Melbourne’s air and sea ports lead the charge

Port of Melbourne

The state of Victoria has left NSW behind in every measure, with its economy and population growing multiple times that of its northern neighbour. Charles Pauka reports.

The additional 1,200 people settling in Victoria every week are putting a major strain on the state’s public infrastructure (roads and public transport, health and education), resources (electricity and water) and housing. While some commentators and citizens believe the growth to be excessive and unsustainable, the Victorian capital’s two major access providers – Melbourne Airport and the Port of Melbourne – are stepping up their development plans to cope with the fast-growing freight sector.

An airport to envy

Located a mere 22 km from the city centre, Melbourne Airport’s massive 2,647 hectares give it unrivalled flexibility in planning and land use. The vast area also allows for 24-hour, unrestricted, curfewfree operations, a feature that has been guaranteed by planning controls that limit land use and building design.

Melbourne continues to suffer from ‘second fiddle’ status syndrome as international airlines have more flights into Sydney, but this situation is likely to change in the near future, according to Melbourne Airport’s freight manager, Lil Valente. “We already punch well above our weight when it comes to freight,” he said. “Of the three east coast airports [Melbourne, Brisbane, Sydney], we get 25% of the international passenger traffic, but handle 36% of airfreight.

“This is understandable, given that 85% of freight moves in passenger planes’ cargo hold (‘belly space’). But more and more airlines are either starting up or increasing their international services to/from Melbourne.”

In calendar 2007, the three Chinese airlines (Air China, China Southern and China Eastern), as well as Cathy Pacific, Korean Air, Philippine and Thai Airlines all added more capacity, and the airport handled more than 300,000 tonnes of airfreight. Lil Valente rues the ‘leakage’ that his airport is suffering to Sydney. “Every day, air freight is heading up the Hume to Sydney on trucks for lack of capacity out of Melbourne,” he said. “We are also aware of a need for 70,000 extra seats a year out of Melbourne to the USA alone. The airline industry is running hot, and Airbus and Boeing can’t keep up with demand.”

He believes, however, that the situation is changing. “We have put in place an information campaign to attract more airlines,” he said. “The airport master plan has provision for four runways (two E-W and two N-S), and we’ll be curfewfree forever. We are ready for the A380, and external access to the airport has also been improved out of sight.”

Melbourne Airport is planning to grow itself into a significant freight hub, with extensive vacant land to be developed into warehousing and distribution-focused commercial areas. Big players already on site include Star Track Express, Australia Post, Australian Air Express, Toll, Kathmandu, The Reject Shop, and many others. These areas have direct access to the Western Ring Road and will connect with the new, expanded airfreight section of the airport itself. Eventually moving to the eastern side of the airport, the freight area will have parking facilities for up to six A380 freighters (and up to 15 on the ultimate plan). Freight traffic can already access this area from the Tullamarine Freeway without having to go through passenger areas.

“Everything we put in the master plan is on track,” said Lil Valente. “And with Melbourne’s population poised to overtake Sydney’s within 15 years, the airport has the land, the capacity, the plans and the will to ensure we will be ready.”

The ship can finally come in

The Port of Melbourne has already surpassed all others and long been the busiest container port in Australia. Last financial year, Melbourne handled over two million TEU in contrast to Sydney’s 1.6m, recording its 16th year of continued growth and an 8.5% increase on the previous year. 339,000 motor vehicles arrived and departed through the port in 2006-07.

And the statistics just keep getting better. Last year’s container trade result was a massive 8.5% up on the previous year’s, and in the 12 months to March this year, 2.2 million TEU were handled.

The port’s bugbear has long been its inability to receive fully-loaded larger containerships, due to Port Philip Bay’s shallow draught of just 12.1 metres at high tide. With all legal obstacles finally overcome early this year, the channel deepening is now progressing apace and is ahead of schedule. The project, for which the corporation has budgeted $961 million, is paid for in part by a $31.50 per TEU levy imposed on import containers, which is indexed to inflation from July 2009 and will continue for 30 years.

The Port of Melbourne’s Master Plan to 2030, reviewed in the December/January 2007 issue of Australasian Freight Logistics magazine, is proceeding on schedule. Sir Rod Eddington’s recently-released report on Melbourne’s infrastructure needs may add to the corporation’s task, however, as he identified additional roles for the port in managing the freight task.

And this has not much to do with the port’s traditional, sea-facing role; rather, Sir Eddington is concerned about the ability of the port to function if its land-side interface is not improved – in other words, there must be a quantum improvement in the removal of containers from the port, and this must be done by rail.

Sir Eddington notes: “For rail freight’s share of port traffic to grow, effective and focused governance is needed. The Port of Melbourne Corporation is ideally suited to take on this responsibility.”

