past 4 years The figures indicate that there is surplus capacity on both evening and midnight shifts when compared to day shift Note that the percentage of road containers handled has increased on day shift relative to the combination of evening and midnight shifts This has been due to terminal efficiencies creating increased capacity during day shifts and the road carriers utilising this capacity

193 This is further emphasised in Figure 4 which shows the trend over time for day

shift containers handled has increased from 2005 evening shift has decreased and midnight shift has not changed significantly

Table 4 DP World Sydney ndash Percentage of Daily Road Container Volume handled by Shift

Year Midnight Shift (2230 ndash 0630hrs)

Day Shift (0630 ndash 1430hrs)

Evening Shift (1430 ndash 2230hrs)

2007 YTD 21 47 32

2006 23 45 33

2005 22 43 36

2004 19 44 38

194 Year to date April 2007 figures may reflect the seasonal trend for lower volumes in this period

Figure6 DP World Sydney ndash Road Volume trendlines by shift 2005-07

Page 23 of 48

20 The Tribunal invites comment on the likely impact of the expansion of the freight

rail network in Sydney on the number of containers moved by rail and on congestion at the port

201 The importance of increasing the proportion of containers moved by rail is

recognised and supported by DP World Sydney

202 To complement the expansion of the rail freight network upgrade the terminal is developing plans to increase the length and the number of sidings within the terminal Over the next three years the terminal is planning to spend an estimated $20million on internal rail infrastructure machinery and systems The terminal upgrade will ensure DP World Sydney has the infrastructure in place to meet a target of 40 throughput by rail

203 The expansion of the freight rail network needs to take into account The access

to each of the terminals especially the access to DP World Sydney where by the terminal has a distinct disadvantage in relation to its competitor

21 The Tribunal invites comment on the impact on the supply chain on ARTC

managing the metropolitan freight rail network

211 Management of freight rail infrastructure is ARTCrsquos core business and will bring additional management expertise and focus to the task of reforming operations on the Port Botany rail infrastructure

212 For ARTC to control the MFN (Metropolitan Freight Network) makes sense from

the point of view they can make informed decisions for both inbound and outbound Port services based on the wider NSW Rail Freight Network operation

213 The ARTC proposal to co-ordinate services by performing the full Network Control

Function (both signalling and Train Control) from the one centralised centre for the Southern Sydney Freight Line (SSFL)MFN and Port Botany emphasises their commitment to ensure safety communications and network management is their primary objective

214 ARTC are focussed on improving the efficiencies at the Port and bring to the

industry fresh innovative ideas to improve the overall capacity on the rail network ARTCrsquos willingness to assist and eagerness to invest in the rail infrastructure brings a breath of fresh air to the industry and specifically the stevedore operations ARTC can integrate the Botany line into its overall investment program paving the way for additional investment to improve the efficiency of operations on the Botany rail line and at the port-rail interface

22 The Tribunal invites comment on the following questions in relation to costs of the

VBS

22a What costs underpin the VBS access charges levied by the two stevedores How are the VBS access charges set

22b1 Refer to Question 14 The revenue from VBS charges account for a very

small proportion of DP Worldrsquos total container terminal revenue For the year ended 31 December 2006 they accounted for 13 of total revenue Of that 13 approximately 30 was for No Shows and Wrong Zones

22b What costs are incurred by the stevedores in moving a container from the

wharf to a truck or train

22b1 DP World Sydney is operated as an integrated business servicing ships road and rail within the context of a national business We do no separately account for the costs of each discrete activity Information on

Page 24 of 48

overall costs is provided to the ACCC and published on an industry basis in the ACCCrsquos Container Stevedoring Monitoring Report

22b3 Wharf to truck activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the VBS to provide orderly access for road carriers

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal space to allow truck drivers to park their vehicles in order to unlockset up their twist locks and processing of containers

bull Processing of the container

bull System to manage the truck movement within the terminal

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the truck by RTG or forklift

bull Provision of terminal area for truck drivers to safely leave their vehicle to lock the twist locks on their trucks check the container seal number and check the container for damage

bull Provision of terminal area for AQIS operation and infrastructure

22b3 Wharf to train activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the Rail Windows to provide orderly access for operators

Page 25 of 48

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal area for rail lines associated rail infrastructure and train inspection requirements within the terminal

bull Processing of the container

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the ITV by RTG or forklift

bull Internal Transfer Vehicle (ITV) movement of the container from the yard stack to the rail line

bull Lift of the container from the ITV onto the rail wagon

22c What influences the nature and amount of these costs (for example are they influenced by the type of equipment used by a stevedore Do they fluctuate with the number of containers handled by the stevedores) and how have costs changed over time

22c1 DP World operates very similar Vehicle Booking Systems in Brisbane

Sydney Melbourne and Fremantle where there are differences in volume through the terminals The only difference in subscription between the terminals are the ldquoB Classrdquo carrier subscriptions The annual subscription is influenced by the number of carriers seeking this class and the hourly allocation of slots to their class given the number of subscriptions In addition Melbourne operates a straddle facility and Brisbane operates a forklift reachstacker Therefore the cost of the Vehicle Booking System is not dependant on or mode but the annual subscription to ldquoB Classrdquo carrier depends on competition for that carrier class

22c2 An annual subscription fee per class which is a characteristic of DP

Worldrsquos VBS does not normally increase with volume At DP World Sydney subscription fees have not been increased since 2003

22c3 Overall landside costs have increased with increases in wages and

salaries (4 pa) property costs (substantially ahead of cpi) fuel and other general costs These increases have been offset to some extent by increases in productivity Industry costs history is also available publicly in the ACCC Container Stevedoring Monitoring Reports

22d Where do the port landside costs stop and the VBS costs start

22d1 Prior to the Entry to Operational Yard (see Attachment 2) the truck is

under the influence of the VBS and also under the influence of the external environment which includes but is not limited to port and metropolitan road conditions container clearance issues truck arrival peaks and troughs truck preparedness processing of the container to the handled by the terminal and maritime security requirements

It is DP World Sydneyrsquos view that the port landside costs stop and the VBS costs start at the choke point

22e Do the VBSsrsquo penalty charges reflect the cost to stevedores What should

they reflect

22e1 The primary rationale for the penalty regime is to seek to modify carrier behaviour

Page 26 of 48

22e2 However it is also the case that a ldquono showrdquo or ldquowrong zonerdquo gives rise to a lost opportunity cost to the terminal Resources made available but not utilised may be wasted

22e3 DP World considers the achievement of orderly access to its terminal as

a primary objective of the VBS To achieve orderly access PampO considers it important to issue ldquono showrdquo and ldquowrong zonerdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay ldquoon timerdquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs The alternative is random access to container terminals by carriers and significant truck queues with associated demurrage costs which are ultimately paid for by the end consumer

22f Should there be different charging arrangements for empty containers that

are returned to the port as opposed to full export containers

22f1 DP World Sydney terminal handles a full container in a similar way to an empty container using purpose built container stacking equipment controlled by a DP World employee A container occupies the same amount of space whether it is full or empty This leads to the same cost for the handling of a single empty container as a single full container Single empty containers returned to the port should be charged a similar rate to full containers

22f2 To reduce the cost of handling empty containers in the terminal destined

for the same port on the one vessel and that are of the same size the terminal in conjunction with the shipping line and the shipping linersquos nominated carrier work together to create a bulk run of empty containers The bulk run maximises the number of empty containers that are handled in a specific time period The terminal dedicates resources to thee bulk runs and also provides priority access to the transport carrier in order to create efficiency and an economy of scale In this way the cost of returning an empty container via a bulk run is reduced

23 The Tribunal invites comment on the following questions in relation to the different

pricing regimes of the two stevedores

23a Why do the stevedores have different pricing schemes for their VBSs

23a1 We do not know why Toll-PatrickAsciano has adopted the pricing scheme it has

23a2 In order to improve earlier versions of its VBS in the mid-1990s DP

World (PampO) introduced categories of carriers and began charging differential subscription fees for carriers registering to use the VBS depending on the level of access required by the carrier Prior to this change some carriers were engaging multiple computer terminals to the detriment of other carriers and it had become clear that a level of differentiation would be in all carrierrsquos interests The different classes of carrier access were introduced to ensure the most balanced overall outcome The level of differentiation is an annual choice of access levels available to all carriers regardless of size Under this approach different subscription fees are charged for each category but all carriers registering in a particular category pay the same fee Our view remains that an annual subscription as opposed to a pay as you go is far less of an administrative burden on both the carriers and the terminal

Page 27 of 48

23a3 There are no restrictions upon carriers wishing to obtain a certain carrier category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for the same carrier categories as larger carriers Smaller carriers may also apply for consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst charging the burden of the cost of that subscription

23a4 Subscription fees based on differences in class are designed to

encourage choice whilst at the same time communicating a level of transparency with terminal pricing and service

23b Do the different pricing schemes influence the efficiency with which

transporters obtain access to the terminals

23b1 We do not believe this to be the case

23c Would standardisation of charges be more appropriate

23c1 It is our understanding that it would be unlawful for a supplier itself to standardise charges by reason of Section 45 of the Trade Practices Act This may be something that Government wishes to consider

24 The Tribunal invites comment on the following non-price access issues to consider

in relation to the operation of the VBSs

24a What effect do access rules and conditions and non price constraints have on booking a timeslot How to the stevedores use their discretion in determining access and charges and what impact does this have

24a1 The introduction of different categories of access stages the carriersrsquo

access to the VBS for the purposes of booking timeslots ldquoB classrdquo carriers are given exclusive access to a pool of slots between 0730-0820 During this period they are subject to zone limitations which restrict carriers to a maximum number of slots for any given hour The zone limit ensures all carriers within that carrier class are given fair and equitable access to the initial release of slots After the initial booking period the zone limit is lifted and carriers are permitted to book any number of unused slots per hour from those remaining in their pool Similar arrangements exist for A class carriers culminating in the cascading of all remaining slots from all segregated pools into a general pool at 1030 for access by all registered carriers

24a2 There are not restrictions upon carriers wishing to obtain a certain carrier

category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for a consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst sharing the burden of the cost of that subscription

24b What are the stevedoresrsquo obligations with regard to access to port facilities

and what should they be

24b1 Without providing an analysis of our obligations under law in general terms we are required to provide access to carriers on an equitable basis recognising the competitive environment we operate in

Page 28 of 48

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

b) the measurement of the job steps which apply to a truck from arrival to departure due to (a)

97 All the above terminals have different truck parking arrangements within and

outside the terminal which impacts TTT Across the board TTT is measured from job processing to job complete (98c to 98e below) however the physical layout and mode can influence when processing commences

98 The process of truck management in simple terms is

a) Pre-arrival of trucks

b) Validation of time slots

c) Processing of job (Manual but if automated it takes effect in b above)

d) Enter the operational yard

e) Job transact and complete (by straddle RTG or Forklift Reach-stacker) and

f) AQIS check for full trucks and depart (gate-out)

99 Depending on the physical layout and provision of sufficient space to hold trucks within the terminal boundary or otherwise the distribution of trucks varies through steps 98a to 98c above

910 At DP World Sydney the equivalent hourly truck volume can be held in the

terminal entry marshalling area therefore multiple trucks can enter the terminal park and be processed by terminal staff Post processing all time spent in the marshalling area forms part of the TTT whilst the truck has not necessarily entered the operational yard (see Annexure 2)

911 At DP World Melbourne on the other hand due to restricted space within the

terminal trucks are normally held outside and a small number is constantly drip fed into the terminal (controlled rate of entry) These trucks then approach the processing points (6 lanes x processing booths) further which they directly enter the operational yard and the TTT is measured from this point

912 DP World Fremantle does not have a truck holding area within the terminal which

means the truck enter the terminal and queue at the Entry to Operational Yard Immediately after being processed the truck enters the terminal yard Therefore unlike Sydney time from Entry to Operational Yard is time historically not published Therefore TTT between DP World Sydney and DPW Fremantle are not comparable

913 DP World Fremantle is also an RTG operation similar to DP World Sydney

However the physical layout and the resulting entry arrangements differ Due to restricted space within the terminal the trucks are normally held outside and constantly drip fed into the terminal (controlled rate of entry) The trucks operate through 3 lanes within the terminal and truck turn time is measured at this processing point when the trucks actually enter the operational yard

914 DP World Adelaide is a straddle operation similar to DP World Melbourne

However its physical layout and resulting entry arrangement is different to that of DP World Melbourne and has some similarities with what takes place in Sydney The hourly truck volume can be held within the terminal and the TTT is measured from entry into the terminal main gate to departure from the terminal main gate The measure differs from the other facilities on both entry are exit gates

915 The benefits of this TTT data is not so much the raw data itself but more so the

long term trend in the data If TTT is constant or even improved during periods of volume growth then this reflects a firm commitment to the landside process Continuous improvement reflects a commitment to landside efficiencies

Page 14 of 48

916 TTT is influenced by the mode of operation the Gate In infrastructure and volume

of containers required to be handled

917 The RTG mode of operation requires the truck to travel to the yard stack where the container is located or assigned as opposed to the straddle operation where the straddle comes to the truck that is parked in a bay external to the stacking area The mode of operation at DP World Sydney generally results in a truck with multiple containers being serviced by multiple RTGs and also having to travel to multiple yard locations At each of these yard locations there will be a different level of demand on the particular RTG covering the area This will result in variations in the time it will take to service the truck in that particular area and therefore will influence the truck turnaround time

918 In comparison a terminal running a straddle operation could employ a different

straddle to handle each of the containers processed for the truck

919 The mode of operations employed by container terminals have various strength and weaknesses and need to be considered based on many factors in a Port (ie not just the landside interface) but both modes can contribute to variability

10 The Tribunal invites comment on how truck turnaround times are currently

measured by supply chain participants and how they should be measured The Tribunal further invites comment on the extent to which the stevedores provide access to their facilities at the specific times booked on the VBS

Truck Turn Time (TTT)

101 DP World Sydney currently measures truck turn times from the time the containers on a truck are processed to the time the last container is completely loaded onto the truck (import containers) or discharged from a truck and landed in the terminal (export containers)

102 TTT is directly influenced by the number of containers to be handled by an RTG

terminal on a truck run ie a higher number of containers results in a longer truck turn time on average This due to the truck having to potentially visit multiple locations within the RTG terminal

103 The reason the container Terminal does not measure the time following

completion of loadingdischarging container from truck is measure regulatory bodies (ie AGIS) have commenced inspection of containers on terminal exit gate which is beyond the control of the container terminal

104 The process time is used to measure the start of the truck turn time as this is the

closest time to the truck being in the terminalrsquos control

105 Trucks that take advantage of the autogate processing (currently 25 of trucks) actually start the truck turn time as they come through the terminal gate as this is where the transponder reader is located DP World Sydney support the increase of the autogate processing and the result that the truck turn time starts at the gate For trucks that do not use the autogate processing opportunity the terminal does not start the truck turn time at the gate as the truck driver may not move efficiently to have the container processed

106 Carriers often use TTT measured from the time the truck services at the standby

queue or the arrival of the truck at the zone queue which are waiting for the next time zone to open

107 In relation to standby queue the CAA clearly stipulates that the use of this system

does not guarantee immediate call-up to the terminal in priority to trucks that have booked a time slot

Page 15 of 48

108 In relation to TTT measured from arrival at the time zone queue the fact that the truck has arrived prior to the commencement of the zone opening is purely a decision of the transport carrier and is beyond the control of the Container Terminal and is not supported by DP World

Container Turn Times

109 DP World Sydney currently measures container turn time from the time the

container is processed to the time the container is loaded onto the truck (import container) or discharged from a truck and landed in the terminal (export container) Over the last 5 years the transport regulators have allowed truck operators to operate larger trucks thereby ultimately improving the efficiency of road transport As transport operators increase the use of larger trucks (capable of carrying multiple containers) the handling of these trucks produces a multiple handling of containers on the same truck at the terminals For example in the past one would handle one container per truck and in that case the CTT and TTT were almost identical With multiple containers on trucks the difference between the CTT and TTT is increasing To be able to benchmark this across a port and other ports becomes hard with TTT due to the ever changing ratio of containers per truck (depends on percentage of large truck operators) firstly within the same port and secondly between different ports Therefore CTT enables us to benchmark the measurement on common grounds across all our operations around the country

Access Times at DP World

1010 DP World Sydney divide the day into hourly time zones within the VBS The time

zones start on the house (eg 0700hrs) and complete at the end of the hour (eg 0759hrs) There is a time zone board located at Simblist Road which indicates which time zone is open Trucks queue at this point waiting for the board to change each hour During daylight hours on average there are 15 trucks waiting for the time zone to open The trucks then make their way to the terminal in gate located on Friendship Road once the zone is open

11 The Tribunal invites comment on the choice between a system where container

numbers are nominated in advance thereby offering the possibility of faster turnaround times or not providing container numbers which would provide road carriers with greater flexibility Or would industry participants prefer a system that allows the choice between both

Import Timeslots

111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the import container number in a timeslot booking up to the start of the time zone The disadvantage for the terminal and the carrier is that this flexible system arrangement does not allow the terminal the chance to reposition the container to a position that will minimise the number of containers that have to be moved (known as ldquoconsolidation movesrdquo) in order to access the container that is to be delivered to the truck once the truck has been processed and is in position for loading The more consolidation moves the terminal has to do to load an import container to a truck the longer the truck turn time will be

112 Undertaking consolidation moves prior to truck arrival would provide the opportunity

to decrease truck turn time

113 To achieve a further reduction in truck turn times and a reduction in cost of delivering a container the terminal would need to control the order in which the import containers are delivered This occurs in other ports in the world

Controlling the order of import deliveries

114 The current arrangement where the shipper controls the order of import containers

to be delivered from the terminals results in extra costs incurred by stevedores and also decreased efficiencies The longer a container remains in the terminal (an

Page 16 of 48

increase in the dwell time) results in increased consolidation (rehandles) undertaken by terminal equipment and an increase in the time taken to load a container to a truck or train

Matching of resources to meet demand

115 The terminal allocates the resources required based on the demand or the

number of timeslots released This occurs 24 hrs in advance

116 Carriers who book timeslots and do not meet their commitment (No Show) results in the terminal resources to be under utilised at certain times and creates an opportunity loss There is also an opportunity lost by another carrier to utilise the time slot for each No Show

117 Carrier who book timeslots and arrive late for their commitment (Wrong Zones)

results in terminal resources being under utilised at times and over utilised at other times The troughs in terminal resource utilisation result in an opportunity loss and the peaks result in a decrease in efficiency (increased truck turn time) or increased cost (increased resources applied) The increase in truck turn time has an impact on carriers who arrive on time for their time slot

118 The current VBS allows for carriers to arrive at the terminal to deliver or pick up a

container without committing to a time and container number thus not enabling the terminal to completely plan the required resources to meet the demand This is termed unplanned work The Standby Queue export tagging by B Carrier no advanced deadline for entering an import container number prior to the time zone and no requirement for an export container number being entered into a time slot booking results in an increase in unplanned work Unplanned work results in peaks in the work required by the planned resources and a decrease in efficiency

119 Rail also has similar problems

1110 By changing this arrangement and giving control to the stevedores to determine

the order of container delivery from the terminal will reduce the costs incurred by the terminal and decrease the turnaround time for trucks

Export Timeslots

1111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the export container number in a timeslot booking up to the start of the time zone It also allows an export time slot to be processed without a container number entered in the time slot booking The container number in then entered by the RampD Clerk at the terminal This often results in human error by the truck driver or the RampD Clerk resulting in delays to trucks This practice also eliminates the opportunity for the carrier to use the automatic processing described below in Question 12 To maximise the use of automation and eliminate human error the export container number needs to be a mandatory field to be updated in the time slot booking by a nominated time prior to the start of the time zone eg 2 hours prior to the start of the time zone

12 The Tribunal invites comments on the increased use of ICT and automation and

any other ways to reduce turnaround times and otherwise improve supply chain efficiency

121 DP World support and are driving the increased use of automation for the

processing of trucks DP World have developed and currently make available an automated truck processing system for carriers who use ePORTS to book and manage timeslots The percentage use of this system at DP World Sydney by carriers averages about 25 of total truck movements excluding stack run trucks

122 This system requires the purchase of a transponder unit from the terminal at the

cost that the terminal purchases the unit plus GST Currently the units are sold to

Page 17 of 48

the carrier for $12050 Also required is access to an eGATE screen in ePORTS The process for carriers wanting to move a number of containers on a transponder run involves

a) Booking through EPORTS the required number of time slots in a time zone

For example if a transport carrier wanted to deliver two export containers and collect one import container on a single truck run it needed to book three slots and

b) Setting up the transponder by inputting the slots truck number container numbers and whether they are import or export containers in the transponder booking screen in ePORTS

123 The benefits for carriers of using this automated processing include

a) The processing occurs earlier (ie at the gate as compared to in the RampD Office) therefore this decreases the chance of Wrong Zones being incurred

b) No need for the truck driver to present documentation at the RampD Office therefore reducing the truck turn time by avoiding any potential queues

c) No interaction between the truck driver and the RampD Clerk therefore decreasing human error during processing and causing further delays

d) As the processing occurs at the gate the trucks can skip ahead of other trucks where their drivers have to manually process in the RampD Office effectively jumping the queue

e) Allows reprogramming of trucks up to 15mins before the end of the time zone (eg 0645 for an 06 slot) without the truck driver needing the Delivery Order in his possession

f) Provides the carrier with the ability to educate their customers to provide the Delivery Orders in a timely manner in order to lodge them at the terminal

g) Electronic copies of the Delivery Orders (excluding scanned copies of originals) can be forwarded to the terminal via email therefore eliminating the need to physically lodge them

h) Enables the carrier to take all advantage of Electronic Import Delivery Orders (eIDOs) that are currently being used by Evergreen Marine at DP World Sydney Other shipping lines will move to the use of eIDOs in the future

13 The Tribunal invites stakeholders to comment on VBS capital and operating costs

and to assist it to distinguish between stand-alone VBS costs and those shared with other stevedoring activities

131 It is important to distinguish between the capital and operating costs of operating

the VBS and the costs of operating the landside interface ie delivering containers to and from trucks

132 The costs of a VBS comprise the following components

bull IT development and maintenance costs and

bull Management and administration time to manage and administer the system

These costs are low relative to the costs of actually providing the services within the terminal ndash loading and unloading the trucks

133 Having a system which requires the terminal to provide a guaranteed number of

slots per hours is to the disadvantage of the terminal Terminal operations are by their nature unpredictable due to the irregular arrival of ships Having to guarantee a number of slots which carry with it a high expectation of performance in terms of TTT tends to force the terminal to set the number of slots at a level which includes a risk mitigation factor against all things not going to plan The net result of this is

Page 18 of 48

that the terminal tends to effectively oversupply equipment and labour increasing its costs The impact of this is far more significant than the isolated costs of running the actual vehicle booking systems

134 Direct VBS costs have nothing to do with ship or rail operations

135 The container yard is run as a single operation servicing ship road and rail By

this means while there are practical limitations we seek to pool resources to maximise the overall efficiency of terminal operations particularly to absorb the peaks and troughs of demand across the operations as a whole This effective sharing of costs improves overall efficiency and results in lower costs to the benefits of users as a whole We anticipate that systems and technology improvements will see greater use of such pooling and greater overall efficiency as a result

14 The Tribunal invites stakeholders to comment on VBS access and penalty charges

and the level of transparency of access through the stevedoresrsquo VBSs

141 The VBS facilitates the provision of orderly access to DP World Sydney Terminal for over 200 individual carriers

142 DP World considers the achievement of orderly access to its terminals as a

primary objective of the VBS To achieve orderly access DP World considers it important to require carriers to pay a nominal subscription charge for the level and rights of access they require and to issue ldquono showrdquo and ldquolaterdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay lsquoon timersquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs

143 The VBS is essentially an ldquoappointment bookrdquo to assist transport carriers to

organise themselves more efficiently leading to a reduction in waiting times at the container terminal The VBS divides all working days into time periods containing a pre-determined number of timeslots The timeslots represent the number of import and export containers that can be handled in that period The number of timeslots in a day is determined by expected carrier demand and the availability of labour and equipment Carriers are then able to book timeslots for collection or delivery of containers

144 The alternative is random access to container terminals by carriers and significant

truck queues with associated demurrage costs which are ultimately paid for by the end user

145 At DP World Sydney the VBS offers transport carriers the ability to access an

internet based computer system or telephone bureau for the purpose of booking time slots for those carriers who do no wish to use the computer system The VBS in its present form offers access on a transparent and equitable basis to all carriers encourages the efficient movement of containers from the ship through the terminal and onto customers and vice-versa encourages innovative practices which are beneficial to terminal efficiency road congestion and the overall cost of the supply chain The ldquono showrdquo and ldquolaterdquo fees encourage these operational practices and efficiencies

146 DP World has adopted a class structure with an annual subscription for access

because this system allows carriers to determine what access is required for their business while providing the industry significant level of transparency in terms of access costs

147 All carriers have an equal opportunity to subscribe to any of the three classes of

access to the VBS (bearing in mind that smaller carriers are allowed to consolidate

Page 19 of 48

their subscriptions in order to share the cost of a B Class subscription) and equal access to timeslots amongst carriers of the same class

148 Annual fees are payable in advance Table 3 sets out the various carrier classes

currently in operation at each terminal and the applicable subscription fees for each class There are no annual limits on the number of slots carriers can book

Table 3 DP World Sydney ndash Current carrier classes and VBS deposit and registration fees for the year commencing 1 July 2005

Terminal Carrier Classes Price Number of active

carriers at Feb 06 Port Botany New South Wales

B Carrier ndash online internet access with high service levels

$2922150 (Non-refundable deposit) No fixed upper limit on annual time slots1

28

A Carrier ndash online internet access with standard service levels

$133400 (Annual registration fee) No fixed upper limit on annual time slots2

162

AB Carrier ndash access via the PampO Phone Booking Bureau with standard service levels

$66760 (Annual registration fee) No fixed upper limit on annual time slots3 39

149 Any carrier selecting the ldquoBrdquo classification is encouraged to also consider the ldquoArdquo

classification unless they are confident of utilising a high level of timeslots that would render the higher subscription fee as attractive per timeslot

1410 In addition to the VBS annual subscription fees the carrier access arrangements

provide for the levying of a no-show fee on carriers who fail to arrive for slots they have booked in the amount of $110 per time slot The terminal also charges carriers late fees of $55 per slot if they fail to arrive for a slot booking within the nominated time zone No fees are charged where a carrier is unable to meet the time slot due to delays caused and acknowledged by DP World Australia or where delays are caused by circumstances genuinely outside of the carrierrsquos control DP World Australia also has the discretion to and does waive ldquono showrdquo and ldquowrong zonerdquo fees in the interest of maintaining a good working relationship with carriers Failure by carriers to pay these ldquono showrdquo and ldquowrong zonerdquo fees may lead to them being prevented from making further bookings ldquoNo showrdquo and ldquowrong zonerdquo fees are the means by which DP World ensures that access to itrsquos terminals is provided in the most efficient manner to all 1carriers as late carriers cause delays for those carriers that are on time

1 No fixed upper limit on annual timeslots ndash Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 2 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 3 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release

Page 20 of 48

1411 The ldquono showrdquo and ldquowrong zonerdquo fee structure was introduced following

consultation with carriers It was originally $20 per late arrival (in Victoria where VBS first commenced) but this is proved to be ineffective in disciplining carrier conduct In response to requests from many carriers DP World increased the ldquono showrdquo fee to $110 The fees also discourage carriers from the practice of overbooking slots which they have no intention of using and preventing other carriers from using those slots

1412 The actual cost of a truck turning up late (Wrong Zone) or not turning up at all (No

Show) is the cost of planned resources (labour equipment etc) based on the VBS demand (number of containers expected to handle during a time period) not being utilised during the time period they are employed

1413 Adjacent to each time zone are grace periods one prior to the time zone and one

following the time zone These grace periods and the trucks arrival time for processing determine the status of the time slot ie arrived on time or arrived late (Wrong Zone) Currently the grace period following the time zone is set at 20 minutes which means that if a truck arrives later than one hour and 20 minutes after the start of the time zone then the time slot will be initially recorded as a Wrong Zone Following the completion of each VBS day Wrong Zones are reviewed and any penalty waived if any of the following determined

a) The terminal is aware that it has contributed to a truck arriving late for the time

slot ie the terminal has previously delayed the truck or carrier on an earlier time slot or

b) The carrier advises that they arrived late due to an unforeseen circumstance eg a break down of the truck

We request that the information in 1414 be kept confidential

1414 Omitted for reasons of confidentiality

1415 Officers at DP World Sydney have regular conversations with carriers in respect of

the waiver of No Show fees as well In certain instances DP World may agree to waive fees prior to an invoice being issued

1416 For both Wrong Zone and No Show fees the terminal provides a grievance

process for carriers who have been issued invoices and do not agree that the fee has been issued fairly The carrier has the opportunity to provide the terminal with an explanation and should officers at DP World Sydney agree that there has been an error in the issuing of the fee or an unforeseen circumstance is explained the terminal will credit the invoice

15 The Tribunal invites stakeholders to indicate the costs of providing the services of

rail windows and rail paths to rail operators

151 Rail windows are based allowance on a rail terminal performance KPI of 30 container moves per hour and charged at $360 per hour A shunting time allowance of 15 mins per window is not charged Additional lifts canare provided by increasing the lifts per hour by applying more machinery at no additional cost

152 The cost of providing terminal rail operations is higher than road operations at DP

World Sydney The RTG mode of operation requires a container to be moved to or from the container stack For road containers the truck takes the export container to the stack and travels to the stack to pick up an import container For a rail container a terminal internal transfer vehicle (ITV) is required to be used by the terminal to move the container from the train to the stack (export containers) or

Page 21 of 48

the stack to the train (import containers) This is not required for container being received or delivered by road

153 For import rail containers there is a loss of efficiency for the vessel discharge

operation in order to stack rail containers separately for delivery to the train For each discharge point in the terminal extra resources are required There is extra administration costs in having to make alternate arrangements to separate these import rail containers

154 Despite the fact that the delivery of containers to rail is higher than road the

terminal seeks only a partial recovery of costs in order to encourage the use of rail in the port in line with the NSW Government objectives

155 There is a management cost of setting up and operating the rail windows This is

similar to the cost of operating a VBS

156 There is additional security infrastructure costs for a rail operation to ensure the terminal meets their legislative security requirements The more terminal entry points created the higher the cost to replicate these security infrastructure requirements

16 The Tribunal invites comment from stakeholders on the planned or mooted

development and expansion of the various intermodal terminals in Sydney and the extent to which this is expected to ease congestion in the landside supply chain at Port Botany

161 DP World supports the development and expansion of an intermodal terminal

network to facilitate an increase in the use of rail as the means of container transport This has the potential flow on benefit of minimising the growth in the number of trucks requiring to access the Port Botany area as port volumes continue to grow

162 Transport between the Botany terminals and the inland intermodal terminals

should be by rail or trucks operating a stack (bulk) run road out during off peak periods eg night shifts or weekends The use of Super B Double trucks would assist with the efficiency of these off peak stack run outs

17 The Tribunal invites comment on the likely effect of the expansion plans at Port

Botany on access to the port terminal during peak periods and efficiency along the supply chain

171 Improving the two-way running or back-loading of trucks has to be a priority in

order to maximise access opportunity at the terminals and efficiency along the supply chain It is likely that a third and separate stevedoring facility will only increase the difficulty of improving truck utilisation over and above the current levels by the increased logistics complexity of coordinating timely access to three terminals rather than two

172 A third stevedore will lead to the same port volume being spread over three

operations While it is resource levels that determine available slots DP World has found that during periodic decreases in volumes carriers favour daytime runs to the terminal as opposed to night time

173 The expansion plans will have a negative impact on rail transport timeliness and

access requirements to DP World Sydney if the requirements to breaksplit trains and shunt sections of trains into multiple terminals continues This will undermine the overall rail effectiveness and the NSW Government rail objectives by the unnecessary increase of splitting trains

Page 22 of 48

18 The Tribunal invites comment on the likely effects of expansion of the intermodal network in Sydney on access to the port and efficiency along the supply chain

181 This is a similar issue to point 16 above

19 The Tribunal invites comment on the likely impact of a peak pricing system along

the lines of the FIC on access to the port terminals and the efficiency of the Port Botany supply chain

191 We understand for the NSW Governmentrsquos announcement (31 May 2007) that the

FIC is no longer being proposed

192 Table 4 shows the average percentage of road containers that are handled by shift at DP World Sydney based on a 6 day x 24 hour receival and delivery operation for the past 4 years The figures indicate that there is surplus capacity on both evening and midnight shifts when compared to day shift Note that the percentage of road containers handled has increased on day shift relative to the combination of evening and midnight shifts This has been due to terminal efficiencies creating increased capacity during day shifts and the road carriers utilising this capacity

193 This is further emphasised in Figure 4 which shows the trend over time for day

shift containers handled has increased from 2005 evening shift has decreased and midnight shift has not changed significantly

Table 4 DP World Sydney ndash Percentage of Daily Road Container Volume handled by Shift

Year Midnight Shift (2230 ndash 0630hrs)

Day Shift (0630 ndash 1430hrs)

Evening Shift (1430 ndash 2230hrs)

2007 YTD 21 47 32

2006 23 45 33

2005 22 43 36

2004 19 44 38

194 Year to date April 2007 figures may reflect the seasonal trend for lower volumes in this period

Figure6 DP World Sydney ndash Road Volume trendlines by shift 2005-07

Page 23 of 48

20 The Tribunal invites comment on the likely impact of the expansion of the freight

rail network in Sydney on the number of containers moved by rail and on congestion at the port

201 The importance of increasing the proportion of containers moved by rail is

recognised and supported by DP World Sydney

202 To complement the expansion of the rail freight network upgrade the terminal is developing plans to increase the length and the number of sidings within the terminal Over the next three years the terminal is planning to spend an estimated $20million on internal rail infrastructure machinery and systems The terminal upgrade will ensure DP World Sydney has the infrastructure in place to meet a target of 40 throughput by rail

203 The expansion of the freight rail network needs to take into account The access

to each of the terminals especially the access to DP World Sydney where by the terminal has a distinct disadvantage in relation to its competitor

21 The Tribunal invites comment on the impact on the supply chain on ARTC

managing the metropolitan freight rail network

211 Management of freight rail infrastructure is ARTCrsquos core business and will bring additional management expertise and focus to the task of reforming operations on the Port Botany rail infrastructure

212 For ARTC to control the MFN (Metropolitan Freight Network) makes sense from

the point of view they can make informed decisions for both inbound and outbound Port services based on the wider NSW Rail Freight Network operation

213 The ARTC proposal to co-ordinate services by performing the full Network Control

Function (both signalling and Train Control) from the one centralised centre for the Southern Sydney Freight Line (SSFL)MFN and Port Botany emphasises their commitment to ensure safety communications and network management is their primary objective

214 ARTC are focussed on improving the efficiencies at the Port and bring to the

industry fresh innovative ideas to improve the overall capacity on the rail network ARTCrsquos willingness to assist and eagerness to invest in the rail infrastructure brings a breath of fresh air to the industry and specifically the stevedore operations ARTC can integrate the Botany line into its overall investment program paving the way for additional investment to improve the efficiency of operations on the Botany rail line and at the port-rail interface

22 The Tribunal invites comment on the following questions in relation to costs of the

VBS

22a What costs underpin the VBS access charges levied by the two stevedores How are the VBS access charges set

22b1 Refer to Question 14 The revenue from VBS charges account for a very

small proportion of DP Worldrsquos total container terminal revenue For the year ended 31 December 2006 they accounted for 13 of total revenue Of that 13 approximately 30 was for No Shows and Wrong Zones

22b What costs are incurred by the stevedores in moving a container from the

wharf to a truck or train

22b1 DP World Sydney is operated as an integrated business servicing ships road and rail within the context of a national business We do no separately account for the costs of each discrete activity Information on

Page 24 of 48

overall costs is provided to the ACCC and published on an industry basis in the ACCCrsquos Container Stevedoring Monitoring Report

22b3 Wharf to truck activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the VBS to provide orderly access for road carriers

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal space to allow truck drivers to park their vehicles in order to unlockset up their twist locks and processing of containers

bull Processing of the container

bull System to manage the truck movement within the terminal

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the truck by RTG or forklift

bull Provision of terminal area for truck drivers to safely leave their vehicle to lock the twist locks on their trucks check the container seal number and check the container for damage

bull Provision of terminal area for AQIS operation and infrastructure

22b3 Wharf to train activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the Rail Windows to provide orderly access for operators

Page 25 of 48

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal area for rail lines associated rail infrastructure and train inspection requirements within the terminal

bull Processing of the container

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the ITV by RTG or forklift

bull Internal Transfer Vehicle (ITV) movement of the container from the yard stack to the rail line

bull Lift of the container from the ITV onto the rail wagon

22c What influences the nature and amount of these costs (for example are they influenced by the type of equipment used by a stevedore Do they fluctuate with the number of containers handled by the stevedores) and how have costs changed over time

22c1 DP World operates very similar Vehicle Booking Systems in Brisbane

Sydney Melbourne and Fremantle where there are differences in volume through the terminals The only difference in subscription between the terminals are the ldquoB Classrdquo carrier subscriptions The annual subscription is influenced by the number of carriers seeking this class and the hourly allocation of slots to their class given the number of subscriptions In addition Melbourne operates a straddle facility and Brisbane operates a forklift reachstacker Therefore the cost of the Vehicle Booking System is not dependant on or mode but the annual subscription to ldquoB Classrdquo carrier depends on competition for that carrier class

22c2 An annual subscription fee per class which is a characteristic of DP

Worldrsquos VBS does not normally increase with volume At DP World Sydney subscription fees have not been increased since 2003

22c3 Overall landside costs have increased with increases in wages and

salaries (4 pa) property costs (substantially ahead of cpi) fuel and other general costs These increases have been offset to some extent by increases in productivity Industry costs history is also available publicly in the ACCC Container Stevedoring Monitoring Reports

22d Where do the port landside costs stop and the VBS costs start

22d1 Prior to the Entry to Operational Yard (see Attachment 2) the truck is

under the influence of the VBS and also under the influence of the external environment which includes but is not limited to port and metropolitan road conditions container clearance issues truck arrival peaks and troughs truck preparedness processing of the container to the handled by the terminal and maritime security requirements

It is DP World Sydneyrsquos view that the port landside costs stop and the VBS costs start at the choke point

22e Do the VBSsrsquo penalty charges reflect the cost to stevedores What should

they reflect

22e1 The primary rationale for the penalty regime is to seek to modify carrier behaviour

Page 26 of 48

22e2 However it is also the case that a ldquono showrdquo or ldquowrong zonerdquo gives rise to a lost opportunity cost to the terminal Resources made available but not utilised may be wasted

22e3 DP World considers the achievement of orderly access to its terminal as

a primary objective of the VBS To achieve orderly access PampO considers it important to issue ldquono showrdquo and ldquowrong zonerdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay ldquoon timerdquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs The alternative is random access to container terminals by carriers and significant truck queues with associated demurrage costs which are ultimately paid for by the end consumer

22f Should there be different charging arrangements for empty containers that

are returned to the port as opposed to full export containers

22f1 DP World Sydney terminal handles a full container in a similar way to an empty container using purpose built container stacking equipment controlled by a DP World employee A container occupies the same amount of space whether it is full or empty This leads to the same cost for the handling of a single empty container as a single full container Single empty containers returned to the port should be charged a similar rate to full containers

22f2 To reduce the cost of handling empty containers in the terminal destined

for the same port on the one vessel and that are of the same size the terminal in conjunction with the shipping line and the shipping linersquos nominated carrier work together to create a bulk run of empty containers The bulk run maximises the number of empty containers that are handled in a specific time period The terminal dedicates resources to thee bulk runs and also provides priority access to the transport carrier in order to create efficiency and an economy of scale In this way the cost of returning an empty container via a bulk run is reduced

