The Australian Transport and Infrastructure Council has affirmed the critical role the freight sector plays in providing essential supplies of food, medicine or other goods. Read more
Ports Australia has released its three priority policies, ahead of the 2019 federal election, that the organisation believes will save Australians money, increase our international competitiveness, strengthen the economy, create jobs in regional areas and help reduce congestion in our cities.
The policies also come with a warning of an impending maritime skills shortage.
According to Ports Australia, the three policies work together to promote a more efficient freight and supply chain through mode neutrality, smarter regulation and job creation.
“Ports are the starting and finishing points for exports and imports heading to and from Australian businesses and households.”
“With our growing population and even faster-growing freight task it is imperative that we start developing and implementing effective long-term plans for our freight network to support this country.
“We believe that an Australia with better-connected Ports that utilise the strength of each transport mode; the flexibility of trucking, connectivity of rail and capacity of shipping, can be a more internationally competitive country with a lower cost of living.
“Our policies also include a caution that poor national freight and infrastructure planning will have compounded negative results. Of concern is the dwindling pool of maritime skills in this country able to run the Ports, Australia’s trade and economic gateways,” Mike Gallacher, Chief Executive, Ports Australia said.
The three policies are:
1. Improving Lives Through Connected Ports
Currently 80 per cent of all freight trips to and from a port are conducted by truck adding to city congestion. By better connecting Ports with rail and road networks and planning approaches to allow for sensible development around Ports, governments can reduce overall congestion, pollution and maintenance costs while increasing road safety through efficient and strategic truck movements. Corridor protection and planning to link Ports with industrial zones and regions will also play a significant role in creating a liveable future for our cities.
2. Building Maritime Skills
Because Ports handle almost all our physical trade, Australia is particularly vulnerable to impacts created by a workforce lacking maritime skills. Ports require highly specialised people who have had decades of experience to fill crucial Ports roles; harbour masters, pilots, tugs masters, hydrographers and land side operators.
“Over 60% of skilled people in the sector are over 45 while the number aged under 30 is reducing. Ports around the country, particularly regional Ports, are struggling to recruit adequately skilled people for specific roles.”
“Government needs to find ways to increase opportunities for Australians to enter the maritime industry. Our Ports around the country already run cadetship, internship and graduate programs but more needs to be done given there is a shortfall in mariners not just in Australia but globally,” Mike said.
3. Using Australia’s Blue Highway
Australia’s freight task will double by 2030 after already increasing by 50 per cent over the past 20 years. Our current and planned infrastructure cannot handle the growth in freight movements. With over 80 per cent of our population living within 50 km of the coast Australians are connected by the Blue Highway, an underutilised transport mode.
“Unfortunately, only 15 per cent of our domestic freight task is moved by ship. We believe more non-time specific freight such as construction materials and fuel can be moved along our blue highway. This frees up space on our roads and rail while providing training opportunities for Australian mariners.”
“Ports are a part of Australia’s future success story and we look forward to working with the government on implementing policies to support Australians through their Ports.
“Freight cooperation and planning is also part of the story. We urge all political parties to reach a bi-partisan agreement on strategy and for the National Freight and Supply Chain Strategy to be released within in the first 100 days of the incoming government,”Mike concluded.
The new Deputy Prime Minister and Minister for Infrastructure and Transport, Michael McCormack, has spoken to Logistics & Materials Handling about his new role, Australia’s upcoming big-ticket projects and the National Freight and Supply Chain Strategy.
“Small regional communities hold a special place in Australia,” he said. “Our vital supply-chain sector, road and rail, accounts for approximately 10 per cent of GDP and plays a pivotal role in supporting enhanced productivity and economic growth.”
He noted that investment in national roads, railways, improved port access, intermodal links, and the upgrade of hundreds of ageing bridges would have long-term benefits for all those using Australia’s transport networks, including public transport and heavy vehicles.
“I look forward to working with the freight and logistics sector to build on the progress that has been made through partnerships with all levels of government and industry to deliver a sustainable, safer and reliable freight network,” McCormack added.
He also shared his excitement for receiving the final report of the Inquiry into National Freight and Supply Chain Priorities from the Expert Panel, which is likely to be unveiled at the ALC Forum, which is taking place this week.
