AUSTRALIA is getting a plan to address looming shortcomings in its supply chain.
The nation’s freight task is predicted to double over the next 20 years, growing alongside its mushrooming population.
According to the latest available numbers from the federal agency BITRE, 1.6 billion tonnes of cargo passed through Australian ports over the 2015-16 financial year. This was an increase of 3.1 per cent on the previous year, and the five-year average annual growth trend was 8.7 per cent.
And, according to the Department of Infrastructure, the broader freight and logistics sector accounts for about 8.6 per cent of Australia’s gross domestic product.
The federal government has recognised the necessity to put together a comprehensive national framework to help address the issue at all levels of government.
The 20-year National Freight and Supply Chain Strategy will aim to address the prediction that the freight task will increase beyond the capacity of the current infrastructure, and even building more infrastructure will not be sufficient to meet the demand for freight.
Development of the strategy is well under way, with the recent completion of an inquiry into the national freight and supply chain priorities, carried out by a four-member panel of experts.
The strategy aims to build on this report and will be presented to the Council of Australian Governments’ Transport and Infrastructure Council in late 2018.
The inquiry’s report identified 54 “priority actions” — recommendations for actions that could be taken to foster better freight movement in Australia and address the impending tidal wave of freight coming to our shores.
“Even with extra investment, Australian transport infrastructure will be hard-pressed to meet this demand. Productivity improvements will need to be obtained through a national approach of coordinated investment and reforms,” the report says.
Ports Australia chief executive Michael Gallacher says this fact is one of the most important aspects of the report. “This is an acknowledgment that something’s got to give,” he says.
“For far too long I’ve seen too many government reports that have pictures of ports and containers and ships with very little content beyond those images.”
Among the report’s recommendations is that cabotage regulations need to change in order to make coastal shipping a more viable method to freight to move interstate.
The report points out that a relaxation of cabotage restrictions would increase the use of available shipping capacity for domestic freight.
More freight moving intra- and interstate by sea would help Australia meet is increasing freight task by reducing demand for land-based freight modes.
Gallacher says he welcomes the report’s acknowledgment of coastal shipping as a way to alleviate some of that congestion, and he says increased domestic sea freight could also present more opportunity for regional ports to diversify their operations, creating more jobs and local wealth.
“I’m happy that the government is looking at ways to include all aspects of moving freight around the country in this debate,” he says.
Planning for the future of Australia’s ports is another issue raised by the inquiry’s report, which recommended that key freight corridors should be identified and protected, with buffer zones to keep residential development from encroaching on essential freight areas.
Ports Australia, meanwhile, has commissioned consultancy Deloitte
Access Economics to investigate the ports’ future role in managing freight and congestion and reducing costs for consumers and business. Results are expected soon.
Port of Brisbane chief executive Roy Cummins says liveability is an important consideration when planning for freight.
“We have to understand that if we can get freight planning right, we can do it in a way that has minimal impact on local residents and communities, maximising liveability,” he says.
“It’s when we put things like corridor preservation in the ‘too-hard’ basket that we condemn ourselves to more trucks on our roads, more impacts on communities, less management of our environment,’’ Cummins says.
“Action on issues like corridor preservation in the short-term, even when it appears difficult, will be much easier than sitting on our hands and leaving it to future generations.”
Down in Melbourne, the issues are similar. A spokesperson for the city’s port says prioritisation needs to be given on a national protection framework to safeguard against urban growth and changing land uses that have the potential to disrupt port operations and supply chain effectiveness.
“As a city port, the development of a national framework will provide much-needed assurance to our operations and planning,” the Port of Melbourne spokesperson says.
“Importantly, it will establish much-needed consistency/certainty across business and community and provide surety around public safety and amenity concerns.”
The spokesperson says that while significant progress has been made with state and local governments on the issue, national oversight and leadership would remove uncertainty regarding ports’ ability to grow and reach their optimal capacity.
“Appropriate planning controls and certainty can ensure that we retain the opportunity to deliver least cost infrastructure in the future and maintain the competitiveness of our freight supply chains,” the spokesperson says.
A spokesperson for the Port of Newcastle echoes these concerns, saying the current pressure on freight movement in NSW would intensify as employment and population increases over the coming decades in Sydney and its surrounds.
“This would lead to substantial growth in the number of containers that need to travel through NSW ports to meet rising demand,” the spokesperson says.
“The level of NSW exports will also increase as output increases, driving even more port activity. Unless relieved by appropriate freight and regional planning, this pressure is likely to be concentrated in the Sydney region as this is where the vast majority of future growth occurs.
“Freight planning in NSW must come to terms with effectively managing a growing freight task in the presence of current challenges in Sydney’s freight network and long-term constraints at Port Botany.”
The spokesperson says Port of Newcastle’s submission to the inquiry emphasises the need for government freight strategies to create an environment in which ports can equally compete for trade and in which cargo owners can choose the most efficient and cost-effective port supply chain for their cargo.
The measurement of the freight task in Australia is an important issue to which the review points.
Among its recommendations are several focused on data gathering and analysis. Recommendations range from establishing a “freight observatory” to collect and publish freight data to establishing a performance review mechanism and comparing Australia’s supply chain performance against international competitors.
Brisbane’s Cummins said there is no doubt that having secure, end to end visibility of supply chain data has the potential to revolutionise trade.
“While that’s not a relatively new initiative, the biggest two stumbling blocks have always been security and attracting enough participants to make it valuable,” he says.
“Blockchain has changed the game when it comes to security, and now the trade community system we are working on, with our partners at PwC and Australian Chamber of Commerce and Industry, is enabling us to bring the broader logistics industry together.”
Cummins says the proof of concept stage for the project is complete but as yet, there have been no commitments made for a pilot stage.
Gallacher says that through the National Freight and Supply Chain Strategy, the government has the opportunity to create a national framework that could foster the conditions that could attract more private-sector investment.
“We must get the government to present that element of confidence and opportunity that the private sector looks for in terms of making investments,” he says.
“And also, for the first time that I’ve seen, government are looking towards us, the industry, as being part of the solution.”
A version of this article first appeared in the 15 June edition of The Australian in its special report on ports.