23 The Tribunal invites comment on the following questions in relation to the different

pricing regimes of the two stevedores

23a Why do the stevedores have different pricing schemes for their VBSs

23a1 We do not know why Toll-PatrickAsciano has adopted the pricing scheme it has

23a2 In order to improve earlier versions of its VBS in the mid-1990s DP

World (PampO) introduced categories of carriers and began charging differential subscription fees for carriers registering to use the VBS depending on the level of access required by the carrier Prior to this change some carriers were engaging multiple computer terminals to the detriment of other carriers and it had become clear that a level of differentiation would be in all carrierrsquos interests The different classes of carrier access were introduced to ensure the most balanced overall outcome The level of differentiation is an annual choice of access levels available to all carriers regardless of size Under this approach different subscription fees are charged for each category but all carriers registering in a particular category pay the same fee Our view remains that an annual subscription as opposed to a pay as you go is far less of an administrative burden on both the carriers and the terminal

Page 27 of 48

23a3 There are no restrictions upon carriers wishing to obtain a certain carrier category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for the same carrier categories as larger carriers Smaller carriers may also apply for consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst charging the burden of the cost of that subscription

23a4 Subscription fees based on differences in class are designed to

encourage choice whilst at the same time communicating a level of transparency with terminal pricing and service

23b Do the different pricing schemes influence the efficiency with which

transporters obtain access to the terminals

23b1 We do not believe this to be the case

23c Would standardisation of charges be more appropriate

23c1 It is our understanding that it would be unlawful for a supplier itself to standardise charges by reason of Section 45 of the Trade Practices Act This may be something that Government wishes to consider

24 The Tribunal invites comment on the following non-price access issues to consider

in relation to the operation of the VBSs

24a What effect do access rules and conditions and non price constraints have on booking a timeslot How to the stevedores use their discretion in determining access and charges and what impact does this have

24a1 The introduction of different categories of access stages the carriersrsquo

access to the VBS for the purposes of booking timeslots ldquoB classrdquo carriers are given exclusive access to a pool of slots between 0730-0820 During this period they are subject to zone limitations which restrict carriers to a maximum number of slots for any given hour The zone limit ensures all carriers within that carrier class are given fair and equitable access to the initial release of slots After the initial booking period the zone limit is lifted and carriers are permitted to book any number of unused slots per hour from those remaining in their pool Similar arrangements exist for A class carriers culminating in the cascading of all remaining slots from all segregated pools into a general pool at 1030 for access by all registered carriers

24a2 There are not restrictions upon carriers wishing to obtain a certain carrier

category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for a consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst sharing the burden of the cost of that subscription

24b What are the stevedoresrsquo obligations with regard to access to port facilities

and what should they be

24b1 Without providing an analysis of our obligations under law in general terms we are required to provide access to carriers on an equitable basis recognising the competitive environment we operate in

Page 28 of 48

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

916 TTT is influenced by the mode of operation the Gate In infrastructure and volume

of containers required to be handled

917 The RTG mode of operation requires the truck to travel to the yard stack where the container is located or assigned as opposed to the straddle operation where the straddle comes to the truck that is parked in a bay external to the stacking area The mode of operation at DP World Sydney generally results in a truck with multiple containers being serviced by multiple RTGs and also having to travel to multiple yard locations At each of these yard locations there will be a different level of demand on the particular RTG covering the area This will result in variations in the time it will take to service the truck in that particular area and therefore will influence the truck turnaround time

918 In comparison a terminal running a straddle operation could employ a different

straddle to handle each of the containers processed for the truck

919 The mode of operations employed by container terminals have various strength and weaknesses and need to be considered based on many factors in a Port (ie not just the landside interface) but both modes can contribute to variability

10 The Tribunal invites comment on how truck turnaround times are currently

measured by supply chain participants and how they should be measured The Tribunal further invites comment on the extent to which the stevedores provide access to their facilities at the specific times booked on the VBS

Truck Turn Time (TTT)

101 DP World Sydney currently measures truck turn times from the time the containers on a truck are processed to the time the last container is completely loaded onto the truck (import containers) or discharged from a truck and landed in the terminal (export containers)

102 TTT is directly influenced by the number of containers to be handled by an RTG

terminal on a truck run ie a higher number of containers results in a longer truck turn time on average This due to the truck having to potentially visit multiple locations within the RTG terminal

103 The reason the container Terminal does not measure the time following

completion of loadingdischarging container from truck is measure regulatory bodies (ie AGIS) have commenced inspection of containers on terminal exit gate which is beyond the control of the container terminal

104 The process time is used to measure the start of the truck turn time as this is the

closest time to the truck being in the terminalrsquos control

105 Trucks that take advantage of the autogate processing (currently 25 of trucks) actually start the truck turn time as they come through the terminal gate as this is where the transponder reader is located DP World Sydney support the increase of the autogate processing and the result that the truck turn time starts at the gate For trucks that do not use the autogate processing opportunity the terminal does not start the truck turn time at the gate as the truck driver may not move efficiently to have the container processed

106 Carriers often use TTT measured from the time the truck services at the standby

queue or the arrival of the truck at the zone queue which are waiting for the next time zone to open

107 In relation to standby queue the CAA clearly stipulates that the use of this system

does not guarantee immediate call-up to the terminal in priority to trucks that have booked a time slot

Page 15 of 48

108 In relation to TTT measured from arrival at the time zone queue the fact that the truck has arrived prior to the commencement of the zone opening is purely a decision of the transport carrier and is beyond the control of the Container Terminal and is not supported by DP World

Container Turn Times

109 DP World Sydney currently measures container turn time from the time the

container is processed to the time the container is loaded onto the truck (import container) or discharged from a truck and landed in the terminal (export container) Over the last 5 years the transport regulators have allowed truck operators to operate larger trucks thereby ultimately improving the efficiency of road transport As transport operators increase the use of larger trucks (capable of carrying multiple containers) the handling of these trucks produces a multiple handling of containers on the same truck at the terminals For example in the past one would handle one container per truck and in that case the CTT and TTT were almost identical With multiple containers on trucks the difference between the CTT and TTT is increasing To be able to benchmark this across a port and other ports becomes hard with TTT due to the ever changing ratio of containers per truck (depends on percentage of large truck operators) firstly within the same port and secondly between different ports Therefore CTT enables us to benchmark the measurement on common grounds across all our operations around the country

Access Times at DP World

1010 DP World Sydney divide the day into hourly time zones within the VBS The time

zones start on the house (eg 0700hrs) and complete at the end of the hour (eg 0759hrs) There is a time zone board located at Simblist Road which indicates which time zone is open Trucks queue at this point waiting for the board to change each hour During daylight hours on average there are 15 trucks waiting for the time zone to open The trucks then make their way to the terminal in gate located on Friendship Road once the zone is open

11 The Tribunal invites comment on the choice between a system where container

numbers are nominated in advance thereby offering the possibility of faster turnaround times or not providing container numbers which would provide road carriers with greater flexibility Or would industry participants prefer a system that allows the choice between both

Import Timeslots

111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the import container number in a timeslot booking up to the start of the time zone The disadvantage for the terminal and the carrier is that this flexible system arrangement does not allow the terminal the chance to reposition the container to a position that will minimise the number of containers that have to be moved (known as ldquoconsolidation movesrdquo) in order to access the container that is to be delivered to the truck once the truck has been processed and is in position for loading The more consolidation moves the terminal has to do to load an import container to a truck the longer the truck turn time will be

112 Undertaking consolidation moves prior to truck arrival would provide the opportunity

to decrease truck turn time

113 To achieve a further reduction in truck turn times and a reduction in cost of delivering a container the terminal would need to control the order in which the import containers are delivered This occurs in other ports in the world

Controlling the order of import deliveries

114 The current arrangement where the shipper controls the order of import containers

to be delivered from the terminals results in extra costs incurred by stevedores and also decreased efficiencies The longer a container remains in the terminal (an

Page 16 of 48

increase in the dwell time) results in increased consolidation (rehandles) undertaken by terminal equipment and an increase in the time taken to load a container to a truck or train

Matching of resources to meet demand

115 The terminal allocates the resources required based on the demand or the

number of timeslots released This occurs 24 hrs in advance

116 Carriers who book timeslots and do not meet their commitment (No Show) results in the terminal resources to be under utilised at certain times and creates an opportunity loss There is also an opportunity lost by another carrier to utilise the time slot for each No Show

117 Carrier who book timeslots and arrive late for their commitment (Wrong Zones)

results in terminal resources being under utilised at times and over utilised at other times The troughs in terminal resource utilisation result in an opportunity loss and the peaks result in a decrease in efficiency (increased truck turn time) or increased cost (increased resources applied) The increase in truck turn time has an impact on carriers who arrive on time for their time slot

118 The current VBS allows for carriers to arrive at the terminal to deliver or pick up a

container without committing to a time and container number thus not enabling the terminal to completely plan the required resources to meet the demand This is termed unplanned work The Standby Queue export tagging by B Carrier no advanced deadline for entering an import container number prior to the time zone and no requirement for an export container number being entered into a time slot booking results in an increase in unplanned work Unplanned work results in peaks in the work required by the planned resources and a decrease in efficiency

119 Rail also has similar problems

1110 By changing this arrangement and giving control to the stevedores to determine

the order of container delivery from the terminal will reduce the costs incurred by the terminal and decrease the turnaround time for trucks

Export Timeslots

1111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the export container number in a timeslot booking up to the start of the time zone It also allows an export time slot to be processed without a container number entered in the time slot booking The container number in then entered by the RampD Clerk at the terminal This often results in human error by the truck driver or the RampD Clerk resulting in delays to trucks This practice also eliminates the opportunity for the carrier to use the automatic processing described below in Question 12 To maximise the use of automation and eliminate human error the export container number needs to be a mandatory field to be updated in the time slot booking by a nominated time prior to the start of the time zone eg 2 hours prior to the start of the time zone

12 The Tribunal invites comments on the increased use of ICT and automation and

any other ways to reduce turnaround times and otherwise improve supply chain efficiency

121 DP World support and are driving the increased use of automation for the

processing of trucks DP World have developed and currently make available an automated truck processing system for carriers who use ePORTS to book and manage timeslots The percentage use of this system at DP World Sydney by carriers averages about 25 of total truck movements excluding stack run trucks

122 This system requires the purchase of a transponder unit from the terminal at the

cost that the terminal purchases the unit plus GST Currently the units are sold to

Page 17 of 48

the carrier for $12050 Also required is access to an eGATE screen in ePORTS The process for carriers wanting to move a number of containers on a transponder run involves

a) Booking through EPORTS the required number of time slots in a time zone

For example if a transport carrier wanted to deliver two export containers and collect one import container on a single truck run it needed to book three slots and

b) Setting up the transponder by inputting the slots truck number container numbers and whether they are import or export containers in the transponder booking screen in ePORTS

123 The benefits for carriers of using this automated processing include

a) The processing occurs earlier (ie at the gate as compared to in the RampD Office) therefore this decreases the chance of Wrong Zones being incurred

b) No need for the truck driver to present documentation at the RampD Office therefore reducing the truck turn time by avoiding any potential queues

c) No interaction between the truck driver and the RampD Clerk therefore decreasing human error during processing and causing further delays

d) As the processing occurs at the gate the trucks can skip ahead of other trucks where their drivers have to manually process in the RampD Office effectively jumping the queue

e) Allows reprogramming of trucks up to 15mins before the end of the time zone (eg 0645 for an 06 slot) without the truck driver needing the Delivery Order in his possession

f) Provides the carrier with the ability to educate their customers to provide the Delivery Orders in a timely manner in order to lodge them at the terminal

g) Electronic copies of the Delivery Orders (excluding scanned copies of originals) can be forwarded to the terminal via email therefore eliminating the need to physically lodge them

h) Enables the carrier to take all advantage of Electronic Import Delivery Orders (eIDOs) that are currently being used by Evergreen Marine at DP World Sydney Other shipping lines will move to the use of eIDOs in the future

13 The Tribunal invites stakeholders to comment on VBS capital and operating costs

and to assist it to distinguish between stand-alone VBS costs and those shared with other stevedoring activities

131 It is important to distinguish between the capital and operating costs of operating

the VBS and the costs of operating the landside interface ie delivering containers to and from trucks

132 The costs of a VBS comprise the following components

bull IT development and maintenance costs and

bull Management and administration time to manage and administer the system

These costs are low relative to the costs of actually providing the services within the terminal ndash loading and unloading the trucks

133 Having a system which requires the terminal to provide a guaranteed number of

slots per hours is to the disadvantage of the terminal Terminal operations are by their nature unpredictable due to the irregular arrival of ships Having to guarantee a number of slots which carry with it a high expectation of performance in terms of TTT tends to force the terminal to set the number of slots at a level which includes a risk mitigation factor against all things not going to plan The net result of this is

Page 18 of 48

that the terminal tends to effectively oversupply equipment and labour increasing its costs The impact of this is far more significant than the isolated costs of running the actual vehicle booking systems

134 Direct VBS costs have nothing to do with ship or rail operations

135 The container yard is run as a single operation servicing ship road and rail By

this means while there are practical limitations we seek to pool resources to maximise the overall efficiency of terminal operations particularly to absorb the peaks and troughs of demand across the operations as a whole This effective sharing of costs improves overall efficiency and results in lower costs to the benefits of users as a whole We anticipate that systems and technology improvements will see greater use of such pooling and greater overall efficiency as a result

14 The Tribunal invites stakeholders to comment on VBS access and penalty charges

and the level of transparency of access through the stevedoresrsquo VBSs

141 The VBS facilitates the provision of orderly access to DP World Sydney Terminal for over 200 individual carriers

142 DP World considers the achievement of orderly access to its terminals as a

primary objective of the VBS To achieve orderly access DP World considers it important to require carriers to pay a nominal subscription charge for the level and rights of access they require and to issue ldquono showrdquo and ldquolaterdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay lsquoon timersquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs

143 The VBS is essentially an ldquoappointment bookrdquo to assist transport carriers to

organise themselves more efficiently leading to a reduction in waiting times at the container terminal The VBS divides all working days into time periods containing a pre-determined number of timeslots The timeslots represent the number of import and export containers that can be handled in that period The number of timeslots in a day is determined by expected carrier demand and the availability of labour and equipment Carriers are then able to book timeslots for collection or delivery of containers

144 The alternative is random access to container terminals by carriers and significant

truck queues with associated demurrage costs which are ultimately paid for by the end user

145 At DP World Sydney the VBS offers transport carriers the ability to access an

internet based computer system or telephone bureau for the purpose of booking time slots for those carriers who do no wish to use the computer system The VBS in its present form offers access on a transparent and equitable basis to all carriers encourages the efficient movement of containers from the ship through the terminal and onto customers and vice-versa encourages innovative practices which are beneficial to terminal efficiency road congestion and the overall cost of the supply chain The ldquono showrdquo and ldquolaterdquo fees encourage these operational practices and efficiencies

146 DP World has adopted a class structure with an annual subscription for access

because this system allows carriers to determine what access is required for their business while providing the industry significant level of transparency in terms of access costs

147 All carriers have an equal opportunity to subscribe to any of the three classes of

access to the VBS (bearing in mind that smaller carriers are allowed to consolidate

Page 19 of 48

their subscriptions in order to share the cost of a B Class subscription) and equal access to timeslots amongst carriers of the same class

148 Annual fees are payable in advance Table 3 sets out the various carrier classes

currently in operation at each terminal and the applicable subscription fees for each class There are no annual limits on the number of slots carriers can book

Table 3 DP World Sydney ndash Current carrier classes and VBS deposit and registration fees for the year commencing 1 July 2005

Terminal Carrier Classes Price Number of active

carriers at Feb 06 Port Botany New South Wales

B Carrier ndash online internet access with high service levels

$2922150 (Non-refundable deposit) No fixed upper limit on annual time slots1

28

A Carrier ndash online internet access with standard service levels

$133400 (Annual registration fee) No fixed upper limit on annual time slots2

162

AB Carrier ndash access via the PampO Phone Booking Bureau with standard service levels

$66760 (Annual registration fee) No fixed upper limit on annual time slots3 39

149 Any carrier selecting the ldquoBrdquo classification is encouraged to also consider the ldquoArdquo

classification unless they are confident of utilising a high level of timeslots that would render the higher subscription fee as attractive per timeslot

1410 In addition to the VBS annual subscription fees the carrier access arrangements

provide for the levying of a no-show fee on carriers who fail to arrive for slots they have booked in the amount of $110 per time slot The terminal also charges carriers late fees of $55 per slot if they fail to arrive for a slot booking within the nominated time zone No fees are charged where a carrier is unable to meet the time slot due to delays caused and acknowledged by DP World Australia or where delays are caused by circumstances genuinely outside of the carrierrsquos control DP World Australia also has the discretion to and does waive ldquono showrdquo and ldquowrong zonerdquo fees in the interest of maintaining a good working relationship with carriers Failure by carriers to pay these ldquono showrdquo and ldquowrong zonerdquo fees may lead to them being prevented from making further bookings ldquoNo showrdquo and ldquowrong zonerdquo fees are the means by which DP World ensures that access to itrsquos terminals is provided in the most efficient manner to all 1carriers as late carriers cause delays for those carriers that are on time

1 No fixed upper limit on annual timeslots ndash Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 2 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 3 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release

Page 20 of 48

1411 The ldquono showrdquo and ldquowrong zonerdquo fee structure was introduced following

consultation with carriers It was originally $20 per late arrival (in Victoria where VBS first commenced) but this is proved to be ineffective in disciplining carrier conduct In response to requests from many carriers DP World increased the ldquono showrdquo fee to $110 The fees also discourage carriers from the practice of overbooking slots which they have no intention of using and preventing other carriers from using those slots

1412 The actual cost of a truck turning up late (Wrong Zone) or not turning up at all (No

Show) is the cost of planned resources (labour equipment etc) based on the VBS demand (number of containers expected to handle during a time period) not being utilised during the time period they are employed

1413 Adjacent to each time zone are grace periods one prior to the time zone and one

following the time zone These grace periods and the trucks arrival time for processing determine the status of the time slot ie arrived on time or arrived late (Wrong Zone) Currently the grace period following the time zone is set at 20 minutes which means that if a truck arrives later than one hour and 20 minutes after the start of the time zone then the time slot will be initially recorded as a Wrong Zone Following the completion of each VBS day Wrong Zones are reviewed and any penalty waived if any of the following determined

a) The terminal is aware that it has contributed to a truck arriving late for the time

slot ie the terminal has previously delayed the truck or carrier on an earlier time slot or

b) The carrier advises that they arrived late due to an unforeseen circumstance eg a break down of the truck

We request that the information in 1414 be kept confidential

1414 Omitted for reasons of confidentiality

1415 Officers at DP World Sydney have regular conversations with carriers in respect of

the waiver of No Show fees as well In certain instances DP World may agree to waive fees prior to an invoice being issued

1416 For both Wrong Zone and No Show fees the terminal provides a grievance

process for carriers who have been issued invoices and do not agree that the fee has been issued fairly The carrier has the opportunity to provide the terminal with an explanation and should officers at DP World Sydney agree that there has been an error in the issuing of the fee or an unforeseen circumstance is explained the terminal will credit the invoice

15 The Tribunal invites stakeholders to indicate the costs of providing the services of

rail windows and rail paths to rail operators

151 Rail windows are based allowance on a rail terminal performance KPI of 30 container moves per hour and charged at $360 per hour A shunting time allowance of 15 mins per window is not charged Additional lifts canare provided by increasing the lifts per hour by applying more machinery at no additional cost

152 The cost of providing terminal rail operations is higher than road operations at DP

World Sydney The RTG mode of operation requires a container to be moved to or from the container stack For road containers the truck takes the export container to the stack and travels to the stack to pick up an import container For a rail container a terminal internal transfer vehicle (ITV) is required to be used by the terminal to move the container from the train to the stack (export containers) or

Page 21 of 48

the stack to the train (import containers) This is not required for container being received or delivered by road

153 For import rail containers there is a loss of efficiency for the vessel discharge

operation in order to stack rail containers separately for delivery to the train For each discharge point in the terminal extra resources are required There is extra administration costs in having to make alternate arrangements to separate these import rail containers

154 Despite the fact that the delivery of containers to rail is higher than road the

terminal seeks only a partial recovery of costs in order to encourage the use of rail in the port in line with the NSW Government objectives

155 There is a management cost of setting up and operating the rail windows This is

similar to the cost of operating a VBS

156 There is additional security infrastructure costs for a rail operation to ensure the terminal meets their legislative security requirements The more terminal entry points created the higher the cost to replicate these security infrastructure requirements

16 The Tribunal invites comment from stakeholders on the planned or mooted

development and expansion of the various intermodal terminals in Sydney and the extent to which this is expected to ease congestion in the landside supply chain at Port Botany

161 DP World supports the development and expansion of an intermodal terminal

network to facilitate an increase in the use of rail as the means of container transport This has the potential flow on benefit of minimising the growth in the number of trucks requiring to access the Port Botany area as port volumes continue to grow

162 Transport between the Botany terminals and the inland intermodal terminals

should be by rail or trucks operating a stack (bulk) run road out during off peak periods eg night shifts or weekends The use of Super B Double trucks would assist with the efficiency of these off peak stack run outs

17 The Tribunal invites comment on the likely effect of the expansion plans at Port

Botany on access to the port terminal during peak periods and efficiency along the supply chain

171 Improving the two-way running or back-loading of trucks has to be a priority in

order to maximise access opportunity at the terminals and efficiency along the supply chain It is likely that a third and separate stevedoring facility will only increase the difficulty of improving truck utilisation over and above the current levels by the increased logistics complexity of coordinating timely access to three terminals rather than two

172 A third stevedore will lead to the same port volume being spread over three

operations While it is resource levels that determine available slots DP World has found that during periodic decreases in volumes carriers favour daytime runs to the terminal as opposed to night time

173 The expansion plans will have a negative impact on rail transport timeliness and

access requirements to DP World Sydney if the requirements to breaksplit trains and shunt sections of trains into multiple terminals continues This will undermine the overall rail effectiveness and the NSW Government rail objectives by the unnecessary increase of splitting trains

Page 22 of 48

18 The Tribunal invites comment on the likely effects of expansion of the intermodal network in Sydney on access to the port and efficiency along the supply chain

181 This is a similar issue to point 16 above

19 The Tribunal invites comment on the likely impact of a peak pricing system along

the lines of the FIC on access to the port terminals and the efficiency of the Port Botany supply chain

191 We understand for the NSW Governmentrsquos announcement (31 May 2007) that the

FIC is no longer being proposed

192 Table 4 shows the average percentage of road containers that are handled by shift at DP World Sydney based on a 6 day x 24 hour receival and delivery operation for the past 4 years The figures indicate that there is surplus capacity on both evening and midnight shifts when compared to day shift Note that the percentage of road containers handled has increased on day shift relative to the combination of evening and midnight shifts This has been due to terminal efficiencies creating increased capacity during day shifts and the road carriers utilising this capacity

193 This is further emphasised in Figure 4 which shows the trend over time for day

shift containers handled has increased from 2005 evening shift has decreased and midnight shift has not changed significantly

Table 4 DP World Sydney ndash Percentage of Daily Road Container Volume handled by Shift

Year Midnight Shift (2230 ndash 0630hrs)

Day Shift (0630 ndash 1430hrs)

Evening Shift (1430 ndash 2230hrs)

2007 YTD 21 47 32

2006 23 45 33

2005 22 43 36

2004 19 44 38

194 Year to date April 2007 figures may reflect the seasonal trend for lower volumes in this period

Figure6 DP World Sydney ndash Road Volume trendlines by shift 2005-07

Page 23 of 48

20 The Tribunal invites comment on the likely impact of the expansion of the freight

rail network in Sydney on the number of containers moved by rail and on congestion at the port

201 The importance of increasing the proportion of containers moved by rail is

recognised and supported by DP World Sydney

202 To complement the expansion of the rail freight network upgrade the terminal is developing plans to increase the length and the number of sidings within the terminal Over the next three years the terminal is planning to spend an estimated $20million on internal rail infrastructure machinery and systems The terminal upgrade will ensure DP World Sydney has the infrastructure in place to meet a target of 40 throughput by rail

203 The expansion of the freight rail network needs to take into account The access

to each of the terminals especially the access to DP World Sydney where by the terminal has a distinct disadvantage in relation to its competitor

21 The Tribunal invites comment on the impact on the supply chain on ARTC

managing the metropolitan freight rail network

211 Management of freight rail infrastructure is ARTCrsquos core business and will bring additional management expertise and focus to the task of reforming operations on the Port Botany rail infrastructure

212 For ARTC to control the MFN (Metropolitan Freight Network) makes sense from

the point of view they can make informed decisions for both inbound and outbound Port services based on the wider NSW Rail Freight Network operation

213 The ARTC proposal to co-ordinate services by performing the full Network Control

Function (both signalling and Train Control) from the one centralised centre for the Southern Sydney Freight Line (SSFL)MFN and Port Botany emphasises their commitment to ensure safety communications and network management is their primary objective

214 ARTC are focussed on improving the efficiencies at the Port and bring to the

industry fresh innovative ideas to improve the overall capacity on the rail network ARTCrsquos willingness to assist and eagerness to invest in the rail infrastructure brings a breath of fresh air to the industry and specifically the stevedore operations ARTC can integrate the Botany line into its overall investment program paving the way for additional investment to improve the efficiency of operations on the Botany rail line and at the port-rail interface

22 The Tribunal invites comment on the following questions in relation to costs of the

VBS

22a What costs underpin the VBS access charges levied by the two stevedores How are the VBS access charges set

22b1 Refer to Question 14 The revenue from VBS charges account for a very

small proportion of DP Worldrsquos total container terminal revenue For the year ended 31 December 2006 they accounted for 13 of total revenue Of that 13 approximately 30 was for No Shows and Wrong Zones

22b What costs are incurred by the stevedores in moving a container from the

wharf to a truck or train

22b1 DP World Sydney is operated as an integrated business servicing ships road and rail within the context of a national business We do no separately account for the costs of each discrete activity Information on

Page 24 of 48

overall costs is provided to the ACCC and published on an industry basis in the ACCCrsquos Container Stevedoring Monitoring Report

22b3 Wharf to truck activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the VBS to provide orderly access for road carriers

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal space to allow truck drivers to park their vehicles in order to unlockset up their twist locks and processing of containers

bull Processing of the container

bull System to manage the truck movement within the terminal

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the truck by RTG or forklift

bull Provision of terminal area for truck drivers to safely leave their vehicle to lock the twist locks on their trucks check the container seal number and check the container for damage

bull Provision of terminal area for AQIS operation and infrastructure

22b3 Wharf to train activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the Rail Windows to provide orderly access for operators

Page 25 of 48

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal area for rail lines associated rail infrastructure and train inspection requirements within the terminal

bull Processing of the container

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the ITV by RTG or forklift

bull Internal Transfer Vehicle (ITV) movement of the container from the yard stack to the rail line

bull Lift of the container from the ITV onto the rail wagon

22c What influences the nature and amount of these costs (for example are they influenced by the type of equipment used by a stevedore Do they fluctuate with the number of containers handled by the stevedores) and how have costs changed over time

22c1 DP World operates very similar Vehicle Booking Systems in Brisbane

Sydney Melbourne and Fremantle where there are differences in volume through the terminals The only difference in subscription between the terminals are the ldquoB Classrdquo carrier subscriptions The annual subscription is influenced by the number of carriers seeking this class and the hourly allocation of slots to their class given the number of subscriptions In addition Melbourne operates a straddle facility and Brisbane operates a forklift reachstacker Therefore the cost of the Vehicle Booking System is not dependant on or mode but the annual subscription to ldquoB Classrdquo carrier depends on competition for that carrier class

22c2 An annual subscription fee per class which is a characteristic of DP

Worldrsquos VBS does not normally increase with volume At DP World Sydney subscription fees have not been increased since 2003

22c3 Overall landside costs have increased with increases in wages and

salaries (4 pa) property costs (substantially ahead of cpi) fuel and other general costs These increases have been offset to some extent by increases in productivity Industry costs history is also available publicly in the ACCC Container Stevedoring Monitoring Reports

22d Where do the port landside costs stop and the VBS costs start

22d1 Prior to the Entry to Operational Yard (see Attachment 2) the truck is

under the influence of the VBS and also under the influence of the external environment which includes but is not limited to port and metropolitan road conditions container clearance issues truck arrival peaks and troughs truck preparedness processing of the container to the handled by the terminal and maritime security requirements

It is DP World Sydneyrsquos view that the port landside costs stop and the VBS costs start at the choke point

22e Do the VBSsrsquo penalty charges reflect the cost to stevedores What should

they reflect

22e1 The primary rationale for the penalty regime is to seek to modify carrier behaviour

Page 26 of 48

22e2 However it is also the case that a ldquono showrdquo or ldquowrong zonerdquo gives rise to a lost opportunity cost to the terminal Resources made available but not utilised may be wasted

22e3 DP World considers the achievement of orderly access to its terminal as

a primary objective of the VBS To achieve orderly access PampO considers it important to issue ldquono showrdquo and ldquowrong zonerdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay ldquoon timerdquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs The alternative is random access to container terminals by carriers and significant truck queues with associated demurrage costs which are ultimately paid for by the end consumer

22f Should there be different charging arrangements for empty containers that

are returned to the port as opposed to full export containers

22f1 DP World Sydney terminal handles a full container in a similar way to an empty container using purpose built container stacking equipment controlled by a DP World employee A container occupies the same amount of space whether it is full or empty This leads to the same cost for the handling of a single empty container as a single full container Single empty containers returned to the port should be charged a similar rate to full containers

22f2 To reduce the cost of handling empty containers in the terminal destined

for the same port on the one vessel and that are of the same size the terminal in conjunction with the shipping line and the shipping linersquos nominated carrier work together to create a bulk run of empty containers The bulk run maximises the number of empty containers that are handled in a specific time period The terminal dedicates resources to thee bulk runs and also provides priority access to the transport carrier in order to create efficiency and an economy of scale In this way the cost of returning an empty container via a bulk run is reduced

23 The Tribunal invites comment on the following questions in relation to the different

pricing regimes of the two stevedores

23a Why do the stevedores have different pricing schemes for their VBSs

23a1 We do not know why Toll-PatrickAsciano has adopted the pricing scheme it has

23a2 In order to improve earlier versions of its VBS in the mid-1990s DP

World (PampO) introduced categories of carriers and began charging differential subscription fees for carriers registering to use the VBS depending on the level of access required by the carrier Prior to this change some carriers were engaging multiple computer terminals to the detriment of other carriers and it had become clear that a level of differentiation would be in all carrierrsquos interests The different classes of carrier access were introduced to ensure the most balanced overall outcome The level of differentiation is an annual choice of access levels available to all carriers regardless of size Under this approach different subscription fees are charged for each category but all carriers registering in a particular category pay the same fee Our view remains that an annual subscription as opposed to a pay as you go is far less of an administrative burden on both the carriers and the terminal

Page 27 of 48

23a3 There are no restrictions upon carriers wishing to obtain a certain carrier category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for the same carrier categories as larger carriers Smaller carriers may also apply for consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst charging the burden of the cost of that subscription

23a4 Subscription fees based on differences in class are designed to

encourage choice whilst at the same time communicating a level of transparency with terminal pricing and service

23b Do the different pricing schemes influence the efficiency with which

transporters obtain access to the terminals

23b1 We do not believe this to be the case

23c Would standardisation of charges be more appropriate

23c1 It is our understanding that it would be unlawful for a supplier itself to standardise charges by reason of Section 45 of the Trade Practices Act This may be something that Government wishes to consider

24 The Tribunal invites comment on the following non-price access issues to consider

in relation to the operation of the VBSs

24a What effect do access rules and conditions and non price constraints have on booking a timeslot How to the stevedores use their discretion in determining access and charges and what impact does this have

24a1 The introduction of different categories of access stages the carriersrsquo

access to the VBS for the purposes of booking timeslots ldquoB classrdquo carriers are given exclusive access to a pool of slots between 0730-0820 During this period they are subject to zone limitations which restrict carriers to a maximum number of slots for any given hour The zone limit ensures all carriers within that carrier class are given fair and equitable access to the initial release of slots After the initial booking period the zone limit is lifted and carriers are permitted to book any number of unused slots per hour from those remaining in their pool Similar arrangements exist for A class carriers culminating in the cascading of all remaining slots from all segregated pools into a general pool at 1030 for access by all registered carriers

24a2 There are not restrictions upon carriers wishing to obtain a certain carrier

category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for a consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst sharing the burden of the cost of that subscription

24b What are the stevedoresrsquo obligations with regard to access to port facilities

and what should they be

24b1 Without providing an analysis of our obligations under law in general terms we are required to provide access to carriers on an equitable basis recognising the competitive environment we operate in

Page 28 of 48

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

108 In relation to TTT measured from arrival at the time zone queue the fact that the truck has arrived prior to the commencement of the zone opening is purely a decision of the transport carrier and is beyond the control of the Container Terminal and is not supported by DP World

Container Turn Times

109 DP World Sydney currently measures container turn time from the time the

container is processed to the time the container is loaded onto the truck (import container) or discharged from a truck and landed in the terminal (export container) Over the last 5 years the transport regulators have allowed truck operators to operate larger trucks thereby ultimately improving the efficiency of road transport As transport operators increase the use of larger trucks (capable of carrying multiple containers) the handling of these trucks produces a multiple handling of containers on the same truck at the terminals For example in the past one would handle one container per truck and in that case the CTT and TTT were almost identical With multiple containers on trucks the difference between the CTT and TTT is increasing To be able to benchmark this across a port and other ports becomes hard with TTT due to the ever changing ratio of containers per truck (depends on percentage of large truck operators) firstly within the same port and secondly between different ports Therefore CTT enables us to benchmark the measurement on common grounds across all our operations around the country

Access Times at DP World

1010 DP World Sydney divide the day into hourly time zones within the VBS The time

zones start on the house (eg 0700hrs) and complete at the end of the hour (eg 0759hrs) There is a time zone board located at Simblist Road which indicates which time zone is open Trucks queue at this point waiting for the board to change each hour During daylight hours on average there are 15 trucks waiting for the time zone to open The trucks then make their way to the terminal in gate located on Friendship Road once the zone is open

11 The Tribunal invites comment on the choice between a system where container

numbers are nominated in advance thereby offering the possibility of faster turnaround times or not providing container numbers which would provide road carriers with greater flexibility Or would industry participants prefer a system that allows the choice between both

Import Timeslots

111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the import container number in a timeslot booking up to the start of the time zone The disadvantage for the terminal and the carrier is that this flexible system arrangement does not allow the terminal the chance to reposition the container to a position that will minimise the number of containers that have to be moved (known as ldquoconsolidation movesrdquo) in order to access the container that is to be delivered to the truck once the truck has been processed and is in position for loading The more consolidation moves the terminal has to do to load an import container to a truck the longer the truck turn time will be

112 Undertaking consolidation moves prior to truck arrival would provide the opportunity

to decrease truck turn time

113 To achieve a further reduction in truck turn times and a reduction in cost of delivering a container the terminal would need to control the order in which the import containers are delivered This occurs in other ports in the world

Controlling the order of import deliveries

114 The current arrangement where the shipper controls the order of import containers

to be delivered from the terminals results in extra costs incurred by stevedores and also decreased efficiencies The longer a container remains in the terminal (an

Page 16 of 48

increase in the dwell time) results in increased consolidation (rehandles) undertaken by terminal equipment and an increase in the time taken to load a container to a truck or train

Matching of resources to meet demand

115 The terminal allocates the resources required based on the demand or the

number of timeslots released This occurs 24 hrs in advance

116 Carriers who book timeslots and do not meet their commitment (No Show) results in the terminal resources to be under utilised at certain times and creates an opportunity loss There is also an opportunity lost by another carrier to utilise the time slot for each No Show

117 Carrier who book timeslots and arrive late for their commitment (Wrong Zones)

results in terminal resources being under utilised at times and over utilised at other times The troughs in terminal resource utilisation result in an opportunity loss and the peaks result in a decrease in efficiency (increased truck turn time) or increased cost (increased resources applied) The increase in truck turn time has an impact on carriers who arrive on time for their time slot

118 The current VBS allows for carriers to arrive at the terminal to deliver or pick up a

container without committing to a time and container number thus not enabling the terminal to completely plan the required resources to meet the demand This is termed unplanned work The Standby Queue export tagging by B Carrier no advanced deadline for entering an import container number prior to the time zone and no requirement for an export container number being entered into a time slot booking results in an increase in unplanned work Unplanned work results in peaks in the work required by the planned resources and a decrease in efficiency

119 Rail also has similar problems

1110 By changing this arrangement and giving control to the stevedores to determine

the order of container delivery from the terminal will reduce the costs incurred by the terminal and decrease the turnaround time for trucks

Export Timeslots

1111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the export container number in a timeslot booking up to the start of the time zone It also allows an export time slot to be processed without a container number entered in the time slot booking The container number in then entered by the RampD Clerk at the terminal This often results in human error by the truck driver or the RampD Clerk resulting in delays to trucks This practice also eliminates the opportunity for the carrier to use the automatic processing described below in Question 12 To maximise the use of automation and eliminate human error the export container number needs to be a mandatory field to be updated in the time slot booking by a nominated time prior to the start of the time zone eg 2 hours prior to the start of the time zone

12 The Tribunal invites comments on the increased use of ICT and automation and

any other ways to reduce turnaround times and otherwise improve supply chain efficiency

121 DP World support and are driving the increased use of automation for the

processing of trucks DP World have developed and currently make available an automated truck processing system for carriers who use ePORTS to book and manage timeslots The percentage use of this system at DP World Sydney by carriers averages about 25 of total truck movements excluding stack run trucks

122 This system requires the purchase of a transponder unit from the terminal at the

cost that the terminal purchases the unit plus GST Currently the units are sold to

Page 17 of 48

the carrier for $12050 Also required is access to an eGATE screen in ePORTS The process for carriers wanting to move a number of containers on a transponder run involves

a) Booking through EPORTS the required number of time slots in a time zone

For example if a transport carrier wanted to deliver two export containers and collect one import container on a single truck run it needed to book three slots and

b) Setting up the transponder by inputting the slots truck number container numbers and whether they are import or export containers in the transponder booking screen in ePORTS

123 The benefits for carriers of using this automated processing include

a) The processing occurs earlier (ie at the gate as compared to in the RampD Office) therefore this decreases the chance of Wrong Zones being incurred

b) No need for the truck driver to present documentation at the RampD Office therefore reducing the truck turn time by avoiding any potential queues

c) No interaction between the truck driver and the RampD Clerk therefore decreasing human error during processing and causing further delays

d) As the processing occurs at the gate the trucks can skip ahead of other trucks where their drivers have to manually process in the RampD Office effectively jumping the queue

e) Allows reprogramming of trucks up to 15mins before the end of the time zone (eg 0645 for an 06 slot) without the truck driver needing the Delivery Order in his possession

f) Provides the carrier with the ability to educate their customers to provide the Delivery Orders in a timely manner in order to lodge them at the terminal

g) Electronic copies of the Delivery Orders (excluding scanned copies of originals) can be forwarded to the terminal via email therefore eliminating the need to physically lodge them

h) Enables the carrier to take all advantage of Electronic Import Delivery Orders (eIDOs) that are currently being used by Evergreen Marine at DP World Sydney Other shipping lines will move to the use of eIDOs in the future

13 The Tribunal invites stakeholders to comment on VBS capital and operating costs

and to assist it to distinguish between stand-alone VBS costs and those shared with other stevedoring activities

131 It is important to distinguish between the capital and operating costs of operating

the VBS and the costs of operating the landside interface ie delivering containers to and from trucks