“It is pleasing to hear of the strong interest and support the Inquiry process has received from industry, and I look forward to working with my state and territory counterparts to address priorities raised through the development of a national freight strategy,” he said.
“Acting on these priorities will not only help drive the productivity improvements necessary to sustain and raise Australia’s standard of living and economic growth, but will also help to improve safety and environmental outcomes of the national freight sector.”
With the Federal Government having announced the composition of the expert panel that will advise on the development of the National Freight and Supply Chain Strategy, the real work of shaping its content is now well and truly under way.
It’s not indulging in hyperbole to say that we have a once-in-a-generation opportunity to get this right. Australia’s rapidly growing population coupled with changing patterns of consumer behaviour – especially with the growth of e-Commerce – will impose significant additional demands on the freight and logistics sector.
Indeed, the National Transport Commission (NTC) estimates that Australia’s freight task will grow by some 26 per cent in the next decade alone. When you think of the capacity constraints that are already evident in some of our major cities, particularly growing traffic congestion, such forecasts can appear daunting.
Although it will require a significant degree of hard work on the part of the freight and logistics industry, I am nonetheless confident that we can come up with solutions that will allow us to meet this burgeoning demand.
We know that industry is willing to play an active role, and we know that the Federal Government’s agreement to develop a National Freight and Supply Chain Strategy shows decision-makers are willing to listen to industry’s advice.
Thus, our immediate challenge is to make certain the advice we provide is the right advice, which will help ensure the Strategy that emerges is the right one for our industry and the right one for the Australian economy.
I think there has been an encouraging start on this front.
At the beginning of March, the ALC held its annual Forum in Melbourne, and the entire focus of the event was discussing the content of the National Freight and Supply Chain Strategy.
Of course, we are not starting with a blank piece of paper. Many of the attendees at the Forum are leading figures within Australia’s freight and logistics industry, and throughout their many years of collective experience they have garnered insights and evidence that will prove invaluable in terms of getting policy settings right.
Although ALC Forum 2017 was the first industry-wide gathering since the Prime Minister’s announcement last November that the Government would develop the Strategy, the discussions revealed there is already a remarkable degree of consensus across the industry about what is required to make it effective. This is a strong basis from which to work.
To help synthesise the industry’s conversations to date, the ALC has produced a Working Paper that summarises the views of industry to date about the contents of the Strategy.
Some of the major themes addressed in that publication are as follows:
Urban encroachment issues
In the lead up to the 2016 Federal Election, the ALC prepared a document called Getting The Supply Chain Right, which highlighted the freight and logistics industry’s most pressing priorities for an incoming government.
One of those was urban encroachment, and the lack of buffer zones, land separation setbacks and design mitigation measures around sensitive use developments, which can significantly hamper the efficient operation of freight-related infrastructure.
At the time, the ALC noted that the national freight supply chain will be unable to support Australia’s growing demand if facilities and infrastructure continue to be prevented from realising their optimal capacity, due to restrictions imposed on their use or operating conditions.
This includes things like night curfews for airfreight and port facilities, restrictive speed limits and the banning of heavy vehicles from key routes that provide access to freight facilities.
These things are often pursued by governments in search of an electoral boost. However, their long-term impact is to simply build inefficiencies into the supply chain, which ultimately results in higher consumer prices.
As industry ‘insiders’, we understand that there is a symbiotic relationship between good outcomes for freight efficiency and good outcomes for the community.
The problem lies in the fact that this is vastly underappreciated by the public at large, and even at times by decision-makers within government.
This is how we end up with poor planning outcomes, such as the failure to preserve freight corridors, and insufficient consideration of freight operations when pursuing ‘urban infill’ objectives surrounding new residential developments.
The freight and logistics industry needs to better ‘sell’ the fact that corridor preservation equates to improved safety, liveability and efficiency outcomes.
There was a broad consensus among participants at the Forum that not enough is being done to make use of data, both in terms of improving safety and efficiency across the supply chain, and also when it comes to effectively planning the nation’s freight infrastructure.
Of course, the top priority must be safety in the supply chain. Regrettably, Australia’s approach to safety in the trucking industry is lagging significantly behind that of other comparable nations. In particular, several participants at the Forum noted that Australia’s trucking industry is making insufficient use of telematics when it comes to making business decisions.
