By Simon Gelder*
THE Port of Newcastle is ready to move on the development of a world-competitive container terminal to service regional Australia; the benefits for NSW and the wider national economy are now well established.
To make this happen, Newcastle does not need anything like the billions of dollars required to address congestion in and around Port Botany or the billons required to reclaim the Port Kembla outer harbour and provide rail connectivity to that port. However, the Port of Newcastle does need an opportunity to compete on a level playing field.
Recent comments reported in the media failed to mention that NSW Ports, in defending its incumbency and apparent confidence in its superior market position, is protected by an anti-competitive arrangement struck with the NSW State Government. This arrangement, now under investigation by the Australian Competition and Consumer Commission, would see it paid “compensation” for every TEU handled (above a nominal threshold) if a successful large-scale container terminal is operated in Newcastle.
Clearly there is a compelling economic case for a container terminal at Newcastle. If there was no case, then surely there should have been no requirement for the anti-competitive restraint. Port of Newcastle already has concept planning approval for up to 350,000 TEUs per annum and has capacity for a significantly larger terminal as required. We believe public policy should be used to facilitate commercial development by private sector businesses that will contribute to regional growth and diversification, not stifle it.
Land exists in Newcastle because it was made available for the specific purpose under earlier NSW Government commitments to establish Newcastle as “NSW’s second container port”. This decision was subsequently reversed for reasons unrelated to Newcastle’s competitive capability or the need for an optimal freight and port system. Given the significant latent capacity that exists in Newcastle, it seems illogical that NSW should be asked to spend billions trying to thread the eye of the needle at Port Botany and reclaim land for a container terminal in Port Kembla.
In addition to suitable vacant land adjacent to an existing 15.2-metre-deep channel, a Newcastle container terminal would have natural advantages, including:
- vessel capabilities over 10,000 TEU;
- an ability to receive trains up to 1.5 kilometres in length;
- capability to deliver heavy vehicles to the national highway network, north, south and west without going through any residential area;
- lower cost road and rail options with significant capacity;
- proximity to a natural catchment of regional and metropolitan areas;
- existing planning approval for up to 350,000 TEUs per annum; and
- a channel that can accommodate a significant increase in vessel movements with no material impact on current trade throughput or terminal turnaround times.
Given the spiralling supply chain costs in all other existing capital city ports, Newcastle offers significant supply chain cost savings for importers and exporters alike by providing the choice of the most efficient and cost effective supply chain for their cargo. According to a recent study by Deloitte Access Economics, the Hunter region and northern NSW is the destination of over a quarter of all container imports to NSW, and it is the source of almost 40% of exports.
Currently, many exporters from major centres including Narrabri, Moree and Tamworth are paying considerably more to send their cargo past the Port of Newcastle’s doorstep and further afield to Port Botany. A Newcastle container terminal could deliver transport cost savings of more than 30% for central west and northern NSW exporters, savings for importers as well as a reduction or deferment in public spending.
The Port of Newcastle has no objection to the development of a container terminal at Port Kembla and welcomes improvements to NSW freight and ports efficiency. Our interest, and the wider public interest, is simply to have the opportunity for a level playing field to unlock productivity-enhancing competition. There is no credible case for distorting the market through the spending of taxpayers’ money on infrastructure that benefits select private businesses without assessing lower cost alternatives.
The Port of Newcastle set out its strong business case for a Newcastle container terminal in a recent submission to the Draft NSW Freight and Ports Plan. To read this submission and the Deloitte Access Economics report, please visit http://www.portofnewcastle.com.au/News/Items/2018/Port-of-Newcastles-submission-re-the-Draft-NSW-Freight-and-Ports-Plan.aspx.
* Simon Gelder is the acting CEO and chief financial officer at the Port of Newcastle