132 The costs of a VBS comprise the following components

bull IT development and maintenance costs and

bull Management and administration time to manage and administer the system

These costs are low relative to the costs of actually providing the services within the terminal ndash loading and unloading the trucks

133 Having a system which requires the terminal to provide a guaranteed number of

slots per hours is to the disadvantage of the terminal Terminal operations are by their nature unpredictable due to the irregular arrival of ships Having to guarantee a number of slots which carry with it a high expectation of performance in terms of TTT tends to force the terminal to set the number of slots at a level which includes a risk mitigation factor against all things not going to plan The net result of this is

Page 18 of 48

that the terminal tends to effectively oversupply equipment and labour increasing its costs The impact of this is far more significant than the isolated costs of running the actual vehicle booking systems

134 Direct VBS costs have nothing to do with ship or rail operations

135 The container yard is run as a single operation servicing ship road and rail By

this means while there are practical limitations we seek to pool resources to maximise the overall efficiency of terminal operations particularly to absorb the peaks and troughs of demand across the operations as a whole This effective sharing of costs improves overall efficiency and results in lower costs to the benefits of users as a whole We anticipate that systems and technology improvements will see greater use of such pooling and greater overall efficiency as a result

14 The Tribunal invites stakeholders to comment on VBS access and penalty charges

and the level of transparency of access through the stevedoresrsquo VBSs

141 The VBS facilitates the provision of orderly access to DP World Sydney Terminal for over 200 individual carriers

142 DP World considers the achievement of orderly access to its terminals as a

primary objective of the VBS To achieve orderly access DP World considers it important to require carriers to pay a nominal subscription charge for the level and rights of access they require and to issue ldquono showrdquo and ldquolaterdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay lsquoon timersquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs

143 The VBS is essentially an ldquoappointment bookrdquo to assist transport carriers to

organise themselves more efficiently leading to a reduction in waiting times at the container terminal The VBS divides all working days into time periods containing a pre-determined number of timeslots The timeslots represent the number of import and export containers that can be handled in that period The number of timeslots in a day is determined by expected carrier demand and the availability of labour and equipment Carriers are then able to book timeslots for collection or delivery of containers

144 The alternative is random access to container terminals by carriers and significant

truck queues with associated demurrage costs which are ultimately paid for by the end user

145 At DP World Sydney the VBS offers transport carriers the ability to access an

internet based computer system or telephone bureau for the purpose of booking time slots for those carriers who do no wish to use the computer system The VBS in its present form offers access on a transparent and equitable basis to all carriers encourages the efficient movement of containers from the ship through the terminal and onto customers and vice-versa encourages innovative practices which are beneficial to terminal efficiency road congestion and the overall cost of the supply chain The ldquono showrdquo and ldquolaterdquo fees encourage these operational practices and efficiencies

146 DP World has adopted a class structure with an annual subscription for access

because this system allows carriers to determine what access is required for their business while providing the industry significant level of transparency in terms of access costs

147 All carriers have an equal opportunity to subscribe to any of the three classes of

access to the VBS (bearing in mind that smaller carriers are allowed to consolidate

Page 19 of 48

their subscriptions in order to share the cost of a B Class subscription) and equal access to timeslots amongst carriers of the same class

148 Annual fees are payable in advance Table 3 sets out the various carrier classes

currently in operation at each terminal and the applicable subscription fees for each class There are no annual limits on the number of slots carriers can book

Table 3 DP World Sydney ndash Current carrier classes and VBS deposit and registration fees for the year commencing 1 July 2005

Terminal Carrier Classes Price Number of active

carriers at Feb 06 Port Botany New South Wales

B Carrier ndash online internet access with high service levels

$2922150 (Non-refundable deposit) No fixed upper limit on annual time slots1

28

A Carrier ndash online internet access with standard service levels

$133400 (Annual registration fee) No fixed upper limit on annual time slots2

162

AB Carrier ndash access via the PampO Phone Booking Bureau with standard service levels

$66760 (Annual registration fee) No fixed upper limit on annual time slots3 39

149 Any carrier selecting the ldquoBrdquo classification is encouraged to also consider the ldquoArdquo

classification unless they are confident of utilising a high level of timeslots that would render the higher subscription fee as attractive per timeslot

1410 In addition to the VBS annual subscription fees the carrier access arrangements

provide for the levying of a no-show fee on carriers who fail to arrive for slots they have booked in the amount of $110 per time slot The terminal also charges carriers late fees of $55 per slot if they fail to arrive for a slot booking within the nominated time zone No fees are charged where a carrier is unable to meet the time slot due to delays caused and acknowledged by DP World Australia or where delays are caused by circumstances genuinely outside of the carrierrsquos control DP World Australia also has the discretion to and does waive ldquono showrdquo and ldquowrong zonerdquo fees in the interest of maintaining a good working relationship with carriers Failure by carriers to pay these ldquono showrdquo and ldquowrong zonerdquo fees may lead to them being prevented from making further bookings ldquoNo showrdquo and ldquowrong zonerdquo fees are the means by which DP World ensures that access to itrsquos terminals is provided in the most efficient manner to all 1carriers as late carriers cause delays for those carriers that are on time

1 No fixed upper limit on annual timeslots ndash Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 2 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 3 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release

Page 20 of 48

1411 The ldquono showrdquo and ldquowrong zonerdquo fee structure was introduced following

consultation with carriers It was originally $20 per late arrival (in Victoria where VBS first commenced) but this is proved to be ineffective in disciplining carrier conduct In response to requests from many carriers DP World increased the ldquono showrdquo fee to $110 The fees also discourage carriers from the practice of overbooking slots which they have no intention of using and preventing other carriers from using those slots

1412 The actual cost of a truck turning up late (Wrong Zone) or not turning up at all (No

Show) is the cost of planned resources (labour equipment etc) based on the VBS demand (number of containers expected to handle during a time period) not being utilised during the time period they are employed

1413 Adjacent to each time zone are grace periods one prior to the time zone and one

following the time zone These grace periods and the trucks arrival time for processing determine the status of the time slot ie arrived on time or arrived late (Wrong Zone) Currently the grace period following the time zone is set at 20 minutes which means that if a truck arrives later than one hour and 20 minutes after the start of the time zone then the time slot will be initially recorded as a Wrong Zone Following the completion of each VBS day Wrong Zones are reviewed and any penalty waived if any of the following determined

a) The terminal is aware that it has contributed to a truck arriving late for the time

slot ie the terminal has previously delayed the truck or carrier on an earlier time slot or

b) The carrier advises that they arrived late due to an unforeseen circumstance eg a break down of the truck

We request that the information in 1414 be kept confidential

1414 Omitted for reasons of confidentiality

1415 Officers at DP World Sydney have regular conversations with carriers in respect of

the waiver of No Show fees as well In certain instances DP World may agree to waive fees prior to an invoice being issued

1416 For both Wrong Zone and No Show fees the terminal provides a grievance

process for carriers who have been issued invoices and do not agree that the fee has been issued fairly The carrier has the opportunity to provide the terminal with an explanation and should officers at DP World Sydney agree that there has been an error in the issuing of the fee or an unforeseen circumstance is explained the terminal will credit the invoice

15 The Tribunal invites stakeholders to indicate the costs of providing the services of

rail windows and rail paths to rail operators

151 Rail windows are based allowance on a rail terminal performance KPI of 30 container moves per hour and charged at $360 per hour A shunting time allowance of 15 mins per window is not charged Additional lifts canare provided by increasing the lifts per hour by applying more machinery at no additional cost

152 The cost of providing terminal rail operations is higher than road operations at DP

World Sydney The RTG mode of operation requires a container to be moved to or from the container stack For road containers the truck takes the export container to the stack and travels to the stack to pick up an import container For a rail container a terminal internal transfer vehicle (ITV) is required to be used by the terminal to move the container from the train to the stack (export containers) or

Page 21 of 48

the stack to the train (import containers) This is not required for container being received or delivered by road

153 For import rail containers there is a loss of efficiency for the vessel discharge

operation in order to stack rail containers separately for delivery to the train For each discharge point in the terminal extra resources are required There is extra administration costs in having to make alternate arrangements to separate these import rail containers

154 Despite the fact that the delivery of containers to rail is higher than road the

terminal seeks only a partial recovery of costs in order to encourage the use of rail in the port in line with the NSW Government objectives

155 There is a management cost of setting up and operating the rail windows This is

similar to the cost of operating a VBS

156 There is additional security infrastructure costs for a rail operation to ensure the terminal meets their legislative security requirements The more terminal entry points created the higher the cost to replicate these security infrastructure requirements

16 The Tribunal invites comment from stakeholders on the planned or mooted

development and expansion of the various intermodal terminals in Sydney and the extent to which this is expected to ease congestion in the landside supply chain at Port Botany

161 DP World supports the development and expansion of an intermodal terminal

network to facilitate an increase in the use of rail as the means of container transport This has the potential flow on benefit of minimising the growth in the number of trucks requiring to access the Port Botany area as port volumes continue to grow

162 Transport between the Botany terminals and the inland intermodal terminals

should be by rail or trucks operating a stack (bulk) run road out during off peak periods eg night shifts or weekends The use of Super B Double trucks would assist with the efficiency of these off peak stack run outs

17 The Tribunal invites comment on the likely effect of the expansion plans at Port

Botany on access to the port terminal during peak periods and efficiency along the supply chain

171 Improving the two-way running or back-loading of trucks has to be a priority in

order to maximise access opportunity at the terminals and efficiency along the supply chain It is likely that a third and separate stevedoring facility will only increase the difficulty of improving truck utilisation over and above the current levels by the increased logistics complexity of coordinating timely access to three terminals rather than two

172 A third stevedore will lead to the same port volume being spread over three

operations While it is resource levels that determine available slots DP World has found that during periodic decreases in volumes carriers favour daytime runs to the terminal as opposed to night time

173 The expansion plans will have a negative impact on rail transport timeliness and

access requirements to DP World Sydney if the requirements to breaksplit trains and shunt sections of trains into multiple terminals continues This will undermine the overall rail effectiveness and the NSW Government rail objectives by the unnecessary increase of splitting trains

Page 22 of 48

18 The Tribunal invites comment on the likely effects of expansion of the intermodal network in Sydney on access to the port and efficiency along the supply chain

181 This is a similar issue to point 16 above

19 The Tribunal invites comment on the likely impact of a peak pricing system along

the lines of the FIC on access to the port terminals and the efficiency of the Port Botany supply chain

191 We understand for the NSW Governmentrsquos announcement (31 May 2007) that the

FIC is no longer being proposed

192 Table 4 shows the average percentage of road containers that are handled by shift at DP World Sydney based on a 6 day x 24 hour receival and delivery operation for the past 4 years The figures indicate that there is surplus capacity on both evening and midnight shifts when compared to day shift Note that the percentage of road containers handled has increased on day shift relative to the combination of evening and midnight shifts This has been due to terminal efficiencies creating increased capacity during day shifts and the road carriers utilising this capacity

193 This is further emphasised in Figure 4 which shows the trend over time for day

shift containers handled has increased from 2005 evening shift has decreased and midnight shift has not changed significantly

Table 4 DP World Sydney ndash Percentage of Daily Road Container Volume handled by Shift

Year Midnight Shift (2230 ndash 0630hrs)

Day Shift (0630 ndash 1430hrs)

Evening Shift (1430 ndash 2230hrs)

2007 YTD 21 47 32

2006 23 45 33

2005 22 43 36

2004 19 44 38

194 Year to date April 2007 figures may reflect the seasonal trend for lower volumes in this period

Figure6 DP World Sydney ndash Road Volume trendlines by shift 2005-07

Page 23 of 48

20 The Tribunal invites comment on the likely impact of the expansion of the freight

rail network in Sydney on the number of containers moved by rail and on congestion at the port

201 The importance of increasing the proportion of containers moved by rail is

recognised and supported by DP World Sydney

202 To complement the expansion of the rail freight network upgrade the terminal is developing plans to increase the length and the number of sidings within the terminal Over the next three years the terminal is planning to spend an estimated $20million on internal rail infrastructure machinery and systems The terminal upgrade will ensure DP World Sydney has the infrastructure in place to meet a target of 40 throughput by rail

203 The expansion of the freight rail network needs to take into account The access

to each of the terminals especially the access to DP World Sydney where by the terminal has a distinct disadvantage in relation to its competitor

21 The Tribunal invites comment on the impact on the supply chain on ARTC

managing the metropolitan freight rail network

211 Management of freight rail infrastructure is ARTCrsquos core business and will bring additional management expertise and focus to the task of reforming operations on the Port Botany rail infrastructure

212 For ARTC to control the MFN (Metropolitan Freight Network) makes sense from

the point of view they can make informed decisions for both inbound and outbound Port services based on the wider NSW Rail Freight Network operation

213 The ARTC proposal to co-ordinate services by performing the full Network Control

Function (both signalling and Train Control) from the one centralised centre for the Southern Sydney Freight Line (SSFL)MFN and Port Botany emphasises their commitment to ensure safety communications and network management is their primary objective

214 ARTC are focussed on improving the efficiencies at the Port and bring to the

industry fresh innovative ideas to improve the overall capacity on the rail network ARTCrsquos willingness to assist and eagerness to invest in the rail infrastructure brings a breath of fresh air to the industry and specifically the stevedore operations ARTC can integrate the Botany line into its overall investment program paving the way for additional investment to improve the efficiency of operations on the Botany rail line and at the port-rail interface

22 The Tribunal invites comment on the following questions in relation to costs of the

VBS

22a What costs underpin the VBS access charges levied by the two stevedores How are the VBS access charges set

22b1 Refer to Question 14 The revenue from VBS charges account for a very

small proportion of DP Worldrsquos total container terminal revenue For the year ended 31 December 2006 they accounted for 13 of total revenue Of that 13 approximately 30 was for No Shows and Wrong Zones

22b What costs are incurred by the stevedores in moving a container from the

wharf to a truck or train

22b1 DP World Sydney is operated as an integrated business servicing ships road and rail within the context of a national business We do no separately account for the costs of each discrete activity Information on

Page 24 of 48

overall costs is provided to the ACCC and published on an industry basis in the ACCCrsquos Container Stevedoring Monitoring Report

22b3 Wharf to truck activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the VBS to provide orderly access for road carriers

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal space to allow truck drivers to park their vehicles in order to unlockset up their twist locks and processing of containers

bull Processing of the container

bull System to manage the truck movement within the terminal

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the truck by RTG or forklift

bull Provision of terminal area for truck drivers to safely leave their vehicle to lock the twist locks on their trucks check the container seal number and check the container for damage

bull Provision of terminal area for AQIS operation and infrastructure

22b3 Wharf to train activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the Rail Windows to provide orderly access for operators

Page 25 of 48

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal area for rail lines associated rail infrastructure and train inspection requirements within the terminal

bull Processing of the container

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the ITV by RTG or forklift

bull Internal Transfer Vehicle (ITV) movement of the container from the yard stack to the rail line

bull Lift of the container from the ITV onto the rail wagon

22c What influences the nature and amount of these costs (for example are they influenced by the type of equipment used by a stevedore Do they fluctuate with the number of containers handled by the stevedores) and how have costs changed over time

22c1 DP World operates very similar Vehicle Booking Systems in Brisbane

Sydney Melbourne and Fremantle where there are differences in volume through the terminals The only difference in subscription between the terminals are the ldquoB Classrdquo carrier subscriptions The annual subscription is influenced by the number of carriers seeking this class and the hourly allocation of slots to their class given the number of subscriptions In addition Melbourne operates a straddle facility and Brisbane operates a forklift reachstacker Therefore the cost of the Vehicle Booking System is not dependant on or mode but the annual subscription to ldquoB Classrdquo carrier depends on competition for that carrier class

22c2 An annual subscription fee per class which is a characteristic of DP

Worldrsquos VBS does not normally increase with volume At DP World Sydney subscription fees have not been increased since 2003

22c3 Overall landside costs have increased with increases in wages and

salaries (4 pa) property costs (substantially ahead of cpi) fuel and other general costs These increases have been offset to some extent by increases in productivity Industry costs history is also available publicly in the ACCC Container Stevedoring Monitoring Reports

22d Where do the port landside costs stop and the VBS costs start

22d1 Prior to the Entry to Operational Yard (see Attachment 2) the truck is

under the influence of the VBS and also under the influence of the external environment which includes but is not limited to port and metropolitan road conditions container clearance issues truck arrival peaks and troughs truck preparedness processing of the container to the handled by the terminal and maritime security requirements

It is DP World Sydneyrsquos view that the port landside costs stop and the VBS costs start at the choke point

22e Do the VBSsrsquo penalty charges reflect the cost to stevedores What should

they reflect

22e1 The primary rationale for the penalty regime is to seek to modify carrier behaviour

Page 26 of 48

22e2 However it is also the case that a ldquono showrdquo or ldquowrong zonerdquo gives rise to a lost opportunity cost to the terminal Resources made available but not utilised may be wasted

22e3 DP World considers the achievement of orderly access to its terminal as

a primary objective of the VBS To achieve orderly access PampO considers it important to issue ldquono showrdquo and ldquowrong zonerdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay ldquoon timerdquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs The alternative is random access to container terminals by carriers and significant truck queues with associated demurrage costs which are ultimately paid for by the end consumer

22f Should there be different charging arrangements for empty containers that

are returned to the port as opposed to full export containers

22f1 DP World Sydney terminal handles a full container in a similar way to an empty container using purpose built container stacking equipment controlled by a DP World employee A container occupies the same amount of space whether it is full or empty This leads to the same cost for the handling of a single empty container as a single full container Single empty containers returned to the port should be charged a similar rate to full containers

22f2 To reduce the cost of handling empty containers in the terminal destined

for the same port on the one vessel and that are of the same size the terminal in conjunction with the shipping line and the shipping linersquos nominated carrier work together to create a bulk run of empty containers The bulk run maximises the number of empty containers that are handled in a specific time period The terminal dedicates resources to thee bulk runs and also provides priority access to the transport carrier in order to create efficiency and an economy of scale In this way the cost of returning an empty container via a bulk run is reduced

23 The Tribunal invites comment on the following questions in relation to the different

pricing regimes of the two stevedores

23a Why do the stevedores have different pricing schemes for their VBSs

23a1 We do not know why Toll-PatrickAsciano has adopted the pricing scheme it has

23a2 In order to improve earlier versions of its VBS in the mid-1990s DP

World (PampO) introduced categories of carriers and began charging differential subscription fees for carriers registering to use the VBS depending on the level of access required by the carrier Prior to this change some carriers were engaging multiple computer terminals to the detriment of other carriers and it had become clear that a level of differentiation would be in all carrierrsquos interests The different classes of carrier access were introduced to ensure the most balanced overall outcome The level of differentiation is an annual choice of access levels available to all carriers regardless of size Under this approach different subscription fees are charged for each category but all carriers registering in a particular category pay the same fee Our view remains that an annual subscription as opposed to a pay as you go is far less of an administrative burden on both the carriers and the terminal

Page 27 of 48

23a3 There are no restrictions upon carriers wishing to obtain a certain carrier category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for the same carrier categories as larger carriers Smaller carriers may also apply for consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst charging the burden of the cost of that subscription

23a4 Subscription fees based on differences in class are designed to

encourage choice whilst at the same time communicating a level of transparency with terminal pricing and service

23b Do the different pricing schemes influence the efficiency with which

transporters obtain access to the terminals

23b1 We do not believe this to be the case

23c Would standardisation of charges be more appropriate

23c1 It is our understanding that it would be unlawful for a supplier itself to standardise charges by reason of Section 45 of the Trade Practices Act This may be something that Government wishes to consider

24 The Tribunal invites comment on the following non-price access issues to consider

in relation to the operation of the VBSs

24a What effect do access rules and conditions and non price constraints have on booking a timeslot How to the stevedores use their discretion in determining access and charges and what impact does this have

24a1 The introduction of different categories of access stages the carriersrsquo

access to the VBS for the purposes of booking timeslots ldquoB classrdquo carriers are given exclusive access to a pool of slots between 0730-0820 During this period they are subject to zone limitations which restrict carriers to a maximum number of slots for any given hour The zone limit ensures all carriers within that carrier class are given fair and equitable access to the initial release of slots After the initial booking period the zone limit is lifted and carriers are permitted to book any number of unused slots per hour from those remaining in their pool Similar arrangements exist for A class carriers culminating in the cascading of all remaining slots from all segregated pools into a general pool at 1030 for access by all registered carriers

24a2 There are not restrictions upon carriers wishing to obtain a certain carrier

category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for a consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst sharing the burden of the cost of that subscription

24b What are the stevedoresrsquo obligations with regard to access to port facilities

and what should they be

24b1 Without providing an analysis of our obligations under law in general terms we are required to provide access to carriers on an equitable basis recognising the competitive environment we operate in

Page 28 of 48

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

increase in the dwell time) results in increased consolidation (rehandles) undertaken by terminal equipment and an increase in the time taken to load a container to a truck or train

Matching of resources to meet demand

115 The terminal allocates the resources required based on the demand or the

number of timeslots released This occurs 24 hrs in advance

116 Carriers who book timeslots and do not meet their commitment (No Show) results in the terminal resources to be under utilised at certain times and creates an opportunity loss There is also an opportunity lost by another carrier to utilise the time slot for each No Show

117 Carrier who book timeslots and arrive late for their commitment (Wrong Zones)

results in terminal resources being under utilised at times and over utilised at other times The troughs in terminal resource utilisation result in an opportunity loss and the peaks result in a decrease in efficiency (increased truck turn time) or increased cost (increased resources applied) The increase in truck turn time has an impact on carriers who arrive on time for their time slot

118 The current VBS allows for carriers to arrive at the terminal to deliver or pick up a

container without committing to a time and container number thus not enabling the terminal to completely plan the required resources to meet the demand This is termed unplanned work The Standby Queue export tagging by B Carrier no advanced deadline for entering an import container number prior to the time zone and no requirement for an export container number being entered into a time slot booking results in an increase in unplanned work Unplanned work results in peaks in the work required by the planned resources and a decrease in efficiency

119 Rail also has similar problems

1110 By changing this arrangement and giving control to the stevedores to determine

the order of container delivery from the terminal will reduce the costs incurred by the terminal and decrease the turnaround time for trucks

Export Timeslots

1111 The current VBS at DP World Sydney allows the flexibility for the carrier to alter

the export container number in a timeslot booking up to the start of the time zone It also allows an export time slot to be processed without a container number entered in the time slot booking The container number in then entered by the RampD Clerk at the terminal This often results in human error by the truck driver or the RampD Clerk resulting in delays to trucks This practice also eliminates the opportunity for the carrier to use the automatic processing described below in Question 12 To maximise the use of automation and eliminate human error the export container number needs to be a mandatory field to be updated in the time slot booking by a nominated time prior to the start of the time zone eg 2 hours prior to the start of the time zone

12 The Tribunal invites comments on the increased use of ICT and automation and

any other ways to reduce turnaround times and otherwise improve supply chain efficiency

121 DP World support and are driving the increased use of automation for the

processing of trucks DP World have developed and currently make available an automated truck processing system for carriers who use ePORTS to book and manage timeslots The percentage use of this system at DP World Sydney by carriers averages about 25 of total truck movements excluding stack run trucks

122 This system requires the purchase of a transponder unit from the terminal at the

cost that the terminal purchases the unit plus GST Currently the units are sold to

Page 17 of 48

the carrier for $12050 Also required is access to an eGATE screen in ePORTS The process for carriers wanting to move a number of containers on a transponder run involves

a) Booking through EPORTS the required number of time slots in a time zone

For example if a transport carrier wanted to deliver two export containers and collect one import container on a single truck run it needed to book three slots and

b) Setting up the transponder by inputting the slots truck number container numbers and whether they are import or export containers in the transponder booking screen in ePORTS

123 The benefits for carriers of using this automated processing include

a) The processing occurs earlier (ie at the gate as compared to in the RampD Office) therefore this decreases the chance of Wrong Zones being incurred

b) No need for the truck driver to present documentation at the RampD Office therefore reducing the truck turn time by avoiding any potential queues

c) No interaction between the truck driver and the RampD Clerk therefore decreasing human error during processing and causing further delays

d) As the processing occurs at the gate the trucks can skip ahead of other trucks where their drivers have to manually process in the RampD Office effectively jumping the queue

e) Allows reprogramming of trucks up to 15mins before the end of the time zone (eg 0645 for an 06 slot) without the truck driver needing the Delivery Order in his possession

f) Provides the carrier with the ability to educate their customers to provide the Delivery Orders in a timely manner in order to lodge them at the terminal

g) Electronic copies of the Delivery Orders (excluding scanned copies of originals) can be forwarded to the terminal via email therefore eliminating the need to physically lodge them

h) Enables the carrier to take all advantage of Electronic Import Delivery Orders (eIDOs) that are currently being used by Evergreen Marine at DP World Sydney Other shipping lines will move to the use of eIDOs in the future

13 The Tribunal invites stakeholders to comment on VBS capital and operating costs

and to assist it to distinguish between stand-alone VBS costs and those shared with other stevedoring activities

131 It is important to distinguish between the capital and operating costs of operating

the VBS and the costs of operating the landside interface ie delivering containers to and from trucks

132 The costs of a VBS comprise the following components

bull IT development and maintenance costs and

bull Management and administration time to manage and administer the system

These costs are low relative to the costs of actually providing the services within the terminal ndash loading and unloading the trucks

133 Having a system which requires the terminal to provide a guaranteed number of

slots per hours is to the disadvantage of the terminal Terminal operations are by their nature unpredictable due to the irregular arrival of ships Having to guarantee a number of slots which carry with it a high expectation of performance in terms of TTT tends to force the terminal to set the number of slots at a level which includes a risk mitigation factor against all things not going to plan The net result of this is

Page 18 of 48

that the terminal tends to effectively oversupply equipment and labour increasing its costs The impact of this is far more significant than the isolated costs of running the actual vehicle booking systems

134 Direct VBS costs have nothing to do with ship or rail operations

135 The container yard is run as a single operation servicing ship road and rail By

this means while there are practical limitations we seek to pool resources to maximise the overall efficiency of terminal operations particularly to absorb the peaks and troughs of demand across the operations as a whole This effective sharing of costs improves overall efficiency and results in lower costs to the benefits of users as a whole We anticipate that systems and technology improvements will see greater use of such pooling and greater overall efficiency as a result

14 The Tribunal invites stakeholders to comment on VBS access and penalty charges

and the level of transparency of access through the stevedoresrsquo VBSs

141 The VBS facilitates the provision of orderly access to DP World Sydney Terminal for over 200 individual carriers

142 DP World considers the achievement of orderly access to its terminals as a

primary objective of the VBS To achieve orderly access DP World considers it important to require carriers to pay a nominal subscription charge for the level and rights of access they require and to issue ldquono showrdquo and ldquolaterdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay lsquoon timersquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs

143 The VBS is essentially an ldquoappointment bookrdquo to assist transport carriers to

organise themselves more efficiently leading to a reduction in waiting times at the container terminal The VBS divides all working days into time periods containing a pre-determined number of timeslots The timeslots represent the number of import and export containers that can be handled in that period The number of timeslots in a day is determined by expected carrier demand and the availability of labour and equipment Carriers are then able to book timeslots for collection or delivery of containers

144 The alternative is random access to container terminals by carriers and significant

truck queues with associated demurrage costs which are ultimately paid for by the end user

145 At DP World Sydney the VBS offers transport carriers the ability to access an

internet based computer system or telephone bureau for the purpose of booking time slots for those carriers who do no wish to use the computer system The VBS in its present form offers access on a transparent and equitable basis to all carriers encourages the efficient movement of containers from the ship through the terminal and onto customers and vice-versa encourages innovative practices which are beneficial to terminal efficiency road congestion and the overall cost of the supply chain The ldquono showrdquo and ldquolaterdquo fees encourage these operational practices and efficiencies

146 DP World has adopted a class structure with an annual subscription for access

because this system allows carriers to determine what access is required for their business while providing the industry significant level of transparency in terms of access costs

147 All carriers have an equal opportunity to subscribe to any of the three classes of

access to the VBS (bearing in mind that smaller carriers are allowed to consolidate

Page 19 of 48

their subscriptions in order to share the cost of a B Class subscription) and equal access to timeslots amongst carriers of the same class

148 Annual fees are payable in advance Table 3 sets out the various carrier classes

currently in operation at each terminal and the applicable subscription fees for each class There are no annual limits on the number of slots carriers can book

Table 3 DP World Sydney ndash Current carrier classes and VBS deposit and registration fees for the year commencing 1 July 2005

Terminal Carrier Classes Price Number of active

carriers at Feb 06 Port Botany New South Wales

B Carrier ndash online internet access with high service levels

$2922150 (Non-refundable deposit) No fixed upper limit on annual time slots1

28

A Carrier ndash online internet access with standard service levels

$133400 (Annual registration fee) No fixed upper limit on annual time slots2

162

AB Carrier ndash access via the PampO Phone Booking Bureau with standard service levels

$66760 (Annual registration fee) No fixed upper limit on annual time slots3 39

149 Any carrier selecting the ldquoBrdquo classification is encouraged to also consider the ldquoArdquo

classification unless they are confident of utilising a high level of timeslots that would render the higher subscription fee as attractive per timeslot

1410 In addition to the VBS annual subscription fees the carrier access arrangements

provide for the levying of a no-show fee on carriers who fail to arrive for slots they have booked in the amount of $110 per time slot The terminal also charges carriers late fees of $55 per slot if they fail to arrive for a slot booking within the nominated time zone No fees are charged where a carrier is unable to meet the time slot due to delays caused and acknowledged by DP World Australia or where delays are caused by circumstances genuinely outside of the carrierrsquos control DP World Australia also has the discretion to and does waive ldquono showrdquo and ldquowrong zonerdquo fees in the interest of maintaining a good working relationship with carriers Failure by carriers to pay these ldquono showrdquo and ldquowrong zonerdquo fees may lead to them being prevented from making further bookings ldquoNo showrdquo and ldquowrong zonerdquo fees are the means by which DP World ensures that access to itrsquos terminals is provided in the most efficient manner to all 1carriers as late carriers cause delays for those carriers that are on time

1 No fixed upper limit on annual timeslots ndash Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 2 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 3 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release

Page 20 of 48

1411 The ldquono showrdquo and ldquowrong zonerdquo fee structure was introduced following

consultation with carriers It was originally $20 per late arrival (in Victoria where VBS first commenced) but this is proved to be ineffective in disciplining carrier conduct In response to requests from many carriers DP World increased the ldquono showrdquo fee to $110 The fees also discourage carriers from the practice of overbooking slots which they have no intention of using and preventing other carriers from using those slots

1412 The actual cost of a truck turning up late (Wrong Zone) or not turning up at all (No

Show) is the cost of planned resources (labour equipment etc) based on the VBS demand (number of containers expected to handle during a time period) not being utilised during the time period they are employed

1413 Adjacent to each time zone are grace periods one prior to the time zone and one

following the time zone These grace periods and the trucks arrival time for processing determine the status of the time slot ie arrived on time or arrived late (Wrong Zone) Currently the grace period following the time zone is set at 20 minutes which means that if a truck arrives later than one hour and 20 minutes after the start of the time zone then the time slot will be initially recorded as a Wrong Zone Following the completion of each VBS day Wrong Zones are reviewed and any penalty waived if any of the following determined

a) The terminal is aware that it has contributed to a truck arriving late for the time

slot ie the terminal has previously delayed the truck or carrier on an earlier time slot or

b) The carrier advises that they arrived late due to an unforeseen circumstance eg a break down of the truck

We request that the information in 1414 be kept confidential

1414 Omitted for reasons of confidentiality

1415 Officers at DP World Sydney have regular conversations with carriers in respect of

the waiver of No Show fees as well In certain instances DP World may agree to waive fees prior to an invoice being issued

1416 For both Wrong Zone and No Show fees the terminal provides a grievance

process for carriers who have been issued invoices and do not agree that the fee has been issued fairly The carrier has the opportunity to provide the terminal with an explanation and should officers at DP World Sydney agree that there has been an error in the issuing of the fee or an unforeseen circumstance is explained the terminal will credit the invoice

15 The Tribunal invites stakeholders to indicate the costs of providing the services of

rail windows and rail paths to rail operators

151 Rail windows are based allowance on a rail terminal performance KPI of 30 container moves per hour and charged at $360 per hour A shunting time allowance of 15 mins per window is not charged Additional lifts canare provided by increasing the lifts per hour by applying more machinery at no additional cost

152 The cost of providing terminal rail operations is higher than road operations at DP

World Sydney The RTG mode of operation requires a container to be moved to or from the container stack For road containers the truck takes the export container to the stack and travels to the stack to pick up an import container For a rail container a terminal internal transfer vehicle (ITV) is required to be used by the terminal to move the container from the train to the stack (export containers) or

Page 21 of 48

the stack to the train (import containers) This is not required for container being received or delivered by road

153 For import rail containers there is a loss of efficiency for the vessel discharge

operation in order to stack rail containers separately for delivery to the train For each discharge point in the terminal extra resources are required There is extra administration costs in having to make alternate arrangements to separate these import rail containers

154 Despite the fact that the delivery of containers to rail is higher than road the

terminal seeks only a partial recovery of costs in order to encourage the use of rail in the port in line with the NSW Government objectives

155 There is a management cost of setting up and operating the rail windows This is

similar to the cost of operating a VBS

156 There is additional security infrastructure costs for a rail operation to ensure the terminal meets their legislative security requirements The more terminal entry points created the higher the cost to replicate these security infrastructure requirements

16 The Tribunal invites comment from stakeholders on the planned or mooted

development and expansion of the various intermodal terminals in Sydney and the extent to which this is expected to ease congestion in the landside supply chain at Port Botany

161 DP World supports the development and expansion of an intermodal terminal

network to facilitate an increase in the use of rail as the means of container transport This has the potential flow on benefit of minimising the growth in the number of trucks requiring to access the Port Botany area as port volumes continue to grow

162 Transport between the Botany terminals and the inland intermodal terminals

should be by rail or trucks operating a stack (bulk) run road out during off peak periods eg night shifts or weekends The use of Super B Double trucks would assist with the efficiency of these off peak stack run outs

17 The Tribunal invites comment on the likely effect of the expansion plans at Port

Botany on access to the port terminal during peak periods and efficiency along the supply chain

171 Improving the two-way running or back-loading of trucks has to be a priority in

order to maximise access opportunity at the terminals and efficiency along the supply chain It is likely that a third and separate stevedoring facility will only increase the difficulty of improving truck utilisation over and above the current levels by the increased logistics complexity of coordinating timely access to three terminals rather than two

172 A third stevedore will lead to the same port volume being spread over three

operations While it is resource levels that determine available slots DP World has found that during periodic decreases in volumes carriers favour daytime runs to the terminal as opposed to night time

173 The expansion plans will have a negative impact on rail transport timeliness and

access requirements to DP World Sydney if the requirements to breaksplit trains and shunt sections of trains into multiple terminals continues This will undermine the overall rail effectiveness and the NSW Government rail objectives by the unnecessary increase of splitting trains

Page 22 of 48

18 The Tribunal invites comment on the likely effects of expansion of the intermodal network in Sydney on access to the port and efficiency along the supply chain

181 This is a similar issue to point 16 above

19 The Tribunal invites comment on the likely impact of a peak pricing system along

the lines of the FIC on access to the port terminals and the efficiency of the Port Botany supply chain

191 We understand for the NSW Governmentrsquos announcement (31 May 2007) that the

FIC is no longer being proposed

192 Table 4 shows the average percentage of road containers that are handled by shift at DP World Sydney based on a 6 day x 24 hour receival and delivery operation for the past 4 years The figures indicate that there is surplus capacity on both evening and midnight shifts when compared to day shift Note that the percentage of road containers handled has increased on day shift relative to the combination of evening and midnight shifts This has been due to terminal efficiencies creating increased capacity during day shifts and the road carriers utilising this capacity

193 This is further emphasised in Figure 4 which shows the trend over time for day

shift containers handled has increased from 2005 evening shift has decreased and midnight shift has not changed significantly

Table 4 DP World Sydney ndash Percentage of Daily Road Container Volume handled by Shift

Year Midnight Shift (2230 ndash 0630hrs)

Day Shift (0630 ndash 1430hrs)

Evening Shift (1430 ndash 2230hrs)

2007 YTD 21 47 32

2006 23 45 33

2005 22 43 36

2004 19 44 38

194 Year to date April 2007 figures may reflect the seasonal trend for lower volumes in this period

Figure6 DP World Sydney ndash Road Volume trendlines by shift 2005-07

Page 23 of 48

20 The Tribunal invites comment on the likely impact of the expansion of the freight

rail network in Sydney on the number of containers moved by rail and on congestion at the port

201 The importance of increasing the proportion of containers moved by rail is

recognised and supported by DP World Sydney

202 To complement the expansion of the rail freight network upgrade the terminal is developing plans to increase the length and the number of sidings within the terminal Over the next three years the terminal is planning to spend an estimated $20million on internal rail infrastructure machinery and systems The terminal upgrade will ensure DP World Sydney has the infrastructure in place to meet a target of 40 throughput by rail

203 The expansion of the freight rail network needs to take into account The access

to each of the terminals especially the access to DP World Sydney where by the terminal has a distinct disadvantage in relation to its competitor

21 The Tribunal invites comment on the impact on the supply chain on ARTC

managing the metropolitan freight rail network

211 Management of freight rail infrastructure is ARTCrsquos core business and will bring additional management expertise and focus to the task of reforming operations on the Port Botany rail infrastructure

212 For ARTC to control the MFN (Metropolitan Freight Network) makes sense from

the point of view they can make informed decisions for both inbound and outbound Port services based on the wider NSW Rail Freight Network operation

213 The ARTC proposal to co-ordinate services by performing the full Network Control

Function (both signalling and Train Control) from the one centralised centre for the Southern Sydney Freight Line (SSFL)MFN and Port Botany emphasises their commitment to ensure safety communications and network management is their primary objective

214 ARTC are focussed on improving the efficiencies at the Port and bring to the

industry fresh innovative ideas to improve the overall capacity on the rail network ARTCrsquos willingness to assist and eagerness to invest in the rail infrastructure brings a breath of fresh air to the industry and specifically the stevedore operations ARTC can integrate the Botany line into its overall investment program paving the way for additional investment to improve the efficiency of operations on the Botany rail line and at the port-rail interface

22 The Tribunal invites comment on the following questions in relation to costs of the

VBS

22a What costs underpin the VBS access charges levied by the two stevedores How are the VBS access charges set

22b1 Refer to Question 14 The revenue from VBS charges account for a very

small proportion of DP Worldrsquos total container terminal revenue For the year ended 31 December 2006 they accounted for 13 of total revenue Of that 13 approximately 30 was for No Shows and Wrong Zones

22b What costs are incurred by the stevedores in moving a container from the

wharf to a truck or train

22b1 DP World Sydney is operated as an integrated business servicing ships road and rail within the context of a national business We do no separately account for the costs of each discrete activity Information on

Page 24 of 48

overall costs is provided to the ACCC and published on an industry basis in the ACCCrsquos Container Stevedoring Monitoring Report

22b3 Wharf to truck activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the VBS to provide orderly access for road carriers

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal space to allow truck drivers to park their vehicles in order to unlockset up their twist locks and processing of containers

bull Processing of the container

bull System to manage the truck movement within the terminal

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the truck by RTG or forklift

bull Provision of terminal area for truck drivers to safely leave their vehicle to lock the twist locks on their trucks check the container seal number and check the container for damage

bull Provision of terminal area for AQIS operation and infrastructure

22b3 Wharf to train activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the Rail Windows to provide orderly access for operators