The ALC will continue to pursue a national telematics law, permitting the use of data about vehicle performance, equipment and driver behaviour that can be used to enhance road safety, improve efficiency within the logistics industry and identify problems with driver behaviour.
Technology also offers a potential way to overcome the impact of ever-more restrictive planning and vehicular access policies when it comes to CBD freight delivery. One detailed presentation discussed using urban consolidation/distribution stations. These can provide for multi-modal routing systems using bicycles, walkers and electronic vans to facilitate freight delivery.
It is far more efficient than using large vehicles to deliver small loads – especially given that an increasing number of large-scale residential developments do not incorporate delivery zones or provide access facilities for freight vehicles.
There is very strong support within the industry for construction of the Inland Rail, at last providing a port-to-port rail link from Melbourne to Brisbane. This project has had a long gestation, but with the increasing demand for freight resulting from free trade agreements and the growth of e-Commerce, encouraging more freight onto rail is vital.
Constructing the Inland Rail will help to cut freight transport times, reduce road congestion and promote cheaper consumer prices. There are also considerable economic benefits for regional communities along the route.
However, there are also opportunities elsewhere in the sector to make greater use of short-haul rail. This includes pursing projects like the duplication of the rail line at Port Botany, which will help achieve NSW Ports’ target of moving three million Twenty-foot Equivalent Units (TEU) by rail by the year 2045.
Pursuing a rail connection between the Port of Melbourne and three of Victoria’s inland ports will also be important in promoting supply greater supply chain efficiency and addressing road congestion.
This issue is especially important in the context of Asia’s rapidly expanding middle class, whose appetite for the type of high-quality agricultural goods Australia produces will be a source of growing demand on our freight and export infrastructure. We must be mindful not to cede our competitive edge in this area by failing to have a supply chain that operates safely and efficiently from paddock to port.
The next steps
The ALC believes that a dynamic Strategy requires a dynamic consultation process to guide its development, and accordingly the ALC will be continuing to engage closely with industry over the coming weeks and months to make sure we get the right outcomes.
However, from the conversation thus far, it’s already apparent that there are some clear expectations from industry.
Existing freight infrastructure needs to be made to operate efficiently, through making sure planning instruments not only identify and preserve the industrial lands to provide the jobs and logistics facilities of the future, but also ensure new residential developments do not encroach on infrastructure and prevent its effective utilisation.
It will also be necessary to establish some form of mandatory system of data collection that will allow better decision making and improved outcomes in safety, planning and investment decisions, all of which will help boost productivity.
We will need to move towards hypothecation of levies, fees, taxes and charges raised for the purpose of developing an identified piece of infrastructure – so that money raised is invested properly and not put back into consolidated revenue.
The construction of Inland Rail must continue to be treated as a priority, ensuring rail as a modality has a clear place in moving freight in the Australian supply chain.
Great Commonwealth leadership needs to promote supply chain safety and efficiency – this includes helping the public at large understand the importance of supply chain efficiency, as well as incentivising state jurisdictions to consider freight needs in their planning instruments by making Commonwealth funding support subject to conditions such as having corridor preservation strategies in place.
Finally, the establishment of a specific Federal Department of Planning and Infrastructure will allow the Commonwealth’s expertise in these areas (including the development of funding mechanisms) to be concentrated and properly able to be used as resource, by industry and by other jurisdictions.
This column appeared in the April/May issue of Logistics & Materials Handling.
The ball has been put into the logistics industry’s court. For some years now, we have been urging government not just for more investment in transport and logistics, but also for better targeted investment – investment that will produce the best returns. We have also argued for better planning and better coordination between the three levels of government in Australia.
We gained some success when the Labor Government set up Infrastructure Australia (IA) as a statutory body in 2008, but it required several years of detailed work before IA could produce a comprehensive priorities list in a report to the Government – its 15-year infrastructure plan. Late last year, the Coalition
Government responded to that report in a statement that was welcomed by the logistics industry, and the Australian Logistics Council in particular.
Prime Minister Malcolm Turnbull agreed to something that has been at the forefront of the ALC’s wishlist – the development of a national freight and supply chain strategy. It was the core recommendation of the ALC’s 2016 election priorities document – ‘Getting the Supply Chain Right’.
So it is now critical that the industry plays a central role in the development of that strategy.
