Hutchison to end Australia's waterfront duopoly
The long-awaited end to a duopoly on Australia's waterfront will finally occur within the next few weeks when Hutchison Ports unloads its first ship at the Port of Brisbane.
The entry of Hong Kong billionaire Li Ka-shing's container ports company threatens to spark discounting of stevedoring charges as it chips away at the market share of incumbents Patrick and DP World.
Hutchison will not reveal the identity of the shipping line behind the first container vessel due to dock at Fisherman Island in Brisbane because it does not want to telegraph its intentions to competitors.
But the ship's arrival will give the industry the first insight into which shipping lines are likely to switch allegiances to the new entrant. Hutchison, the world's largest port operator, is initially expected to target smaller shipping companies as it expands its presence in Australia.
However, insiders emphasise that Cosco, OOCL and China Shipping are likely to use its terminals at Brisbane and Sydney's Port Botany in the longer term because of their common links to China.
The Hong Kong company is also expected to lead a shortlist of several bidders to be named within the next two months to operate a new container terminal at the Port of Melbourne. The winning bidder for the Webb Dock terminal is unlikely to be announced until the first half of next year.
With its Brisbane terminal open, Hutchison is still targeting late this year for when it will begin operations at its new $400 million terminal at Port Botany. However, analysts believe it will be delayed until next year because the area slated for the terminal still resembles an excavation site.
The entry of the deep-pocketed Hutchison signals the start of a shake-up of the country's waterfront.
It comes as the NSW government on Friday awarded a 99-year lease for Port Botany and Port Kembla in Wollongong to a consortium led by Industry Funds Management for $5.07 billion.
Commonwealth Bank analyst Matt Crowe believes investors have underestimated the longer-term impact on Patrick's listed parent, Asciano, from the entry of Hutchison. "It is a real game changer for the industry ... [and] a really serious issue for Patrick," he said.
While Hutchison would gain market share equal to the size of its operations, Mr Crowe said it was unclear how aggressive the new operator would be in lowering stevedoring charges to gain customers, and the extent to which Patrick and DP World would respond.
He expects Hutchison to initially target the smaller shipping lines because the large companies such as Maersk and MSC were contracted with the incumbent stevedores.
Patrick has been preparing for the arrival of Hutchison with plans to replicate its automated terminal in Brisbane at its operations at Port Botany. The switch in Sydney to automated straddles, which shift containers, will result in Patrick laying off 270 of its 511 workers at the port within the next 18 months.