Page 25 of 48

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal area for rail lines associated rail infrastructure and train inspection requirements within the terminal

bull Processing of the container

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the ITV by RTG or forklift

bull Internal Transfer Vehicle (ITV) movement of the container from the yard stack to the rail line

bull Lift of the container from the ITV onto the rail wagon

22c What influences the nature and amount of these costs (for example are they influenced by the type of equipment used by a stevedore Do they fluctuate with the number of containers handled by the stevedores) and how have costs changed over time

22c1 DP World operates very similar Vehicle Booking Systems in Brisbane

Sydney Melbourne and Fremantle where there are differences in volume through the terminals The only difference in subscription between the terminals are the ldquoB Classrdquo carrier subscriptions The annual subscription is influenced by the number of carriers seeking this class and the hourly allocation of slots to their class given the number of subscriptions In addition Melbourne operates a straddle facility and Brisbane operates a forklift reachstacker Therefore the cost of the Vehicle Booking System is not dependant on or mode but the annual subscription to ldquoB Classrdquo carrier depends on competition for that carrier class

22c2 An annual subscription fee per class which is a characteristic of DP

Worldrsquos VBS does not normally increase with volume At DP World Sydney subscription fees have not been increased since 2003

22c3 Overall landside costs have increased with increases in wages and

salaries (4 pa) property costs (substantially ahead of cpi) fuel and other general costs These increases have been offset to some extent by increases in productivity Industry costs history is also available publicly in the ACCC Container Stevedoring Monitoring Reports

22d Where do the port landside costs stop and the VBS costs start

22d1 Prior to the Entry to Operational Yard (see Attachment 2) the truck is

under the influence of the VBS and also under the influence of the external environment which includes but is not limited to port and metropolitan road conditions container clearance issues truck arrival peaks and troughs truck preparedness processing of the container to the handled by the terminal and maritime security requirements

It is DP World Sydneyrsquos view that the port landside costs stop and the VBS costs start at the choke point

22e Do the VBSsrsquo penalty charges reflect the cost to stevedores What should

they reflect

22e1 The primary rationale for the penalty regime is to seek to modify carrier behaviour

Page 26 of 48

22e2 However it is also the case that a ldquono showrdquo or ldquowrong zonerdquo gives rise to a lost opportunity cost to the terminal Resources made available but not utilised may be wasted

22e3 DP World considers the achievement of orderly access to its terminal as

a primary objective of the VBS To achieve orderly access PampO considers it important to issue ldquono showrdquo and ldquowrong zonerdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay ldquoon timerdquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs The alternative is random access to container terminals by carriers and significant truck queues with associated demurrage costs which are ultimately paid for by the end consumer

22f Should there be different charging arrangements for empty containers that

are returned to the port as opposed to full export containers

22f1 DP World Sydney terminal handles a full container in a similar way to an empty container using purpose built container stacking equipment controlled by a DP World employee A container occupies the same amount of space whether it is full or empty This leads to the same cost for the handling of a single empty container as a single full container Single empty containers returned to the port should be charged a similar rate to full containers

22f2 To reduce the cost of handling empty containers in the terminal destined

for the same port on the one vessel and that are of the same size the terminal in conjunction with the shipping line and the shipping linersquos nominated carrier work together to create a bulk run of empty containers The bulk run maximises the number of empty containers that are handled in a specific time period The terminal dedicates resources to thee bulk runs and also provides priority access to the transport carrier in order to create efficiency and an economy of scale In this way the cost of returning an empty container via a bulk run is reduced

23 The Tribunal invites comment on the following questions in relation to the different

pricing regimes of the two stevedores

23a Why do the stevedores have different pricing schemes for their VBSs

23a1 We do not know why Toll-PatrickAsciano has adopted the pricing scheme it has

23a2 In order to improve earlier versions of its VBS in the mid-1990s DP

World (PampO) introduced categories of carriers and began charging differential subscription fees for carriers registering to use the VBS depending on the level of access required by the carrier Prior to this change some carriers were engaging multiple computer terminals to the detriment of other carriers and it had become clear that a level of differentiation would be in all carrierrsquos interests The different classes of carrier access were introduced to ensure the most balanced overall outcome The level of differentiation is an annual choice of access levels available to all carriers regardless of size Under this approach different subscription fees are charged for each category but all carriers registering in a particular category pay the same fee Our view remains that an annual subscription as opposed to a pay as you go is far less of an administrative burden on both the carriers and the terminal

Page 27 of 48

23a3 There are no restrictions upon carriers wishing to obtain a certain carrier category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for the same carrier categories as larger carriers Smaller carriers may also apply for consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst charging the burden of the cost of that subscription

23a4 Subscription fees based on differences in class are designed to

encourage choice whilst at the same time communicating a level of transparency with terminal pricing and service

23b Do the different pricing schemes influence the efficiency with which

transporters obtain access to the terminals

23b1 We do not believe this to be the case

23c Would standardisation of charges be more appropriate

23c1 It is our understanding that it would be unlawful for a supplier itself to standardise charges by reason of Section 45 of the Trade Practices Act This may be something that Government wishes to consider

24 The Tribunal invites comment on the following non-price access issues to consider

in relation to the operation of the VBSs

24a What effect do access rules and conditions and non price constraints have on booking a timeslot How to the stevedores use their discretion in determining access and charges and what impact does this have

24a1 The introduction of different categories of access stages the carriersrsquo

access to the VBS for the purposes of booking timeslots ldquoB classrdquo carriers are given exclusive access to a pool of slots between 0730-0820 During this period they are subject to zone limitations which restrict carriers to a maximum number of slots for any given hour The zone limit ensures all carriers within that carrier class are given fair and equitable access to the initial release of slots After the initial booking period the zone limit is lifted and carriers are permitted to book any number of unused slots per hour from those remaining in their pool Similar arrangements exist for A class carriers culminating in the cascading of all remaining slots from all segregated pools into a general pool at 1030 for access by all registered carriers

24a2 There are not restrictions upon carriers wishing to obtain a certain carrier

category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for a consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst sharing the burden of the cost of that subscription

24b What are the stevedoresrsquo obligations with regard to access to port facilities

and what should they be

24b1 Without providing an analysis of our obligations under law in general terms we are required to provide access to carriers on an equitable basis recognising the competitive environment we operate in

Page 28 of 48

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

the carrier for $12050 Also required is access to an eGATE screen in ePORTS The process for carriers wanting to move a number of containers on a transponder run involves

a) Booking through EPORTS the required number of time slots in a time zone

For example if a transport carrier wanted to deliver two export containers and collect one import container on a single truck run it needed to book three slots and

b) Setting up the transponder by inputting the slots truck number container numbers and whether they are import or export containers in the transponder booking screen in ePORTS

123 The benefits for carriers of using this automated processing include

a) The processing occurs earlier (ie at the gate as compared to in the RampD Office) therefore this decreases the chance of Wrong Zones being incurred

b) No need for the truck driver to present documentation at the RampD Office therefore reducing the truck turn time by avoiding any potential queues

c) No interaction between the truck driver and the RampD Clerk therefore decreasing human error during processing and causing further delays

d) As the processing occurs at the gate the trucks can skip ahead of other trucks where their drivers have to manually process in the RampD Office effectively jumping the queue

e) Allows reprogramming of trucks up to 15mins before the end of the time zone (eg 0645 for an 06 slot) without the truck driver needing the Delivery Order in his possession

f) Provides the carrier with the ability to educate their customers to provide the Delivery Orders in a timely manner in order to lodge them at the terminal

g) Electronic copies of the Delivery Orders (excluding scanned copies of originals) can be forwarded to the terminal via email therefore eliminating the need to physically lodge them

h) Enables the carrier to take all advantage of Electronic Import Delivery Orders (eIDOs) that are currently being used by Evergreen Marine at DP World Sydney Other shipping lines will move to the use of eIDOs in the future

13 The Tribunal invites stakeholders to comment on VBS capital and operating costs

and to assist it to distinguish between stand-alone VBS costs and those shared with other stevedoring activities

131 It is important to distinguish between the capital and operating costs of operating

the VBS and the costs of operating the landside interface ie delivering containers to and from trucks

132 The costs of a VBS comprise the following components

bull IT development and maintenance costs and

bull Management and administration time to manage and administer the system

These costs are low relative to the costs of actually providing the services within the terminal ndash loading and unloading the trucks

133 Having a system which requires the terminal to provide a guaranteed number of

slots per hours is to the disadvantage of the terminal Terminal operations are by their nature unpredictable due to the irregular arrival of ships Having to guarantee a number of slots which carry with it a high expectation of performance in terms of TTT tends to force the terminal to set the number of slots at a level which includes a risk mitigation factor against all things not going to plan The net result of this is

Page 18 of 48

that the terminal tends to effectively oversupply equipment and labour increasing its costs The impact of this is far more significant than the isolated costs of running the actual vehicle booking systems

134 Direct VBS costs have nothing to do with ship or rail operations

135 The container yard is run as a single operation servicing ship road and rail By

this means while there are practical limitations we seek to pool resources to maximise the overall efficiency of terminal operations particularly to absorb the peaks and troughs of demand across the operations as a whole This effective sharing of costs improves overall efficiency and results in lower costs to the benefits of users as a whole We anticipate that systems and technology improvements will see greater use of such pooling and greater overall efficiency as a result

14 The Tribunal invites stakeholders to comment on VBS access and penalty charges

and the level of transparency of access through the stevedoresrsquo VBSs

141 The VBS facilitates the provision of orderly access to DP World Sydney Terminal for over 200 individual carriers

142 DP World considers the achievement of orderly access to its terminals as a

primary objective of the VBS To achieve orderly access DP World considers it important to require carriers to pay a nominal subscription charge for the level and rights of access they require and to issue ldquono showrdquo and ldquolaterdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay lsquoon timersquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs

143 The VBS is essentially an ldquoappointment bookrdquo to assist transport carriers to

organise themselves more efficiently leading to a reduction in waiting times at the container terminal The VBS divides all working days into time periods containing a pre-determined number of timeslots The timeslots represent the number of import and export containers that can be handled in that period The number of timeslots in a day is determined by expected carrier demand and the availability of labour and equipment Carriers are then able to book timeslots for collection or delivery of containers

144 The alternative is random access to container terminals by carriers and significant

truck queues with associated demurrage costs which are ultimately paid for by the end user

145 At DP World Sydney the VBS offers transport carriers the ability to access an

internet based computer system or telephone bureau for the purpose of booking time slots for those carriers who do no wish to use the computer system The VBS in its present form offers access on a transparent and equitable basis to all carriers encourages the efficient movement of containers from the ship through the terminal and onto customers and vice-versa encourages innovative practices which are beneficial to terminal efficiency road congestion and the overall cost of the supply chain The ldquono showrdquo and ldquolaterdquo fees encourage these operational practices and efficiencies

146 DP World has adopted a class structure with an annual subscription for access

because this system allows carriers to determine what access is required for their business while providing the industry significant level of transparency in terms of access costs

147 All carriers have an equal opportunity to subscribe to any of the three classes of

access to the VBS (bearing in mind that smaller carriers are allowed to consolidate

Page 19 of 48

their subscriptions in order to share the cost of a B Class subscription) and equal access to timeslots amongst carriers of the same class

148 Annual fees are payable in advance Table 3 sets out the various carrier classes

currently in operation at each terminal and the applicable subscription fees for each class There are no annual limits on the number of slots carriers can book

Table 3 DP World Sydney ndash Current carrier classes and VBS deposit and registration fees for the year commencing 1 July 2005

Terminal Carrier Classes Price Number of active

carriers at Feb 06 Port Botany New South Wales

B Carrier ndash online internet access with high service levels

$2922150 (Non-refundable deposit) No fixed upper limit on annual time slots1

28

A Carrier ndash online internet access with standard service levels

$133400 (Annual registration fee) No fixed upper limit on annual time slots2

162

AB Carrier ndash access via the PampO Phone Booking Bureau with standard service levels

$66760 (Annual registration fee) No fixed upper limit on annual time slots3 39

149 Any carrier selecting the ldquoBrdquo classification is encouraged to also consider the ldquoArdquo

classification unless they are confident of utilising a high level of timeslots that would render the higher subscription fee as attractive per timeslot

1410 In addition to the VBS annual subscription fees the carrier access arrangements

provide for the levying of a no-show fee on carriers who fail to arrive for slots they have booked in the amount of $110 per time slot The terminal also charges carriers late fees of $55 per slot if they fail to arrive for a slot booking within the nominated time zone No fees are charged where a carrier is unable to meet the time slot due to delays caused and acknowledged by DP World Australia or where delays are caused by circumstances genuinely outside of the carrierrsquos control DP World Australia also has the discretion to and does waive ldquono showrdquo and ldquowrong zonerdquo fees in the interest of maintaining a good working relationship with carriers Failure by carriers to pay these ldquono showrdquo and ldquowrong zonerdquo fees may lead to them being prevented from making further bookings ldquoNo showrdquo and ldquowrong zonerdquo fees are the means by which DP World ensures that access to itrsquos terminals is provided in the most efficient manner to all 1carriers as late carriers cause delays for those carriers that are on time

1 No fixed upper limit on annual timeslots ndash Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 2 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 3 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release

Page 20 of 48

1411 The ldquono showrdquo and ldquowrong zonerdquo fee structure was introduced following

consultation with carriers It was originally $20 per late arrival (in Victoria where VBS first commenced) but this is proved to be ineffective in disciplining carrier conduct In response to requests from many carriers DP World increased the ldquono showrdquo fee to $110 The fees also discourage carriers from the practice of overbooking slots which they have no intention of using and preventing other carriers from using those slots

1412 The actual cost of a truck turning up late (Wrong Zone) or not turning up at all (No

Show) is the cost of planned resources (labour equipment etc) based on the VBS demand (number of containers expected to handle during a time period) not being utilised during the time period they are employed

1413 Adjacent to each time zone are grace periods one prior to the time zone and one

following the time zone These grace periods and the trucks arrival time for processing determine the status of the time slot ie arrived on time or arrived late (Wrong Zone) Currently the grace period following the time zone is set at 20 minutes which means that if a truck arrives later than one hour and 20 minutes after the start of the time zone then the time slot will be initially recorded as a Wrong Zone Following the completion of each VBS day Wrong Zones are reviewed and any penalty waived if any of the following determined

a) The terminal is aware that it has contributed to a truck arriving late for the time

slot ie the terminal has previously delayed the truck or carrier on an earlier time slot or

b) The carrier advises that they arrived late due to an unforeseen circumstance eg a break down of the truck

We request that the information in 1414 be kept confidential

1414 Omitted for reasons of confidentiality

1415 Officers at DP World Sydney have regular conversations with carriers in respect of

the waiver of No Show fees as well In certain instances DP World may agree to waive fees prior to an invoice being issued

1416 For both Wrong Zone and No Show fees the terminal provides a grievance

process for carriers who have been issued invoices and do not agree that the fee has been issued fairly The carrier has the opportunity to provide the terminal with an explanation and should officers at DP World Sydney agree that there has been an error in the issuing of the fee or an unforeseen circumstance is explained the terminal will credit the invoice

15 The Tribunal invites stakeholders to indicate the costs of providing the services of

rail windows and rail paths to rail operators

151 Rail windows are based allowance on a rail terminal performance KPI of 30 container moves per hour and charged at $360 per hour A shunting time allowance of 15 mins per window is not charged Additional lifts canare provided by increasing the lifts per hour by applying more machinery at no additional cost

152 The cost of providing terminal rail operations is higher than road operations at DP

World Sydney The RTG mode of operation requires a container to be moved to or from the container stack For road containers the truck takes the export container to the stack and travels to the stack to pick up an import container For a rail container a terminal internal transfer vehicle (ITV) is required to be used by the terminal to move the container from the train to the stack (export containers) or

Page 21 of 48

the stack to the train (import containers) This is not required for container being received or delivered by road

153 For import rail containers there is a loss of efficiency for the vessel discharge

operation in order to stack rail containers separately for delivery to the train For each discharge point in the terminal extra resources are required There is extra administration costs in having to make alternate arrangements to separate these import rail containers

154 Despite the fact that the delivery of containers to rail is higher than road the

terminal seeks only a partial recovery of costs in order to encourage the use of rail in the port in line with the NSW Government objectives

155 There is a management cost of setting up and operating the rail windows This is

similar to the cost of operating a VBS

156 There is additional security infrastructure costs for a rail operation to ensure the terminal meets their legislative security requirements The more terminal entry points created the higher the cost to replicate these security infrastructure requirements

16 The Tribunal invites comment from stakeholders on the planned or mooted

development and expansion of the various intermodal terminals in Sydney and the extent to which this is expected to ease congestion in the landside supply chain at Port Botany

161 DP World supports the development and expansion of an intermodal terminal

network to facilitate an increase in the use of rail as the means of container transport This has the potential flow on benefit of minimising the growth in the number of trucks requiring to access the Port Botany area as port volumes continue to grow

162 Transport between the Botany terminals and the inland intermodal terminals

should be by rail or trucks operating a stack (bulk) run road out during off peak periods eg night shifts or weekends The use of Super B Double trucks would assist with the efficiency of these off peak stack run outs

17 The Tribunal invites comment on the likely effect of the expansion plans at Port

Botany on access to the port terminal during peak periods and efficiency along the supply chain

171 Improving the two-way running or back-loading of trucks has to be a priority in

order to maximise access opportunity at the terminals and efficiency along the supply chain It is likely that a third and separate stevedoring facility will only increase the difficulty of improving truck utilisation over and above the current levels by the increased logistics complexity of coordinating timely access to three terminals rather than two

172 A third stevedore will lead to the same port volume being spread over three

operations While it is resource levels that determine available slots DP World has found that during periodic decreases in volumes carriers favour daytime runs to the terminal as opposed to night time

173 The expansion plans will have a negative impact on rail transport timeliness and

access requirements to DP World Sydney if the requirements to breaksplit trains and shunt sections of trains into multiple terminals continues This will undermine the overall rail effectiveness and the NSW Government rail objectives by the unnecessary increase of splitting trains

Page 22 of 48

18 The Tribunal invites comment on the likely effects of expansion of the intermodal network in Sydney on access to the port and efficiency along the supply chain

181 This is a similar issue to point 16 above

19 The Tribunal invites comment on the likely impact of a peak pricing system along

the lines of the FIC on access to the port terminals and the efficiency of the Port Botany supply chain

191 We understand for the NSW Governmentrsquos announcement (31 May 2007) that the

FIC is no longer being proposed

192 Table 4 shows the average percentage of road containers that are handled by shift at DP World Sydney based on a 6 day x 24 hour receival and delivery operation for the past 4 years The figures indicate that there is surplus capacity on both evening and midnight shifts when compared to day shift Note that the percentage of road containers handled has increased on day shift relative to the combination of evening and midnight shifts This has been due to terminal efficiencies creating increased capacity during day shifts and the road carriers utilising this capacity

193 This is further emphasised in Figure 4 which shows the trend over time for day

shift containers handled has increased from 2005 evening shift has decreased and midnight shift has not changed significantly

Table 4 DP World Sydney ndash Percentage of Daily Road Container Volume handled by Shift

Year Midnight Shift (2230 ndash 0630hrs)

Day Shift (0630 ndash 1430hrs)

Evening Shift (1430 ndash 2230hrs)

2007 YTD 21 47 32

2006 23 45 33

2005 22 43 36

2004 19 44 38

194 Year to date April 2007 figures may reflect the seasonal trend for lower volumes in this period

Figure6 DP World Sydney ndash Road Volume trendlines by shift 2005-07

Page 23 of 48

20 The Tribunal invites comment on the likely impact of the expansion of the freight

rail network in Sydney on the number of containers moved by rail and on congestion at the port

201 The importance of increasing the proportion of containers moved by rail is

recognised and supported by DP World Sydney

202 To complement the expansion of the rail freight network upgrade the terminal is developing plans to increase the length and the number of sidings within the terminal Over the next three years the terminal is planning to spend an estimated $20million on internal rail infrastructure machinery and systems The terminal upgrade will ensure DP World Sydney has the infrastructure in place to meet a target of 40 throughput by rail

203 The expansion of the freight rail network needs to take into account The access

to each of the terminals especially the access to DP World Sydney where by the terminal has a distinct disadvantage in relation to its competitor

21 The Tribunal invites comment on the impact on the supply chain on ARTC

managing the metropolitan freight rail network

211 Management of freight rail infrastructure is ARTCrsquos core business and will bring additional management expertise and focus to the task of reforming operations on the Port Botany rail infrastructure

212 For ARTC to control the MFN (Metropolitan Freight Network) makes sense from

the point of view they can make informed decisions for both inbound and outbound Port services based on the wider NSW Rail Freight Network operation

213 The ARTC proposal to co-ordinate services by performing the full Network Control

Function (both signalling and Train Control) from the one centralised centre for the Southern Sydney Freight Line (SSFL)MFN and Port Botany emphasises their commitment to ensure safety communications and network management is their primary objective

214 ARTC are focussed on improving the efficiencies at the Port and bring to the

industry fresh innovative ideas to improve the overall capacity on the rail network ARTCrsquos willingness to assist and eagerness to invest in the rail infrastructure brings a breath of fresh air to the industry and specifically the stevedore operations ARTC can integrate the Botany line into its overall investment program paving the way for additional investment to improve the efficiency of operations on the Botany rail line and at the port-rail interface

22 The Tribunal invites comment on the following questions in relation to costs of the

VBS

22a What costs underpin the VBS access charges levied by the two stevedores How are the VBS access charges set

22b1 Refer to Question 14 The revenue from VBS charges account for a very

small proportion of DP Worldrsquos total container terminal revenue For the year ended 31 December 2006 they accounted for 13 of total revenue Of that 13 approximately 30 was for No Shows and Wrong Zones

22b What costs are incurred by the stevedores in moving a container from the

wharf to a truck or train

22b1 DP World Sydney is operated as an integrated business servicing ships road and rail within the context of a national business We do no separately account for the costs of each discrete activity Information on

Page 24 of 48

overall costs is provided to the ACCC and published on an industry basis in the ACCCrsquos Container Stevedoring Monitoring Report

22b3 Wharf to truck activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the VBS to provide orderly access for road carriers

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal space to allow truck drivers to park their vehicles in order to unlockset up their twist locks and processing of containers

bull Processing of the container

bull System to manage the truck movement within the terminal

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the truck by RTG or forklift

bull Provision of terminal area for truck drivers to safely leave their vehicle to lock the twist locks on their trucks check the container seal number and check the container for damage

bull Provision of terminal area for AQIS operation and infrastructure

22b3 Wharf to train activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the Rail Windows to provide orderly access for operators

Page 25 of 48

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal area for rail lines associated rail infrastructure and train inspection requirements within the terminal

bull Processing of the container

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the ITV by RTG or forklift

bull Internal Transfer Vehicle (ITV) movement of the container from the yard stack to the rail line

bull Lift of the container from the ITV onto the rail wagon

22c What influences the nature and amount of these costs (for example are they influenced by the type of equipment used by a stevedore Do they fluctuate with the number of containers handled by the stevedores) and how have costs changed over time

22c1 DP World operates very similar Vehicle Booking Systems in Brisbane

Sydney Melbourne and Fremantle where there are differences in volume through the terminals The only difference in subscription between the terminals are the ldquoB Classrdquo carrier subscriptions The annual subscription is influenced by the number of carriers seeking this class and the hourly allocation of slots to their class given the number of subscriptions In addition Melbourne operates a straddle facility and Brisbane operates a forklift reachstacker Therefore the cost of the Vehicle Booking System is not dependant on or mode but the annual subscription to ldquoB Classrdquo carrier depends on competition for that carrier class

22c2 An annual subscription fee per class which is a characteristic of DP

Worldrsquos VBS does not normally increase with volume At DP World Sydney subscription fees have not been increased since 2003

22c3 Overall landside costs have increased with increases in wages and

salaries (4 pa) property costs (substantially ahead of cpi) fuel and other general costs These increases have been offset to some extent by increases in productivity Industry costs history is also available publicly in the ACCC Container Stevedoring Monitoring Reports

22d Where do the port landside costs stop and the VBS costs start

22d1 Prior to the Entry to Operational Yard (see Attachment 2) the truck is

under the influence of the VBS and also under the influence of the external environment which includes but is not limited to port and metropolitan road conditions container clearance issues truck arrival peaks and troughs truck preparedness processing of the container to the handled by the terminal and maritime security requirements

It is DP World Sydneyrsquos view that the port landside costs stop and the VBS costs start at the choke point

22e Do the VBSsrsquo penalty charges reflect the cost to stevedores What should

they reflect

22e1 The primary rationale for the penalty regime is to seek to modify carrier behaviour

Page 26 of 48

22e2 However it is also the case that a ldquono showrdquo or ldquowrong zonerdquo gives rise to a lost opportunity cost to the terminal Resources made available but not utilised may be wasted

22e3 DP World considers the achievement of orderly access to its terminal as

a primary objective of the VBS To achieve orderly access PampO considers it important to issue ldquono showrdquo and ldquowrong zonerdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay ldquoon timerdquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs The alternative is random access to container terminals by carriers and significant truck queues with associated demurrage costs which are ultimately paid for by the end consumer

22f Should there be different charging arrangements for empty containers that

are returned to the port as opposed to full export containers

22f1 DP World Sydney terminal handles a full container in a similar way to an empty container using purpose built container stacking equipment controlled by a DP World employee A container occupies the same amount of space whether it is full or empty This leads to the same cost for the handling of a single empty container as a single full container Single empty containers returned to the port should be charged a similar rate to full containers

22f2 To reduce the cost of handling empty containers in the terminal destined

for the same port on the one vessel and that are of the same size the terminal in conjunction with the shipping line and the shipping linersquos nominated carrier work together to create a bulk run of empty containers The bulk run maximises the number of empty containers that are handled in a specific time period The terminal dedicates resources to thee bulk runs and also provides priority access to the transport carrier in order to create efficiency and an economy of scale In this way the cost of returning an empty container via a bulk run is reduced

23 The Tribunal invites comment on the following questions in relation to the different

pricing regimes of the two stevedores

23a Why do the stevedores have different pricing schemes for their VBSs

23a1 We do not know why Toll-PatrickAsciano has adopted the pricing scheme it has

23a2 In order to improve earlier versions of its VBS in the mid-1990s DP

World (PampO) introduced categories of carriers and began charging differential subscription fees for carriers registering to use the VBS depending on the level of access required by the carrier Prior to this change some carriers were engaging multiple computer terminals to the detriment of other carriers and it had become clear that a level of differentiation would be in all carrierrsquos interests The different classes of carrier access were introduced to ensure the most balanced overall outcome The level of differentiation is an annual choice of access levels available to all carriers regardless of size Under this approach different subscription fees are charged for each category but all carriers registering in a particular category pay the same fee Our view remains that an annual subscription as opposed to a pay as you go is far less of an administrative burden on both the carriers and the terminal

Page 27 of 48

23a3 There are no restrictions upon carriers wishing to obtain a certain carrier category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for the same carrier categories as larger carriers Smaller carriers may also apply for consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst charging the burden of the cost of that subscription

23a4 Subscription fees based on differences in class are designed to

encourage choice whilst at the same time communicating a level of transparency with terminal pricing and service

23b Do the different pricing schemes influence the efficiency with which

transporters obtain access to the terminals

23b1 We do not believe this to be the case

23c Would standardisation of charges be more appropriate

23c1 It is our understanding that it would be unlawful for a supplier itself to standardise charges by reason of Section 45 of the Trade Practices Act This may be something that Government wishes to consider

24 The Tribunal invites comment on the following non-price access issues to consider

in relation to the operation of the VBSs

24a What effect do access rules and conditions and non price constraints have on booking a timeslot How to the stevedores use their discretion in determining access and charges and what impact does this have

24a1 The introduction of different categories of access stages the carriersrsquo

access to the VBS for the purposes of booking timeslots ldquoB classrdquo carriers are given exclusive access to a pool of slots between 0730-0820 During this period they are subject to zone limitations which restrict carriers to a maximum number of slots for any given hour The zone limit ensures all carriers within that carrier class are given fair and equitable access to the initial release of slots After the initial booking period the zone limit is lifted and carriers are permitted to book any number of unused slots per hour from those remaining in their pool Similar arrangements exist for A class carriers culminating in the cascading of all remaining slots from all segregated pools into a general pool at 1030 for access by all registered carriers

24a2 There are not restrictions upon carriers wishing to obtain a certain carrier

category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for a consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst sharing the burden of the cost of that subscription

24b What are the stevedoresrsquo obligations with regard to access to port facilities

and what should they be

24b1 Without providing an analysis of our obligations under law in general terms we are required to provide access to carriers on an equitable basis recognising the competitive environment we operate in

Page 28 of 48

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

that the terminal tends to effectively oversupply equipment and labour increasing its costs The impact of this is far more significant than the isolated costs of running the actual vehicle booking systems

134 Direct VBS costs have nothing to do with ship or rail operations

135 The container yard is run as a single operation servicing ship road and rail By

this means while there are practical limitations we seek to pool resources to maximise the overall efficiency of terminal operations particularly to absorb the peaks and troughs of demand across the operations as a whole This effective sharing of costs improves overall efficiency and results in lower costs to the benefits of users as a whole We anticipate that systems and technology improvements will see greater use of such pooling and greater overall efficiency as a result

14 The Tribunal invites stakeholders to comment on VBS access and penalty charges

and the level of transparency of access through the stevedoresrsquo VBSs

141 The VBS facilitates the provision of orderly access to DP World Sydney Terminal for over 200 individual carriers

142 DP World considers the achievement of orderly access to its terminals as a

primary objective of the VBS To achieve orderly access DP World considers it important to require carriers to pay a nominal subscription charge for the level and rights of access they require and to issue ldquono showrdquo and ldquolaterdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay lsquoon timersquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs

143 The VBS is essentially an ldquoappointment bookrdquo to assist transport carriers to

organise themselves more efficiently leading to a reduction in waiting times at the container terminal The VBS divides all working days into time periods containing a pre-determined number of timeslots The timeslots represent the number of import and export containers that can be handled in that period The number of timeslots in a day is determined by expected carrier demand and the availability of labour and equipment Carriers are then able to book timeslots for collection or delivery of containers

144 The alternative is random access to container terminals by carriers and significant

truck queues with associated demurrage costs which are ultimately paid for by the end user

145 At DP World Sydney the VBS offers transport carriers the ability to access an

internet based computer system or telephone bureau for the purpose of booking time slots for those carriers who do no wish to use the computer system The VBS in its present form offers access on a transparent and equitable basis to all carriers encourages the efficient movement of containers from the ship through the terminal and onto customers and vice-versa encourages innovative practices which are beneficial to terminal efficiency road congestion and the overall cost of the supply chain The ldquono showrdquo and ldquolaterdquo fees encourage these operational practices and efficiencies

146 DP World has adopted a class structure with an annual subscription for access

because this system allows carriers to determine what access is required for their business while providing the industry significant level of transparency in terms of access costs

147 All carriers have an equal opportunity to subscribe to any of the three classes of

access to the VBS (bearing in mind that smaller carriers are allowed to consolidate

Page 19 of 48

their subscriptions in order to share the cost of a B Class subscription) and equal access to timeslots amongst carriers of the same class

148 Annual fees are payable in advance Table 3 sets out the various carrier classes

currently in operation at each terminal and the applicable subscription fees for each class There are no annual limits on the number of slots carriers can book

Table 3 DP World Sydney ndash Current carrier classes and VBS deposit and registration fees for the year commencing 1 July 2005

Terminal Carrier Classes Price Number of active

carriers at Feb 06 Port Botany New South Wales

B Carrier ndash online internet access with high service levels

$2922150 (Non-refundable deposit) No fixed upper limit on annual time slots1

28

A Carrier ndash online internet access with standard service levels

$133400 (Annual registration fee) No fixed upper limit on annual time slots2

162

AB Carrier ndash access via the PampO Phone Booking Bureau with standard service levels

$66760 (Annual registration fee) No fixed upper limit on annual time slots3 39

149 Any carrier selecting the ldquoBrdquo classification is encouraged to also consider the ldquoArdquo

classification unless they are confident of utilising a high level of timeslots that would render the higher subscription fee as attractive per timeslot

1410 In addition to the VBS annual subscription fees the carrier access arrangements

provide for the levying of a no-show fee on carriers who fail to arrive for slots they have booked in the amount of $110 per time slot The terminal also charges carriers late fees of $55 per slot if they fail to arrive for a slot booking within the nominated time zone No fees are charged where a carrier is unable to meet the time slot due to delays caused and acknowledged by DP World Australia or where delays are caused by circumstances genuinely outside of the carrierrsquos control DP World Australia also has the discretion to and does waive ldquono showrdquo and ldquowrong zonerdquo fees in the interest of maintaining a good working relationship with carriers Failure by carriers to pay these ldquono showrdquo and ldquowrong zonerdquo fees may lead to them being prevented from making further bookings ldquoNo showrdquo and ldquowrong zonerdquo fees are the means by which DP World ensures that access to itrsquos terminals is provided in the most efficient manner to all 1carriers as late carriers cause delays for those carriers that are on time

1 No fixed upper limit on annual timeslots ndash Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 2 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 3 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release

Page 20 of 48

1411 The ldquono showrdquo and ldquowrong zonerdquo fee structure was introduced following

consultation with carriers It was originally $20 per late arrival (in Victoria where VBS first commenced) but this is proved to be ineffective in disciplining carrier conduct In response to requests from many carriers DP World increased the ldquono showrdquo fee to $110 The fees also discourage carriers from the practice of overbooking slots which they have no intention of using and preventing other carriers from using those slots

1412 The actual cost of a truck turning up late (Wrong Zone) or not turning up at all (No

Show) is the cost of planned resources (labour equipment etc) based on the VBS demand (number of containers expected to handle during a time period) not being utilised during the time period they are employed

1413 Adjacent to each time zone are grace periods one prior to the time zone and one

following the time zone These grace periods and the trucks arrival time for processing determine the status of the time slot ie arrived on time or arrived late (Wrong Zone) Currently the grace period following the time zone is set at 20 minutes which means that if a truck arrives later than one hour and 20 minutes after the start of the time zone then the time slot will be initially recorded as a Wrong Zone Following the completion of each VBS day Wrong Zones are reviewed and any penalty waived if any of the following determined

a) The terminal is aware that it has contributed to a truck arriving late for the time

slot ie the terminal has previously delayed the truck or carrier on an earlier time slot or

b) The carrier advises that they arrived late due to an unforeseen circumstance eg a break down of the truck

We request that the information in 1414 be kept confidential

1414 Omitted for reasons of confidentiality

1415 Officers at DP World Sydney have regular conversations with carriers in respect of

the waiver of No Show fees as well In certain instances DP World may agree to waive fees prior to an invoice being issued

1416 For both Wrong Zone and No Show fees the terminal provides a grievance

process for carriers who have been issued invoices and do not agree that the fee has been issued fairly The carrier has the opportunity to provide the terminal with an explanation and should officers at DP World Sydney agree that there has been an error in the issuing of the fee or an unforeseen circumstance is explained the terminal will credit the invoice

15 The Tribunal invites stakeholders to indicate the costs of providing the services of

rail windows and rail paths to rail operators

151 Rail windows are based allowance on a rail terminal performance KPI of 30 container moves per hour and charged at $360 per hour A shunting time allowance of 15 mins per window is not charged Additional lifts canare provided by increasing the lifts per hour by applying more machinery at no additional cost

152 The cost of providing terminal rail operations is higher than road operations at DP

World Sydney The RTG mode of operation requires a container to be moved to or from the container stack For road containers the truck takes the export container to the stack and travels to the stack to pick up an import container For a rail container a terminal internal transfer vehicle (ITV) is required to be used by the terminal to move the container from the train to the stack (export containers) or

Page 21 of 48

the stack to the train (import containers) This is not required for container being received or delivered by road

153 For import rail containers there is a loss of efficiency for the vessel discharge

operation in order to stack rail containers separately for delivery to the train For each discharge point in the terminal extra resources are required There is extra administration costs in having to make alternate arrangements to separate these import rail containers

154 Despite the fact that the delivery of containers to rail is higher than road the

terminal seeks only a partial recovery of costs in order to encourage the use of rail in the port in line with the NSW Government objectives

155 There is a management cost of setting up and operating the rail windows This is

similar to the cost of operating a VBS

156 There is additional security infrastructure costs for a rail operation to ensure the terminal meets their legislative security requirements The more terminal entry points created the higher the cost to replicate these security infrastructure requirements

16 The Tribunal invites comment from stakeholders on the planned or mooted

development and expansion of the various intermodal terminals in Sydney and the extent to which this is expected to ease congestion in the landside supply chain at Port Botany

161 DP World supports the development and expansion of an intermodal terminal

network to facilitate an increase in the use of rail as the means of container transport This has the potential flow on benefit of minimising the growth in the number of trucks requiring to access the Port Botany area as port volumes continue to grow

162 Transport between the Botany terminals and the inland intermodal terminals

should be by rail or trucks operating a stack (bulk) run road out during off peak periods eg night shifts or weekends The use of Super B Double trucks would assist with the efficiency of these off peak stack run outs

17 The Tribunal invites comment on the likely effect of the expansion plans at Port

Botany on access to the port terminal during peak periods and efficiency along the supply chain

171 Improving the two-way running or back-loading of trucks has to be a priority in

order to maximise access opportunity at the terminals and efficiency along the supply chain It is likely that a third and separate stevedoring facility will only increase the difficulty of improving truck utilisation over and above the current levels by the increased logistics complexity of coordinating timely access to three terminals rather than two

172 A third stevedore will lead to the same port volume being spread over three

operations While it is resource levels that determine available slots DP World has found that during periodic decreases in volumes carriers favour daytime runs to the terminal as opposed to night time

173 The expansion plans will have a negative impact on rail transport timeliness and

access requirements to DP World Sydney if the requirements to breaksplit trains and shunt sections of trains into multiple terminals continues This will undermine the overall rail effectiveness and the NSW Government rail objectives by the unnecessary increase of splitting trains

Page 22 of 48

18 The Tribunal invites comment on the likely effects of expansion of the intermodal network in Sydney on access to the port and efficiency along the supply chain

181 This is a similar issue to point 16 above

19 The Tribunal invites comment on the likely impact of a peak pricing system along

the lines of the FIC on access to the port terminals and the efficiency of the Port Botany supply chain

191 We understand for the NSW Governmentrsquos announcement (31 May 2007) that the

FIC is no longer being proposed

192 Table 4 shows the average percentage of road containers that are handled by shift at DP World Sydney based on a 6 day x 24 hour receival and delivery operation for the past 4 years The figures indicate that there is surplus capacity on both evening and midnight shifts when compared to day shift Note that the percentage of road containers handled has increased on day shift relative to the combination of evening and midnight shifts This has been due to terminal efficiencies creating increased capacity during day shifts and the road carriers utilising this capacity

193 This is further emphasised in Figure 4 which shows the trend over time for day

shift containers handled has increased from 2005 evening shift has decreased and midnight shift has not changed significantly

Table 4 DP World Sydney ndash Percentage of Daily Road Container Volume handled by Shift

Year Midnight Shift (2230 ndash 0630hrs)

Day Shift (0630 ndash 1430hrs)

Evening Shift (1430 ndash 2230hrs)

2007 YTD 21 47 32

2006 23 45 33

2005 22 43 36

2004 19 44 38

194 Year to date April 2007 figures may reflect the seasonal trend for lower volumes in this period

Figure6 DP World Sydney ndash Road Volume trendlines by shift 2005-07

Page 23 of 48

20 The Tribunal invites comment on the likely impact of the expansion of the freight

rail network in Sydney on the number of containers moved by rail and on congestion at the port

201 The importance of increasing the proportion of containers moved by rail is

recognised and supported by DP World Sydney

202 To complement the expansion of the rail freight network upgrade the terminal is developing plans to increase the length and the number of sidings within the terminal Over the next three years the terminal is planning to spend an estimated $20million on internal rail infrastructure machinery and systems The terminal upgrade will ensure DP World Sydney has the infrastructure in place to meet a target of 40 throughput by rail

