EXPLANATORY STATEMENT
Issued by the authority of
the Parliamentary Secretary to the Minister for Transport and Regional Services
Trade Practices Act 1974
DECLARATIONS PURSUANT TO SUBSECTION 10.03(2) OF PART X
International liner cargo shipping services are regular, scheduled services that carry non-bulk cargoes, mostly in containers. They are a vital facilitator of international trade and it is crucial for Australia’s international trading performance, especially for value-added products, that liner cargo shipping services are provided at internationally competitive rates.
Part X (International liner cargo shipping) of the Trade Practices Act 1974 (TPA) regulates the market conduct of international cargo shipping companies that collaborate as ‘conferences’ in order to provide joint liner cargo shipping services, often at agreed freight rates. Liner shipping operators have traditionally been permitted by governments around the world to act in concert as ‘conferences’ in order to limit competition and stabilise freight rates. They allow members to: allocate routes; fix prices; manage capacity; offer loyalty agreements; and pool revenue/ losses. The traditional justification for allowing collusive behaviour of this kind is that it prevents destructive competition, which could lead to unsustainable prices below cost, and so market instability, which would impact on the capability of ocean carriers to provide the frequent, reliable services valued by shippers.
Part X had its origins in the late 1920s out of a concern that, despite Australia’s long sea-trade routes, shippers in all states and territories should have access to liner shipping services of good quality (capacity, frequency, reliability, and port range served) at freight rates that are internationally competitive. It is designed to be an effective, low cost, limited intervention regulatory regime.
As well as permitting ocean carriers to work together in conferences, Part X provides exporters and importers with countervailing powers to strengthen their negotiating ability with conferences, through shipper bodies designated by the Minister for that purpose. Part X obligates shipping lines who are members of a conference to negotiate with designated shipper bodies in relation to liner cargo shipping services they intend to provide.
Designated peak shipper bodies deal with matters affecting liner trades as a whole whereas designated secondary shipper bodies may be nominated to negotiate with ocean carriers in relation to, for example, matters affecting shippers of a particular commodity, or shippers in a particular state/ territory.
Pursuant to subsection 10.03(2) of Part X, the Minister may declare an association to be a designated outwards secondary shipper body, provided the Minister is of the opinion that, in relation to outwards liner cargo shipping, the association represents the interests of Australian shippers in a particular trade, or of Australian shippers of particular kinds of goods, or of shippers in a particular part of Australia, or of producers of goods of a kind exported from Australia, and that such a declaration is desirable.
Part X of the TPA falls within the portfolio responsibility of the Minister for Transport and Regional Services; this responsibility has been delegated to the Parliamentary Secretary to the Minister for Transport and Regional Services.
By force of the Legislative Instruments Act 2003, the instruments declaring five designated outwards secondary shipper bodies will expire on 31 December 2007. All have indicated a wish to continue in this role and all meet the criteria outlined in subsection 10.03(2) of Part X of the TPA. These associations are:
- The Meat Industry Shippers Association, which was declared to be an outwards secondary shipper body on 17 May 1990. The Meat Industry Shippers Association meets the criteria in respect of subsection 10.03(2) because it is an association which represents the interests, in relation to outward liner cargo shipping services, of shippers and producers of meat products from Australia.
- The South Australian Shipping User Group, which was declared to be an outwards secondary shipper body on 31 August 1990. The South Australian Shipping User Group meets the criteria in respect of subsection 10.03(2) because it is an association which represents the interests, in relation to outward liner cargo shipping services, of shippers and producers of exports from South Australia.
- The Western Australian Shippers Council Inc, which was declared to be an outwards secondary shipper body on 3 August 1990. The Western Australian Shippers Council Inc meets the criteria in respect of subsection 10.03(2) because it is an association which represents the interests, in relation to outward liner cargo shipping services, of shippers and producers of exports from Western Australia.
- The Australian Horticultural Exporters Association, which was declared to be an outwards secondary shipper body on 31 October 1990. The Australian Horticultural Exporters Association meets the criteria in respect of subsection 10.03(2) because it is an association which represents the interests, in relation to outward liner cargo shipping services, of shippers and producers of horticultural products from Australia.
- The Australian International Movers Association was declared to be an outwards secondary shipper body on 10 October 1990. The Australian International Movers Association meets the criteria in respect of subsection 10.03(2) because it is an association which represents the interests, in relation to outward liner cargo shipping services, of shippers of personal and household effects from Australia.
Pursuant to subsection 10.03(2) of Part X of the TPA, the Parliamentary Secretary to the Minister for Transport and Regional Services has declared the above associations, by legislative instrument, to be designated outwards secondary shipper bodies. This will, importantly, permit them to continue to negotiate with shipping conferences in relation to liner cargo shipping services, where it is appropriate that they do so.