The ball is in our court. If we sit on our hands and presume that governments, the general public and narrow industry interests will get it right, we will be sadly disappointed.
The Prime Minister said, “Money alone is not the answer. We need to get better at planning and building the infrastructure, and to do that we have to work together – all governments, industry, stakeholders, consumers and citizens. And we must take a much longer view, rather than the short-term one driven, of course, by election cycles.”
He is quite right. But all too often lofty sentiments get watered down and sidetracked.
One of the critical questions will be the emphasis given to the various parts of the fairly finite infrastructure cake: transport (comprising road, rail, sea and air, with each of them divided into freight and passenger); telecommunications; water; energy; and buildings (particularly schools, hospitals and sportsgrounds).
Unless the logistics industry makes its voice heard, there is a danger that the strategy will emerge with the wrong balance. We know freight does not vote. It means that we start with a proclivity to favour public transport over freight, and to favour buildings over other infrastructure.
There is also a danger that the money for transport will geographically follow the votes rather than the freight.
It is imperative that the logistics industry and its premier voice, the Australian Logistics Council (ALC), put forward sound suggestions for the national strategy.
The ALC has always believed in taking the long view, so it is pleasing to see the Prime Minister stating that the national strategy must do the same. The ALC has always believed in only putting to government soundly argued, evidence-based submissions. This is because our members span the entire supply chain, incorporating road, rail, sea, air, sea ports and intermodal ports, so we are not interested in special pleading. That being the case, our input should be well received – but we cannot take that for granted.
Though the logistics industry impacts every business and consumer in the nation, it is often seen as one removed. People look at the parcel, not the truck, carriage or aircraft belly that delivered it.
We will have to make greater efforts to communicate the importance of our industry to the wider public.
The logistics and transport industries employ 1.2 million Australians and represent 8.6 per cent of the economy. We need to impress this upon the public as well as the people who will develop the national strategy. We also have to stress that the freight task will almost treble by 2050.
Taking the long view and getting coordination between the three levels of government in Australia have been almost intractable problems, so it was pleasing to see the Prime Minister’s intention to tackle them. The ALC’s ‘Getting the Supply Chain Right’ document said the Federal Government, “in partnership with the states and territories, should establish effective corridor protection mechanisms from urban encroachment or incompatible land uses to ensure the timely preservation of surface, subterranean and air corridors and strategic sites for future infrastructure priorities.”
The ALC is determined to not waste this opportunity – for the good of our industry and our nation and its people and businesses. The ALC’s annual Forum in 2017 in Melbourne had the development of the national freight and supply chain strategy as its theme. Taking the industry’s views and resolutions on the strategy from the Forum to government will be the main task of the ALC in 2017.
Experience has show that promoting good policy over bad – but popular – policy is a continuous task. But it has borne fruit in the past and we are determined to keep government accountable to deliver on the sentiments in the Prime Minister’s statement in the future.
Victorian Transport Association (VTA) CEO Peter Anderson has highlighted the major productivity challenges facing Australian freight and logistics operator in opening remarks to the VTA’s annual State Conference at Lorne.
Anderson said in a big-picture sense, it is a challenging time for all freight operators.
“Freight movements are generally down thanks to a stagnant economy, and operator margins that are already stretched thin are being further squeezed by higher input and variable costs. We are also operating in an increasing regulatory environment and having to adapt our businesses to satisfy and comply with additional regulatory oversight.”
Anderson explained operators are also facing higher road and infrastructure user charges, which eat into profits and erode margins.
“These factors highlight the need for operators to extract greater productivity from their systems, their equipment, their people, their customers and their suppliers to remain viable and successful.”
Anderon noted that there are a lot of exciting things happening in the industry across technology and innovation, safety and training and human resources, and infrastructure.
“We now have a North East Link Authority established and are actively putting together the business case and corridor study for the connection, which will finally link the M80 to EastLink or the Eastern Freeway,” he said.
“This has long been the VTA’s priority road infrastructure project and we are playing an active role in the consultation and planning for the connection, which the current Victorian Government has committed to take to the next election.
Anderson also reflected on the considerable progress made on the West Gate Tunnel project. The Victorian Government last week released additional plans and environmental modelling for the project, which will provide better access to the Port of Melbourne for heavy vehicles.