The Victorian Government is accepting public submissions until 15 July 2008, after which it will formulate its response. Australasian Freight Logistics magazine will run a full report on the direction of Melbourne’s urban rail/intermodal and road links to the port following the release of the government’s response.

* Excerpted from Australasian Freight Logistics Issue 12, June/July 2008 (pp.20-21)

Melbourne’s Dynon port rail link moves forward

Beams being lifted into place for the last bridge span across Appleton Dock Road
With the first stage of the Dynon port rail link project completed, the outbound lanes of the new Footscary Road overpass will open to traffic this weekend.
Victorian roads and ports minister Tim Pallas announced the level crossing on Appleton Dock Road will be removed when the newly constructed overpass is opened to traffic.
The project is to separate road and rail access to the Port of Melbourne, reducing congestion on Footscary Road and enhancing safety at a major road and rail bottleneck.
“Currently the Port’s only rail access is via a single dual-gauge track crossing Footscray Road. This project will see the existing rail line relocated and replaced with two new dual gauge rail lines into the Port of Melbourne from the Dynon terminal precinct,” Mr Pallas said.

“The extra rail capacity and traffic overpass will increase the amount of freight that can be carried directly to the port, helping to secure Melbourne’s position as the largest and most efficient container port in Australia.”

Mr Pallas said with the Channel Deepening Project progressing well, it was essential that the appropriate landside infrastructure was in place to support freight movement.

“Work will now commence on stage two of the Dynon port rail link project, which will involve construction of the new city-bound bridge on Footscray Road,” he said.

The city-bound bridge is expected to be opened to traffic in early 2009.


Stevedores warned of duopoly

The Port of Melbourne.

The Port of Melbourne…warned.

The Australian Competition and Consumer Commission (ACCC) has warned a lack of competition in the stevedoring sector would get in the way of future growth.

According to the ACCC’s latest annual monitoring report of container stevedoring, throughput volumes recorded an increase of 10.7 per cent in 2007-08, with productivity levels jumping almost 47 per cent over the last decade.

ACCC chairman Graeme Samuel said the report showed decade-old waterfront reforms have significantly boosted the stevedoring sector, but a lack of competition in the industry was worrying. 

“During this time, demand for stevedoring services has doubled. The cost of using stevedoring services has fallen in real terms.

“In turn, the stevedoring businesses have become more productive and profitable, even during a period when significant expenditure on assets was made,” Mr Samuel said.

“However, as the ACCC has noted in previous reports, questions remain about the extent to which the stevedores actually compete to win each other’s business. This is important when we look forward ten years and consider the high rates of demand that are forecast to continue.”

Mr Samuel said while the ports of Sydney and Brisbane were well progressed in testing the market for new competitors, the Port of Melbourne was lagging behind with a third container terminal not set to open until 2017.

He said the delayed development at Australia’s largest port would make its two incumbents, Patrick and DP World, settle for the convenience of the current duopoly.

“Any unnecessary delays in establishing additional container terminal facilities could result in lost opportunities for greater competition.

“More intense levels of competition can not only improve efficiency but may also result in a greater share of the benefits being passed on to users and the wider community that reply on the movement of goods into and out of Australian ports,” he said.

TOP issues to drive business case

Efforts to achieve maximum efficiency from the Port of Melbourne container logistics chain have taken another step forward with the release of a major discussion paper on current problems and possible future remedies.

The Victorian Freight and Logistics Council this week published the distilled findings of the first stage of its Truck Optimisation Plan (TOP), a Port of Melbourne Corporation-funded project designed to have industry drive efforts to manage truck traffic in and around the port in the face of an expected doubling of freight volumes by 2020.

VFLC chairman John Begley said projected trade growth, combined with urban freight deliveries, would generate significant growth in vehicle movements through the port precinct, impacting in turn on container terminal capacity and overall port efficiency.

“Port infrastructure and road space are finite physical assets,” Mr Begley said. “We have to optimise within those limits, not just to extract the greatest value from the assets but to recognise industry’s responsibility to surrounding communities and the liveability of Melbourne.”

The project work, which is being undertaken by a TOP steering committee of the Council’s Freight Intermodal Efficiency Group (FIEG), was prompted by raw figures that measured container haulage truck slot use in the port precinct and linked hinterland, with two-way loading at 40%. These figures seemed at odds with Australia’s road transport industry’s reputation as amongst the most efficient.

The VFLC, in conjunction with the Victorian Transport Association and Roy Morgan Research, surveyed metropolitan and country-based port carriers about their business patterns and practices, and undertook four detailed representative case studies and face-to-face industry workshops. What has been revealed is a complex situation that will require concerted and co-ordinated industry action and possible State government leadership.

