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Australian Journal of Maritime & Ocean Affairs

ISSN: 1836-6503 (Print) 2333-6498 (Online) Journal homepage: http://www.tandfonline.com/loi/ramo20

Ports and the Environment 2013

Nicholas Whitlam

To cite this article: Nicholas Whitlam (2013) Ports and the Environment 2013, AustralianJournal of Maritime & Ocean Affairs, 5:4, 130-132, DOI: 10.1080/18366503.2013.10815744

To link to this article: http://dx.doi.org/10.1080/18366503.2013.10815744

Published online: 01 Apr 2014.

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Ports and the environment 2013 Australian Journal of Maritime and Ocean Affairs (2013) Vol. 5(4)

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Ports and the Environment 2013 Nicholas Whitlam*

Abstract

Australia’s seaports are critical for the nation’s economic wellbeing. 98% of our national trade is by sea. Seaports are the quintessential intermodal facilities; every item of trade moves from one mode of transports – the sea – to another, typically road or rail. And it is these costs that we must minimise. Australia’s ports are in good shape with strategies in place for substantial future growth but they are also operating in a very complex environment.

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Introduction

Her colleagues knew Margaret Thatcher, when they were most exasperated with her, as TINA. It was an acronym for “There Is No Alternative.” And so it is with Australia’s seaports: 98% of our national trade is by sea. There is no alternative. Let me provide a report on our nation’s ports. Before I do, I would like to congratulate the Royal Australian Navy for delivering the spectacular Fleet Review in celebration of the first Australian Naval fleet entry in 1913. The Fleet Review was an outstanding success and that speaks volumes for the many people who worked hard to make sure every contingency was covered, no doubt a logistics nightmare but it was so well planned that we saw little comment on this brilliant aspect of the event.

Interestingly, back in 1913 Sydney was actually far better placed to accommodate such a fleet as there were more than 12 kilometres of berth space available. That would not work today. We have other needs and other solutions. The harbour was the thriving commercial hub of the nation and in the context of my subject matter it is very interesting to note that in 1913 the Sydney Harbour Trust produced a visionary co-ordinated Master Plan for future development of the port. They, and other port authorities around the nation, were struggling with the boom in trade brought about by the steam ship revolution and long term master planning became a tool to meet the demands of that boom. They included concepts for road, rail and inland waterway connection and the development of land buffer zones behind wharves. even included elements of environmental protection.

History shows that this Sydney Master Plan was very effective until containerisation began to revolutionise global trade in the late 1960s.

Containerisation changed everything for all but bulk ports. And now, 100 years after that visionary Master Plan was developed, Governments, agencies and peak bodies are once again facing the task of master planning the future of our seaports.

The importance of Australia’s seaports

Ports have had to constantly evolve to meet the relentless demand for trade, especially here in Australia where – as I have noted – 98% of our national trade is by sea. The reality is our ports must continue to compete and grow to meet the relentless demand for trade. We have no choice. There is no alternative. While there is universal recognition that our ports must grow and must improve efficiency such improvements can only be realised with the support of the Australian governments (federal, state and local), the shipping, stevedoring and supply chain industries and the co-operation and support of unions and local communities.

It has been said many times before that the one of the big challenges for Australian ports is the tyranny of distance. Australia is an island continent, the sixth largest country in the world, with 35 thousand kilometres of coastline. We float in isolation between the Indian and Pacific Oceans so far from the hubs of global trade. As our national anthem says we are “girt by sea”.

Our distance from these hubs is the one thing we can do nothing about – fuel costs being shipping’s biggest cost – but that does put added pressure on our ports to offset the higher costs of shipping with best practice port and landside efficiencies. Seaports are the quintessential intermodal facilities; every item of trade moves from one mode of

*Chairman of Port Kembla Port Corporation, Sydney Ports Corporation and Newcastle Port Corporation.�

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transports – the sea – to another, typically road or rail. And it is these costs that we must minimise.

Economic success

We are a nation of just 23 million people and yet globally we are punching well above our weight. Australia is ranked 12th of the 195 largest economies by GDP. Australia is the world’s 20th largest importer and exporter; i.e. the twentieth largest trading nation. The Australian economy grew at an average annual rate of 3.6% over the past 15 years, well above the OECD average of 2.5%. Such success brings increased demands, not least at our ports

While much of the world’s trade remains in the doldrums following the global financial crisis, activity through Australian ports is remaining strong. Over the past decade, total throughput for our 46 trading ports is up by 418 million mass tonnes, or close to 68%. Total international cargo handled by Australian ports increased last financial year by 9.1 per cent, by value, and increased 9.7 per cent, by weight. For the year ended June 2012 two-way trade totalled A$625 billion, around 43 per cent of nominal GDP and up more than 9% on the previous year.

Size, variety and growth of Australia’s Ports

Australia has the biggest iron ore and coal exporting ports in the world – Port Hedland and Newcastle – and as such it is no surprise that iron ore and coal are Australia’s leading export items. Valued at A$111 billion iron ore and coal exports account for 35 per cent of Australia’s total exports of goods and services. These two commodities have risen by an incredible average annual rate of 34 per cent and 16 per cent respectively over the past five years.

Australia’s bulk ports have witnessed extraordinary growth in the last decade, with tonnage rising by over 75 per cent; mining exports accounting for most of this growth. The growth in activity has been achieved by expanding infrastructure capacity along the logistics chain, such as at the ports themselves.