“While we support the project, we are unimpressed with plans to permanently curfew trucks from existing roads and force them to use a toll road. We’re working closely with the treasurer and the roads minister on incentives for trucks to use the new freeway, such as toll rebates and reduced tolls at nights, as well as exempting modern and efficient vehicles from the proposed curfews.”
Anderson explained that the Association is encouraging infrastructure planning and investments in the Port of Melbourne to ensure it remains Australia’s biggest.
“There are many issues working against freight volumes increasing within the Port of Melbourne, so it’s important we plan now for short- and long-term infrastructure needs at the Port to keep it competitive,” he said.
“This includes improving rail access via Port Rail Shuttles, proper road and rail infrastructure planning for freight movements in and out of the new Webb Dock Terminal, and upgrading infrastructure to accommodate high productivity freight vehicles.”
Minister for Infrastructure and Transport Darren Chester has called for submissions on a discussion paper for the Inquiry into National Freight and Supply Chain Priorities.
“The Australian Government has announced a record $75 billion infrastructure investment programme, which comprises a range of freight initiatives including the Melbourne to Brisbane Inland Rail and the Western Sydney Airport,” Chester said.
“Feedback on the discussion paper will help the inquiry examine how our investment in the freight network can boost the nation’s prosperity and meet community expectations for safety, security and environmental amenity.
“It will also further our understanding of what challenges and opportunities lie ahead, and how we can take advantage of them.
Chester noted that the discussion paper offers an opportunity for key freight stakeholders such as carriers, shippers, forwarders, primary producers, land developers and consumers to have their voices heard.
“Everybody is part of the national supply chain, whether you are a consumer, business owner, producer, farmer or freight operator,” he added.
Submissions close on 28 July 2017. For more details on how to make a submission, visit the infrastructure.gov website.
The Australian Logistics Council (ALC) has welcomed the release of the Discussion Paper.
“[The] ALC believes there is merit in engaging in a wide-ranging public debate involving government, industry and the community to ensure road funding reform proposals improve supply chain efficiency against the backdrop of an increasing national freight task,” said Michael Kilgariff, Managing Director, ALC.
“[The] ALC supports a critical analysis of the current PAYGO formula for road pricing, which is an inefficient and ultimately unsustainable approach to road pricing. As the 2015 Harper Review stated, ‘roads are the least reformed of all infrastructure sectors’, and the Discussion Paper makes it clear the Federal Government is prepared to address this problem.
“As ALC has consistently said, a reform of this nature will only succeed if the freight logistics industry is actively involved in the development of the new road pricing system. It is therefore pleasing that the Government is seeking industry comment on the options put forward in the Discussion Paper.”
This article first appeared in the February/March 2017 issue of Logistics & Materials Handling
The privatisation of the Port of Melbourne in late 2016 will have major economic and infrastructural implications for the city, Victoria and the country for the next half-century. For the region’s logistics industry, it will be anything but business as usual.
Australia’s largest container and general cargo port, the Port of Melbourne, was recently leased for 50 years to a private syndicate, the Lonsdale Consortium. Victoria’s logistics industry is set to benefit from massive investment by the new owners to improve the Port’s efficiency and increase its capacity.
The deal follows the privatisation of the east coast’s other major marine transport hubs, the ports of Brisbane, Botany Bay, Kembla and Newcastle, in recent years. The Victorian gateway handles the bulk of Australia’s freight task and, as such, the agreement will impact the region’s logistics industry at every level, in the region and across the country.
The successful bidders secured the lease in September 2016 in a deal worth $9.7 billion, and promptly took control of the Port of Melbourne on 31 October. Having expected to settle around the $7 billion mark, the Victorian Government was pleased with the result, vowing to invest the money on improving the region’s transportation links. Along with an additional, expected-though-disputed 15 per cent top up from the Federal Government under the asset recycling agreement, Victoria’s $11 billion windfall will have massive implications for its trade, transport and infrastructure ambitions.
Several projects have already been earmarked for investment with the proceeds of the sale, each aimed at relieving transport woes around the region. Lease proceeds going to the Victorian Transport Fund will be allocated to improved rail and vehicular access to the Port and the removal of 50 of the area’s worst level crossings to ease urban traffic congestion. Also to receive funds is a major urban rail project, Melbourne Metro, designed to ease commuter congestion on highways, and the ‘Western Distributor’, a five-kilometre toll road to link the West Gate Freeway at Yarraville in Melbourne with CityLink at Docklands, allegedly taking 6,000 trucks per day off the West Gate Bridge.
