Supply chain academic says the Port of Melbourne will reach its capacity mid-way through the proposed lease
The Port of Melbourne will hit its capacity well before the proposed 50-year lease expires, Victoria University’s Institute for Supply Chain and Logistics has advised.
Director Hermione Parsons says the state government should therefore avoid any privatisation deal in which it has to pay compensation if and a when a second container port begins operation.
Speaking to the Victorian Transport Association’s Port Outlook seminar, Parsons questioned the capacity and growth expectations of the port.
But even taking the most extreme figures, she says the port is likely to reach full capacity within 20 years, forcing development of a second container port by 2035.
She says the recent state government decision to discontinue plans for a port at Hastings was a good one.
“Since the 1960s, Hastings was considered the next port for development,” she says.
“But there are significant landside issues.”
These include the need for a rail connection that takes containers through the bulk of metropolitan Melbourne, including some of the city’s best-heeled suburbs.
“Trains would need to be going through Toorak and South Yarra around the clock,” Parsons says.
“No one believes it is [politically] possible.”
The Hastings location was originally favoured because of its deep water access, but Parsons says this was neither true, nor necessary for the second port.
“It’s not a natural deep water port – that’s a fallacy,” she says – adding that the larger container ships that require deeper drafts are unlikely to call at Melbourne regardless.
“Ships are sent to markets, not to ports,” she explains.
“Melbourne is a small market and an end destination.
“Those megaships are not coming anywhere near the market of Melbourne.”
Parsons concludes that the proposal for a second port within Port Philip Bay – the so-called “Bay West” option – represents the most accessible and feasible location.
With 15 years’ lead time to develop before it is required, the state’s government and logistics sector are well placed to deliver a state-of-the-art facility before it is actually required.
But it will be important for the government not to be forced into building an uncompetitive alternative because of its lease agreement for the privatised Port of Melbourne.
“A new port will be required before the new lease ends, so any contractual arrangements involving compensation payments should be carefully reconsidered,” she says.
Ports minister Luke Donnellan, who also addressed the Port Outlook Seminar, says the compensation clause is a necessary part of any public asset lease arrangement.
He notes that compensation will only be triggered if a “significant” part of the container freight task is diverted from the Port of Melbourne.