A dispute over rent is turning operators away from Australia’s largest general cargo port, a major container stevedore says.
DP World Australia is disputing a proposed 750 per cent hike in rent at the Port of Melbourne, the site of the company’s largest container terminal.
Other users of the port may also face steep rent increases when their rents are due for review.
DP World says the proposed rent hike, tabled by the Port of Melbourne Corporation in December 2014, would make the port the most costly in the world.
That could force shipping companies to shift cargo to other ports, potentially threatening the jobs of around 300 of DP World’s 600-plus employees, plus workers at other businesses.
It could also result in consumers paying more for their goods. In light of the dispute, the Port of Melbourne has requested the President of the Australian Property Institute appoint an independent valuer to review the proposed rent increase.
But DP World Australia chief executive Paul Scurrah the independent arbiter might still come back with a value that DP World would be unable to tolerate.
The stevedore firm last week made a confidential counter-offer on the rent increase to the Port of Melbourne.
DP World is also putting together an application to the National Competition Council that could result in the Australian Competition and Consumer Commission regulating rents at the port.
Mr Scurrah says the logistics industry wants the issue resolved sooner rather than later.
“The uncertainty is creating a circumstance where people are looking at alternatives (to using the Port of Melbourne),” he said today.
“At the moment there is still the fear that there is going to be a significant rent charge.
“I think the uncertainty around the future costs is costing the port of Melbourne business at the moment.” A spokesperson for the Port of Melbourne said it was proceeding with the appointment of an independent expert, and is in talks with DP World.
The dispute comes as the Victorian government considers a $5 billion privatisation of the Port of Melbourne.
The port’s operator has said a review of rents is routine and would have been undertaken irrespective of the Victorian government’s plans to seek a lease for the port.