At the time of the sale, ALC Managing Director Michael Kilgariff voiced his support for major investment in logistics infrastructure. “Infrastructure Australia has predicted the volume of containerised trade going through our ports and airports will increase by 165 per cent from 2011 to 2031,” he said. “This significant growth underscores a need for all governments, including Victoria, to invest in appropriate national infrastructure to ensure our landside infrastructure can keep pace with waterside growth.
“Now is the time to get Victoria’s supply chains right by investing in the State’s logistics infrastructure to maximise the Port’s future potential.”
Tim Pallas MP, Treasurer of Victoria, has given assurances that the money obtained from the lease sale will directly benefit road users, and commercial vehicles in particular. “The Victorian Government is already working to take thousands of trucks off the West Gate Bridge and to the Port of Melbourne by a new dedicated road link, easing congestion for city-bound traffic,” he wrote in an official release. He has, however, already expressed concerns over funding and the politics of progress after the Federal Government refused to offer the full 15 per-cent asset recycling scheme top-up payment. Nonetheless, it would appear that, at least for the near future and the current government, the coffers are full and investment is possible.
On the other side of the transaction, the Lonsdale Consortium, comprising the Future Fund, QIC, Global Infrastructure Partners and OMERS, has secured a valuable deal. For their money, they have gained control over Australia’s largest and busiest container, automotive and general cargo port, and the 3,000 vessels that visit each year handling 36 per cent of the country’s container trade.
In addition, the deal specifies that the State will be required to pay compensation if a second container port in the region is constructed within the 15 years of the lease’s commencement.
Some observers worry that in order to recoup their cash, the Consortium will hike up fees and rents as soon as an agreed 15-year fee freeze period has expired, resulting in a loss for the Port’s users and, indirectly, consumers. ANL Container Line Managing Director John Lines warned at the time of the sale that port users and the broader Victorian community would soon feel the squeeze. “Port and other State asset privatisations are a tax by stealth which will be paid over decades to come,” he told Lloyd’s List Australia. “If we look at the numbers for Melbourne and do some very simple calculations, the Port made EBIT in 2014–15 of $121 million which at the sale price of $9.7 billion for a 50-year lease, is $195 million per year just to get their money back, let alone make a good investment return. So the only way is up for prices. There is some comfort in the 15-year price cap in the lease agreement but after that, for another 35 years, it will be open slather…and we will all be paying dearly for it.”
The Victorian Transport Association (VTA), meanwhile, has advocated the private lease, welcoming the infrastructure improvements to come as a result. “The VTA played a significant role in the process behind leasing the Port of Melbourne, through numerous submissions, appearances before the Upper House lease inquiry and advocating for transport projects lease proceeds,” said VTA CEO, Peter Anderson. “The windfall from the lease will fund projects through the Victorian Transport Fund, such as strengthening roads and bridges to accommodate high productivity freight vehicles.
“It was also notable that through our efforts, the legislation was modified to address the major concerns we had about protections at the port, giving operators certainty against excessive price hikes.”
As the Lonsdale Consortium and Victorian Government congratulate themselves on a job well done, thoughts must move to the realities of a privatised Port for the thousands who pass through it each day.
In return for the anticipated rise in fees, port users will ideally benefit from the spoils of a transition from state ownership to private management, including increased efficiency, faster decision- and change-making powers thanks to a less bureaucratic system and investment in facilities.
In reaction to a once-popular opinion favouring government intervention, Harvard Professor of Economics, Andrei Schleifer, stated in his much-cited 1998 paper State Versus Private Ownership that capitalism limited by government regulation – not socialism – should be the answer. “Private ownership should generally be preferred to public ownership when the incentives to innovate and to contain costs must be strong,” he wrote. “Many of the concerns that private firms fail to address ‘social goals’ can be addressed through government contracting and regulation, without resort to government ownership.” Schleifer’s vision, however, relies on the absence of monopoly, a fact that the Lonsdale Consortium’s contenders for the lease will now be keenly aware of, though the Victorian Government will retain responsibility for some aspects of port business – notably safety and environmental regulation.