203 The expansion of the freight rail network needs to take into account The access

to each of the terminals especially the access to DP World Sydney where by the terminal has a distinct disadvantage in relation to its competitor

21 The Tribunal invites comment on the impact on the supply chain on ARTC

managing the metropolitan freight rail network

211 Management of freight rail infrastructure is ARTCrsquos core business and will bring additional management expertise and focus to the task of reforming operations on the Port Botany rail infrastructure

212 For ARTC to control the MFN (Metropolitan Freight Network) makes sense from

the point of view they can make informed decisions for both inbound and outbound Port services based on the wider NSW Rail Freight Network operation

213 The ARTC proposal to co-ordinate services by performing the full Network Control

Function (both signalling and Train Control) from the one centralised centre for the Southern Sydney Freight Line (SSFL)MFN and Port Botany emphasises their commitment to ensure safety communications and network management is their primary objective

214 ARTC are focussed on improving the efficiencies at the Port and bring to the

industry fresh innovative ideas to improve the overall capacity on the rail network ARTCrsquos willingness to assist and eagerness to invest in the rail infrastructure brings a breath of fresh air to the industry and specifically the stevedore operations ARTC can integrate the Botany line into its overall investment program paving the way for additional investment to improve the efficiency of operations on the Botany rail line and at the port-rail interface

22 The Tribunal invites comment on the following questions in relation to costs of the

VBS

22a What costs underpin the VBS access charges levied by the two stevedores How are the VBS access charges set

22b1 Refer to Question 14 The revenue from VBS charges account for a very

small proportion of DP Worldrsquos total container terminal revenue For the year ended 31 December 2006 they accounted for 13 of total revenue Of that 13 approximately 30 was for No Shows and Wrong Zones

22b What costs are incurred by the stevedores in moving a container from the

wharf to a truck or train

22b1 DP World Sydney is operated as an integrated business servicing ships road and rail within the context of a national business We do no separately account for the costs of each discrete activity Information on

Page 24 of 48

overall costs is provided to the ACCC and published on an industry basis in the ACCCrsquos Container Stevedoring Monitoring Report

22b3 Wharf to truck activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the VBS to provide orderly access for road carriers

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal space to allow truck drivers to park their vehicles in order to unlockset up their twist locks and processing of containers

bull Processing of the container

bull System to manage the truck movement within the terminal

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the truck by RTG or forklift

bull Provision of terminal area for truck drivers to safely leave their vehicle to lock the twist locks on their trucks check the container seal number and check the container for damage

bull Provision of terminal area for AQIS operation and infrastructure

22b3 Wharf to train activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the Rail Windows to provide orderly access for operators

Page 25 of 48

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal area for rail lines associated rail infrastructure and train inspection requirements within the terminal

bull Processing of the container

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the ITV by RTG or forklift

bull Internal Transfer Vehicle (ITV) movement of the container from the yard stack to the rail line

bull Lift of the container from the ITV onto the rail wagon

22c What influences the nature and amount of these costs (for example are they influenced by the type of equipment used by a stevedore Do they fluctuate with the number of containers handled by the stevedores) and how have costs changed over time

22c1 DP World operates very similar Vehicle Booking Systems in Brisbane

Sydney Melbourne and Fremantle where there are differences in volume through the terminals The only difference in subscription between the terminals are the ldquoB Classrdquo carrier subscriptions The annual subscription is influenced by the number of carriers seeking this class and the hourly allocation of slots to their class given the number of subscriptions In addition Melbourne operates a straddle facility and Brisbane operates a forklift reachstacker Therefore the cost of the Vehicle Booking System is not dependant on or mode but the annual subscription to ldquoB Classrdquo carrier depends on competition for that carrier class

22c2 An annual subscription fee per class which is a characteristic of DP

Worldrsquos VBS does not normally increase with volume At DP World Sydney subscription fees have not been increased since 2003

22c3 Overall landside costs have increased with increases in wages and

salaries (4 pa) property costs (substantially ahead of cpi) fuel and other general costs These increases have been offset to some extent by increases in productivity Industry costs history is also available publicly in the ACCC Container Stevedoring Monitoring Reports

22d Where do the port landside costs stop and the VBS costs start

22d1 Prior to the Entry to Operational Yard (see Attachment 2) the truck is

under the influence of the VBS and also under the influence of the external environment which includes but is not limited to port and metropolitan road conditions container clearance issues truck arrival peaks and troughs truck preparedness processing of the container to the handled by the terminal and maritime security requirements

It is DP World Sydneyrsquos view that the port landside costs stop and the VBS costs start at the choke point

22e Do the VBSsrsquo penalty charges reflect the cost to stevedores What should

they reflect

22e1 The primary rationale for the penalty regime is to seek to modify carrier behaviour

Page 26 of 48

22e2 However it is also the case that a ldquono showrdquo or ldquowrong zonerdquo gives rise to a lost opportunity cost to the terminal Resources made available but not utilised may be wasted

22e3 DP World considers the achievement of orderly access to its terminal as

a primary objective of the VBS To achieve orderly access PampO considers it important to issue ldquono showrdquo and ldquowrong zonerdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay ldquoon timerdquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs The alternative is random access to container terminals by carriers and significant truck queues with associated demurrage costs which are ultimately paid for by the end consumer

22f Should there be different charging arrangements for empty containers that

are returned to the port as opposed to full export containers

22f1 DP World Sydney terminal handles a full container in a similar way to an empty container using purpose built container stacking equipment controlled by a DP World employee A container occupies the same amount of space whether it is full or empty This leads to the same cost for the handling of a single empty container as a single full container Single empty containers returned to the port should be charged a similar rate to full containers

22f2 To reduce the cost of handling empty containers in the terminal destined

for the same port on the one vessel and that are of the same size the terminal in conjunction with the shipping line and the shipping linersquos nominated carrier work together to create a bulk run of empty containers The bulk run maximises the number of empty containers that are handled in a specific time period The terminal dedicates resources to thee bulk runs and also provides priority access to the transport carrier in order to create efficiency and an economy of scale In this way the cost of returning an empty container via a bulk run is reduced

23 The Tribunal invites comment on the following questions in relation to the different

pricing regimes of the two stevedores

23a Why do the stevedores have different pricing schemes for their VBSs

23a1 We do not know why Toll-PatrickAsciano has adopted the pricing scheme it has

23a2 In order to improve earlier versions of its VBS in the mid-1990s DP

World (PampO) introduced categories of carriers and began charging differential subscription fees for carriers registering to use the VBS depending on the level of access required by the carrier Prior to this change some carriers were engaging multiple computer terminals to the detriment of other carriers and it had become clear that a level of differentiation would be in all carrierrsquos interests The different classes of carrier access were introduced to ensure the most balanced overall outcome The level of differentiation is an annual choice of access levels available to all carriers regardless of size Under this approach different subscription fees are charged for each category but all carriers registering in a particular category pay the same fee Our view remains that an annual subscription as opposed to a pay as you go is far less of an administrative burden on both the carriers and the terminal

Page 27 of 48

23a3 There are no restrictions upon carriers wishing to obtain a certain carrier category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for the same carrier categories as larger carriers Smaller carriers may also apply for consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst charging the burden of the cost of that subscription

23a4 Subscription fees based on differences in class are designed to

encourage choice whilst at the same time communicating a level of transparency with terminal pricing and service

23b Do the different pricing schemes influence the efficiency with which

transporters obtain access to the terminals

23b1 We do not believe this to be the case

23c Would standardisation of charges be more appropriate

23c1 It is our understanding that it would be unlawful for a supplier itself to standardise charges by reason of Section 45 of the Trade Practices Act This may be something that Government wishes to consider

24 The Tribunal invites comment on the following non-price access issues to consider

in relation to the operation of the VBSs

24a What effect do access rules and conditions and non price constraints have on booking a timeslot How to the stevedores use their discretion in determining access and charges and what impact does this have

24a1 The introduction of different categories of access stages the carriersrsquo

access to the VBS for the purposes of booking timeslots ldquoB classrdquo carriers are given exclusive access to a pool of slots between 0730-0820 During this period they are subject to zone limitations which restrict carriers to a maximum number of slots for any given hour The zone limit ensures all carriers within that carrier class are given fair and equitable access to the initial release of slots After the initial booking period the zone limit is lifted and carriers are permitted to book any number of unused slots per hour from those remaining in their pool Similar arrangements exist for A class carriers culminating in the cascading of all remaining slots from all segregated pools into a general pool at 1030 for access by all registered carriers

24a2 There are not restrictions upon carriers wishing to obtain a certain carrier

category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for a consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst sharing the burden of the cost of that subscription

24b What are the stevedoresrsquo obligations with regard to access to port facilities

and what should they be

24b1 Without providing an analysis of our obligations under law in general terms we are required to provide access to carriers on an equitable basis recognising the competitive environment we operate in

Page 28 of 48

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

their subscriptions in order to share the cost of a B Class subscription) and equal access to timeslots amongst carriers of the same class

148 Annual fees are payable in advance Table 3 sets out the various carrier classes

currently in operation at each terminal and the applicable subscription fees for each class There are no annual limits on the number of slots carriers can book

Table 3 DP World Sydney ndash Current carrier classes and VBS deposit and registration fees for the year commencing 1 July 2005

Terminal Carrier Classes Price Number of active

carriers at Feb 06 Port Botany New South Wales

B Carrier ndash online internet access with high service levels

$2922150 (Non-refundable deposit) No fixed upper limit on annual time slots1

28

A Carrier ndash online internet access with standard service levels

$133400 (Annual registration fee) No fixed upper limit on annual time slots2

162

AB Carrier ndash access via the PampO Phone Booking Bureau with standard service levels

$66760 (Annual registration fee) No fixed upper limit on annual time slots3 39

149 Any carrier selecting the ldquoBrdquo classification is encouraged to also consider the ldquoArdquo

classification unless they are confident of utilising a high level of timeslots that would render the higher subscription fee as attractive per timeslot

1410 In addition to the VBS annual subscription fees the carrier access arrangements

provide for the levying of a no-show fee on carriers who fail to arrive for slots they have booked in the amount of $110 per time slot The terminal also charges carriers late fees of $55 per slot if they fail to arrive for a slot booking within the nominated time zone No fees are charged where a carrier is unable to meet the time slot due to delays caused and acknowledged by DP World Australia or where delays are caused by circumstances genuinely outside of the carrierrsquos control DP World Australia also has the discretion to and does waive ldquono showrdquo and ldquowrong zonerdquo fees in the interest of maintaining a good working relationship with carriers Failure by carriers to pay these ldquono showrdquo and ldquowrong zonerdquo fees may lead to them being prevented from making further bookings ldquoNo showrdquo and ldquowrong zonerdquo fees are the means by which DP World ensures that access to itrsquos terminals is provided in the most efficient manner to all 1carriers as late carriers cause delays for those carriers that are on time

1 No fixed upper limit on annual timeslots ndash Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 2 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release 3 No fixed upper limit on annual timeslots - Subject to Terminal capacity and hourly slot limitations within carrier classes on the first day of release Such limitations are relaxed each day after the initial slot release

Page 20 of 48

1411 The ldquono showrdquo and ldquowrong zonerdquo fee structure was introduced following

consultation with carriers It was originally $20 per late arrival (in Victoria where VBS first commenced) but this is proved to be ineffective in disciplining carrier conduct In response to requests from many carriers DP World increased the ldquono showrdquo fee to $110 The fees also discourage carriers from the practice of overbooking slots which they have no intention of using and preventing other carriers from using those slots

1412 The actual cost of a truck turning up late (Wrong Zone) or not turning up at all (No

Show) is the cost of planned resources (labour equipment etc) based on the VBS demand (number of containers expected to handle during a time period) not being utilised during the time period they are employed

1413 Adjacent to each time zone are grace periods one prior to the time zone and one

following the time zone These grace periods and the trucks arrival time for processing determine the status of the time slot ie arrived on time or arrived late (Wrong Zone) Currently the grace period following the time zone is set at 20 minutes which means that if a truck arrives later than one hour and 20 minutes after the start of the time zone then the time slot will be initially recorded as a Wrong Zone Following the completion of each VBS day Wrong Zones are reviewed and any penalty waived if any of the following determined

a) The terminal is aware that it has contributed to a truck arriving late for the time

slot ie the terminal has previously delayed the truck or carrier on an earlier time slot or

b) The carrier advises that they arrived late due to an unforeseen circumstance eg a break down of the truck

We request that the information in 1414 be kept confidential

1414 Omitted for reasons of confidentiality

1415 Officers at DP World Sydney have regular conversations with carriers in respect of

the waiver of No Show fees as well In certain instances DP World may agree to waive fees prior to an invoice being issued

1416 For both Wrong Zone and No Show fees the terminal provides a grievance

process for carriers who have been issued invoices and do not agree that the fee has been issued fairly The carrier has the opportunity to provide the terminal with an explanation and should officers at DP World Sydney agree that there has been an error in the issuing of the fee or an unforeseen circumstance is explained the terminal will credit the invoice

15 The Tribunal invites stakeholders to indicate the costs of providing the services of

rail windows and rail paths to rail operators

151 Rail windows are based allowance on a rail terminal performance KPI of 30 container moves per hour and charged at $360 per hour A shunting time allowance of 15 mins per window is not charged Additional lifts canare provided by increasing the lifts per hour by applying more machinery at no additional cost

152 The cost of providing terminal rail operations is higher than road operations at DP

World Sydney The RTG mode of operation requires a container to be moved to or from the container stack For road containers the truck takes the export container to the stack and travels to the stack to pick up an import container For a rail container a terminal internal transfer vehicle (ITV) is required to be used by the terminal to move the container from the train to the stack (export containers) or

Page 21 of 48

the stack to the train (import containers) This is not required for container being received or delivered by road

153 For import rail containers there is a loss of efficiency for the vessel discharge

operation in order to stack rail containers separately for delivery to the train For each discharge point in the terminal extra resources are required There is extra administration costs in having to make alternate arrangements to separate these import rail containers

154 Despite the fact that the delivery of containers to rail is higher than road the

terminal seeks only a partial recovery of costs in order to encourage the use of rail in the port in line with the NSW Government objectives

155 There is a management cost of setting up and operating the rail windows This is

similar to the cost of operating a VBS

156 There is additional security infrastructure costs for a rail operation to ensure the terminal meets their legislative security requirements The more terminal entry points created the higher the cost to replicate these security infrastructure requirements

16 The Tribunal invites comment from stakeholders on the planned or mooted

development and expansion of the various intermodal terminals in Sydney and the extent to which this is expected to ease congestion in the landside supply chain at Port Botany

161 DP World supports the development and expansion of an intermodal terminal

network to facilitate an increase in the use of rail as the means of container transport This has the potential flow on benefit of minimising the growth in the number of trucks requiring to access the Port Botany area as port volumes continue to grow

162 Transport between the Botany terminals and the inland intermodal terminals

should be by rail or trucks operating a stack (bulk) run road out during off peak periods eg night shifts or weekends The use of Super B Double trucks would assist with the efficiency of these off peak stack run outs

17 The Tribunal invites comment on the likely effect of the expansion plans at Port

Botany on access to the port terminal during peak periods and efficiency along the supply chain

171 Improving the two-way running or back-loading of trucks has to be a priority in

order to maximise access opportunity at the terminals and efficiency along the supply chain It is likely that a third and separate stevedoring facility will only increase the difficulty of improving truck utilisation over and above the current levels by the increased logistics complexity of coordinating timely access to three terminals rather than two

172 A third stevedore will lead to the same port volume being spread over three

operations While it is resource levels that determine available slots DP World has found that during periodic decreases in volumes carriers favour daytime runs to the terminal as opposed to night time

173 The expansion plans will have a negative impact on rail transport timeliness and

access requirements to DP World Sydney if the requirements to breaksplit trains and shunt sections of trains into multiple terminals continues This will undermine the overall rail effectiveness and the NSW Government rail objectives by the unnecessary increase of splitting trains

Page 22 of 48

18 The Tribunal invites comment on the likely effects of expansion of the intermodal network in Sydney on access to the port and efficiency along the supply chain

181 This is a similar issue to point 16 above

19 The Tribunal invites comment on the likely impact of a peak pricing system along

the lines of the FIC on access to the port terminals and the efficiency of the Port Botany supply chain

191 We understand for the NSW Governmentrsquos announcement (31 May 2007) that the

FIC is no longer being proposed

192 Table 4 shows the average percentage of road containers that are handled by shift at DP World Sydney based on a 6 day x 24 hour receival and delivery operation for the past 4 years The figures indicate that there is surplus capacity on both evening and midnight shifts when compared to day shift Note that the percentage of road containers handled has increased on day shift relative to the combination of evening and midnight shifts This has been due to terminal efficiencies creating increased capacity during day shifts and the road carriers utilising this capacity

193 This is further emphasised in Figure 4 which shows the trend over time for day

shift containers handled has increased from 2005 evening shift has decreased and midnight shift has not changed significantly

Table 4 DP World Sydney ndash Percentage of Daily Road Container Volume handled by Shift

Year Midnight Shift (2230 ndash 0630hrs)

Day Shift (0630 ndash 1430hrs)

Evening Shift (1430 ndash 2230hrs)

2007 YTD 21 47 32

2006 23 45 33

2005 22 43 36

2004 19 44 38

194 Year to date April 2007 figures may reflect the seasonal trend for lower volumes in this period

Figure6 DP World Sydney ndash Road Volume trendlines by shift 2005-07

Page 23 of 48

20 The Tribunal invites comment on the likely impact of the expansion of the freight

rail network in Sydney on the number of containers moved by rail and on congestion at the port

201 The importance of increasing the proportion of containers moved by rail is

recognised and supported by DP World Sydney

202 To complement the expansion of the rail freight network upgrade the terminal is developing plans to increase the length and the number of sidings within the terminal Over the next three years the terminal is planning to spend an estimated $20million on internal rail infrastructure machinery and systems The terminal upgrade will ensure DP World Sydney has the infrastructure in place to meet a target of 40 throughput by rail

203 The expansion of the freight rail network needs to take into account The access

to each of the terminals especially the access to DP World Sydney where by the terminal has a distinct disadvantage in relation to its competitor

21 The Tribunal invites comment on the impact on the supply chain on ARTC

managing the metropolitan freight rail network

211 Management of freight rail infrastructure is ARTCrsquos core business and will bring additional management expertise and focus to the task of reforming operations on the Port Botany rail infrastructure

212 For ARTC to control the MFN (Metropolitan Freight Network) makes sense from

the point of view they can make informed decisions for both inbound and outbound Port services based on the wider NSW Rail Freight Network operation

213 The ARTC proposal to co-ordinate services by performing the full Network Control

Function (both signalling and Train Control) from the one centralised centre for the Southern Sydney Freight Line (SSFL)MFN and Port Botany emphasises their commitment to ensure safety communications and network management is their primary objective

214 ARTC are focussed on improving the efficiencies at the Port and bring to the

industry fresh innovative ideas to improve the overall capacity on the rail network ARTCrsquos willingness to assist and eagerness to invest in the rail infrastructure brings a breath of fresh air to the industry and specifically the stevedore operations ARTC can integrate the Botany line into its overall investment program paving the way for additional investment to improve the efficiency of operations on the Botany rail line and at the port-rail interface

22 The Tribunal invites comment on the following questions in relation to costs of the

VBS

22a What costs underpin the VBS access charges levied by the two stevedores How are the VBS access charges set

22b1 Refer to Question 14 The revenue from VBS charges account for a very

small proportion of DP Worldrsquos total container terminal revenue For the year ended 31 December 2006 they accounted for 13 of total revenue Of that 13 approximately 30 was for No Shows and Wrong Zones

22b What costs are incurred by the stevedores in moving a container from the

wharf to a truck or train

22b1 DP World Sydney is operated as an integrated business servicing ships road and rail within the context of a national business We do no separately account for the costs of each discrete activity Information on

Page 24 of 48

overall costs is provided to the ACCC and published on an industry basis in the ACCCrsquos Container Stevedoring Monitoring Report

22b3 Wharf to truck activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the VBS to provide orderly access for road carriers

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal space to allow truck drivers to park their vehicles in order to unlockset up their twist locks and processing of containers

bull Processing of the container

bull System to manage the truck movement within the terminal

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the truck by RTG or forklift

bull Provision of terminal area for truck drivers to safely leave their vehicle to lock the twist locks on their trucks check the container seal number and check the container for damage

bull Provision of terminal area for AQIS operation and infrastructure

22b3 Wharf to train activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the Rail Windows to provide orderly access for operators

Page 25 of 48

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal area for rail lines associated rail infrastructure and train inspection requirements within the terminal

bull Processing of the container

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the ITV by RTG or forklift

bull Internal Transfer Vehicle (ITV) movement of the container from the yard stack to the rail line

bull Lift of the container from the ITV onto the rail wagon

22c What influences the nature and amount of these costs (for example are they influenced by the type of equipment used by a stevedore Do they fluctuate with the number of containers handled by the stevedores) and how have costs changed over time

22c1 DP World operates very similar Vehicle Booking Systems in Brisbane

Sydney Melbourne and Fremantle where there are differences in volume through the terminals The only difference in subscription between the terminals are the ldquoB Classrdquo carrier subscriptions The annual subscription is influenced by the number of carriers seeking this class and the hourly allocation of slots to their class given the number of subscriptions In addition Melbourne operates a straddle facility and Brisbane operates a forklift reachstacker Therefore the cost of the Vehicle Booking System is not dependant on or mode but the annual subscription to ldquoB Classrdquo carrier depends on competition for that carrier class

22c2 An annual subscription fee per class which is a characteristic of DP

Worldrsquos VBS does not normally increase with volume At DP World Sydney subscription fees have not been increased since 2003

22c3 Overall landside costs have increased with increases in wages and

salaries (4 pa) property costs (substantially ahead of cpi) fuel and other general costs These increases have been offset to some extent by increases in productivity Industry costs history is also available publicly in the ACCC Container Stevedoring Monitoring Reports

22d Where do the port landside costs stop and the VBS costs start

22d1 Prior to the Entry to Operational Yard (see Attachment 2) the truck is

under the influence of the VBS and also under the influence of the external environment which includes but is not limited to port and metropolitan road conditions container clearance issues truck arrival peaks and troughs truck preparedness processing of the container to the handled by the terminal and maritime security requirements

It is DP World Sydneyrsquos view that the port landside costs stop and the VBS costs start at the choke point

22e Do the VBSsrsquo penalty charges reflect the cost to stevedores What should

they reflect

22e1 The primary rationale for the penalty regime is to seek to modify carrier behaviour

Page 26 of 48

22e2 However it is also the case that a ldquono showrdquo or ldquowrong zonerdquo gives rise to a lost opportunity cost to the terminal Resources made available but not utilised may be wasted

22e3 DP World considers the achievement of orderly access to its terminal as

a primary objective of the VBS To achieve orderly access PampO considers it important to issue ldquono showrdquo and ldquowrong zonerdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay ldquoon timerdquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs The alternative is random access to container terminals by carriers and significant truck queues with associated demurrage costs which are ultimately paid for by the end consumer

22f Should there be different charging arrangements for empty containers that

are returned to the port as opposed to full export containers

22f1 DP World Sydney terminal handles a full container in a similar way to an empty container using purpose built container stacking equipment controlled by a DP World employee A container occupies the same amount of space whether it is full or empty This leads to the same cost for the handling of a single empty container as a single full container Single empty containers returned to the port should be charged a similar rate to full containers

22f2 To reduce the cost of handling empty containers in the terminal destined

for the same port on the one vessel and that are of the same size the terminal in conjunction with the shipping line and the shipping linersquos nominated carrier work together to create a bulk run of empty containers The bulk run maximises the number of empty containers that are handled in a specific time period The terminal dedicates resources to thee bulk runs and also provides priority access to the transport carrier in order to create efficiency and an economy of scale In this way the cost of returning an empty container via a bulk run is reduced

23 The Tribunal invites comment on the following questions in relation to the different

pricing regimes of the two stevedores

23a Why do the stevedores have different pricing schemes for their VBSs

23a1 We do not know why Toll-PatrickAsciano has adopted the pricing scheme it has

23a2 In order to improve earlier versions of its VBS in the mid-1990s DP

World (PampO) introduced categories of carriers and began charging differential subscription fees for carriers registering to use the VBS depending on the level of access required by the carrier Prior to this change some carriers were engaging multiple computer terminals to the detriment of other carriers and it had become clear that a level of differentiation would be in all carrierrsquos interests The different classes of carrier access were introduced to ensure the most balanced overall outcome The level of differentiation is an annual choice of access levels available to all carriers regardless of size Under this approach different subscription fees are charged for each category but all carriers registering in a particular category pay the same fee Our view remains that an annual subscription as opposed to a pay as you go is far less of an administrative burden on both the carriers and the terminal

Page 27 of 48

23a3 There are no restrictions upon carriers wishing to obtain a certain carrier category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for the same carrier categories as larger carriers Smaller carriers may also apply for consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst charging the burden of the cost of that subscription

23a4 Subscription fees based on differences in class are designed to

encourage choice whilst at the same time communicating a level of transparency with terminal pricing and service

23b Do the different pricing schemes influence the efficiency with which

transporters obtain access to the terminals

23b1 We do not believe this to be the case

23c Would standardisation of charges be more appropriate

23c1 It is our understanding that it would be unlawful for a supplier itself to standardise charges by reason of Section 45 of the Trade Practices Act This may be something that Government wishes to consider

24 The Tribunal invites comment on the following non-price access issues to consider

in relation to the operation of the VBSs

24a What effect do access rules and conditions and non price constraints have on booking a timeslot How to the stevedores use their discretion in determining access and charges and what impact does this have

24a1 The introduction of different categories of access stages the carriersrsquo

access to the VBS for the purposes of booking timeslots ldquoB classrdquo carriers are given exclusive access to a pool of slots between 0730-0820 During this period they are subject to zone limitations which restrict carriers to a maximum number of slots for any given hour The zone limit ensures all carriers within that carrier class are given fair and equitable access to the initial release of slots After the initial booking period the zone limit is lifted and carriers are permitted to book any number of unused slots per hour from those remaining in their pool Similar arrangements exist for A class carriers culminating in the cascading of all remaining slots from all segregated pools into a general pool at 1030 for access by all registered carriers

24a2 There are not restrictions upon carriers wishing to obtain a certain carrier

category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for a consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst sharing the burden of the cost of that subscription

24b What are the stevedoresrsquo obligations with regard to access to port facilities

and what should they be

24b1 Without providing an analysis of our obligations under law in general terms we are required to provide access to carriers on an equitable basis recognising the competitive environment we operate in

Page 28 of 48

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

1411 The ldquono showrdquo and ldquowrong zonerdquo fee structure was introduced following

consultation with carriers It was originally $20 per late arrival (in Victoria where VBS first commenced) but this is proved to be ineffective in disciplining carrier conduct In response to requests from many carriers DP World increased the ldquono showrdquo fee to $110 The fees also discourage carriers from the practice of overbooking slots which they have no intention of using and preventing other carriers from using those slots

1412 The actual cost of a truck turning up late (Wrong Zone) or not turning up at all (No

Show) is the cost of planned resources (labour equipment etc) based on the VBS demand (number of containers expected to handle during a time period) not being utilised during the time period they are employed

1413 Adjacent to each time zone are grace periods one prior to the time zone and one

following the time zone These grace periods and the trucks arrival time for processing determine the status of the time slot ie arrived on time or arrived late (Wrong Zone) Currently the grace period following the time zone is set at 20 minutes which means that if a truck arrives later than one hour and 20 minutes after the start of the time zone then the time slot will be initially recorded as a Wrong Zone Following the completion of each VBS day Wrong Zones are reviewed and any penalty waived if any of the following determined

a) The terminal is aware that it has contributed to a truck arriving late for the time

slot ie the terminal has previously delayed the truck or carrier on an earlier time slot or

b) The carrier advises that they arrived late due to an unforeseen circumstance eg a break down of the truck

We request that the information in 1414 be kept confidential

1414 Omitted for reasons of confidentiality

1415 Officers at DP World Sydney have regular conversations with carriers in respect of

the waiver of No Show fees as well In certain instances DP World may agree to waive fees prior to an invoice being issued

1416 For both Wrong Zone and No Show fees the terminal provides a grievance

process for carriers who have been issued invoices and do not agree that the fee has been issued fairly The carrier has the opportunity to provide the terminal with an explanation and should officers at DP World Sydney agree that there has been an error in the issuing of the fee or an unforeseen circumstance is explained the terminal will credit the invoice

15 The Tribunal invites stakeholders to indicate the costs of providing the services of

rail windows and rail paths to rail operators

151 Rail windows are based allowance on a rail terminal performance KPI of 30 container moves per hour and charged at $360 per hour A shunting time allowance of 15 mins per window is not charged Additional lifts canare provided by increasing the lifts per hour by applying more machinery at no additional cost

152 The cost of providing terminal rail operations is higher than road operations at DP

World Sydney The RTG mode of operation requires a container to be moved to or from the container stack For road containers the truck takes the export container to the stack and travels to the stack to pick up an import container For a rail container a terminal internal transfer vehicle (ITV) is required to be used by the terminal to move the container from the train to the stack (export containers) or

Page 21 of 48

the stack to the train (import containers) This is not required for container being received or delivered by road

153 For import rail containers there is a loss of efficiency for the vessel discharge

operation in order to stack rail containers separately for delivery to the train For each discharge point in the terminal extra resources are required There is extra administration costs in having to make alternate arrangements to separate these import rail containers

154 Despite the fact that the delivery of containers to rail is higher than road the

terminal seeks only a partial recovery of costs in order to encourage the use of rail in the port in line with the NSW Government objectives

155 There is a management cost of setting up and operating the rail windows This is

similar to the cost of operating a VBS

156 There is additional security infrastructure costs for a rail operation to ensure the terminal meets their legislative security requirements The more terminal entry points created the higher the cost to replicate these security infrastructure requirements

16 The Tribunal invites comment from stakeholders on the planned or mooted

development and expansion of the various intermodal terminals in Sydney and the extent to which this is expected to ease congestion in the landside supply chain at Port Botany

161 DP World supports the development and expansion of an intermodal terminal

network to facilitate an increase in the use of rail as the means of container transport This has the potential flow on benefit of minimising the growth in the number of trucks requiring to access the Port Botany area as port volumes continue to grow

162 Transport between the Botany terminals and the inland intermodal terminals

should be by rail or trucks operating a stack (bulk) run road out during off peak periods eg night shifts or weekends The use of Super B Double trucks would assist with the efficiency of these off peak stack run outs

17 The Tribunal invites comment on the likely effect of the expansion plans at Port

Botany on access to the port terminal during peak periods and efficiency along the supply chain

171 Improving the two-way running or back-loading of trucks has to be a priority in

order to maximise access opportunity at the terminals and efficiency along the supply chain It is likely that a third and separate stevedoring facility will only increase the difficulty of improving truck utilisation over and above the current levels by the increased logistics complexity of coordinating timely access to three terminals rather than two

172 A third stevedore will lead to the same port volume being spread over three

operations While it is resource levels that determine available slots DP World has found that during periodic decreases in volumes carriers favour daytime runs to the terminal as opposed to night time

173 The expansion plans will have a negative impact on rail transport timeliness and

access requirements to DP World Sydney if the requirements to breaksplit trains and shunt sections of trains into multiple terminals continues This will undermine the overall rail effectiveness and the NSW Government rail objectives by the unnecessary increase of splitting trains

Page 22 of 48

18 The Tribunal invites comment on the likely effects of expansion of the intermodal network in Sydney on access to the port and efficiency along the supply chain

181 This is a similar issue to point 16 above

19 The Tribunal invites comment on the likely impact of a peak pricing system along

the lines of the FIC on access to the port terminals and the efficiency of the Port Botany supply chain

191 We understand for the NSW Governmentrsquos announcement (31 May 2007) that the

FIC is no longer being proposed

192 Table 4 shows the average percentage of road containers that are handled by shift at DP World Sydney based on a 6 day x 24 hour receival and delivery operation for the past 4 years The figures indicate that there is surplus capacity on both evening and midnight shifts when compared to day shift Note that the percentage of road containers handled has increased on day shift relative to the combination of evening and midnight shifts This has been due to terminal efficiencies creating increased capacity during day shifts and the road carriers utilising this capacity

193 This is further emphasised in Figure 4 which shows the trend over time for day

shift containers handled has increased from 2005 evening shift has decreased and midnight shift has not changed significantly

Table 4 DP World Sydney ndash Percentage of Daily Road Container Volume handled by Shift

Year Midnight Shift (2230 ndash 0630hrs)

Day Shift (0630 ndash 1430hrs)

Evening Shift (1430 ndash 2230hrs)

2007 YTD 21 47 32

2006 23 45 33

2005 22 43 36

2004 19 44 38

194 Year to date April 2007 figures may reflect the seasonal trend for lower volumes in this period

Figure6 DP World Sydney ndash Road Volume trendlines by shift 2005-07

Page 23 of 48

20 The Tribunal invites comment on the likely impact of the expansion of the freight

rail network in Sydney on the number of containers moved by rail and on congestion at the port

201 The importance of increasing the proportion of containers moved by rail is

recognised and supported by DP World Sydney

202 To complement the expansion of the rail freight network upgrade the terminal is developing plans to increase the length and the number of sidings within the terminal Over the next three years the terminal is planning to spend an estimated $20million on internal rail infrastructure machinery and systems The terminal upgrade will ensure DP World Sydney has the infrastructure in place to meet a target of 40 throughput by rail

203 The expansion of the freight rail network needs to take into account The access

to each of the terminals especially the access to DP World Sydney where by the terminal has a distinct disadvantage in relation to its competitor

21 The Tribunal invites comment on the impact on the supply chain on ARTC

managing the metropolitan freight rail network

211 Management of freight rail infrastructure is ARTCrsquos core business and will bring additional management expertise and focus to the task of reforming operations on the Port Botany rail infrastructure

212 For ARTC to control the MFN (Metropolitan Freight Network) makes sense from

the point of view they can make informed decisions for both inbound and outbound Port services based on the wider NSW Rail Freight Network operation

213 The ARTC proposal to co-ordinate services by performing the full Network Control

Function (both signalling and Train Control) from the one centralised centre for the Southern Sydney Freight Line (SSFL)MFN and Port Botany emphasises their commitment to ensure safety communications and network management is their primary objective

214 ARTC are focussed on improving the efficiencies at the Port and bring to the

industry fresh innovative ideas to improve the overall capacity on the rail network ARTCrsquos willingness to assist and eagerness to invest in the rail infrastructure brings a breath of fresh air to the industry and specifically the stevedore operations ARTC can integrate the Botany line into its overall investment program paving the way for additional investment to improve the efficiency of operations on the Botany rail line and at the port-rail interface

22 The Tribunal invites comment on the following questions in relation to costs of the

VBS

22a What costs underpin the VBS access charges levied by the two stevedores How are the VBS access charges set

22b1 Refer to Question 14 The revenue from VBS charges account for a very

small proportion of DP Worldrsquos total container terminal revenue For the year ended 31 December 2006 they accounted for 13 of total revenue Of that 13 approximately 30 was for No Shows and Wrong Zones

22b What costs are incurred by the stevedores in moving a container from the

wharf to a truck or train

22b1 DP World Sydney is operated as an integrated business servicing ships road and rail within the context of a national business We do no separately account for the costs of each discrete activity Information on

Page 24 of 48

overall costs is provided to the ACCC and published on an industry basis in the ACCCrsquos Container Stevedoring Monitoring Report

22b3 Wharf to truck activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the VBS to provide orderly access for road carriers

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal space to allow truck drivers to park their vehicles in order to unlockset up their twist locks and processing of containers

bull Processing of the container

bull System to manage the truck movement within the terminal

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the truck by RTG or forklift

bull Provision of terminal area for truck drivers to safely leave their vehicle to lock the twist locks on their trucks check the container seal number and check the container for damage

bull Provision of terminal area for AQIS operation and infrastructure

22b3 Wharf to train activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the Rail Windows to provide orderly access for operators

Page 25 of 48

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal area for rail lines associated rail infrastructure and train inspection requirements within the terminal

bull Processing of the container

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the ITV by RTG or forklift

bull Internal Transfer Vehicle (ITV) movement of the container from the yard stack to the rail line

bull Lift of the container from the ITV onto the rail wagon

22c What influences the nature and amount of these costs (for example are they influenced by the type of equipment used by a stevedore Do they fluctuate with the number of containers handled by the stevedores) and how have costs changed over time

22c1 DP World operates very similar Vehicle Booking Systems in Brisbane

Sydney Melbourne and Fremantle where there are differences in volume through the terminals The only difference in subscription between the terminals are the ldquoB Classrdquo carrier subscriptions The annual subscription is influenced by the number of carriers seeking this class and the hourly allocation of slots to their class given the number of subscriptions In addition Melbourne operates a straddle facility and Brisbane operates a forklift reachstacker Therefore the cost of the Vehicle Booking System is not dependant on or mode but the annual subscription to ldquoB Classrdquo carrier depends on competition for that carrier class

22c2 An annual subscription fee per class which is a characteristic of DP

Worldrsquos VBS does not normally increase with volume At DP World Sydney subscription fees have not been increased since 2003

22c3 Overall landside costs have increased with increases in wages and

salaries (4 pa) property costs (substantially ahead of cpi) fuel and other general costs These increases have been offset to some extent by increases in productivity Industry costs history is also available publicly in the ACCC Container Stevedoring Monitoring Reports

22d Where do the port landside costs stop and the VBS costs start

22d1 Prior to the Entry to Operational Yard (see Attachment 2) the truck is

under the influence of the VBS and also under the influence of the external environment which includes but is not limited to port and metropolitan road conditions container clearance issues truck arrival peaks and troughs truck preparedness processing of the container to the handled by the terminal and maritime security requirements

It is DP World Sydneyrsquos view that the port landside costs stop and the VBS costs start at the choke point

22e Do the VBSsrsquo penalty charges reflect the cost to stevedores What should

they reflect

22e1 The primary rationale for the penalty regime is to seek to modify carrier behaviour

Page 26 of 48

22e2 However it is also the case that a ldquono showrdquo or ldquowrong zonerdquo gives rise to a lost opportunity cost to the terminal Resources made available but not utilised may be wasted

22e3 DP World considers the achievement of orderly access to its terminal as

a primary objective of the VBS To achieve orderly access PampO considers it important to issue ldquono showrdquo and ldquowrong zonerdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay ldquoon timerdquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs The alternative is random access to container terminals by carriers and significant truck queues with associated demurrage costs which are ultimately paid for by the end consumer

22f Should there be different charging arrangements for empty containers that

are returned to the port as opposed to full export containers

22f1 DP World Sydney terminal handles a full container in a similar way to an empty container using purpose built container stacking equipment controlled by a DP World employee A container occupies the same amount of space whether it is full or empty This leads to the same cost for the handling of a single empty container as a single full container Single empty containers returned to the port should be charged a similar rate to full containers

22f2 To reduce the cost of handling empty containers in the terminal destined

for the same port on the one vessel and that are of the same size the terminal in conjunction with the shipping line and the shipping linersquos nominated carrier work together to create a bulk run of empty containers The bulk run maximises the number of empty containers that are handled in a specific time period The terminal dedicates resources to thee bulk runs and also provides priority access to the transport carrier in order to create efficiency and an economy of scale In this way the cost of returning an empty container via a bulk run is reduced

23 The Tribunal invites comment on the following questions in relation to the different

pricing regimes of the two stevedores

23a Why do the stevedores have different pricing schemes for their VBSs

23a1 We do not know why Toll-PatrickAsciano has adopted the pricing scheme it has

