Australia’s Competition Commission (ACCC) has flagged a series of concerns over DP World’s proposed acquisition of Silk Logistics, as the terminal operator highlighted the success of its end-to-end logistics model in its full-year 2024 results.
In a preliminary statement this morning, the ACCC warned that the purchase could “prompt increased charges and diminished services for rival logistics providers, conditional discounts, and potential access to commercially sensitive information”.
Commissioner Philip Williams said the ACCC had “concerns” around the threat posed to competition within the Australian logistics scene.
“Our review is focused on DP World Australia’s ability and incentive to either increase terminal fees or worsen the quality of terminal services for container transport providers that compete with Silk, after the acquisition,” Dr Williams added.
“We are also assessing whether DP World Australia, after acquiring Silk, is likely to offer below-cost transportation prices to importers and exporters if their containers are also picked up and dropped off at DP World Australia’s stevedoring terminals.
“This is because a discounting strategy involving below-cost prices could reduce container transport competition allowing a combined DP World Australia and Silk to raise prices later.”
Landside charges in Australia have surged by some A$2bn ($1.25bn) over the past three years, with the Freight & Trade Alliance (FTA) saying the spike in charges had come “despite declining operating costs and an oversupply of terminal capacity”.
FTA figures suggested a 22% spike in total revenue per container lift since 2022, compared to just an 8.9% upturn in operating costs; DP World Australia’s terminal access charges (TACs) having jumped 10%.
Director Paul Zalai said the report confirmed long-held FTA suspicions that “stevedores and empty container parks impose charges unchecked, with transport operators, exporters, and importers left without any ability to negotiate”.
“The government must act before costs spiral further out of control. The proposed DPWA-Silk acquisition raises serious concerns about potential impact on competition, particularly given the increasing burden of TACs.”
As news of ACCC’s concerns were aired, DP World announced a record-breaking 2024, in which global revenues jumped 9.7% year on year, to $20bn, as adjusted ebitda was a record-breaking $5.5bn, 6.7% up on 2023’s figures.
DP World Group CEO Ahmed bin Sulayem said: “These results demonstrate the benefits of our strategic focus on high-margin cargo, end-to-end integrated supply chain solutions, and disciplined cost optimisation.”
Even so, higher funding costs were attributed to the 2% decline reported in the group’s overall profit, which dipped to $1.5bn.
