SYDNEY: Speculation is frothing around the national waterfront that Chris Corrigan’s Qube Logistics has approached Sydney’s retreating third container port operator, Hutchison Ports, with an offer for its rapidly emptying Port Botany terminal.
But talk of a recent $300 million offer for Hutchinson’s controversial Sydney outpost is dismissed by Qube people. As it turns out, there were quite serious discussions between Qube and Hutchison maybe two years ago, but the price offered by Chris Corrigan’s bargain hunters came nowhere near the $800 million plus book value of the Sydney terminal and it was never seriously entertained.
Now there are no live discussions between Qube and Hong Kong’s global stevedore. And this news might comfort those senior investors said to be quietly nervous about the potential that the restless logistics business might pay anything like value for a chance to go back to the future.
The issue there is as obvious as it is well appreciated by Qube management. If a global operator such as Hutchison could not attract enough business to make a go of container terminals in Brisbane and Sydney, why might Qube imagine that it could do any better?
Well, for a whole lot of reasons, I expect. The first thing to appreciate about Qube is that it is home to a whole lot of the management that made Patrick Corporation the $6 billion business that Toll Holding just had to have back in 2006.
From Qube chief executive Maurice James down, this is a management team steeped in the intricacies of attracting container terminal custom and extracting value from the movement of containers across wharves. Then, looming over all of them, there is the canny shadow of Mr Waterfront Reform himself, Qube chairman Chris Corrigan.
Ever since Qube emerged under its current brand, we have wondered if it would be the vehicle for a return to the frontline of the container business. Last year’s failed tilt at the title for Melbourne’s third terminal certainly underlined this potential was very real indeed.
Qube was the underbidder (at least on one critical level) in the tender for a slice of Melbourne Webb Dock and for rights to build the third container terminal it is supposed to host sometime over the next two years.
Whether that happens, of course, is very much a moot point. Bid winner ICTSI is pretty unhappy with its lot.
The Philippines operator beat off Qube and Hutchison by offering to pay rents to the Port of Melbourne that were seven times higher than the legacy operators. It plainly expected those rents to set a new base for the new deals that DP World and Patrick needed to make. In DP’s case, that has not happened. And it seems likely it will not happen when the negotiations with Asciano are done with sometime next year.
This means the ICTSI business case has been blown out of the water. It is seeking to renegotiate terms. But the government will not hear of it.
As a result, there is speculation built likely on nothing firmer than logic, that says ICTSI should make a play for whatever Hutchison is not going to use in Sydney.
There is a lot of interest, meanwhile, in the fact that both the winner and the underbidder in the Webb Dock process, built their cases on solo operations.
Both may have had plans to align their customer offering with Hutchinson’s third terminals in Sydney and Brisbane, but it is clear ICTSI and Qube believed they could make good money running a terminal that was not supported by the east coast network, more usually perceived as necessary in the Australian container game.
It is not clear if that potential is unique to Melbourne – Australia’s biggest container port and a centre for transhipping goods to Tasmania. But Qube’s rejected expression of interest in Hutchison’s operation at Port Botany two years ago would suggest that James might have a draft for solo viability in Sydney too.
How that might be is a possibility patently beyond the ken of Hutchison.
Having signalled in June a strategic retreat in its efforts to establish itself as the duopoly breaker on the Australian waterfront, Hutchison last week delivered itself into contest and controversy by sacking 97 Sydney dock workers by text and email.
The company has been ordered to rehire those workers for two weeks while the Federal Court decides if Hutchison breached the terms of the greenfields enterprise agreement it signed with the Maritime Union of Australia in 2013.
The MUA says Hutchison management has not met the consultation obligations of that employment agreement and has trooped off to the Federal Court, with good success so far. Meanwhile, in an impressive refinement of a tactic originally aimed at Qube in Melbourne a couple of years back, Hutchison’s Port Botany operation has been subject to a “community protest” that looks, for all the world, like a union picket. This expression of community anger at and around Hutch’s gates has been organised by the AWU and the CFMEU, whose people are manning the protest on a rotating shift.
In an industrial relations sense, at very least, it could be said that the only thing that disgraces Hutchison more than its arrival on the Australian waterfront mainstream, is the manner of its leaving.
Hutchinson was lambasted by its competitors for the EA it struck in 2013. The deal was received as a massive rollback that surrendered many of the hard-earned gains that flowed from Corrigan’s legendary waterfront showdown in 1998 and a two-year contest with the MUA though 2011-12.
In the end, Hutchinson’s rollback was self-destructive. It baked in an uncompetitive cost base that has contributed to its inability to generate the level of customer support needed to sustain their $700 million outposts. Reports from Brisbane indicate Hutchison’s terminal there is emptying out with customers picking up containers but no new business coming in. To the south, Hutchinson is sub-contracting its few Sydney shipments to competitors DP World or Asciano while it assesses its future and sacks people with shameless digital distance.
We don’t often find ourselves in agreement with MUA boss Paddy Crumlin. But sacking workers by text certainly “doesn’t pass the pub test” and is utterly unacceptable.
That said, Hutchison’s stupidity comes as a certain fillip for a union that has been condemned as a home of bullies on two sides of the continent and whose processes earned unflattering illumination in hearings of the Royal Commission into Trade Union Governance and Corruption.