The key finding is that, to a large extent, road carriers are balancing their operations between two strictly controlled environments – the port terminal and the customer delivery windows.

“Each node manager and supplier is searching for internal efficiencies, often at the expense of other parts of the supply chain, or frequently, at the expense of the public infrastructure and public environment,” the VFLC’s TOP options paper says.

“Transport operators are fiercely price-competitive, often to the detriment of their own sustainability. While some of the larger carriers are confident of their value proposition, others are unwilling or unable to educate their customers to an appreciation of the service.”

These major carriers are investing heavily in depots, equipment and customer service, commonly staging containers through transit depots to gain efficiencies and offering a range of value-added logistics and storage solutions.

The TOP discussion paper deals with seven major challenges affecting truck utilisation and canvases options for improvement. Issues of empty container park arrangements and operating hours, vehicle booking systems, container terminal interface, customer flexibility, co-operation between transport operators, labour supply and regulation will be now be further refined with the port community, peak bodies, freight customers and government agencies to ascertain which are the most feasible options and which have a perceived commercial benefit. After detailed analysis the FIEG will develop a business case for implementation and the recommended Truck Optimisation Plan will be presented to industry and government.

“The VFLC has a strong interest in industry-led solutions, supported where necessary by government policy and regulatory settings,” Mr Begley said. “Industry-led solutions are most likely to bring about sustained change in business behaviours and deliver outcomes that are effective as well as cost-efficient.

“We recognise that change takes time and businesses need to carefully consider changes that have impacts on their assets, operations and investments,” he said.

“However, it should be kept in mind that any small improvements will have cumulative benefits and multiply across volumes of freight movements.”

Copies of the TRUCK OPTIMISATION PLAN: Options Paper can be obtained from the VFLC website at Individuals, businesses and organisations are invited to make a submission outlining their views, and this can be done using the appropriate form also available on the website.

TOP is a two-stage project modelled on the VFLC’s very successful Business Activity Harmonisation Study, in which the experience and expertise of supply chain members was very successfully mined to address long-standing frustrations in a practical and co-operative manner.

The Victorian Freight and Logistics Council is an independent industry advisory body that provides advice to government on the development, planning, regulation and operation of freight and logistics transport, infrastructure and services in Victoria.

Interactive website for Melbourne’s supply chain

A new online platform has become available for supply chain businesses working with the Port of Melbourne.

Victorian industry and trade minister Theo Theophanous has launched the Port of Melbourne Supply Chain Awareness Interactive Website to provide online resources, including printable supply chain maps and text detailing the main activities undertaken within the export/import supply chain.

The web project, developed by Transport and Distribution Training Victoria, was funded by the State Government as part of the Victorian Supply Chain Excellence Action Plan.

Mr Theophanous said achieving supply chain excellence would put the state ahead in the global marketplace.

“The website aims to help companies operate more efficiently along sea freight logistics chains,” Mr Theophanous said.

“The content is based on input from all key stakeholders and includes exporters, importers, stevedores, Australian Customs and AQIS, freight forwarders, custom agents and shipping lines.”


Port of Melbourne Corporation has announced record trade growth in April, boosted by containerised exports, which increased 15.3% to 65,654 TEU.

The company’s CEO Stephen Bradford said all cargo types showed strong results in the month with total port trade growing by 12.7% over the same month last year.

Dredging completed amid economic meltdown

Aerial view of Port Phillip Bay.

Aerial veiw of Port Phillip Bay.

The Port of Melbourne’s $1 billion channel deepening project has marked a milestone by completing dredging at the entrance to Port Phillip Bay, but the port’s self-claimed success has faced questions.

The port’s CEO Stephen Bradford said the dredging operations had been completed on time and budget, meeting all environmental requirements.

He said that the channel deepening project was progressing smoothly, with 40 per cent complete after 238 days.

“To carry out this work at the entrance on schedule and within budget is a significant achievement when you consider that prior to this project it was not known technically whether the dredging could actually be done,” Mr Bradford said.

Victorian Ports Minister Tim Pallas said the $1 billion project would bring significant economic and social benefits to the state, with port activities currently supporting almost 14,000 jobs. 

“Channel deepening is expected to generate $2 billion to the national economy over the next 30 years, and create more than 2,000 jobs,” Mr Pallas said.

He said the completion of the project by the end of next year would enable larger vessels to dock in Melbourne, lifting the port’s container freight throughput almost four-fold.

However, the economic prospect of the project is being questioned as Victorian exports have declined by 10.5 per cent since 2001, suggesting the biggest beneficiary of the project would be importers, not exporters.

Mr Pallas rebutted, saying container shipping was growing by almost 8 per cent each year.