23a2 In order to improve earlier versions of its VBS in the mid-1990s DP

World (PampO) introduced categories of carriers and began charging differential subscription fees for carriers registering to use the VBS depending on the level of access required by the carrier Prior to this change some carriers were engaging multiple computer terminals to the detriment of other carriers and it had become clear that a level of differentiation would be in all carrierrsquos interests The different classes of carrier access were introduced to ensure the most balanced overall outcome The level of differentiation is an annual choice of access levels available to all carriers regardless of size Under this approach different subscription fees are charged for each category but all carriers registering in a particular category pay the same fee Our view remains that an annual subscription as opposed to a pay as you go is far less of an administrative burden on both the carriers and the terminal

Page 27 of 48

23a3 There are no restrictions upon carriers wishing to obtain a certain carrier category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for the same carrier categories as larger carriers Smaller carriers may also apply for consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst charging the burden of the cost of that subscription

23a4 Subscription fees based on differences in class are designed to

encourage choice whilst at the same time communicating a level of transparency with terminal pricing and service

23b Do the different pricing schemes influence the efficiency with which

transporters obtain access to the terminals

23b1 We do not believe this to be the case

23c Would standardisation of charges be more appropriate

23c1 It is our understanding that it would be unlawful for a supplier itself to standardise charges by reason of Section 45 of the Trade Practices Act This may be something that Government wishes to consider

24 The Tribunal invites comment on the following non-price access issues to consider

in relation to the operation of the VBSs

24a What effect do access rules and conditions and non price constraints have on booking a timeslot How to the stevedores use their discretion in determining access and charges and what impact does this have

24a1 The introduction of different categories of access stages the carriersrsquo

access to the VBS for the purposes of booking timeslots ldquoB classrdquo carriers are given exclusive access to a pool of slots between 0730-0820 During this period they are subject to zone limitations which restrict carriers to a maximum number of slots for any given hour The zone limit ensures all carriers within that carrier class are given fair and equitable access to the initial release of slots After the initial booking period the zone limit is lifted and carriers are permitted to book any number of unused slots per hour from those remaining in their pool Similar arrangements exist for A class carriers culminating in the cascading of all remaining slots from all segregated pools into a general pool at 1030 for access by all registered carriers

24a2 There are not restrictions upon carriers wishing to obtain a certain carrier

category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for a consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst sharing the burden of the cost of that subscription

24b What are the stevedoresrsquo obligations with regard to access to port facilities

and what should they be

24b1 Without providing an analysis of our obligations under law in general terms we are required to provide access to carriers on an equitable basis recognising the competitive environment we operate in

Page 28 of 48

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

the stack to the train (import containers) This is not required for container being received or delivered by road

153 For import rail containers there is a loss of efficiency for the vessel discharge

operation in order to stack rail containers separately for delivery to the train For each discharge point in the terminal extra resources are required There is extra administration costs in having to make alternate arrangements to separate these import rail containers

154 Despite the fact that the delivery of containers to rail is higher than road the

terminal seeks only a partial recovery of costs in order to encourage the use of rail in the port in line with the NSW Government objectives

155 There is a management cost of setting up and operating the rail windows This is

similar to the cost of operating a VBS

156 There is additional security infrastructure costs for a rail operation to ensure the terminal meets their legislative security requirements The more terminal entry points created the higher the cost to replicate these security infrastructure requirements

16 The Tribunal invites comment from stakeholders on the planned or mooted

development and expansion of the various intermodal terminals in Sydney and the extent to which this is expected to ease congestion in the landside supply chain at Port Botany

161 DP World supports the development and expansion of an intermodal terminal

network to facilitate an increase in the use of rail as the means of container transport This has the potential flow on benefit of minimising the growth in the number of trucks requiring to access the Port Botany area as port volumes continue to grow

162 Transport between the Botany terminals and the inland intermodal terminals

should be by rail or trucks operating a stack (bulk) run road out during off peak periods eg night shifts or weekends The use of Super B Double trucks would assist with the efficiency of these off peak stack run outs

17 The Tribunal invites comment on the likely effect of the expansion plans at Port

Botany on access to the port terminal during peak periods and efficiency along the supply chain

171 Improving the two-way running or back-loading of trucks has to be a priority in

order to maximise access opportunity at the terminals and efficiency along the supply chain It is likely that a third and separate stevedoring facility will only increase the difficulty of improving truck utilisation over and above the current levels by the increased logistics complexity of coordinating timely access to three terminals rather than two

172 A third stevedore will lead to the same port volume being spread over three

operations While it is resource levels that determine available slots DP World has found that during periodic decreases in volumes carriers favour daytime runs to the terminal as opposed to night time

173 The expansion plans will have a negative impact on rail transport timeliness and

access requirements to DP World Sydney if the requirements to breaksplit trains and shunt sections of trains into multiple terminals continues This will undermine the overall rail effectiveness and the NSW Government rail objectives by the unnecessary increase of splitting trains

Page 22 of 48

18 The Tribunal invites comment on the likely effects of expansion of the intermodal network in Sydney on access to the port and efficiency along the supply chain

181 This is a similar issue to point 16 above

19 The Tribunal invites comment on the likely impact of a peak pricing system along

the lines of the FIC on access to the port terminals and the efficiency of the Port Botany supply chain

191 We understand for the NSW Governmentrsquos announcement (31 May 2007) that the

FIC is no longer being proposed

192 Table 4 shows the average percentage of road containers that are handled by shift at DP World Sydney based on a 6 day x 24 hour receival and delivery operation for the past 4 years The figures indicate that there is surplus capacity on both evening and midnight shifts when compared to day shift Note that the percentage of road containers handled has increased on day shift relative to the combination of evening and midnight shifts This has been due to terminal efficiencies creating increased capacity during day shifts and the road carriers utilising this capacity

193 This is further emphasised in Figure 4 which shows the trend over time for day

shift containers handled has increased from 2005 evening shift has decreased and midnight shift has not changed significantly

Table 4 DP World Sydney ndash Percentage of Daily Road Container Volume handled by Shift

Year Midnight Shift (2230 ndash 0630hrs)

Day Shift (0630 ndash 1430hrs)

Evening Shift (1430 ndash 2230hrs)

2007 YTD 21 47 32

2006 23 45 33

2005 22 43 36

2004 19 44 38

194 Year to date April 2007 figures may reflect the seasonal trend for lower volumes in this period

Figure6 DP World Sydney ndash Road Volume trendlines by shift 2005-07

Page 23 of 48

20 The Tribunal invites comment on the likely impact of the expansion of the freight

rail network in Sydney on the number of containers moved by rail and on congestion at the port

201 The importance of increasing the proportion of containers moved by rail is

recognised and supported by DP World Sydney

202 To complement the expansion of the rail freight network upgrade the terminal is developing plans to increase the length and the number of sidings within the terminal Over the next three years the terminal is planning to spend an estimated $20million on internal rail infrastructure machinery and systems The terminal upgrade will ensure DP World Sydney has the infrastructure in place to meet a target of 40 throughput by rail

203 The expansion of the freight rail network needs to take into account The access

to each of the terminals especially the access to DP World Sydney where by the terminal has a distinct disadvantage in relation to its competitor

21 The Tribunal invites comment on the impact on the supply chain on ARTC

managing the metropolitan freight rail network

211 Management of freight rail infrastructure is ARTCrsquos core business and will bring additional management expertise and focus to the task of reforming operations on the Port Botany rail infrastructure

212 For ARTC to control the MFN (Metropolitan Freight Network) makes sense from

the point of view they can make informed decisions for both inbound and outbound Port services based on the wider NSW Rail Freight Network operation

213 The ARTC proposal to co-ordinate services by performing the full Network Control

Function (both signalling and Train Control) from the one centralised centre for the Southern Sydney Freight Line (SSFL)MFN and Port Botany emphasises their commitment to ensure safety communications and network management is their primary objective

214 ARTC are focussed on improving the efficiencies at the Port and bring to the

industry fresh innovative ideas to improve the overall capacity on the rail network ARTCrsquos willingness to assist and eagerness to invest in the rail infrastructure brings a breath of fresh air to the industry and specifically the stevedore operations ARTC can integrate the Botany line into its overall investment program paving the way for additional investment to improve the efficiency of operations on the Botany rail line and at the port-rail interface

22 The Tribunal invites comment on the following questions in relation to costs of the

VBS

22a What costs underpin the VBS access charges levied by the two stevedores How are the VBS access charges set

22b1 Refer to Question 14 The revenue from VBS charges account for a very

small proportion of DP Worldrsquos total container terminal revenue For the year ended 31 December 2006 they accounted for 13 of total revenue Of that 13 approximately 30 was for No Shows and Wrong Zones

22b What costs are incurred by the stevedores in moving a container from the

wharf to a truck or train

22b1 DP World Sydney is operated as an integrated business servicing ships road and rail within the context of a national business We do no separately account for the costs of each discrete activity Information on

Page 24 of 48

overall costs is provided to the ACCC and published on an industry basis in the ACCCrsquos Container Stevedoring Monitoring Report

22b3 Wharf to truck activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the VBS to provide orderly access for road carriers

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal space to allow truck drivers to park their vehicles in order to unlockset up their twist locks and processing of containers

bull Processing of the container

bull System to manage the truck movement within the terminal

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the truck by RTG or forklift

bull Provision of terminal area for truck drivers to safely leave their vehicle to lock the twist locks on their trucks check the container seal number and check the container for damage

bull Provision of terminal area for AQIS operation and infrastructure

22b3 Wharf to train activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the Rail Windows to provide orderly access for operators

Page 25 of 48

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal area for rail lines associated rail infrastructure and train inspection requirements within the terminal

bull Processing of the container

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the ITV by RTG or forklift

bull Internal Transfer Vehicle (ITV) movement of the container from the yard stack to the rail line

bull Lift of the container from the ITV onto the rail wagon

22c What influences the nature and amount of these costs (for example are they influenced by the type of equipment used by a stevedore Do they fluctuate with the number of containers handled by the stevedores) and how have costs changed over time

22c1 DP World operates very similar Vehicle Booking Systems in Brisbane

Sydney Melbourne and Fremantle where there are differences in volume through the terminals The only difference in subscription between the terminals are the ldquoB Classrdquo carrier subscriptions The annual subscription is influenced by the number of carriers seeking this class and the hourly allocation of slots to their class given the number of subscriptions In addition Melbourne operates a straddle facility and Brisbane operates a forklift reachstacker Therefore the cost of the Vehicle Booking System is not dependant on or mode but the annual subscription to ldquoB Classrdquo carrier depends on competition for that carrier class

22c2 An annual subscription fee per class which is a characteristic of DP

Worldrsquos VBS does not normally increase with volume At DP World Sydney subscription fees have not been increased since 2003

22c3 Overall landside costs have increased with increases in wages and

salaries (4 pa) property costs (substantially ahead of cpi) fuel and other general costs These increases have been offset to some extent by increases in productivity Industry costs history is also available publicly in the ACCC Container Stevedoring Monitoring Reports

22d Where do the port landside costs stop and the VBS costs start

22d1 Prior to the Entry to Operational Yard (see Attachment 2) the truck is

under the influence of the VBS and also under the influence of the external environment which includes but is not limited to port and metropolitan road conditions container clearance issues truck arrival peaks and troughs truck preparedness processing of the container to the handled by the terminal and maritime security requirements

It is DP World Sydneyrsquos view that the port landside costs stop and the VBS costs start at the choke point

22e Do the VBSsrsquo penalty charges reflect the cost to stevedores What should

they reflect

22e1 The primary rationale for the penalty regime is to seek to modify carrier behaviour

Page 26 of 48

22e2 However it is also the case that a ldquono showrdquo or ldquowrong zonerdquo gives rise to a lost opportunity cost to the terminal Resources made available but not utilised may be wasted

22e3 DP World considers the achievement of orderly access to its terminal as

a primary objective of the VBS To achieve orderly access PampO considers it important to issue ldquono showrdquo and ldquowrong zonerdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay ldquoon timerdquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs The alternative is random access to container terminals by carriers and significant truck queues with associated demurrage costs which are ultimately paid for by the end consumer

22f Should there be different charging arrangements for empty containers that

are returned to the port as opposed to full export containers

22f1 DP World Sydney terminal handles a full container in a similar way to an empty container using purpose built container stacking equipment controlled by a DP World employee A container occupies the same amount of space whether it is full or empty This leads to the same cost for the handling of a single empty container as a single full container Single empty containers returned to the port should be charged a similar rate to full containers

22f2 To reduce the cost of handling empty containers in the terminal destined

for the same port on the one vessel and that are of the same size the terminal in conjunction with the shipping line and the shipping linersquos nominated carrier work together to create a bulk run of empty containers The bulk run maximises the number of empty containers that are handled in a specific time period The terminal dedicates resources to thee bulk runs and also provides priority access to the transport carrier in order to create efficiency and an economy of scale In this way the cost of returning an empty container via a bulk run is reduced

23 The Tribunal invites comment on the following questions in relation to the different

pricing regimes of the two stevedores

23a Why do the stevedores have different pricing schemes for their VBSs

23a1 We do not know why Toll-PatrickAsciano has adopted the pricing scheme it has

23a2 In order to improve earlier versions of its VBS in the mid-1990s DP

World (PampO) introduced categories of carriers and began charging differential subscription fees for carriers registering to use the VBS depending on the level of access required by the carrier Prior to this change some carriers were engaging multiple computer terminals to the detriment of other carriers and it had become clear that a level of differentiation would be in all carrierrsquos interests The different classes of carrier access were introduced to ensure the most balanced overall outcome The level of differentiation is an annual choice of access levels available to all carriers regardless of size Under this approach different subscription fees are charged for each category but all carriers registering in a particular category pay the same fee Our view remains that an annual subscription as opposed to a pay as you go is far less of an administrative burden on both the carriers and the terminal

Page 27 of 48

23a3 There are no restrictions upon carriers wishing to obtain a certain carrier category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for the same carrier categories as larger carriers Smaller carriers may also apply for consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst charging the burden of the cost of that subscription

23a4 Subscription fees based on differences in class are designed to

encourage choice whilst at the same time communicating a level of transparency with terminal pricing and service

23b Do the different pricing schemes influence the efficiency with which

transporters obtain access to the terminals

23b1 We do not believe this to be the case

23c Would standardisation of charges be more appropriate

23c1 It is our understanding that it would be unlawful for a supplier itself to standardise charges by reason of Section 45 of the Trade Practices Act This may be something that Government wishes to consider

24 The Tribunal invites comment on the following non-price access issues to consider

in relation to the operation of the VBSs

24a What effect do access rules and conditions and non price constraints have on booking a timeslot How to the stevedores use their discretion in determining access and charges and what impact does this have

24a1 The introduction of different categories of access stages the carriersrsquo

access to the VBS for the purposes of booking timeslots ldquoB classrdquo carriers are given exclusive access to a pool of slots between 0730-0820 During this period they are subject to zone limitations which restrict carriers to a maximum number of slots for any given hour The zone limit ensures all carriers within that carrier class are given fair and equitable access to the initial release of slots After the initial booking period the zone limit is lifted and carriers are permitted to book any number of unused slots per hour from those remaining in their pool Similar arrangements exist for A class carriers culminating in the cascading of all remaining slots from all segregated pools into a general pool at 1030 for access by all registered carriers

24a2 There are not restrictions upon carriers wishing to obtain a certain carrier

category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for a consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst sharing the burden of the cost of that subscription

24b What are the stevedoresrsquo obligations with regard to access to port facilities

and what should they be

24b1 Without providing an analysis of our obligations under law in general terms we are required to provide access to carriers on an equitable basis recognising the competitive environment we operate in

Page 28 of 48

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

18 The Tribunal invites comment on the likely effects of expansion of the intermodal network in Sydney on access to the port and efficiency along the supply chain

181 This is a similar issue to point 16 above

19 The Tribunal invites comment on the likely impact of a peak pricing system along

the lines of the FIC on access to the port terminals and the efficiency of the Port Botany supply chain

191 We understand for the NSW Governmentrsquos announcement (31 May 2007) that the

FIC is no longer being proposed

192 Table 4 shows the average percentage of road containers that are handled by shift at DP World Sydney based on a 6 day x 24 hour receival and delivery operation for the past 4 years The figures indicate that there is surplus capacity on both evening and midnight shifts when compared to day shift Note that the percentage of road containers handled has increased on day shift relative to the combination of evening and midnight shifts This has been due to terminal efficiencies creating increased capacity during day shifts and the road carriers utilising this capacity

193 This is further emphasised in Figure 4 which shows the trend over time for day

shift containers handled has increased from 2005 evening shift has decreased and midnight shift has not changed significantly

Table 4 DP World Sydney ndash Percentage of Daily Road Container Volume handled by Shift

Year Midnight Shift (2230 ndash 0630hrs)

Day Shift (0630 ndash 1430hrs)

Evening Shift (1430 ndash 2230hrs)

2007 YTD 21 47 32

2006 23 45 33

2005 22 43 36

2004 19 44 38

194 Year to date April 2007 figures may reflect the seasonal trend for lower volumes in this period

Figure6 DP World Sydney ndash Road Volume trendlines by shift 2005-07

Page 23 of 48

20 The Tribunal invites comment on the likely impact of the expansion of the freight

rail network in Sydney on the number of containers moved by rail and on congestion at the port

201 The importance of increasing the proportion of containers moved by rail is

recognised and supported by DP World Sydney

202 To complement the expansion of the rail freight network upgrade the terminal is developing plans to increase the length and the number of sidings within the terminal Over the next three years the terminal is planning to spend an estimated $20million on internal rail infrastructure machinery and systems The terminal upgrade will ensure DP World Sydney has the infrastructure in place to meet a target of 40 throughput by rail

203 The expansion of the freight rail network needs to take into account The access

to each of the terminals especially the access to DP World Sydney where by the terminal has a distinct disadvantage in relation to its competitor

21 The Tribunal invites comment on the impact on the supply chain on ARTC

managing the metropolitan freight rail network

211 Management of freight rail infrastructure is ARTCrsquos core business and will bring additional management expertise and focus to the task of reforming operations on the Port Botany rail infrastructure

212 For ARTC to control the MFN (Metropolitan Freight Network) makes sense from

the point of view they can make informed decisions for both inbound and outbound Port services based on the wider NSW Rail Freight Network operation

213 The ARTC proposal to co-ordinate services by performing the full Network Control

Function (both signalling and Train Control) from the one centralised centre for the Southern Sydney Freight Line (SSFL)MFN and Port Botany emphasises their commitment to ensure safety communications and network management is their primary objective

214 ARTC are focussed on improving the efficiencies at the Port and bring to the

industry fresh innovative ideas to improve the overall capacity on the rail network ARTCrsquos willingness to assist and eagerness to invest in the rail infrastructure brings a breath of fresh air to the industry and specifically the stevedore operations ARTC can integrate the Botany line into its overall investment program paving the way for additional investment to improve the efficiency of operations on the Botany rail line and at the port-rail interface

22 The Tribunal invites comment on the following questions in relation to costs of the

VBS

22a What costs underpin the VBS access charges levied by the two stevedores How are the VBS access charges set

22b1 Refer to Question 14 The revenue from VBS charges account for a very

small proportion of DP Worldrsquos total container terminal revenue For the year ended 31 December 2006 they accounted for 13 of total revenue Of that 13 approximately 30 was for No Shows and Wrong Zones

22b What costs are incurred by the stevedores in moving a container from the

wharf to a truck or train

22b1 DP World Sydney is operated as an integrated business servicing ships road and rail within the context of a national business We do no separately account for the costs of each discrete activity Information on

Page 24 of 48

overall costs is provided to the ACCC and published on an industry basis in the ACCCrsquos Container Stevedoring Monitoring Report

22b3 Wharf to truck activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the VBS to provide orderly access for road carriers

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal space to allow truck drivers to park their vehicles in order to unlockset up their twist locks and processing of containers

bull Processing of the container

bull System to manage the truck movement within the terminal

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the truck by RTG or forklift

bull Provision of terminal area for truck drivers to safely leave their vehicle to lock the twist locks on their trucks check the container seal number and check the container for damage

bull Provision of terminal area for AQIS operation and infrastructure

22b3 Wharf to train activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the Rail Windows to provide orderly access for operators

Page 25 of 48

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal area for rail lines associated rail infrastructure and train inspection requirements within the terminal

bull Processing of the container

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the ITV by RTG or forklift

bull Internal Transfer Vehicle (ITV) movement of the container from the yard stack to the rail line

bull Lift of the container from the ITV onto the rail wagon

22c What influences the nature and amount of these costs (for example are they influenced by the type of equipment used by a stevedore Do they fluctuate with the number of containers handled by the stevedores) and how have costs changed over time

22c1 DP World operates very similar Vehicle Booking Systems in Brisbane

Sydney Melbourne and Fremantle where there are differences in volume through the terminals The only difference in subscription between the terminals are the ldquoB Classrdquo carrier subscriptions The annual subscription is influenced by the number of carriers seeking this class and the hourly allocation of slots to their class given the number of subscriptions In addition Melbourne operates a straddle facility and Brisbane operates a forklift reachstacker Therefore the cost of the Vehicle Booking System is not dependant on or mode but the annual subscription to ldquoB Classrdquo carrier depends on competition for that carrier class

22c2 An annual subscription fee per class which is a characteristic of DP

Worldrsquos VBS does not normally increase with volume At DP World Sydney subscription fees have not been increased since 2003

22c3 Overall landside costs have increased with increases in wages and

salaries (4 pa) property costs (substantially ahead of cpi) fuel and other general costs These increases have been offset to some extent by increases in productivity Industry costs history is also available publicly in the ACCC Container Stevedoring Monitoring Reports

22d Where do the port landside costs stop and the VBS costs start

22d1 Prior to the Entry to Operational Yard (see Attachment 2) the truck is

under the influence of the VBS and also under the influence of the external environment which includes but is not limited to port and metropolitan road conditions container clearance issues truck arrival peaks and troughs truck preparedness processing of the container to the handled by the terminal and maritime security requirements

It is DP World Sydneyrsquos view that the port landside costs stop and the VBS costs start at the choke point

22e Do the VBSsrsquo penalty charges reflect the cost to stevedores What should

they reflect

22e1 The primary rationale for the penalty regime is to seek to modify carrier behaviour

Page 26 of 48

22e2 However it is also the case that a ldquono showrdquo or ldquowrong zonerdquo gives rise to a lost opportunity cost to the terminal Resources made available but not utilised may be wasted

22e3 DP World considers the achievement of orderly access to its terminal as

a primary objective of the VBS To achieve orderly access PampO considers it important to issue ldquono showrdquo and ldquowrong zonerdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay ldquoon timerdquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs The alternative is random access to container terminals by carriers and significant truck queues with associated demurrage costs which are ultimately paid for by the end consumer

22f Should there be different charging arrangements for empty containers that

are returned to the port as opposed to full export containers

22f1 DP World Sydney terminal handles a full container in a similar way to an empty container using purpose built container stacking equipment controlled by a DP World employee A container occupies the same amount of space whether it is full or empty This leads to the same cost for the handling of a single empty container as a single full container Single empty containers returned to the port should be charged a similar rate to full containers

22f2 To reduce the cost of handling empty containers in the terminal destined

for the same port on the one vessel and that are of the same size the terminal in conjunction with the shipping line and the shipping linersquos nominated carrier work together to create a bulk run of empty containers The bulk run maximises the number of empty containers that are handled in a specific time period The terminal dedicates resources to thee bulk runs and also provides priority access to the transport carrier in order to create efficiency and an economy of scale In this way the cost of returning an empty container via a bulk run is reduced

23 The Tribunal invites comment on the following questions in relation to the different

pricing regimes of the two stevedores

23a Why do the stevedores have different pricing schemes for their VBSs

23a1 We do not know why Toll-PatrickAsciano has adopted the pricing scheme it has

23a2 In order to improve earlier versions of its VBS in the mid-1990s DP

World (PampO) introduced categories of carriers and began charging differential subscription fees for carriers registering to use the VBS depending on the level of access required by the carrier Prior to this change some carriers were engaging multiple computer terminals to the detriment of other carriers and it had become clear that a level of differentiation would be in all carrierrsquos interests The different classes of carrier access were introduced to ensure the most balanced overall outcome The level of differentiation is an annual choice of access levels available to all carriers regardless of size Under this approach different subscription fees are charged for each category but all carriers registering in a particular category pay the same fee Our view remains that an annual subscription as opposed to a pay as you go is far less of an administrative burden on both the carriers and the terminal

Page 27 of 48

23a3 There are no restrictions upon carriers wishing to obtain a certain carrier category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for the same carrier categories as larger carriers Smaller carriers may also apply for consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst charging the burden of the cost of that subscription

23a4 Subscription fees based on differences in class are designed to

encourage choice whilst at the same time communicating a level of transparency with terminal pricing and service

23b Do the different pricing schemes influence the efficiency with which

transporters obtain access to the terminals

23b1 We do not believe this to be the case

23c Would standardisation of charges be more appropriate

23c1 It is our understanding that it would be unlawful for a supplier itself to standardise charges by reason of Section 45 of the Trade Practices Act This may be something that Government wishes to consider

24 The Tribunal invites comment on the following non-price access issues to consider

in relation to the operation of the VBSs

24a What effect do access rules and conditions and non price constraints have on booking a timeslot How to the stevedores use their discretion in determining access and charges and what impact does this have

24a1 The introduction of different categories of access stages the carriersrsquo

access to the VBS for the purposes of booking timeslots ldquoB classrdquo carriers are given exclusive access to a pool of slots between 0730-0820 During this period they are subject to zone limitations which restrict carriers to a maximum number of slots for any given hour The zone limit ensures all carriers within that carrier class are given fair and equitable access to the initial release of slots After the initial booking period the zone limit is lifted and carriers are permitted to book any number of unused slots per hour from those remaining in their pool Similar arrangements exist for A class carriers culminating in the cascading of all remaining slots from all segregated pools into a general pool at 1030 for access by all registered carriers

24a2 There are not restrictions upon carriers wishing to obtain a certain carrier

category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for a consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst sharing the burden of the cost of that subscription

24b What are the stevedoresrsquo obligations with regard to access to port facilities

and what should they be

24b1 Without providing an analysis of our obligations under law in general terms we are required to provide access to carriers on an equitable basis recognising the competitive environment we operate in

Page 28 of 48

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

20 The Tribunal invites comment on the likely impact of the expansion of the freight

rail network in Sydney on the number of containers moved by rail and on congestion at the port

201 The importance of increasing the proportion of containers moved by rail is

recognised and supported by DP World Sydney

202 To complement the expansion of the rail freight network upgrade the terminal is developing plans to increase the length and the number of sidings within the terminal Over the next three years the terminal is planning to spend an estimated $20million on internal rail infrastructure machinery and systems The terminal upgrade will ensure DP World Sydney has the infrastructure in place to meet a target of 40 throughput by rail

203 The expansion of the freight rail network needs to take into account The access

to each of the terminals especially the access to DP World Sydney where by the terminal has a distinct disadvantage in relation to its competitor

21 The Tribunal invites comment on the impact on the supply chain on ARTC

managing the metropolitan freight rail network

211 Management of freight rail infrastructure is ARTCrsquos core business and will bring additional management expertise and focus to the task of reforming operations on the Port Botany rail infrastructure

212 For ARTC to control the MFN (Metropolitan Freight Network) makes sense from

the point of view they can make informed decisions for both inbound and outbound Port services based on the wider NSW Rail Freight Network operation

213 The ARTC proposal to co-ordinate services by performing the full Network Control

Function (both signalling and Train Control) from the one centralised centre for the Southern Sydney Freight Line (SSFL)MFN and Port Botany emphasises their commitment to ensure safety communications and network management is their primary objective

214 ARTC are focussed on improving the efficiencies at the Port and bring to the

industry fresh innovative ideas to improve the overall capacity on the rail network ARTCrsquos willingness to assist and eagerness to invest in the rail infrastructure brings a breath of fresh air to the industry and specifically the stevedore operations ARTC can integrate the Botany line into its overall investment program paving the way for additional investment to improve the efficiency of operations on the Botany rail line and at the port-rail interface

22 The Tribunal invites comment on the following questions in relation to costs of the

VBS

22a What costs underpin the VBS access charges levied by the two stevedores How are the VBS access charges set

22b1 Refer to Question 14 The revenue from VBS charges account for a very

small proportion of DP Worldrsquos total container terminal revenue For the year ended 31 December 2006 they accounted for 13 of total revenue Of that 13 approximately 30 was for No Shows and Wrong Zones

22b What costs are incurred by the stevedores in moving a container from the

wharf to a truck or train

22b1 DP World Sydney is operated as an integrated business servicing ships road and rail within the context of a national business We do no separately account for the costs of each discrete activity Information on

Page 24 of 48

overall costs is provided to the ACCC and published on an industry basis in the ACCCrsquos Container Stevedoring Monitoring Report

22b3 Wharf to truck activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the VBS to provide orderly access for road carriers

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal space to allow truck drivers to park their vehicles in order to unlockset up their twist locks and processing of containers

bull Processing of the container

bull System to manage the truck movement within the terminal

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the truck by RTG or forklift

bull Provision of terminal area for truck drivers to safely leave their vehicle to lock the twist locks on their trucks check the container seal number and check the container for damage

bull Provision of terminal area for AQIS operation and infrastructure

22b3 Wharf to train activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the Rail Windows to provide orderly access for operators

Page 25 of 48

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal area for rail lines associated rail infrastructure and train inspection requirements within the terminal

bull Processing of the container

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the ITV by RTG or forklift

bull Internal Transfer Vehicle (ITV) movement of the container from the yard stack to the rail line

bull Lift of the container from the ITV onto the rail wagon

22c What influences the nature and amount of these costs (for example are they influenced by the type of equipment used by a stevedore Do they fluctuate with the number of containers handled by the stevedores) and how have costs changed over time

22c1 DP World operates very similar Vehicle Booking Systems in Brisbane

Sydney Melbourne and Fremantle where there are differences in volume through the terminals The only difference in subscription between the terminals are the ldquoB Classrdquo carrier subscriptions The annual subscription is influenced by the number of carriers seeking this class and the hourly allocation of slots to their class given the number of subscriptions In addition Melbourne operates a straddle facility and Brisbane operates a forklift reachstacker Therefore the cost of the Vehicle Booking System is not dependant on or mode but the annual subscription to ldquoB Classrdquo carrier depends on competition for that carrier class

22c2 An annual subscription fee per class which is a characteristic of DP

Worldrsquos VBS does not normally increase with volume At DP World Sydney subscription fees have not been increased since 2003

22c3 Overall landside costs have increased with increases in wages and

salaries (4 pa) property costs (substantially ahead of cpi) fuel and other general costs These increases have been offset to some extent by increases in productivity Industry costs history is also available publicly in the ACCC Container Stevedoring Monitoring Reports

22d Where do the port landside costs stop and the VBS costs start

22d1 Prior to the Entry to Operational Yard (see Attachment 2) the truck is

under the influence of the VBS and also under the influence of the external environment which includes but is not limited to port and metropolitan road conditions container clearance issues truck arrival peaks and troughs truck preparedness processing of the container to the handled by the terminal and maritime security requirements

It is DP World Sydneyrsquos view that the port landside costs stop and the VBS costs start at the choke point

22e Do the VBSsrsquo penalty charges reflect the cost to stevedores What should

they reflect

22e1 The primary rationale for the penalty regime is to seek to modify carrier behaviour

Page 26 of 48

22e2 However it is also the case that a ldquono showrdquo or ldquowrong zonerdquo gives rise to a lost opportunity cost to the terminal Resources made available but not utilised may be wasted

22e3 DP World considers the achievement of orderly access to its terminal as

a primary objective of the VBS To achieve orderly access PampO considers it important to issue ldquono showrdquo and ldquowrong zonerdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay ldquoon timerdquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs The alternative is random access to container terminals by carriers and significant truck queues with associated demurrage costs which are ultimately paid for by the end consumer

22f Should there be different charging arrangements for empty containers that

are returned to the port as opposed to full export containers

22f1 DP World Sydney terminal handles a full container in a similar way to an empty container using purpose built container stacking equipment controlled by a DP World employee A container occupies the same amount of space whether it is full or empty This leads to the same cost for the handling of a single empty container as a single full container Single empty containers returned to the port should be charged a similar rate to full containers

22f2 To reduce the cost of handling empty containers in the terminal destined

for the same port on the one vessel and that are of the same size the terminal in conjunction with the shipping line and the shipping linersquos nominated carrier work together to create a bulk run of empty containers The bulk run maximises the number of empty containers that are handled in a specific time period The terminal dedicates resources to thee bulk runs and also provides priority access to the transport carrier in order to create efficiency and an economy of scale In this way the cost of returning an empty container via a bulk run is reduced

23 The Tribunal invites comment on the following questions in relation to the different

pricing regimes of the two stevedores

23a Why do the stevedores have different pricing schemes for their VBSs

23a1 We do not know why Toll-PatrickAsciano has adopted the pricing scheme it has

23a2 In order to improve earlier versions of its VBS in the mid-1990s DP

World (PampO) introduced categories of carriers and began charging differential subscription fees for carriers registering to use the VBS depending on the level of access required by the carrier Prior to this change some carriers were engaging multiple computer terminals to the detriment of other carriers and it had become clear that a level of differentiation would be in all carrierrsquos interests The different classes of carrier access were introduced to ensure the most balanced overall outcome The level of differentiation is an annual choice of access levels available to all carriers regardless of size Under this approach different subscription fees are charged for each category but all carriers registering in a particular category pay the same fee Our view remains that an annual subscription as opposed to a pay as you go is far less of an administrative burden on both the carriers and the terminal

Page 27 of 48

23a3 There are no restrictions upon carriers wishing to obtain a certain carrier category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for the same carrier categories as larger carriers Smaller carriers may also apply for consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst charging the burden of the cost of that subscription

23a4 Subscription fees based on differences in class are designed to

encourage choice whilst at the same time communicating a level of transparency with terminal pricing and service

23b Do the different pricing schemes influence the efficiency with which

transporters obtain access to the terminals

23b1 We do not believe this to be the case

23c Would standardisation of charges be more appropriate

23c1 It is our understanding that it would be unlawful for a supplier itself to standardise charges by reason of Section 45 of the Trade Practices Act This may be something that Government wishes to consider

24 The Tribunal invites comment on the following non-price access issues to consider

in relation to the operation of the VBSs

24a What effect do access rules and conditions and non price constraints have on booking a timeslot How to the stevedores use their discretion in determining access and charges and what impact does this have

24a1 The introduction of different categories of access stages the carriersrsquo

access to the VBS for the purposes of booking timeslots ldquoB classrdquo carriers are given exclusive access to a pool of slots between 0730-0820 During this period they are subject to zone limitations which restrict carriers to a maximum number of slots for any given hour The zone limit ensures all carriers within that carrier class are given fair and equitable access to the initial release of slots After the initial booking period the zone limit is lifted and carriers are permitted to book any number of unused slots per hour from those remaining in their pool Similar arrangements exist for A class carriers culminating in the cascading of all remaining slots from all segregated pools into a general pool at 1030 for access by all registered carriers

24a2 There are not restrictions upon carriers wishing to obtain a certain carrier

category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for a consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst sharing the burden of the cost of that subscription

24b What are the stevedoresrsquo obligations with regard to access to port facilities

and what should they be

24b1 Without providing an analysis of our obligations under law in general terms we are required to provide access to carriers on an equitable basis recognising the competitive environment we operate in

Page 28 of 48

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

overall costs is provided to the ACCC and published on an industry basis in the ACCCrsquos Container Stevedoring Monitoring Report

22b3 Wharf to truck activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the VBS to provide orderly access for road carriers

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal space to allow truck drivers to park their vehicles in order to unlockset up their twist locks and processing of containers

bull Processing of the container

bull System to manage the truck movement within the terminal

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the truck by RTG or forklift

bull Provision of terminal area for truck drivers to safely leave their vehicle to lock the twist locks on their trucks check the container seal number and check the container for damage

bull Provision of terminal area for AQIS operation and infrastructure

22b3 Wharf to train activities are

bull Terminal Yard Planning

bull Internal Transfer Vehicle (ITV) movement of the container from the quay crane to the yard stack

bull Lift of the container into the yard stack by a Rubber Tyred Gantry (RTG) or forklift

bull Confirmation of the container position in the stack

bull Terminal operating system development maintenance and operation to track the container

bull Development and maintenance of systems to meet statutory requirements and ensuring customers costs are recovered (eg ACS AQIS shipping line holds)

bull Development maintenance and management of the Rail Windows to provide orderly access for operators

Page 25 of 48

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal area for rail lines associated rail infrastructure and train inspection requirements within the terminal

bull Processing of the container

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the ITV by RTG or forklift

bull Internal Transfer Vehicle (ITV) movement of the container from the yard stack to the rail line

bull Lift of the container from the ITV onto the rail wagon

22c What influences the nature and amount of these costs (for example are they influenced by the type of equipment used by a stevedore Do they fluctuate with the number of containers handled by the stevedores) and how have costs changed over time

22c1 DP World operates very similar Vehicle Booking Systems in Brisbane

Sydney Melbourne and Fremantle where there are differences in volume through the terminals The only difference in subscription between the terminals are the ldquoB Classrdquo carrier subscriptions The annual subscription is influenced by the number of carriers seeking this class and the hourly allocation of slots to their class given the number of subscriptions In addition Melbourne operates a straddle facility and Brisbane operates a forklift reachstacker Therefore the cost of the Vehicle Booking System is not dependant on or mode but the annual subscription to ldquoB Classrdquo carrier depends on competition for that carrier class

22c2 An annual subscription fee per class which is a characteristic of DP

Worldrsquos VBS does not normally increase with volume At DP World Sydney subscription fees have not been increased since 2003

22c3 Overall landside costs have increased with increases in wages and

salaries (4 pa) property costs (substantially ahead of cpi) fuel and other general costs These increases have been offset to some extent by increases in productivity Industry costs history is also available publicly in the ACCC Container Stevedoring Monitoring Reports

22d Where do the port landside costs stop and the VBS costs start

22d1 Prior to the Entry to Operational Yard (see Attachment 2) the truck is

under the influence of the VBS and also under the influence of the external environment which includes but is not limited to port and metropolitan road conditions container clearance issues truck arrival peaks and troughs truck preparedness processing of the container to the handled by the terminal and maritime security requirements

It is DP World Sydneyrsquos view that the port landside costs stop and the VBS costs start at the choke point

22e Do the VBSsrsquo penalty charges reflect the cost to stevedores What should

they reflect

22e1 The primary rationale for the penalty regime is to seek to modify carrier behaviour

Page 26 of 48

22e2 However it is also the case that a ldquono showrdquo or ldquowrong zonerdquo gives rise to a lost opportunity cost to the terminal Resources made available but not utilised may be wasted

22e3 DP World considers the achievement of orderly access to its terminal as

a primary objective of the VBS To achieve orderly access PampO considers it important to issue ldquono showrdquo and ldquowrong zonerdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay ldquoon timerdquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs The alternative is random access to container terminals by carriers and significant truck queues with associated demurrage costs which are ultimately paid for by the end consumer

22f Should there be different charging arrangements for empty containers that

are returned to the port as opposed to full export containers

22f1 DP World Sydney terminal handles a full container in a similar way to an empty container using purpose built container stacking equipment controlled by a DP World employee A container occupies the same amount of space whether it is full or empty This leads to the same cost for the handling of a single empty container as a single full container Single empty containers returned to the port should be charged a similar rate to full containers

22f2 To reduce the cost of handling empty containers in the terminal destined

for the same port on the one vessel and that are of the same size the terminal in conjunction with the shipping line and the shipping linersquos nominated carrier work together to create a bulk run of empty containers The bulk run maximises the number of empty containers that are handled in a specific time period The terminal dedicates resources to thee bulk runs and also provides priority access to the transport carrier in order to create efficiency and an economy of scale In this way the cost of returning an empty container via a bulk run is reduced