According to former ports boss Michal Frydrych, while privatisation or leasing of terminals and port operations can be beneficial, selling or leasing entire ports can lead to serious abuse of power. “I have always operated on the premise that ports are vital to development of countries and should play a supporting role to the rest of the economy,” he wrote. “We cannot have expensive ports with limiting power over other port developments. We need ports in correct places, practical and managed by port people.
“Ports are far too important to be used for quick cash to be used to build bridges that should have been built anyway.”
The privatisation of the Port may lead to an increased cost of business for its users, with owners pursuing profitability and shareholder interests. Already it seems likely that a levy introduced by the Victorian Government in 2012 to improve infrastructure around the port and increase supply chain efficiency, the ‘Port Licence Fee’, will continue to be collected beyond its original projected end date of 2022. Peter Van Duyn, Maritime Logistics Expert at the Institute for Supply Chain and Logistics at Victoria University, warned in late 2016 that the ‘temporary’ charge is likely to be collected until the end of the lease agreement. “The Port Licence Fee, which currently contributes approximately $80 million per year to the Port’s coffers and is CPI indexed…was originally meant to be levied for a duration of about 10 years, or until it had raised $1 billion,” he wrote. “It looks like importers and exporters are now stuck with this fee for the next 50 years.”
There are big changes ahead for the Port of Melbourne. Over the next 50 years, the Lonsdale Consortium will be responsible for the success, or failure, of Australia’s most important port and its many dependents. So far, many promises have been made, but it shall soon become clear whether the Lonsdale Consortium will deliver, or if the people of Victoria are being taken for a ride.
Air logistics – outlook
The Port of Melbourne lease is not likely to have a dramatic, direct impact on the region’s air logistics industry. Indirectly, though, it is sure to benefit from the upgrade projects and investment in other parts of the region, with shorter Port-to-airport times thanks to reduced road congestion, the construction of dedicated freight routes and the reduction of commuter traffic if a metro system is developed. Additionally, with members of the Lonsdale Consortium holding stakes in Melbourne Airport, the region’s air cargo hub may well figure in the group’s long-term vision for Victorian logistics.
Marine logistics – outlook
Set to benefit most from improved efficiencies in processes in the Port of Melbourne, marine logistics is also positioned to take the brunt of added fees. With no second container port in the area to help deal with the projected doubling of freight volume in the next decade, and with a 15-year block on the construction of a new one, the Port of Melbourne will continue to face the massive task alone, with some operators worrying they will be at the mercy of the owners’ management, rules and fees. ANL Container Line Managing Director, John Lines, expressed serious concerns about the privatisation, for example: “Ports are big, lumpy bits of vital infrastructure for each region and, being a natural monopoly, are best owned by the state. The prices paid to cash-strapped governments are no doubt attractive but these prices can only be recouped by the purchaser by increased flows or increased prices and only one of these, prices, is under their control,” he says. “These extra costs will flow through the whole economy.”
Rail logistics – outlook
Rail logistics are set to benefit from the privatisation of the Port of Melbourne, both directly and indirectly. Russell Smith, Partner at Global Infrastructure Partners (GIP), part of the winning Lonsdale Consortium, advised at the time of purchase that the group has plans to use its experience in managing port and rail assets to make the rail logistics chain from regional NSW and Victoria into the Port more efficient and pricing more competitive with other ports. “GIP looks forward to bringing to bear our strong port and rail industry expertise to drive forward the efficiency and capacity of the Port of Melbourne and focus on the necessary transformational change in the road/rail mix servicing the freight task,” he commented.
Some proceeds from the sale are to be directed towards developing better rail infrastructure in anticipation of growing freight volume. At the time of the purchase, ALC Managing Director, Michael Kilgariff, commented on the importance of investment in road and rail infrastructure linking the port to the wider transport network, including the development of an inter-modal terminal. “This includes an appropriate investment of the $58 million set aside for the port rail shuttle, which has been on hold while the port lease transaction was finalised,” he said. “Investment must incorporate all modes of transport, including short-haul rail, which needs to play a greater role into the future as our ports continue to move greater numbers of containers each year.”
