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Port of Melbourne investment to lift capacity and address congestion

Posted : Friday, June 29, 2012

"By investing in the future of the Port of Melbourne as Australia's premier trading gateway we will lift capacity, boost completion, and ensure Melbourne continues to be the number one container port in Australia," Victorian Minister for Ports, Major Projects, Regional Cities and Racing, Dr Denis Napthine told a CEDA audience in Melbourne.

"By 2025 we expect to be doing 5.5 million TEUs (twenty-foot equivalent units)  and by 2035 that will be as high as eight million," he said.

Dr Napthine said the Government has recently announced projects that will increase short to medium-term capacity of the Port of Melbourne's and medium to long-term capacity increases at the port of Hastings, including:

• A $1.2 billion project to allow the Port of Melbourne to develop a new container terminal at Webb Dock, which would increase capacity to about five million containers annually, and generate 700 direct and 1900 indirect jobs. This will be accompanied by infrastructure upgrades.

• $400 million for the construction of a new automotive stevedoring facility at Webb Dock West to increase import/export capacity of automobiles at  Port of Melbourne from about 375,000 to 600,000 vehicles per year.

• As part of the above investment, a new onsite facility for pre-delivery inspection (PDI) and pre-export inspection built north of Webb Dock West, connecting to the M1 (Monash Freeway) to provide greater productivity and also reduce the traffic on the Westgate Bridge. At present, 60 per cent of the cars arriving are taken across the Westgate Bridge to Laverton-Altona for PDIs and then taken back over the Westgate Bridge to the eastern suburbs.

"The government has also announced it will prioritise the development of the Port of Hastings as a new container port for Melbourne and Victoria, to be operated as a complementary but competitive container port," Dr Napthine said.

"Currently there are no container facilities at Hastings and only preliminary environmental studies have been undertaken, so it is estimated it will take 10-15 years to make Hastings a working container port."

Port of Melbourne Corporation, Chief Executive Officer, Stephen Bradford said: "We weren't surprised at all when the GDP figures were most recently announced of 4.3 per cent growth, (it's) very consistent with what the Port of Melbourne is seeing. We actually thought that might have been a bit higher."

"I predict going into the next quarter it would be of the same percentage," he said.

"Being at the forefront of trade and seeing what goes through containers and the number of cars each month, we get a very good insight into what is happening with our economy."

Mr Bradford said the Port of Melbourne is currently ranked 53 in the world and holds approximately 36 per cent of the nation's share of container trade, with the prediction of higher ranks and increased trade in the future.

"May container growth (was) 218,000 TEUs and importantly 61,000 full export containers. No port in this country has ever done 61,000 full export containers in a single month," he said.

"This is an economy and a port driven by the success of regional Victoria and southern NSW. All cargo types are growing."

Mr Bradford said in delivering the PDI facility project a number of community issues have been considered, including:

• Closing the Williamstown road connection for trucks at Todd road and building a separate road which will link the whole Webb Dock to the M1 in both directions; and
• Key Performance Indicators (KPIs) biased towards encouraging the movement of containers outside of peak hours (currently 40 per cent are moved out at night and on weekends).

Asciano Group, Chief Executive Officer, John Mullen said we need to decide if ports are an asset from which maximum returns should be extracted or a facilitator of trade.

"As an industry we have not invested fast enough that would significantly improve productivity," he said.

"We, as a stevedoring industry, really need to get our act together and deliver world class services at competitive prices to do our bit to help with the overall conundrum.

"There's no question that we have been lax for many years and our customers, shipping line and end consumers have suffered as a result."

With increased competition, Mr Mullen said container ports must focus on what they do best.

"Hiding behind protectionism, barriers to entry is disingenuous and ultimately is doomed to fail," he said.

Infrastructure Australia (IA), National Infrastructure Coordinator, Michael Deegan said IA's national audit of infrastructure identified ports as a top priority for scrutiny and action.

The Commonwealth Government is about to release its update to the National Land Freight Strategy, which will complement the national port strategy, he said.

Mr Deegan said IA is currently reviewing port balance sheet capacity to determine their capacity to fund their own improvements. In many cases state governments are coming to IA to fund what are supposed to be commercial operations, he said.

"The ability of government owned ports to attract commercial resources for investment is a major issue," he said.

"In our work to be released shortly, we have benchmarked eight major Australian ports against a series of other Australian and international ports and port operators.

"None of the eight ports is generating a return on assets equivalent to that risk free rate (3.89 per cent Australian Government 10 year bond rate)."

Clearly there are a range of issues around the regulatory environment and others but return on investment is certainly below what you would expect for a commercial organisation, he said.

In addition Mr Deegan said: "While there are few, if any, long-term plans around our ports, there are plenty of engineering based expansion plans...very few of them are integrated into the supply chain and very few are subjected to rigorous cost-benefit analysis and certainly the opportunity for private funding is infrequently applied."

AECOM, Client Director - Ports and Freight, Nick Van Bronswijk said Australian ports and infrastructure play a vital role in prolonging the competitiveness of our manufacturing sector in the short and medium term through the provision of efficient transport for raw materials and processed goods and finished products.

"They will intrinsically influence cost of living and quality of life of our community, and failure to invest will see a gradual degradation of our standard of living," he said.