23 The Tribunal invites comment on the following questions in relation to the different

pricing regimes of the two stevedores

23a Why do the stevedores have different pricing schemes for their VBSs

23a1 We do not know why Toll-PatrickAsciano has adopted the pricing scheme it has

23a2 In order to improve earlier versions of its VBS in the mid-1990s DP

World (PampO) introduced categories of carriers and began charging differential subscription fees for carriers registering to use the VBS depending on the level of access required by the carrier Prior to this change some carriers were engaging multiple computer terminals to the detriment of other carriers and it had become clear that a level of differentiation would be in all carrierrsquos interests The different classes of carrier access were introduced to ensure the most balanced overall outcome The level of differentiation is an annual choice of access levels available to all carriers regardless of size Under this approach different subscription fees are charged for each category but all carriers registering in a particular category pay the same fee Our view remains that an annual subscription as opposed to a pay as you go is far less of an administrative burden on both the carriers and the terminal

Page 27 of 48

23a3 There are no restrictions upon carriers wishing to obtain a certain carrier category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for the same carrier categories as larger carriers Smaller carriers may also apply for consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst charging the burden of the cost of that subscription

23a4 Subscription fees based on differences in class are designed to

encourage choice whilst at the same time communicating a level of transparency with terminal pricing and service

23b Do the different pricing schemes influence the efficiency with which

transporters obtain access to the terminals

23b1 We do not believe this to be the case

23c Would standardisation of charges be more appropriate

23c1 It is our understanding that it would be unlawful for a supplier itself to standardise charges by reason of Section 45 of the Trade Practices Act This may be something that Government wishes to consider

24 The Tribunal invites comment on the following non-price access issues to consider

in relation to the operation of the VBSs

24a What effect do access rules and conditions and non price constraints have on booking a timeslot How to the stevedores use their discretion in determining access and charges and what impact does this have

24a1 The introduction of different categories of access stages the carriersrsquo

access to the VBS for the purposes of booking timeslots ldquoB classrdquo carriers are given exclusive access to a pool of slots between 0730-0820 During this period they are subject to zone limitations which restrict carriers to a maximum number of slots for any given hour The zone limit ensures all carriers within that carrier class are given fair and equitable access to the initial release of slots After the initial booking period the zone limit is lifted and carriers are permitted to book any number of unused slots per hour from those remaining in their pool Similar arrangements exist for A class carriers culminating in the cascading of all remaining slots from all segregated pools into a general pool at 1030 for access by all registered carriers

24a2 There are not restrictions upon carriers wishing to obtain a certain carrier

category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for a consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst sharing the burden of the cost of that subscription

24b What are the stevedoresrsquo obligations with regard to access to port facilities

and what should they be

24b1 Without providing an analysis of our obligations under law in general terms we are required to provide access to carriers on an equitable basis recognising the competitive environment we operate in

Page 28 of 48

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

bull Security infrastructure system development management and operation in order to meet Maritime Security requirements at entry and exit

bull Provision of terminal area for rail lines associated rail infrastructure and train inspection requirements within the terminal

bull Processing of the container

bull Consolidations (container lifts and movements) to access the required container

bull Lift of the container from the yard stack onto the ITV by RTG or forklift

bull Internal Transfer Vehicle (ITV) movement of the container from the yard stack to the rail line

bull Lift of the container from the ITV onto the rail wagon

22c What influences the nature and amount of these costs (for example are they influenced by the type of equipment used by a stevedore Do they fluctuate with the number of containers handled by the stevedores) and how have costs changed over time

22c1 DP World operates very similar Vehicle Booking Systems in Brisbane

Sydney Melbourne and Fremantle where there are differences in volume through the terminals The only difference in subscription between the terminals are the ldquoB Classrdquo carrier subscriptions The annual subscription is influenced by the number of carriers seeking this class and the hourly allocation of slots to their class given the number of subscriptions In addition Melbourne operates a straddle facility and Brisbane operates a forklift reachstacker Therefore the cost of the Vehicle Booking System is not dependant on or mode but the annual subscription to ldquoB Classrdquo carrier depends on competition for that carrier class

22c2 An annual subscription fee per class which is a characteristic of DP

Worldrsquos VBS does not normally increase with volume At DP World Sydney subscription fees have not been increased since 2003

22c3 Overall landside costs have increased with increases in wages and

salaries (4 pa) property costs (substantially ahead of cpi) fuel and other general costs These increases have been offset to some extent by increases in productivity Industry costs history is also available publicly in the ACCC Container Stevedoring Monitoring Reports

22d Where do the port landside costs stop and the VBS costs start

22d1 Prior to the Entry to Operational Yard (see Attachment 2) the truck is

under the influence of the VBS and also under the influence of the external environment which includes but is not limited to port and metropolitan road conditions container clearance issues truck arrival peaks and troughs truck preparedness processing of the container to the handled by the terminal and maritime security requirements

It is DP World Sydneyrsquos view that the port landside costs stop and the VBS costs start at the choke point

22e Do the VBSsrsquo penalty charges reflect the cost to stevedores What should

they reflect

22e1 The primary rationale for the penalty regime is to seek to modify carrier behaviour

Page 26 of 48

22e2 However it is also the case that a ldquono showrdquo or ldquowrong zonerdquo gives rise to a lost opportunity cost to the terminal Resources made available but not utilised may be wasted

22e3 DP World considers the achievement of orderly access to its terminal as

a primary objective of the VBS To achieve orderly access PampO considers it important to issue ldquono showrdquo and ldquowrong zonerdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay ldquoon timerdquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs The alternative is random access to container terminals by carriers and significant truck queues with associated demurrage costs which are ultimately paid for by the end consumer

22f Should there be different charging arrangements for empty containers that

are returned to the port as opposed to full export containers

22f1 DP World Sydney terminal handles a full container in a similar way to an empty container using purpose built container stacking equipment controlled by a DP World employee A container occupies the same amount of space whether it is full or empty This leads to the same cost for the handling of a single empty container as a single full container Single empty containers returned to the port should be charged a similar rate to full containers

22f2 To reduce the cost of handling empty containers in the terminal destined

for the same port on the one vessel and that are of the same size the terminal in conjunction with the shipping line and the shipping linersquos nominated carrier work together to create a bulk run of empty containers The bulk run maximises the number of empty containers that are handled in a specific time period The terminal dedicates resources to thee bulk runs and also provides priority access to the transport carrier in order to create efficiency and an economy of scale In this way the cost of returning an empty container via a bulk run is reduced

23 The Tribunal invites comment on the following questions in relation to the different

pricing regimes of the two stevedores

23a Why do the stevedores have different pricing schemes for their VBSs

23a1 We do not know why Toll-PatrickAsciano has adopted the pricing scheme it has

23a2 In order to improve earlier versions of its VBS in the mid-1990s DP

World (PampO) introduced categories of carriers and began charging differential subscription fees for carriers registering to use the VBS depending on the level of access required by the carrier Prior to this change some carriers were engaging multiple computer terminals to the detriment of other carriers and it had become clear that a level of differentiation would be in all carrierrsquos interests The different classes of carrier access were introduced to ensure the most balanced overall outcome The level of differentiation is an annual choice of access levels available to all carriers regardless of size Under this approach different subscription fees are charged for each category but all carriers registering in a particular category pay the same fee Our view remains that an annual subscription as opposed to a pay as you go is far less of an administrative burden on both the carriers and the terminal

Page 27 of 48

23a3 There are no restrictions upon carriers wishing to obtain a certain carrier category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for the same carrier categories as larger carriers Smaller carriers may also apply for consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst charging the burden of the cost of that subscription

23a4 Subscription fees based on differences in class are designed to

encourage choice whilst at the same time communicating a level of transparency with terminal pricing and service

23b Do the different pricing schemes influence the efficiency with which

transporters obtain access to the terminals

23b1 We do not believe this to be the case

23c Would standardisation of charges be more appropriate

23c1 It is our understanding that it would be unlawful for a supplier itself to standardise charges by reason of Section 45 of the Trade Practices Act This may be something that Government wishes to consider

24 The Tribunal invites comment on the following non-price access issues to consider

in relation to the operation of the VBSs

24a What effect do access rules and conditions and non price constraints have on booking a timeslot How to the stevedores use their discretion in determining access and charges and what impact does this have

24a1 The introduction of different categories of access stages the carriersrsquo

access to the VBS for the purposes of booking timeslots ldquoB classrdquo carriers are given exclusive access to a pool of slots between 0730-0820 During this period they are subject to zone limitations which restrict carriers to a maximum number of slots for any given hour The zone limit ensures all carriers within that carrier class are given fair and equitable access to the initial release of slots After the initial booking period the zone limit is lifted and carriers are permitted to book any number of unused slots per hour from those remaining in their pool Similar arrangements exist for A class carriers culminating in the cascading of all remaining slots from all segregated pools into a general pool at 1030 for access by all registered carriers

24a2 There are not restrictions upon carriers wishing to obtain a certain carrier

category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for a consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst sharing the burden of the cost of that subscription

24b What are the stevedoresrsquo obligations with regard to access to port facilities

and what should they be

24b1 Without providing an analysis of our obligations under law in general terms we are required to provide access to carriers on an equitable basis recognising the competitive environment we operate in

Page 28 of 48

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

22e2 However it is also the case that a ldquono showrdquo or ldquowrong zonerdquo gives rise to a lost opportunity cost to the terminal Resources made available but not utilised may be wasted

22e3 DP World considers the achievement of orderly access to its terminal as

a primary objective of the VBS To achieve orderly access PampO considers it important to issue ldquono showrdquo and ldquowrong zonerdquo fees to encourage efficient carrier practices A carrierrsquos failure to utilise any timeslot booked results in service inefficiencies normally translating into additional costs for the terminal and other carriers Carriers who arrive outside their allocated timeslots can delay ldquoon timerdquo carriers by blocking the access entry queue The purpose of these fees is to encourage efficient practices and offset avoidable costs The alternative is random access to container terminals by carriers and significant truck queues with associated demurrage costs which are ultimately paid for by the end consumer

22f Should there be different charging arrangements for empty containers that

are returned to the port as opposed to full export containers

22f1 DP World Sydney terminal handles a full container in a similar way to an empty container using purpose built container stacking equipment controlled by a DP World employee A container occupies the same amount of space whether it is full or empty This leads to the same cost for the handling of a single empty container as a single full container Single empty containers returned to the port should be charged a similar rate to full containers

22f2 To reduce the cost of handling empty containers in the terminal destined

for the same port on the one vessel and that are of the same size the terminal in conjunction with the shipping line and the shipping linersquos nominated carrier work together to create a bulk run of empty containers The bulk run maximises the number of empty containers that are handled in a specific time period The terminal dedicates resources to thee bulk runs and also provides priority access to the transport carrier in order to create efficiency and an economy of scale In this way the cost of returning an empty container via a bulk run is reduced

23 The Tribunal invites comment on the following questions in relation to the different

pricing regimes of the two stevedores

23a Why do the stevedores have different pricing schemes for their VBSs

23a1 We do not know why Toll-PatrickAsciano has adopted the pricing scheme it has

23a2 In order to improve earlier versions of its VBS in the mid-1990s DP

World (PampO) introduced categories of carriers and began charging differential subscription fees for carriers registering to use the VBS depending on the level of access required by the carrier Prior to this change some carriers were engaging multiple computer terminals to the detriment of other carriers and it had become clear that a level of differentiation would be in all carrierrsquos interests The different classes of carrier access were introduced to ensure the most balanced overall outcome The level of differentiation is an annual choice of access levels available to all carriers regardless of size Under this approach different subscription fees are charged for each category but all carriers registering in a particular category pay the same fee Our view remains that an annual subscription as opposed to a pay as you go is far less of an administrative burden on both the carriers and the terminal

Page 27 of 48

23a3 There are no restrictions upon carriers wishing to obtain a certain carrier category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for the same carrier categories as larger carriers Smaller carriers may also apply for consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst charging the burden of the cost of that subscription

23a4 Subscription fees based on differences in class are designed to

encourage choice whilst at the same time communicating a level of transparency with terminal pricing and service

23b Do the different pricing schemes influence the efficiency with which

transporters obtain access to the terminals

23b1 We do not believe this to be the case

23c Would standardisation of charges be more appropriate

23c1 It is our understanding that it would be unlawful for a supplier itself to standardise charges by reason of Section 45 of the Trade Practices Act This may be something that Government wishes to consider

24 The Tribunal invites comment on the following non-price access issues to consider

in relation to the operation of the VBSs

24a What effect do access rules and conditions and non price constraints have on booking a timeslot How to the stevedores use their discretion in determining access and charges and what impact does this have

24a1 The introduction of different categories of access stages the carriersrsquo

access to the VBS for the purposes of booking timeslots ldquoB classrdquo carriers are given exclusive access to a pool of slots between 0730-0820 During this period they are subject to zone limitations which restrict carriers to a maximum number of slots for any given hour The zone limit ensures all carriers within that carrier class are given fair and equitable access to the initial release of slots After the initial booking period the zone limit is lifted and carriers are permitted to book any number of unused slots per hour from those remaining in their pool Similar arrangements exist for A class carriers culminating in the cascading of all remaining slots from all segregated pools into a general pool at 1030 for access by all registered carriers

24a2 There are not restrictions upon carriers wishing to obtain a certain carrier

category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for a consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst sharing the burden of the cost of that subscription

24b What are the stevedoresrsquo obligations with regard to access to port facilities

and what should they be

24b1 Without providing an analysis of our obligations under law in general terms we are required to provide access to carriers on an equitable basis recognising the competitive environment we operate in

Page 28 of 48

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

23a3 There are no restrictions upon carriers wishing to obtain a certain carrier category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for the same carrier categories as larger carriers Smaller carriers may also apply for consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst charging the burden of the cost of that subscription

23a4 Subscription fees based on differences in class are designed to

encourage choice whilst at the same time communicating a level of transparency with terminal pricing and service

23b Do the different pricing schemes influence the efficiency with which

transporters obtain access to the terminals

23b1 We do not believe this to be the case

23c Would standardisation of charges be more appropriate

23c1 It is our understanding that it would be unlawful for a supplier itself to standardise charges by reason of Section 45 of the Trade Practices Act This may be something that Government wishes to consider

24 The Tribunal invites comment on the following non-price access issues to consider

in relation to the operation of the VBSs

24a What effect do access rules and conditions and non price constraints have on booking a timeslot How to the stevedores use their discretion in determining access and charges and what impact does this have

24a1 The introduction of different categories of access stages the carriersrsquo

access to the VBS for the purposes of booking timeslots ldquoB classrdquo carriers are given exclusive access to a pool of slots between 0730-0820 During this period they are subject to zone limitations which restrict carriers to a maximum number of slots for any given hour The zone limit ensures all carriers within that carrier class are given fair and equitable access to the initial release of slots After the initial booking period the zone limit is lifted and carriers are permitted to book any number of unused slots per hour from those remaining in their pool Similar arrangements exist for A class carriers culminating in the cascading of all remaining slots from all segregated pools into a general pool at 1030 for access by all registered carriers

24a2 There are not restrictions upon carriers wishing to obtain a certain carrier

category provided they pay the non-refundable deposit or subscription fee for that category Smaller carriers can if they wish apply for a consolidated subscription as a group which allows them to access the privileges associated with the higher level subscription whilst sharing the burden of the cost of that subscription

24b What are the stevedoresrsquo obligations with regard to access to port facilities

and what should they be

24b1 Without providing an analysis of our obligations under law in general terms we are required to provide access to carriers on an equitable basis recognising the competitive environment we operate in

Page 28 of 48

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

24c What impediments to access exist

24c1 There are three main ways in which a transport carrier can access the DP World Sydney Terminal

a) a carrier can use a timeslot which is booked or reserved through the

VBS operated by DP World

b) a carrier may access the terminal through a standby queue

c) a carrier may organise a bulk run

24c2 The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form

24c3 Carriers can access DP World Sydney terminal either through the VBS

using the phone bureau or computer links (for which a subscription fee is charged) or through the standby queue (for which there is no charge)

24c4 Access by the Standby Queue is irregular and not guaranteed at any

particular time and is available to all carriers whether registered or not registered in the VBS The standby queue is primarily intended for carriers who choose not to register for the VBS and those who were late for their allocated timeslot No pre-booking is required and no charge is levied on carriers for the use of standby queue Approximately 10 of carriers access Port Botany on a standby basis The standby entry is not a random queue it operates in the same manner as at airports ie no guarantee of entry at a particular time but every effort is made to provide entry and at times that do not adversely affect those ldquoon timerdquo carriers entering via VBS bookings

24c5 Access via a Bulk Stack Run is determined by the level of subscription to

the VBS lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff

24c6 All other Carriers may at DP World Sydney discretion arrange a Bulk

Stack Run Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request

24c7 For physical access the truck driver must have a valid Maritime Security

Identification Card (MSIC) and a 1-Stop access card An MSIC is required in order to the site to comply with the Department of Transport Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal

24d What is the maximum number of slots available each hour or each day

What factors determine the number of slots available

Page 29 of 48

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

The information contained in 24d1 is commercially sensitive and we request that it is kept confidential

24d1 Omitted for reasons of confidentiality

Page 30 of 48

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

24d2 The maximum timeslots made available at DP World Sydney has been 100 in a time zone On a particular day in December 2006 there were 5 zones where 100 timeslots were made available (zones 08 11 12 13 and 16) 4 zones where 95 timeslots were made available (zones 07 15 19 and 20) and the remaining time zones varied between 75 and 30 timeslots made available The total timeslots made available on this day was 1485 The total number of containers handled that day was 1587 which includes trucks gaining access via the Standby Queue however excludes Bulk Run containers

24d3 Factors determining the number of timeslots made available (in no

particular order)

bull The time of the day ie more timeslots are made available during the peak times of the day due to the higher demand

bull The volume of import containers in the terminal available for delivery on a particular day ie this should reflect the demand for timeslots required by the carriers with the exception of Mondays

bull The volume of export containers expected to be received by the terminal This is more difficult for the terminal to forecast as the current VBS does not require export timeslots to be booked by a predetermined time in advance of the time zone and the terminal currently has a working arrangement that allows B Carriers to bring in exports without a timeslot (export tagging)

bull The requirement for terminal resources to be working the vessels An increase in the number of quay cranes operating decreases the availability of the resources to be allocated to the road interface This increase in resources required for quay cranes also contributes to increased traffic within the terminal and an increase in opportunity for congestion to occur a safety concern There is also more opportunity for there to be a requirement for road and vesselrail operations to conflict especially in the refrigerated container stacking areas

bull The day of the week There is an imbalance in throughput between vessel operations and the road operations caused by the road interface only being utilised effectively five of the seven days each week This results in the terminal import volumes being higher on a Monday than any other day of the week Increased volumes cause higher container stack density and contribute to an increased number of consolidationsrehandles required to deliver import containers randomly from a stack of containers DP World Sydney has committed to providing a consistent truck turnaround for VBS

Page 31 of 48

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

subscribers and to achieve this on a Monday limits the number of timeslots that can be made available especially Monday morning or until the import stack density decreases

24e How has the number of slots changed over time

24e1 The number of slots have increased since the introduction of the VBS to cater for the increase in volume of containers moving through the terminal by road

24f How has the length of time of each slot changed over time

24f1 The length of a time zone has not changed and has remained at one hour however the terminal has become more flexible in allowing the early and late arrival of the timeslot

24g What flexibility exists around the hourly allocation by stevedores

through the VBSs What happens when transporters arrive early or late What grace periods exist at various times of the day

24g1 DP World Sydney allow carriers to arrive at the terminal up to two

hours after the time zone start time After this time the carrier may need to utilise the Standby Queue in order to gain access The timeslot can still be processed after this two hour period however fees may apply

24g2 DP World Sydney bring time zones forward where possible in order

to decrease the carriers waiting time due to their early arrival

24g3 Carriers that arrive early can access the terminal up to the limit of the grace period prior to the time zone without incurring a Wrong Zone fee as long as they are utilising the automatic processing option (transponder) All other carriers can access the terminal early without incurring Wrong Zones when the terminal brings time zones forward

24g4 DP World Sydney applies a grace period prior to the zone and after

the time zone within the terminal operating system The grace period determines if a Wrong Zone status is applied to a timeslot at the time of timeslot processing A Wrong Zone status applied to a timeslot does not guarantee that the carrier will be invoiced for a Wrong Zone as Wrong Zone fees may be waived prior to invoicing Refer to comments in Section 14 of this submission

24g5 The current grace period prior to the time zone start equals 59

minutes 24g6 The current grace period after the time zone end equals 20 minutes

25 The Tribunal invites comment on the following questions that might be considered in relation to the structural issues in relation to efficiency of the VBSs

25a How could the VBSs be improved

25a1 DP Worldrsquos VBS is the subject of constant review Recent actions by

Government regulators have unfortunately further hindered efforts to progress VBS and other terminal carrier access issues at DP World Sydney In our view Sydney now trails the remainder of the countryrsquos Capital cities In other Capital cities we have recently implemented and continue to work on a number of initiatives aimed at improving accessibility to slots earlier information process flows for improved container availabilities and significant slot structure development work in an attempt to reduce port road congestion Consideration is also being

Page 32 of 48

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

given to automated gate structures to fully utilise all available information through our community system thus further reducing transaction times at the terminals

25a2 Below is a list of suggestions that may improve the VBS at DP World

Sydney

bull Guaranteed slots to carriers

bull KPIs that determine the access class

bull Confirmation of the import container number by a predetermined time prior to the start of the time zone

bull Removing speculative timeslot booking

bull Incentives to increase the use of non peak timeslots

bull Removing the randomness of the container to be delivered to a truck

bull The use of dual timeslot bookings to encourage multiple container movements on one truck and two-way running

bull Ability for a carrier to move this booking to an earlier timeslot if one becomes available without the risk of incurring a No Show fee and

bull A single VBS platform to be used

25b Is one VBS more effective or efficient that the other

25b1 While there will always be room for further efficiency improvement and we are willing to consider alternative solutions to the issues of carrier access (as outlined in Question 24a) we have arrived at the current VBS over many years and believe it represents an effective and efficient solution

25f Since the introduction of the VBSs have changes been made that improve

the system Or have changes had a negative impact Are the original objectives of the VBSs still being met

25c1 The terms and conditions of access to Port Botany terminal are publicly

available to all carriers The current form of the document which was originally developed after extensive consultation with the NSWRTA has been used for almost 6 years with annual adjustments for the subscription fees and minor amendments to the terms and conditions

25c2 If the terminal operators were to abolish a Vehicle Booking System the

result would be significant congestion outside the terminal and significant costs to importers and exporters which would damage trade through Port Botany Within the terminal we would expect to be able to process more trucks per hour

25f What improvements in efficiency have resulted at Port Botany from the

introduction of the VBSs

25d1 See Question 8

25f Do bulk runs by the stevedores outside peak hours reduce timeslot congestion Are these available to all road operators Should they be made more widely available

25e1 DP World Sydney primarily only offers bulk runs for empty export

containers Bulk runs are available for all carriers as long as the minimum requirements are met Bulk runs can occur on any shift and when these

Page 33 of 48

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

runs occur outside of peak periods they do assist in reducing terminal access congestion

25f Are single truck owner-drivers disadvantaged by the VBSs

25f1 Single Truck owner drivers have the same opportunity to subscribe to a

VBS Carrier Class and utilise the Standby Queue for access as any other road transport operator Many owner operators choose the AB Class which is the lowest cost subscription DP World Sydney provides this class with a bureau service which was put in place as many owner operators did not have access to the internet to book timeslots There are a small number of timeslots allocated to the AB Class each time zone during the initial booking period

25f2 DP World Sydney believes that AB Class subscriptions get more access

to timeslots than A Class carriers This highlighted by some AB Class subscribers gaining access to more than 10 timeslots per day spread throughout the peak period

26 The Tribunal invites comments on how the introduction of a third stevedore might

affect the answers to the questions above

26a1 See Question 17

27 The Tribunal invites comments on the following questions on the issue of rail access charges

27b How are rail terminal access charges calculated What are the costs

relating to the services to which the charges pertain Are the charges cost reflective

27a1 The rail windows and charges were put in place to attempt to address the

inefficiencies of rail including the reliability of arrival at the terminal Free access to the terminal encourages random arrival and potential queues to develop Windows are more efficient for all parties except the terminal who operate more efficiently when there is a queue of trains waiting for access

27a2 The terminal access charges or ldquoRail Windowsrdquo are calculated based on

the length of time of the window The window also has a negotiated minimum capacity that the terminal will guarantee to deliver should there be adequate volume of containers available The terminal will not charge for lifts handled above the guaranteed minimum capacity This is to encourage the rail operator to run full trains both ways in order to reduce the incremental cost of transporting more containers on larger trains

27a3 At DP World Sydney the rail access charges are a partial recovery of the

cost to load or discharge a container to or from a rail wagon The terminal provides dedicated resources to the rail for a shift and within that shift multiple windows are scheduled

27a4 All rail operators are treated on an equitable basis DP World Sydney

currently charges $360 per hour of window (excluding a 15 minute time allowance for shunting) and DP World Sydney guarantees to loadunload 30 containers per hour during the window The incremental cost of delivering this service over a road delivery is far in excess of this figure

27b What other charges and costs do rail operators face What charges to

intermodal operators levy on rail operators How does this impact on the cost of transporting containers by rail

Page 34 of 48

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

27b1 We cannot provide informed comment in this regard

27c How should rail terminal access charges be determined relative to the VBSsrsquo charges

27c1 The interface cost is higher for rail than road for a terminal There is an

extra transfer and lift required by the terminal to handle a container onto or off a rail wagon when comparing the handling of container to or from a truck

27c2 Rail Operators are given guaranteed windows whereas road operators

are not and have to compete for slots on a daily basis This guaranteed access provides reliability and better scheduling opportunities for the rail operator to maximise efficiency

27d What is the impact of rail charges on railrsquos share of container movement

27d1 We do not believe our rail terminal access charges have any significant

impact on the rail modal share

27e Are there reasons other than price that explain why rail is not used as widely as road transport 27e1 Reasons include reliability of service and availability of a rail service to

the destination of the cargo

27f What factors determine which mode transport is used to more freight price or reliability more important or are there other factors of more note

27f1 See 27e above

28 The Tribunal invites comments on the following questions on the issue of storage

charges

28a What is the rationale behind free storage days

28a1 Stevedoring Terminals are primarily for container transit as opposed to container storage DP World believes that storage fees have a role in encouraging carriers and importers to collect containers from the terminal as soon as possible and discouraging importers and carriers from using the terminal as a storage facility The presence of too many containers at the terminal leads to congestion which has a significant detrimental impact on the operational efficiency of the terminal Premium port land is not intended for use as cheap storage The 3-day free period plus the first availability time offers ample time for carriers to move boxes out of the terminal and there are unbooked timeslots virtually every mid-week evening and night shifts and Saturday shift

28a2 The additional first availability time ensures every container has more

than 3 free days and up to 3 days and 175 hours to pick up a container before storage is incurred B Carriers also have an opportunity to pick up a container prior to the first availability time however they attempt to do so with no guarantee as the terminal may not be able to deliver the container prior to the first availability time due to operational constraints

28a3 By choosing to use the terminal for storage carriers are electing a high

cost option as terminal operators seek to recoup returns on high premium land and equipment It is open to carriers to shift the containers directly to their customers warehouse or to a lower cost storage facility as PampO Trans Australia has done at Port Botany and

Page 35 of 48

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

Extra Transport has done at West Swanson Extra Transport is a classic example of how the VBS enables a smaller carrier using innovative business structures to compete with larger carriers In our view encouraging this practice leads to increased productivity at the terminal and overall reduction in the end-end cost of the logistics chain

28a4 DP World enters into contracts with shipping lines (often as members of

consortia) for the provision of a whole of port service In respect of imports the whole of port service provides for DP World to arrange the unloading of shipping containers storage of containers at the DP World container yard and the loading of containers onto trucks o trains In respect of exports DP World provides the reverse service

28b How are current storage charges calculated What are the costs relating to the services to which the charges pertain Are the charges cost reflective See above also

28b1 Please refer to the storage and handling charges attached at the end of

the submission

28b2 The cost of storing a container at the terminal increases the longer a container remains in the terminal As time increases the internal handling and operational cost of storing the container increases Increasing lease costs and operational costs contribute to storage charges increasing overtime

28c What is the utilisation of storage at Port Botany

28c1 Approximately 93 of boxes are collected within the 3 day period Approximately 50 of the import storage revenue collected by DP World Sydney is derived from containers that have remained in the terminal for more than 9 days after vessel discharge despite all efforts to encourage carriers to remove containers within the 3 day free period

28d What storage alternatives are there

28d1 There are storage alternatives within the Port Botany area accessible by

road many within two kilometres of DP World Sydney and at intermodal terminals accessible by rail and road

29 The Tribunal invites comments on the following questions of the issue of vertical

integration of the supply chain

29a What is the extent of each stevedorersquos business interest in businesses that operate in the Port Botany supply chain

29a1 DP World owns 50 of PampO Trans Australia (POTA) POTA operates a

landside port services logistics business servicing import and export marine container services nationally including Sydney The activities conducted by the business include port containerised transport empty and full container parks container freight stations land bridge rail services rail terminals and incidental warehousing and local distribution POTA employs approximately 500 people and generated revenue for the year ending 31 December 2006 of approximately $130 million

29b How has vertical integration by the stevedores impacted on the efficiency

of the supply chain What will be the impact of the proposed business separation and restructuring

Page 36 of 48

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

29b1 Vertical integration has historically encouraged PampO Trans Australia to move containers from DP World Sydney during off peak periods This has freed slot allocation to the general road industry during daytime hours With the proposed business separation and restructuring the joint venture will continue to explore means of encouraging POTA to move bulk volume from DP World in off peak periods

29c Are the access arrangements and associated charges and penalties for the

VBSs and rail access administered on a transparent and equitable basis What terminal access arrangements are in place for transport businesses owned by Toll and DP World Do they face the same costs as other operators

29c1 We believe that our pricing and access arrangement are transparent and

fair The access arrangements including charges and penalties have been discussed elsewhere in this document

29d Is preferential treatment given to supply chain participants that are not

affiliated with the stevedores

29d1 The rules of access are described elsewhere in this document and as described are administered on a transparent and equitable basis

30 The Tribunal invites comments on the following questions on the issue of hours of

operation

30a To what extent does the mismatch of hours affect the efficiency of the Port Botany supply chain

30a1 This question has been addressed in previous questions

30b What will the impact of stevedores moving to 24 hours a day 7 days a week

operation

30b1 As an international container terminal Port Botany is expected to meet international standards and operate on a 247 basis For Australia to be credible player in the global marketplace the Australian transport industry as a whole needs to work in concert to meet these international demands Currently on the shipside DP World operates on a 247 basis to enable shipping lines call at the terminal around the clock to load and unload containers DP World incurs a significant incremental labour and equipment cost to offer a 247 service DP World is also committed to working with Sydney Ports Corporation and the community to improve and extend 247 operations in line with the recommendations made in the Brereton Report

30b2 On the landside carriers would ideally match the 247 ship discharge

operations to maximise the efficient movement of containers through the terminal area to avoid congestion As a result of resistance to the extended workweek from carriers in the past DP World only operates on a 267 basis on the landside even though it has 247 operations on the shipside DP World still faces significant resistance by the carriers to the 246 workweek and approximately 44 of Saturday slots were unused in 200512 The elimination of Saturdays and public holidays as days of availability could result in an increase in container dwell times and a corresponding drop in terminal efficiency This will adversely affect DP Worldrsquos ability to meet industryrsquos requirement for 247 operation and ultimately be detrimental to the public interest

1 Refer to Table 4

Page 37 of 48

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

30c What is the impact of the mismatch of hours on the VBSs

30c1 Wasted resources as equipment levels are based upon max slot utilisation for any given hour in the 8hr shift for which equipment is requisitioned The fact that peaking and troughing in demand for slots occurs every mid week evening night and Saturday shifts in Sydney translates to wasted costly resources for large portions of shifts

30d Which businesses are most affected by the mismatch in hours

30d1 Presently stevedores but this could change when daylight capacity is exhausted and industry will have little choice but to review practices and alter behaviour to better align demand for services with inelastic supply

30e Would changing VBS fees penalties or storage charges alter demand in

peak times

30e1 Yes

30f What incentives do (or could) exist for transporters and importers and exporters to operate at different times to those currently operated

30f1 Restriction of access to the port terminal in the day

30f2 Price of access to the port terminal in the day

30f3 Higher utilisation of truck assets

30g Should relatively lower prices be applied to off-peak timeslots

30g1 There is currently no differential in pricing for peak and off-peak Any change would require a detailed assessment of the impact on shippers carriers and the community However clearly in order to generate a differential this will result in higher pricing than currently exist for peak slots as the cost of off-peak slots is zero

31 The Tribunal invites comment on the following questions on the issue of

misaligned incentives

31a How do transport operators importers and exporters influence the landside operations of the stevedores

31a1 See Question 3

31b Do importers and exporters influence which stevedore is used by shipping

lines See

31b1 Yes 31c What induces a shipping line to switch stevedores

31c1 DP World Sydney believes the following influences the choice of

stevedore

bull Service including vessel schedule integrity

bull Price and

bull Landside efficiency

Page 38 of 48

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

31d Are the VBSsrsquo standard and penalty charges passed on to importers and exporters What effect do these charges have in importers and exporters when choosing a shipping line

31d1 We do not know

31e How relevant to shipping lines are the VBSs storage and penalty charges in

the choice of stevedoring operator How relevant are the charges for importers and exporters

31e1 Not significantly relevant There are no ldquoVBS storagerdquo charges (it is a

booking system) Further the shipping lines do not pay charges relating to the VBS or storage charges

31e2 We do not know

Page 39 of 48

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

Annexure 1

Setting up an eGate run What is eGate eGate is just as the word states it is an electronic gate at the Terminal This Electronic Gate allows registered trucking companies an electronic processing point within the terminal The advantage of the eGate facility is that it automates the processing of containers both imports and exports There is no need for the truck driver to visit the Receival amp Delivery (RampD) Office This will save each truck and your company valuable time Truck drivers simply drive up to the eGate at the terminal (located at the Security Gate) where their trucking credentials and container information are processed and authorised by the eGate electronic equipment which is installed on the truck (transponder unit) and the eGate facility (transponder reader) A ticket indicating the containers for export and import and the yard locations will be printed What do I need to do to set-up eGate To set up eGate four things are required to successfully utilise the eGate facility These four requirements are bull Scheduled booking of a VBS timeslot bull Container to be Pre-advised PRA (for Exports) bull Container will require IDO (for Imports) received by the Terminal bull eGate transponder electronic equipment installed on truck bull eGate access assigned to the companyrsquos profile by ePORTS How do I set-up an eGate run bull Successfully book a VBS timeslot bull Enter in all container details for the slot via the VBS bull Access the eGate utility listed on the ePORTS home page From the eGate facility on the ePORTS website enter in the appropriate details bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go Once the Go button is pressed information regarding this slot will be displayed The information displayed is as follows

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

Field Description Run No List run number for each truck in sequential order 1 ndash 999

each day Bat No This value lists the Truck ID or Bat number

Pin No This PIN assigned by the terminal is your 3 letter Carrier Code or other code obtained from the terminal

Reg No This value lists the registration number of the vehicle that enters the terminal automatically derived from the Bat No

VBS booking slot details The following VBS booking details for the specified slot will be displayed Fields include VBS Ref No Zone Type Container VslVoy Length and Hold

Upon entering the required information submit the inputted data into the terminal system and the eGate facility by simply pressing the Assign button The eGate facility is now ready to be utilised by the trucking company As mentioned before all that is required is for the truck to simply drive up to the eGate facility during the correct time zone and once validated wait for the Bat to be called then proceed to the grid location specified by the transponder ticket

Removing a scheduled eGate run bull Access the eGate utility bull Select the VBS booking date from the drop down list bull Select the VBS Zone number from the drop down list bull Press Go This will display all the eGate scheduled run entries for the specified date and time zone bull Tick the check box located in the Remove column bull Press the De-Assign button This will now de-assign the eGate entry for that specified booking For more information on eGate please click on the following link httpwwweportscomaucodeeGateInfoasp

Truck Marshalling Area

Operational Yard

Typical truck path

Entry to Operational Yard

Main Entry and Exit gate to Terminal

Processing Point

CARRIER ACCESS ARRANGEMENTS

DP World Sydney Port Botany Terminal

DP World Sydney 42 Friendship Rd

PO Box 192 Matraville NSW 2036

Telephone +61 2 9394 0900 Facsimile +61 2 9394 0944

wwwdpworldcom

VBS Carrier Access 2007 ndash 08 1

CARRIER ACCESS ARRANGEMENTS

2007 - 08

DP World Sydney Port Botany Terminal

INDEX

Section Page 1 Overview 3 2 Subscription Requirements 3 3 VBS Carrier Categories 3 4 Time Zone Information 3 5 Driver Induction and Accreditation 4 6 Terminal Arrival Procedures 4 7 Internet Access 4 8 Allocation of Timeslots 4 9 Information Requirements 4 10 Documentation Requirements 5 11 Container Availability 5 12 Time Slot Exchange 5 13 Time Slot Swapping 5 14 Changing A Booking 5 15 Cancellations 5 16 VBS Fees 5 17 Terminal Contact Details 5 A Rules and Terms for lsquoArsquo Carriers 6 AB Rules and Terms for lsquoABrsquo Carriers 6 B Rules and Terms for lsquoBrsquo Carriers 6 S Standby Queue Access 6

VBS Carrier Access 2007 ndash 08 2

VBS Carrier Access 2007 ndash 08 3

1 OVERVIEW Carrier access to DP World Sydney is either by pre-booked time slots booked through the DP World Sydney Vehicle Booking System (VBS) or by a Standby Queue Access by the Standby Queue is irregular and not guaranteed at any particular time and is available to all carriers whether registered or not registered in the VBS

However VBS registered carriers using Standby access in place of adhering to a booked time slot are still liable for the booked time slot (and if not used a fee will apply) regardless of the time of Standby Queue entry and processing

Carriers wishing to use the VBS (other than carriers exclusively using the Standby arrangement) are required to register or re-register as a VBS user prior to 1 July each year and identify the level of carrier VBS access required (lsquoArsquo lsquoABrsquo or lsquoBrsquo) Annual registration fees applying are payable in advance prior to access to the VBS being provided after July 1 Any outstanding accounts must be paid in full before access to the VBS is approved The annual registration fee applies from 1st July to 30th June ndash there are no pro rata rates Refunds will not be given if a carrier no longer requires their VBS access Carriers wishing to change their level of access must re-register and pay the appropriate registration fee DP World Sydney reserves the right to alter Terms and Conditions of the VBS 2 SUBSCRIPTION REQUIREMENTS The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form 21 Registration Fee An annual registration fee applies to all registered carriers payable in advance as detailed in the annual registration form 22 Carrier Access Codes Carrier subscribers are issued with a unique Carrier Access Code enabling carriers to book their time slots electronically via their own computer hardware Carriers are responsible for safeguarding their access codes Carriers may have multiple users however only one user per carrier can make time slot bookings during the initial booking period 3 VBS CARRIER CATEGORIES Carriers may apply to be registered for one (and only one) of the following levels of VBS access

A Standard Carrier ndash with Online access via

Internet to DP World Sydney database AB Standard Carrier ndash exclusively using the DP