For example, at Port Hedland iron ore handling capacity has expanded five-fold in the last decade and iron ore capacity has more than doubled at Dampier and at Cape Lambert. The total through-put at Port Hedland in the 2012-13 financial year was more than 288 million tonnes, and this year it is expected to exceed 320 million tonnes – an increase of 11%. The port is forecasting that further

expansion in coming years could increase capacity to nearly 500 million tonnes a year.

At Newcastle, the port’s performance has been exemplary, reporting its 13th consecutive record year of trade, with volume increasing almost 16% to 148.87 million tonnes. Coal-handling capacity has more than doubled in the past 8 years with further capacity expansion underway. Last year the Newcastle Coal Infrastructure Group commissioned its Kooragang 10 berth with a maximum capacity export target of 66 million tonnes of coal per annum. The final stage of its terminal is due to be completed in late this year.

Our biggest container ports – Melbourne, Sydney and Brisbane – have also experienced strong growth over the decade. This growth has mainly been in mainly imports: Melbourne 62%; Sydney 75%; and Brisbane 72%. Our ports handled more than 32-thousand cargo ship visits last financial year – and it has been increasing more than 5% a year for the past 5 years.

Australia’s bulk commodity exports and metropolitan container imports are both expected to double in size every ten years. As I mentioned before the relentless growth in trade is putting enormous pressure on our ports to perform and expand and where ports co-exist with urban communities the task becomes more difficult. We have shown that we can meet the challenges at our bulk ports. The way forward is less clear at many of our container ports.

It not just the relentless growth in volume; perhaps the next big challenge for Australia’s container ports will be their ability to handle the ever increasing size of ships. In the past 50 years, the average size of ships has increased 250 per cent – they have never been so sophisticated – never carried so much cargo – never been safer and never been so environmentally friendly as they are today. With bunker costs so high, shipping companies are trending increasingly to larger ships and while we may never see a visit from Maersk’s Tripe E ships capable of carrying 18,000 TEU (twenty foot equivalent units), our ports will be no doubt be expected to host march larger vessels than they currently accommodate.

And what of Tasmania? It suffers because of the high cost of international and interstate trade. For international trade, moving containers to Melbourne for trans-shipment means higher costs in Tasmania and negative effect on trade growth. The answers are not clear.

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Planning

Various Governments, peak bodies, organizations, scholars and communities have all had opinions on long-term coordinated planning around future ports capacity, transport corridors and shipping channels feeding our major ports. Generally, regions or localities in which seaports are located are best equipped to understand what their ports and landside strategies need to address – and many are in the process of doing just that. Victoria has just announced its Freight State strategy and the new NSW and Queensland Governments are preparing to release their ports and freight strategies. It is still work in progress for the other state and Northern Territory governments.

• In 2007 the Australian Government report - The Great Freight Task – stated that the problem for Australia’s infrastructure planners is to achieve the necessary expansion of Australia’s land transport infrastructure, with the most efficient distribution of funds between competing rail and road interests.

• The National Ports Strategy by Infrastructure Australia and the National Transport Commission released in 2012 recognised coordinated port master planning as significant to improve land use planning and corridor protection in and around Australian ports.

• In March 2013 the Australian Logistics Council argued that addressing Australia’s commercial infrastructure needs is the highest priority for the freight and logistics industry.

• In August 2013 a Ports Australia’s report also identified the importance of Master Planning to create greater environmental friendliness and create additional economic value through increased investor confidence.

• The Export Council of Australia in its Trade Policy Recommendations report released in August 2013, highlighted the need to focus on removal of impediments that hinder Australia’s ability to compete internationally including trade facilitation and eliminating unnecessary government red and green tape.

The important message here is that everyone is aware of the need to ensure our ports can cope with future demand and that stakeholder collaboration in port and supply chain planning is critical to achieving desired outcomes.

I know we are all watching with interest where the new Federal government stands on this although we have already heard positive words from the new Infrastructure and Regional Development Minister Warren Truss. I hope he understands the importance of landside rail transport. In terms of improving port and landside efficiencies, Australia’s bigger ports have recognized the need to stream-line the flow of freight through terminals with intermodals, innovative co-ordination of road and rail users and of course, automation.

Our major terminals are investing hundreds of millions in post-Panamax crane and straddle automation as Australia’s container ports move from duopoly to tri-opoly stevedoring – with improved efficiency and competition the desired outcome. Into this mix our ports are increasingly being privatized – Portland, Flinders, Geelong, Brisbane, Port Botany and Port Kembla – have now been privatised with Newcastle next cab off the rank if scoping studies find the sale viable.

To my mind it makes all the sense in the world for State Governments to privatize their ports once the port has reached a mature stage. The governments have taken the entrepreneurial role and risk by developing the port; yet have unending demands on their purse for new roads and schools and hospitals and so on; once a port is mature, they can cash in their investment and recycle the funds into new infrastructure and conservative long term investors – like super funds – can enjoy what is effectively annuity incomes from the developed port assets, and carefully invest further.

Conclusion

Generally, Australia’s ports are in good shape with strategies in place for substantial future growth but they are also operating in a very complex environment. The challenge will always be what is needed against what can be had. How do we continue to meet ever increasing import and export demand without conceding that almost everything we consume or use must come and go through a port that needs to share our roads and rail and to co-exist with encroaching urban communities? There is no silver bullet. Our ports must grow and must find ways to improve efficiencies. They must also comply with environmental laws and must find ways to engage communities positively in that process. There is no alternative. It was a challenge back in 1913 and no doubt it will still be a challenge in 2113.

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