“Even if the economic environment were to dampen we will not see anything other than the continuing growth and movement towards containerisation,” he told AAP.

“That growth will continue, there is absolutely no doubt about that, and our projections show we have got something like 2.2 million TEU actually moving through the Port of Melbourne at the moment. Projections are in the next 30 years that we’ll see something like eight million TEU.”

Mr Bradford said dredging was the most technologically challenging and ecologically sensitive aspect of the project, involving the removal of hardened material from the top of rocky banks.

“It is the first time in the port’s history that the entrance has been deepened without the use of explosives, a practice ceased in 1986.

“We have conducted underwater video surveillance at the entrance and further monitoring activities are scheduled. In fact, surveying at the entrance is scheduled to be ongoing for 10 years.”

He said the port would now start cleaning up residual materials at the entrance to meet the requirements of the project’s environment management plan.

Sunday costs more on the docks

Swandon Dock at night.

Swanson Dock at night.

(Image courtesy of the Port of Melbourne)

Additional costs arising from stevedore DP World’s Sunday operations must be passed on in the transport chain, the Victorian Transport Association (VTA) has argued.

In July, DP World Melbourne announced its West Swanson Terminal would treat Sunday as a normal receival, delivery and storage day from October, in response to the significant increase in the number of vessel calls and congestion at the terminal particularly over weekends.

Under the new policy, Sunday will be included as part of the three days of availability for the delivery of imports and as an export receival day. Storage charges will also accrue for ‘time-up’ containers on a Sunday.

VTA CEO Philip Lovel said the issues of handling container trade volumes effectively at the terminal were yet to be resolved.

“We continue to have significant dialogue with DP World on the issues. It is appreciated that while on average some 30 per cent of container volumes are received into West Swanson Terminal from vessels over weekends, only some 11 per cent of containers are distributed through the stevedore’s gate on a weekend,” Mr Lovel said.

“We also continue to work with transport companies to encourage greater uptake of vehicle booking slots at night and over weekends.

“This is having an effect, with more volumes moved by road in the Port of Melbourne during night-shifts and on weekends than in any other major capital city port in Australia,” he said.

However, he said additional costs were unavoidable because of the limited importer and exporter operating hours on weekends as well as very limited opportunities to de-hire empty containers on weekends, leading to further staging added costs.

He added that Customs’ container examination facility and some of the AQIS external wash facilities were shut on Sundays.

“The immediate practical outcome of DP World’s Sunday operations policy will be added costs in the landside logistics task ‘downstream’ from the stevedore’s gate, and increased terminal storage costs as containers become ‘time up’ on a Sunday,” Mr Lovel said.

“We have urged all road transport operators engaged in container transport to ensure that the added costs of transit operations and the additional costs of moving towards 24/7 operations must be borne by the end-use of their services – importers, exporters and freight forwarders.”

He said the container transport sector should push harder to solve the mismatch of operating hours across its chain to effectively cope with continuing container growth.

“Studies all point to the need for parties in the container transport chain to consider the ramifications of their existing operational practices against the realities of continued strong container trade growth and the pressures of 24/7 operations at the ocean terminal interface,” Mr Lovel said.

Profits flow in to the Port of Melbourne

Port of Melbourne.

The Port of Melbourne has reported a net profit after tax of $43.3 million in the 2007/08 fiscal year, with the seventeenth consecutive year of growth in its core container trade being a key contributor.

Its total revenue grew $29.4 million to $171.5 million, while total expenditure fell $3.9 million to $103.8 million.

The strong result benefited from a 7.8 per cent increase in total container trade to 2.26 million TEU, making the Australian port one of the world’s top fifty container ports.

The port’s CEO Stephen Bradford said another year of solid financial result was made possible by its ongoing extensive capital investment program to secure the port’s long-term sustainability.

“In a challenging trading environment, which included higher fuel prices and ongoing drought conditions in south-eastern Australia, we have invested a further $48.5 million during the year in essential port infrastructure.

“To improve facilities for our customers and port users, we have now invested over $200 million in port infrastructure over the past five years, excluding the channel deepening project,” Mr Bradford said.

With an additional $126.8 million invested in the channel deepening project in the year, dredging for the project is now 31 per cent complete, amounting to a total volume of 7.25 million cubic metres dredged to date.

The port’s total net assets were now reported to be $1.2 billion and total trade grew by 6.7 per cent to 75.7 million tonnes in the year.

The company said nearly all cargo types contributed to the strong performance while liquid and dry bulk cargoes experienced marginal declines.

The 2007/08 dividend to the Victorian Government is scheduled to be paid in October this year.

©2019 All Rights Reserved. MHD Magazine is a registered trademark of Prime Creative Media.