World Sydney Phone Booking Bureau B Major Carrier ndash with Online access via

Internet to DP World Sydney database The rules and terms outlined in sections 2 ndash 16 apply to all A AB and B class carriers The rules and terms of the VBS that specifically apply to lsquoArsquo category carriers are detailed in section A of this document The rules and terms of the VBS that specifically apply to lsquoABrsquo category carriers are detailed in section AB of this document The rules and terms of the VBS that specifically apply to lsquoBrsquo category carriers are detailed in section B of this document The rules and terms of Standby Entry are detailed in section S of this document 4 TIME ZONE INFORMATION Each day is split into 24 time zones throughout the day Monday to Saturdays as follows

Daily Time Slot Full Prefix Codes Times Zone ID IMP EXP

0000 ndash 0059 00 00I 00E 0100 - 0159 01 01I 01E 0200 - 0259 02 02I 02E 0300 ndash 0359 03 03I 03E 0400 ndash 0459 04 04I 04E 0500 ndash 0559 05 05I 05E 0600 ndash 0759 06 06I 06E 0700 ndash 0759 07 07I 07E 0800 ndash 0859 08 08I 08E 0900 ndash 0959 09 09I 09E 1000 ndash 1059 10 10I 10E 1100 ndash 1159 11 11I 11E 1200 ndash 1259 12 12I 12E 1300 ndash 1359 13 13I 13E 1400 ndash 1459 14 14I 14E 1500 ndash 1559 15 15I 15E 1600 ndash 1659 16 16I 16E 1700 ndash 1759 17 17I 17E 1800 ndash 1859 18 18I 18E 1900 ndash 1959 19 19I 19E 2000 ndash 2059 20 20I 20E 2100 ndash 2159 21 21I 21E 2200 ndash 2259 22 22I 22E

VBS Carrier Access 2007 ndash 08 4

2300 ndash 2359 23 23I 23E Time slot numbers consist of 8 alphanumeric characters The first 2 numeric characters indicate the time zone based upon the 24-hour clock system These are followed by 1 alphabetical character to indicate whether the time slot is an import (I) or an export (E) slot The last 5 numeric characters are the sequential time slot number Additional time zones may be advertised from time to time In the event of additional time zones being opened timeslots will be entered into the system and carriers advised accordingly 5 DRIVER INDUCTION AND ACCREDITATION Carriers must be aware that only drivers that have undergone the DP World Sydney driver induction and accreditation process will be serviced at the terminal Trucks that are turned away due to drivers not being accredited will incur a No Show fee for each time slot booked for that truck DP World Sydney will not be responsible for delays incurred whilst drivers gain their accreditation 6 TERMINAL ARRIVAL PROCEDURES 61 All carriers (other than Standby carriers) attempting to enter the terminal must have a pre-booked time slot for every container to be handled unless by prior arrangement with DP World Sydney management 62 Carriers are required to arrive at the terminal for container processing from the commencement of the time zone and no later than 59 minutes after the commencement of the time zone For example a truck using a zone 08 slot should arrive between 0800 and 0859 hours 63 Carriers that arrive early will not be admitted 64 Carriers who are late will be directed to the Standby Queue Late arrivals may be subject to the Wrong Zone Fee provisions as outlined in these rules Carriers who do not utilise their booked timeslot may be subject to a No Show Fee 65 All carriers (including non registered carriers accessing the facility via the standby queue) must have a DP World Sydney authorised BAT number clearly located on both doors (driver amp passenger) and on the cabin roof The authorised BAT number must be of a size comparable to 30cm long and 20 cm high (A4 Landscape Size) This BAT number is required for safety security and operational efficiency reasons A carrier who does not meet these BAT number requirements may be refused entry to the terminal 66 All truck drivers must carry with them at all times their Maritime Security Identification Card (MSIC) in order for the site to comply with the Department of

Transport amp Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal Entry to the facility is subject to the DP World Sydney conditions of entry detailed on signage at each entry point to the terminal This includes full compliance with Security and Occupational Health amp Safety requirements DP World Sydney reserves the right to alter entry arrangements subject to legislative and procedural requirements 7 INTERNET ACCESS Access to the VBS is via httpwwweportscomau All carriers are permitted up to 15 minutes idle time (ie no interaction or activity) on line before being automatically disconnected from ePORTS Reconnecting to ePORTS will be necessary to continue to use the VBS 8 ALLOCATION OF TIMESLOTS 81 A pool of timeslots is available to each carrier class at the specific booking access times referred to in sections A1 AB1 and B1 82 During the initial carrier class booking access time each carrier is allowed to book a maximum number of time slots per zone This may vary between time zones 83 After a predetermined time all carrier classes may compete for any remaining time slots regardless of category limits 9 INFORMATION REQUIREMENTS When making a time slot booking all carriers are to provide the following accurate information bull Whether it is an Import or Export booking bull The shiprsquos information (ship code and voyage

number) bull The commodity group (eg Reefer General

Empty Out of Gauge or Hazardous) bull Container Length (20rsquo 40rsquo or 45rsquo) For Import container reservations Carriers must provide the container number This can be done at the time of booking or may be done afterwards but must be done before 2100hrs for slots the following working day Carriers who fail to provide an import container number will be refused entry and directed to the Standby queue They will be subject to the No Show Fee provisions as outlined in these rules 91 Import Delivery Times

CARRIER ACCESS ARRANGEMENTS

DP World Sydney Port Botany Terminal

DP World Sydney 42 Friendship Rd

PO Box 192 Matraville NSW 2036

Telephone +61 2 9394 0900 Facsimile +61 2 9394 0944

wwwdpworldcom

VBS Carrier Access 2007 ndash 08 1

CARRIER ACCESS ARRANGEMENTS

2007 - 08

DP World Sydney Port Botany Terminal

INDEX

Section Page 1 Overview 3 2 Subscription Requirements 3 3 VBS Carrier Categories 3 4 Time Zone Information 3 5 Driver Induction and Accreditation 4 6 Terminal Arrival Procedures 4 7 Internet Access 4 8 Allocation of Timeslots 4 9 Information Requirements 4 10 Documentation Requirements 5 11 Container Availability 5 12 Time Slot Exchange 5 13 Time Slot Swapping 5 14 Changing A Booking 5 15 Cancellations 5 16 VBS Fees 5 17 Terminal Contact Details 5 A Rules and Terms for lsquoArsquo Carriers 6 AB Rules and Terms for lsquoABrsquo Carriers 6 B Rules and Terms for lsquoBrsquo Carriers 6 S Standby Queue Access 6

VBS Carrier Access 2007 ndash 08 2

VBS Carrier Access 2007 ndash 08 3

1 OVERVIEW Carrier access to DP World Sydney is either by pre-booked time slots booked through the DP World Sydney Vehicle Booking System (VBS) or by a Standby Queue Access by the Standby Queue is irregular and not guaranteed at any particular time and is available to all carriers whether registered or not registered in the VBS

However VBS registered carriers using Standby access in place of adhering to a booked time slot are still liable for the booked time slot (and if not used a fee will apply) regardless of the time of Standby Queue entry and processing

Carriers wishing to use the VBS (other than carriers exclusively using the Standby arrangement) are required to register or re-register as a VBS user prior to 1 July each year and identify the level of carrier VBS access required (lsquoArsquo lsquoABrsquo or lsquoBrsquo) Annual registration fees applying are payable in advance prior to access to the VBS being provided after July 1 Any outstanding accounts must be paid in full before access to the VBS is approved The annual registration fee applies from 1st July to 30th June ndash there are no pro rata rates Refunds will not be given if a carrier no longer requires their VBS access Carriers wishing to change their level of access must re-register and pay the appropriate registration fee DP World Sydney reserves the right to alter Terms and Conditions of the VBS 2 SUBSCRIPTION REQUIREMENTS The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form 21 Registration Fee An annual registration fee applies to all registered carriers payable in advance as detailed in the annual registration form 22 Carrier Access Codes Carrier subscribers are issued with a unique Carrier Access Code enabling carriers to book their time slots electronically via their own computer hardware Carriers are responsible for safeguarding their access codes Carriers may have multiple users however only one user per carrier can make time slot bookings during the initial booking period 3 VBS CARRIER CATEGORIES Carriers may apply to be registered for one (and only one) of the following levels of VBS access

A Standard Carrier ndash with Online access via

Internet to DP World Sydney database AB Standard Carrier ndash exclusively using the DP

World Sydney Phone Booking Bureau B Major Carrier ndash with Online access via

Internet to DP World Sydney database The rules and terms outlined in sections 2 ndash 16 apply to all A AB and B class carriers The rules and terms of the VBS that specifically apply to lsquoArsquo category carriers are detailed in section A of this document The rules and terms of the VBS that specifically apply to lsquoABrsquo category carriers are detailed in section AB of this document The rules and terms of the VBS that specifically apply to lsquoBrsquo category carriers are detailed in section B of this document The rules and terms of Standby Entry are detailed in section S of this document 4 TIME ZONE INFORMATION Each day is split into 24 time zones throughout the day Monday to Saturdays as follows

Daily Time Slot Full Prefix Codes Times Zone ID IMP EXP

0000 ndash 0059 00 00I 00E 0100 - 0159 01 01I 01E 0200 - 0259 02 02I 02E 0300 ndash 0359 03 03I 03E 0400 ndash 0459 04 04I 04E 0500 ndash 0559 05 05I 05E 0600 ndash 0759 06 06I 06E 0700 ndash 0759 07 07I 07E 0800 ndash 0859 08 08I 08E 0900 ndash 0959 09 09I 09E 1000 ndash 1059 10 10I 10E 1100 ndash 1159 11 11I 11E 1200 ndash 1259 12 12I 12E 1300 ndash 1359 13 13I 13E 1400 ndash 1459 14 14I 14E 1500 ndash 1559 15 15I 15E 1600 ndash 1659 16 16I 16E 1700 ndash 1759 17 17I 17E 1800 ndash 1859 18 18I 18E 1900 ndash 1959 19 19I 19E 2000 ndash 2059 20 20I 20E 2100 ndash 2159 21 21I 21E 2200 ndash 2259 22 22I 22E

VBS Carrier Access 2007 ndash 08 4

2300 ndash 2359 23 23I 23E Time slot numbers consist of 8 alphanumeric characters The first 2 numeric characters indicate the time zone based upon the 24-hour clock system These are followed by 1 alphabetical character to indicate whether the time slot is an import (I) or an export (E) slot The last 5 numeric characters are the sequential time slot number Additional time zones may be advertised from time to time In the event of additional time zones being opened timeslots will be entered into the system and carriers advised accordingly 5 DRIVER INDUCTION AND ACCREDITATION Carriers must be aware that only drivers that have undergone the DP World Sydney driver induction and accreditation process will be serviced at the terminal Trucks that are turned away due to drivers not being accredited will incur a No Show fee for each time slot booked for that truck DP World Sydney will not be responsible for delays incurred whilst drivers gain their accreditation 6 TERMINAL ARRIVAL PROCEDURES 61 All carriers (other than Standby carriers) attempting to enter the terminal must have a pre-booked time slot for every container to be handled unless by prior arrangement with DP World Sydney management 62 Carriers are required to arrive at the terminal for container processing from the commencement of the time zone and no later than 59 minutes after the commencement of the time zone For example a truck using a zone 08 slot should arrive between 0800 and 0859 hours 63 Carriers that arrive early will not be admitted 64 Carriers who are late will be directed to the Standby Queue Late arrivals may be subject to the Wrong Zone Fee provisions as outlined in these rules Carriers who do not utilise their booked timeslot may be subject to a No Show Fee 65 All carriers (including non registered carriers accessing the facility via the standby queue) must have a DP World Sydney authorised BAT number clearly located on both doors (driver amp passenger) and on the cabin roof The authorised BAT number must be of a size comparable to 30cm long and 20 cm high (A4 Landscape Size) This BAT number is required for safety security and operational efficiency reasons A carrier who does not meet these BAT number requirements may be refused entry to the terminal 66 All truck drivers must carry with them at all times their Maritime Security Identification Card (MSIC) in order for the site to comply with the Department of

Transport amp Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal Entry to the facility is subject to the DP World Sydney conditions of entry detailed on signage at each entry point to the terminal This includes full compliance with Security and Occupational Health amp Safety requirements DP World Sydney reserves the right to alter entry arrangements subject to legislative and procedural requirements 7 INTERNET ACCESS Access to the VBS is via httpwwweportscomau All carriers are permitted up to 15 minutes idle time (ie no interaction or activity) on line before being automatically disconnected from ePORTS Reconnecting to ePORTS will be necessary to continue to use the VBS 8 ALLOCATION OF TIMESLOTS 81 A pool of timeslots is available to each carrier class at the specific booking access times referred to in sections A1 AB1 and B1 82 During the initial carrier class booking access time each carrier is allowed to book a maximum number of time slots per zone This may vary between time zones 83 After a predetermined time all carrier classes may compete for any remaining time slots regardless of category limits 9 INFORMATION REQUIREMENTS When making a time slot booking all carriers are to provide the following accurate information bull Whether it is an Import or Export booking bull The shiprsquos information (ship code and voyage

number) bull The commodity group (eg Reefer General

Empty Out of Gauge or Hazardous) bull Container Length (20rsquo 40rsquo or 45rsquo) For Import container reservations Carriers must provide the container number This can be done at the time of booking or may be done afterwards but must be done before 2100hrs for slots the following working day Carriers who fail to provide an import container number will be refused entry and directed to the Standby queue They will be subject to the No Show Fee provisions as outlined in these rules 91 Import Delivery Times

CARRIER ACCESS ARRANGEMENTS

2007 - 08

DP World Sydney Port Botany Terminal

INDEX

Section Page 1 Overview 3 2 Subscription Requirements 3 3 VBS Carrier Categories 3 4 Time Zone Information 3 5 Driver Induction and Accreditation 4 6 Terminal Arrival Procedures 4 7 Internet Access 4 8 Allocation of Timeslots 4 9 Information Requirements 4 10 Documentation Requirements 5 11 Container Availability 5 12 Time Slot Exchange 5 13 Time Slot Swapping 5 14 Changing A Booking 5 15 Cancellations 5 16 VBS Fees 5 17 Terminal Contact Details 5 A Rules and Terms for lsquoArsquo Carriers 6 AB Rules and Terms for lsquoABrsquo Carriers 6 B Rules and Terms for lsquoBrsquo Carriers 6 S Standby Queue Access 6

VBS Carrier Access 2007 ndash 08 2

VBS Carrier Access 2007 ndash 08 3

1 OVERVIEW Carrier access to DP World Sydney is either by pre-booked time slots booked through the DP World Sydney Vehicle Booking System (VBS) or by a Standby Queue Access by the Standby Queue is irregular and not guaranteed at any particular time and is available to all carriers whether registered or not registered in the VBS

However VBS registered carriers using Standby access in place of adhering to a booked time slot are still liable for the booked time slot (and if not used a fee will apply) regardless of the time of Standby Queue entry and processing

Carriers wishing to use the VBS (other than carriers exclusively using the Standby arrangement) are required to register or re-register as a VBS user prior to 1 July each year and identify the level of carrier VBS access required (lsquoArsquo lsquoABrsquo or lsquoBrsquo) Annual registration fees applying are payable in advance prior to access to the VBS being provided after July 1 Any outstanding accounts must be paid in full before access to the VBS is approved The annual registration fee applies from 1st July to 30th June ndash there are no pro rata rates Refunds will not be given if a carrier no longer requires their VBS access Carriers wishing to change their level of access must re-register and pay the appropriate registration fee DP World Sydney reserves the right to alter Terms and Conditions of the VBS 2 SUBSCRIPTION REQUIREMENTS The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form 21 Registration Fee An annual registration fee applies to all registered carriers payable in advance as detailed in the annual registration form 22 Carrier Access Codes Carrier subscribers are issued with a unique Carrier Access Code enabling carriers to book their time slots electronically via their own computer hardware Carriers are responsible for safeguarding their access codes Carriers may have multiple users however only one user per carrier can make time slot bookings during the initial booking period 3 VBS CARRIER CATEGORIES Carriers may apply to be registered for one (and only one) of the following levels of VBS access

A Standard Carrier ndash with Online access via

Internet to DP World Sydney database AB Standard Carrier ndash exclusively using the DP

World Sydney Phone Booking Bureau B Major Carrier ndash with Online access via

Internet to DP World Sydney database The rules and terms outlined in sections 2 ndash 16 apply to all A AB and B class carriers The rules and terms of the VBS that specifically apply to lsquoArsquo category carriers are detailed in section A of this document The rules and terms of the VBS that specifically apply to lsquoABrsquo category carriers are detailed in section AB of this document The rules and terms of the VBS that specifically apply to lsquoBrsquo category carriers are detailed in section B of this document The rules and terms of Standby Entry are detailed in section S of this document 4 TIME ZONE INFORMATION Each day is split into 24 time zones throughout the day Monday to Saturdays as follows

Daily Time Slot Full Prefix Codes Times Zone ID IMP EXP

0000 ndash 0059 00 00I 00E 0100 - 0159 01 01I 01E 0200 - 0259 02 02I 02E 0300 ndash 0359 03 03I 03E 0400 ndash 0459 04 04I 04E 0500 ndash 0559 05 05I 05E 0600 ndash 0759 06 06I 06E 0700 ndash 0759 07 07I 07E 0800 ndash 0859 08 08I 08E 0900 ndash 0959 09 09I 09E 1000 ndash 1059 10 10I 10E 1100 ndash 1159 11 11I 11E 1200 ndash 1259 12 12I 12E 1300 ndash 1359 13 13I 13E 1400 ndash 1459 14 14I 14E 1500 ndash 1559 15 15I 15E 1600 ndash 1659 16 16I 16E 1700 ndash 1759 17 17I 17E 1800 ndash 1859 18 18I 18E 1900 ndash 1959 19 19I 19E 2000 ndash 2059 20 20I 20E 2100 ndash 2159 21 21I 21E 2200 ndash 2259 22 22I 22E

VBS Carrier Access 2007 ndash 08 4

2300 ndash 2359 23 23I 23E Time slot numbers consist of 8 alphanumeric characters The first 2 numeric characters indicate the time zone based upon the 24-hour clock system These are followed by 1 alphabetical character to indicate whether the time slot is an import (I) or an export (E) slot The last 5 numeric characters are the sequential time slot number Additional time zones may be advertised from time to time In the event of additional time zones being opened timeslots will be entered into the system and carriers advised accordingly 5 DRIVER INDUCTION AND ACCREDITATION Carriers must be aware that only drivers that have undergone the DP World Sydney driver induction and accreditation process will be serviced at the terminal Trucks that are turned away due to drivers not being accredited will incur a No Show fee for each time slot booked for that truck DP World Sydney will not be responsible for delays incurred whilst drivers gain their accreditation 6 TERMINAL ARRIVAL PROCEDURES 61 All carriers (other than Standby carriers) attempting to enter the terminal must have a pre-booked time slot for every container to be handled unless by prior arrangement with DP World Sydney management 62 Carriers are required to arrive at the terminal for container processing from the commencement of the time zone and no later than 59 minutes after the commencement of the time zone For example a truck using a zone 08 slot should arrive between 0800 and 0859 hours 63 Carriers that arrive early will not be admitted 64 Carriers who are late will be directed to the Standby Queue Late arrivals may be subject to the Wrong Zone Fee provisions as outlined in these rules Carriers who do not utilise their booked timeslot may be subject to a No Show Fee 65 All carriers (including non registered carriers accessing the facility via the standby queue) must have a DP World Sydney authorised BAT number clearly located on both doors (driver amp passenger) and on the cabin roof The authorised BAT number must be of a size comparable to 30cm long and 20 cm high (A4 Landscape Size) This BAT number is required for safety security and operational efficiency reasons A carrier who does not meet these BAT number requirements may be refused entry to the terminal 66 All truck drivers must carry with them at all times their Maritime Security Identification Card (MSIC) in order for the site to comply with the Department of

Transport amp Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal Entry to the facility is subject to the DP World Sydney conditions of entry detailed on signage at each entry point to the terminal This includes full compliance with Security and Occupational Health amp Safety requirements DP World Sydney reserves the right to alter entry arrangements subject to legislative and procedural requirements 7 INTERNET ACCESS Access to the VBS is via httpwwweportscomau All carriers are permitted up to 15 minutes idle time (ie no interaction or activity) on line before being automatically disconnected from ePORTS Reconnecting to ePORTS will be necessary to continue to use the VBS 8 ALLOCATION OF TIMESLOTS 81 A pool of timeslots is available to each carrier class at the specific booking access times referred to in sections A1 AB1 and B1 82 During the initial carrier class booking access time each carrier is allowed to book a maximum number of time slots per zone This may vary between time zones 83 After a predetermined time all carrier classes may compete for any remaining time slots regardless of category limits 9 INFORMATION REQUIREMENTS When making a time slot booking all carriers are to provide the following accurate information bull Whether it is an Import or Export booking bull The shiprsquos information (ship code and voyage

number) bull The commodity group (eg Reefer General

Empty Out of Gauge or Hazardous) bull Container Length (20rsquo 40rsquo or 45rsquo) For Import container reservations Carriers must provide the container number This can be done at the time of booking or may be done afterwards but must be done before 2100hrs for slots the following working day Carriers who fail to provide an import container number will be refused entry and directed to the Standby queue They will be subject to the No Show Fee provisions as outlined in these rules 91 Import Delivery Times

VBS Carrier Access 2007 ndash 08 3

1 OVERVIEW Carrier access to DP World Sydney is either by pre-booked time slots booked through the DP World Sydney Vehicle Booking System (VBS) or by a Standby Queue Access by the Standby Queue is irregular and not guaranteed at any particular time and is available to all carriers whether registered or not registered in the VBS

However VBS registered carriers using Standby access in place of adhering to a booked time slot are still liable for the booked time slot (and if not used a fee will apply) regardless of the time of Standby Queue entry and processing

Carriers wishing to use the VBS (other than carriers exclusively using the Standby arrangement) are required to register or re-register as a VBS user prior to 1 July each year and identify the level of carrier VBS access required (lsquoArsquo lsquoABrsquo or lsquoBrsquo) Annual registration fees applying are payable in advance prior to access to the VBS being provided after July 1 Any outstanding accounts must be paid in full before access to the VBS is approved The annual registration fee applies from 1st July to 30th June ndash there are no pro rata rates Refunds will not be given if a carrier no longer requires their VBS access Carriers wishing to change their level of access must re-register and pay the appropriate registration fee DP World Sydney reserves the right to alter Terms and Conditions of the VBS 2 SUBSCRIPTION REQUIREMENTS The VBS is only available for booking purposes to bona fide carriers Bona fide carriers are defined as transport companies that directly manage and operate trucks carrying containers to and from the terminal Carriers are required to complete a registration form and acceptance as a bona fide carrier is dependent on meeting the required DP World Sydney criteria Applicants are also required to detail the truck registration numbers they directly manage and operate on the Truck Registration Form 21 Registration Fee An annual registration fee applies to all registered carriers payable in advance as detailed in the annual registration form 22 Carrier Access Codes Carrier subscribers are issued with a unique Carrier Access Code enabling carriers to book their time slots electronically via their own computer hardware Carriers are responsible for safeguarding their access codes Carriers may have multiple users however only one user per carrier can make time slot bookings during the initial booking period 3 VBS CARRIER CATEGORIES Carriers may apply to be registered for one (and only one) of the following levels of VBS access

A Standard Carrier ndash with Online access via

Internet to DP World Sydney database AB Standard Carrier ndash exclusively using the DP

World Sydney Phone Booking Bureau B Major Carrier ndash with Online access via

Internet to DP World Sydney database The rules and terms outlined in sections 2 ndash 16 apply to all A AB and B class carriers The rules and terms of the VBS that specifically apply to lsquoArsquo category carriers are detailed in section A of this document The rules and terms of the VBS that specifically apply to lsquoABrsquo category carriers are detailed in section AB of this document The rules and terms of the VBS that specifically apply to lsquoBrsquo category carriers are detailed in section B of this document The rules and terms of Standby Entry are detailed in section S of this document 4 TIME ZONE INFORMATION Each day is split into 24 time zones throughout the day Monday to Saturdays as follows

Daily Time Slot Full Prefix Codes Times Zone ID IMP EXP

0000 ndash 0059 00 00I 00E 0100 - 0159 01 01I 01E 0200 - 0259 02 02I 02E 0300 ndash 0359 03 03I 03E 0400 ndash 0459 04 04I 04E 0500 ndash 0559 05 05I 05E 0600 ndash 0759 06 06I 06E 0700 ndash 0759 07 07I 07E 0800 ndash 0859 08 08I 08E 0900 ndash 0959 09 09I 09E 1000 ndash 1059 10 10I 10E 1100 ndash 1159 11 11I 11E 1200 ndash 1259 12 12I 12E 1300 ndash 1359 13 13I 13E 1400 ndash 1459 14 14I 14E 1500 ndash 1559 15 15I 15E 1600 ndash 1659 16 16I 16E 1700 ndash 1759 17 17I 17E 1800 ndash 1859 18 18I 18E 1900 ndash 1959 19 19I 19E 2000 ndash 2059 20 20I 20E 2100 ndash 2159 21 21I 21E 2200 ndash 2259 22 22I 22E

VBS Carrier Access 2007 ndash 08 4

2300 ndash 2359 23 23I 23E Time slot numbers consist of 8 alphanumeric characters The first 2 numeric characters indicate the time zone based upon the 24-hour clock system These are followed by 1 alphabetical character to indicate whether the time slot is an import (I) or an export (E) slot The last 5 numeric characters are the sequential time slot number Additional time zones may be advertised from time to time In the event of additional time zones being opened timeslots will be entered into the system and carriers advised accordingly 5 DRIVER INDUCTION AND ACCREDITATION Carriers must be aware that only drivers that have undergone the DP World Sydney driver induction and accreditation process will be serviced at the terminal Trucks that are turned away due to drivers not being accredited will incur a No Show fee for each time slot booked for that truck DP World Sydney will not be responsible for delays incurred whilst drivers gain their accreditation 6 TERMINAL ARRIVAL PROCEDURES 61 All carriers (other than Standby carriers) attempting to enter the terminal must have a pre-booked time slot for every container to be handled unless by prior arrangement with DP World Sydney management 62 Carriers are required to arrive at the terminal for container processing from the commencement of the time zone and no later than 59 minutes after the commencement of the time zone For example a truck using a zone 08 slot should arrive between 0800 and 0859 hours 63 Carriers that arrive early will not be admitted 64 Carriers who are late will be directed to the Standby Queue Late arrivals may be subject to the Wrong Zone Fee provisions as outlined in these rules Carriers who do not utilise their booked timeslot may be subject to a No Show Fee 65 All carriers (including non registered carriers accessing the facility via the standby queue) must have a DP World Sydney authorised BAT number clearly located on both doors (driver amp passenger) and on the cabin roof The authorised BAT number must be of a size comparable to 30cm long and 20 cm high (A4 Landscape Size) This BAT number is required for safety security and operational efficiency reasons A carrier who does not meet these BAT number requirements may be refused entry to the terminal 66 All truck drivers must carry with them at all times their Maritime Security Identification Card (MSIC) in order for the site to comply with the Department of

Transport amp Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal Entry to the facility is subject to the DP World Sydney conditions of entry detailed on signage at each entry point to the terminal This includes full compliance with Security and Occupational Health amp Safety requirements DP World Sydney reserves the right to alter entry arrangements subject to legislative and procedural requirements 7 INTERNET ACCESS Access to the VBS is via httpwwweportscomau All carriers are permitted up to 15 minutes idle time (ie no interaction or activity) on line before being automatically disconnected from ePORTS Reconnecting to ePORTS will be necessary to continue to use the VBS 8 ALLOCATION OF TIMESLOTS 81 A pool of timeslots is available to each carrier class at the specific booking access times referred to in sections A1 AB1 and B1 82 During the initial carrier class booking access time each carrier is allowed to book a maximum number of time slots per zone This may vary between time zones 83 After a predetermined time all carrier classes may compete for any remaining time slots regardless of category limits 9 INFORMATION REQUIREMENTS When making a time slot booking all carriers are to provide the following accurate information bull Whether it is an Import or Export booking bull The shiprsquos information (ship code and voyage

number) bull The commodity group (eg Reefer General

Empty Out of Gauge or Hazardous) bull Container Length (20rsquo 40rsquo or 45rsquo) For Import container reservations Carriers must provide the container number This can be done at the time of booking or may be done afterwards but must be done before 2100hrs for slots the following working day Carriers who fail to provide an import container number will be refused entry and directed to the Standby queue They will be subject to the No Show Fee provisions as outlined in these rules 91 Import Delivery Times

VBS Carrier Access 2007 ndash 08 4

2300 ndash 2359 23 23I 23E Time slot numbers consist of 8 alphanumeric characters The first 2 numeric characters indicate the time zone based upon the 24-hour clock system These are followed by 1 alphabetical character to indicate whether the time slot is an import (I) or an export (E) slot The last 5 numeric characters are the sequential time slot number Additional time zones may be advertised from time to time In the event of additional time zones being opened timeslots will be entered into the system and carriers advised accordingly 5 DRIVER INDUCTION AND ACCREDITATION Carriers must be aware that only drivers that have undergone the DP World Sydney driver induction and accreditation process will be serviced at the terminal Trucks that are turned away due to drivers not being accredited will incur a No Show fee for each time slot booked for that truck DP World Sydney will not be responsible for delays incurred whilst drivers gain their accreditation 6 TERMINAL ARRIVAL PROCEDURES 61 All carriers (other than Standby carriers) attempting to enter the terminal must have a pre-booked time slot for every container to be handled unless by prior arrangement with DP World Sydney management 62 Carriers are required to arrive at the terminal for container processing from the commencement of the time zone and no later than 59 minutes after the commencement of the time zone For example a truck using a zone 08 slot should arrive between 0800 and 0859 hours 63 Carriers that arrive early will not be admitted 64 Carriers who are late will be directed to the Standby Queue Late arrivals may be subject to the Wrong Zone Fee provisions as outlined in these rules Carriers who do not utilise their booked timeslot may be subject to a No Show Fee 65 All carriers (including non registered carriers accessing the facility via the standby queue) must have a DP World Sydney authorised BAT number clearly located on both doors (driver amp passenger) and on the cabin roof The authorised BAT number must be of a size comparable to 30cm long and 20 cm high (A4 Landscape Size) This BAT number is required for safety security and operational efficiency reasons A carrier who does not meet these BAT number requirements may be refused entry to the terminal 66 All truck drivers must carry with them at all times their Maritime Security Identification Card (MSIC) in order for the site to comply with the Department of

Transport amp Regional Security (DOTARS) National Maritime Security Requirements This card must be presented at the Security Gate upon entry Any driver who does not have an MSIC may be refused entry to the terminal Entry to the facility is subject to the DP World Sydney conditions of entry detailed on signage at each entry point to the terminal This includes full compliance with Security and Occupational Health amp Safety requirements DP World Sydney reserves the right to alter entry arrangements subject to legislative and procedural requirements 7 INTERNET ACCESS Access to the VBS is via httpwwweportscomau All carriers are permitted up to 15 minutes idle time (ie no interaction or activity) on line before being automatically disconnected from ePORTS Reconnecting to ePORTS will be necessary to continue to use the VBS 8 ALLOCATION OF TIMESLOTS 81 A pool of timeslots is available to each carrier class at the specific booking access times referred to in sections A1 AB1 and B1 82 During the initial carrier class booking access time each carrier is allowed to book a maximum number of time slots per zone This may vary between time zones 83 After a predetermined time all carrier classes may compete for any remaining time slots regardless of category limits 9 INFORMATION REQUIREMENTS When making a time slot booking all carriers are to provide the following accurate information bull Whether it is an Import or Export booking bull The shiprsquos information (ship code and voyage

number) bull The commodity group (eg Reefer General

Empty Out of Gauge or Hazardous) bull Container Length (20rsquo 40rsquo or 45rsquo) For Import container reservations Carriers must provide the container number This can be done at the time of booking or may be done afterwards but must be done before 2100hrs for slots the following working day Carriers who fail to provide an import container number will be refused entry and directed to the Standby queue They will be subject to the No Show Fee provisions as outlined in these rules 91 Import Delivery Times

VBS Carrier Access 2007 ndash 08 5

Import containers can be picked up from the advertised date and time of import availability The availability for each vessel is advertised on ePORTS and 1-Stop httpwwweportscomau or www1-stopbiz 92 Export Receival Times Export container time slots are available over a set receival period prior to the vesselrsquos arrival The export receival dates for each vessel are advertised on ePORTS and 1-Stop httpwwweportscomau or www1-stopbiz 93 Booking in Advance Both Export and Import slots can be booked up to 2 working days in advance or otherwise notified by PBT 10 DOCUMENTATION REQUIREMENTS Carriers are required to use the following documents only a Exports A Pre-Receival Advice (PRA) is required to be lodged for all full export containers and is recommended for all empty export containers prior to arrival at the terminal b Imports The standard Import Delivery Order (IDO) or ACS Under Bond Movement Authority (B200) This can be lodged electronically or in paper form c Hazardous Imports amp Exports All relevant hazardous documents as required by the governing body (eg Multimodal Hazardous Goods Form 1) Carriers are responsible for ensuring the supply accuracy and legibility of all paperwork 11 CONTAINER AVAILABILITY 111 All carriers are reminded that only containers that have received the necessary ACSAQIS clearances will be released Carriers are responsible for checking that each container is available for delivery prior to arriving at the terminal Failure to utilise a timeslot due to ACS Holds will attract a No Show fee as outlined in these conditions 112 Monies owing due to storage must be paid or accepted by the Carrier before a container can be picked up Storage payment arrangements are available in a separate brochure Failure to utilise a timeslot due to storage not being paid will attract a no-show fee as outlined in these conditions 12 TIME SLOT EXCHANGE 121 In accordance with these rules the responsibility for all booked time slots remains with the original carrier and any fees incurred will be the responsibility of the original carrier

122 DP World Sydney provides a Time Slot Exchange Service The DP World Sydney Booking Bureau or DP World Sydney website httpwwweportscomau facilitates this service If your booking is successfully swapped via the Time slot exchange service then the responsibility for that timeslot lies with the new carrier The original carrier has responsibility up until that time and will incur fees outlined in the rules if the timeslot is not used 13 TIME SLOT SWAPPING Carriers are allowed to swap their own import and export time slots around to facilitate back loading For example if the carrier has one or more import time slots in time zone 09 and one or more export time slots in time zone 15 the carrier can swap an import from zone 09 with an export in zone 15 in order to twin an import time slot with an export in the same time zone 14 CHANGING A BOOKING Changing time slot-booking information such as the vessel code commodity group container length or container number prior to arriving at the terminal is permissible subject to conditions under items 8 9 10 and 11 above However the container status (Import or Export) cannot be changed and bookings cannot be cancelled 15 CANCELLATIONS DP World Sydney reserves the right to cancel a time zone as a result of unforeseen circumstances This will be generally done with at least one hourrsquos notice where possible DP World Sydney will endeavour to assist carriers with replacement timeslots 16 VBS FEES 161 No Show Fee Carriers who book time slots fail to arrive for the booking or process a container will incur a fee of $10000 plus GST per time slot unless the carrier was unable to meet the time slot due to delays caused and acknowledged by DP World Sydney These fees are due and payable within 14 days of invoice date 162 Wrong Zone Fee Carriers who book time slots but fail to arrive for the booking within the nominated time zone will incur a fee of $5000 plus GST per time slot unless the carrier was unable to meet the time slot due to delays caused and acknowledged by DP World Sydney These fees are due and payable within 14 days of invoice date

VBS Carrier Access 2007 ndash 08 6

163 Failure to Pay If the balance of No Show Fees and Wrong Zone Fees is not paid when due the carrierrsquos allocation may be suspended and no bookings will then be possible ie booking access may be denied 17 TERMINAL CONTACT DETAILS Key terminal telephone email and facsimile numbers are bull Customer Services Desk 02 9394

0900 bull VBS Co-ordinatorBureau 02 9394

0905 Email pbttransportdpworldcom Fax 02 9394 0944 bull Transport Coordinator 02 9394

0939 bull TransportCommercial Manager 02 9394

0930 Section A - RULES amp TERMS FOR lsquoArsquo CARRIERS The rules and terms outlined in sections 2 ndash 16 apply to all lsquoArsquo class carriers A1 Booking Access Times Time slot bookings for two working days in advance open at 0900hrs For example bookings for Wednesday open at 0900hrs Monday lsquoArsquo carriers have exclusive access to their allocation at these times ie 0900-1030hrs At 0930hrs lsquoArsquo carriers have exclusive access to the remaining time slots for two working days in advance from the lsquoArsquo class pool From 1030hrs lsquoArsquo carriers have access with other carrier classes without restrictions to the total remaining time slots for two working days in advance These times are subject to change A2 Bulk Stack Runs lsquoArsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Runs Bulk Stack Runs attract a fee The terms and conditions for Bulk Stack Runs are covered in a separate document available upon request Section AB -RULES amp TERMS FOR lsquoABrsquo

CARRIERS

The rules and terms outlined in sections 2 ndash 16 apply to all lsquoABrsquo class carriers AB1 Booking Access Times Bureau Carriers are allocated a specific booking access time period in which to book timeslots or request information AB2 Bulk Stack Runs This facility is not available for bureau carriers AB3 Suspension of Bureau Services DP World Sydney reserves the right to withdraw the DP World Sydney Booking Bureau at any time with one monthrsquos notice In such an event a pro-rata refund of the annual subscription fee would apply Section B - RULES amp TERMS FOR lsquoBrsquo CARRIERS The rules and terms outlined in sections 2 ndash 16 apply to all lsquoBrsquo class carriers B1 Booking Access Times Timeslot bookings for two working days in advance open at 0730hrs and remain open until 0820hrs For example bookings for Wednesday open at 0730hrs Monday lsquoBrsquo carriers have exclusive access to their allocation at these times ie 0730-0820hrs At 0930hrs lsquoBrsquo carriers have exclusive access to the remaining time slots for two working days in advance from the lsquoBrsquo class pool At 1030hrs lsquoBrsquo carriers have access with other carrier classes without restrictions to the total remaining time slots for two working days in advance These times are subject to change B2 Bulk Stack Run Ins lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run In Bulk Stack Run In fees are included in the lsquoBrsquo carrier access subscription tariff The terms and conditions for Bulk Stack Run Ins are covered in a separate document B3 Bulk Stack Run Out lsquoBrsquo Carriers may at DP World Sydney discretion arrange a Bulk Stack Run Out B4 Delays Caused by Terminal If a lsquoBrsquo Carrier is delayed at DP World Sydney for more than two hours (ie from the time they are processed to the time the job is completed) per single container or three hours per multiple container vehicle DP World Sydney will accept claims relating to periods in excess of two and three hours respectively for reasonable out of pocket costs to a limit of $500 per incident and in any one year (July 1 to June 30) up to $10000 total per year maximum Section S -STANDBY QUEUE ACCESS

VBS Carrier Access 2007 ndash 08 7

S1 General All categories of carrier may use the Standby Queue to access the terminal The Standby Queue is primarily intended for bull Carriers not registered in the VBS bull Carriers who were late for their timeslot S2 Queuing Arrangements Carriers are to queue in the designated lane behind the Standby sign on Simblest Road S3 Requirements All carriers must comply with conditions outlined under sections 65 910 and 11 S4 Access Individual carriers may only move forward beyond the Standby sign when instructed to do so by the Standby sign Access is not guaranteed at any time DP World Sydney will endeavour to process the Standby Queue when operational parameters allow

• IPART Submission - Publicpdf
• • Letterpdf
  • • Re Review of the Interface between the Land Transport Industries and the
    • • Stevedores of Port Botany
      • Introduction to DP World
      • Australian Operations
      • DP World Sydney
      • • IPART Public Versionpdf
        • • Annexure 1 - eGate (2)pdf
          • • Removing a scheduled eGate run
            • • Annexure 2pdf
              • Annexure 3pdf
              • • Daily Time Slot