Road logistics – outlook
If planned infrastructure developments come to fruition, fleets will benefit from better port access and traffic conditions, avoiding the overloaded West Gate Bridge thanks to the ‘Western Distributor’ project. “An appropriately regulated port, supported by efficient road and rail links, is vital to sustaining the Victorian economy and driving productivity improvement across the supply chain,” said ALC Managing Director Michael Kilgariff. Beyond the port, improved infrastructure in the region funded by the sale will contribute to more efficient journeys, directly through the removal of level crossings, and indirectly by getting cars off the road and people onto a city-wide metro system.
Sources: Lloyd’s List Australia, Shleifer, A. (1998) ‘State Versus Private Ownership’. Ferrier Hodgson (2014) Transport and Logistics Insights: The road ahead. AFR (2016) Record $11b Port of Melbourne sale rides infrastructure boom. Infrastructure Victoria (2016) Advice…on options to secure Victoria’s future ports capacity.
The Victorian Transport Association (VTA) has revealed that the CEO of Transport Certification Australia (TCA), Chris Koniditsiotis, will headline a session focusing on technology on day one of the annual VTA State Conference, to take place in Lorne from 4–6 June.
The full program is to be released later this week.
The TCA is the Australian government body responsible for providing advice, accreditation and administration services for public purpose initiatives involving the use of telematics and related intelligent technologies. It has been in the news recently after releasing a new specification to promote the interconnectivity of telematics.
“Chris and the TCA have been great supporters of the VTA and, at a time when operators are so regularly introduced to new technology, it will be great to have an update from the peak body charged with providing advice, accreditation and administrative services in relation to the deployment of telematics and related technology,” said VTA CEO Peter Anderson.
“Technology can dramatically improve productivity for operators, but naturally that comes at a cost. Operators must understand the benefits that technology investments can have for their bottom-line, and the technology session will cover the pace and benefits of recent developments, as well as advice for landing on the right transport technology strategy.”
The session will also feature a panel discussion with technology companies Trimble, FleetEffect, Seeing Machines and In-Vehicle Camera Systems, followed by an update from Victoria International Container Terminal (VICT) on the recent commencement of its new fully-automated terminal at Webb Dock.
“With so much technology in the marketplace, operators can easily be forgiven for putting technology in the ‘too hard’ basket, however the mix of conference speakers we’ve assembled to address delegates on this important part of transport will no doubt help operators understand why they need to invest in technology to be competitive and productive,” Anderson said.
Australia’s associations and industry have welcomed the major support for Australian infrastructure in the 2017–18 Federal Budget.
The Australian Logistics Council (ALC) commended the Government’s $8.4 billion support of Inland Rail, commitments to construct the Western Sydney Airport and duplicate the Port Botany freight rail line and support of Infrastructure Australia.
“The Budget’s strong focus on infrastructure is timely, coming less than six months after the Federal Government agreed to ALC’s request to develop a National Freight and Supply Chain Strategy,” said Michael Kilgariff, Managing Director, ALC. “We welcome the measures announced tonight as a positive first step in continuing efforts to deliver a safer, more efficient supply chain.”
Aurizon Managing Director and CEO Andrew Harding reported that he was pleased to see the Government commit to investing in freight rail infrastructure, adding that he believes Governments – at both the federal and state level – have key roles to play in implementing sound policy and regulatory frameworks to support a competitive rail industry.
“To improve the competitiveness of rail freight, the Inland Rail project and linked supply chains will need more than the correct design and construction, they will require major transport policy reform,” Harding said.
“Rail freight companies need to be able to compete on equal footing with other transport modes and allow rail to do more of the heavy-lifting in Australia’s freight transport task.”
Rail freight operator Pacific National and the Australasian Railway Association (ARA) also spoke out in support of the Budget.
“More than thirty years since the ambitious rail link was first suggested, the 1,700km rail line is now well on track to become a reality following the $8.4 billion commitment in last night’s Federal Budget,” Pacific National said in a statement.
“Pacific National believes the Inland Rail project will be transformative for Australia, helping revitalise regional communities and providing a boost in national productivity that will deliver for generations to come.”
Victorian Transport Association (VTA) CEO Peter Anderson welcomed the Inland Rail investment and other long-term infrastructure commitments.
“This package from the Government looks a lot like pork-barrelling by the Coalition to protect their inland seats through regional Victoria, NSW and Queensland as they desperately try to stave off the threat from One Nation and other parties.”