Saturday, May 15, 2010

Economic Inefficiency

Imagine that you are a coal buyer, a ship owner or just someone who is affected by the cost of coal or the sale of coal. The picture above (which was a snapshot made at 8:57 am today) tells a story of your pain.
Each of the green squares represents a ship at anchor. Each of the green "ship" shapes represents a ship moving. The "moving" ships in amongst the anchored ships are likely to be either coming to anchor or getting underway.
That picture is not unusual and shows at least 21 ships at anchor off Newcastle. They're waiting their turn at the Newcastle coal loader!! Every hour that a ship sits at anchor costs someone something. Ultimately the cost of steel or power is increased because these ships are sitting idle. This goes on week in, week out. There are always ships at anchor off Newcastle simply because there is insufficient coal loader capacity.
The other "cost" is that each and every one of those ships is at risk of being driven ashore in a gale (think Pasha Bulker), a fact that the ATSB commented on in their report on the Pasha Bulker. So there is an environmental risk to them sitting out there like that.
My question is this: Why, with historically high commodity prices for a number of years (despite the hiccup of the GFC), has Australia not invested effectively in the infrastructure to enable it to efficiently export its product? Why does the ACCC continue to allow a monopoly situation with the Newcastle coal loader?

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