Victoria's freight sector is evolving with key projects like Inland Rail and the West Gate Tunnel, addressing economic challenges and leveraging opportunities in clean energy and housing
VICTORIA sometimes markets itself as the “freight state”.
The folks in New South Wales would likely argue the toss. However, there’s no denying the crucial role Victoria plays in the nation’s freight apparatus, with the state possessing the great Port of Melbourne, the ports of Geelong and Portland and new projects such as the Inland Rail and the Beveridge Intermodal Freight Terminal (BIFT).
The state’s economy faces challenges, however, and some have argued it is in a per capita recession but leading independent economist Saul Eslake said Victoria’s economic performance “hasn’t been as bad as it is sometimes portrayed”.
Economist Saul Eslake believes Victoria has made progress in
terms of housing construction. Image: Supplied
“For example, over the past decade (2014-15 to 2024-25) Victoria’s economy, as measured by real gross state product, has grown at an average annual rate of 2.6%, which is faster than any other state or territory except the ACT,” he said.
“Even over the past three years Victoria’s average annual economic growth rate of 2.0% has been only marginally behind the national average of 2.1%.
“Likewise, over the past three years employment has grown at an average annual rate of 2.6%, twice as fast as NSW’s 1.3% and well above the national average of 2.1%.”
Mr Eslake said one thing Victoria has ‘got right’, compared with other states, was housing, with more new dwellings completed in Victoria than in NSW in all but one of the past twenty years.
He notes, however, weaknesses, with the state’s economy disproportionately based upon population growth as well as low-productivity industries such as the care economy, retail trade and accommodation and food services.
He also observes that Victoria’s economic growth has also depended “to a greater extent than any other jurisdiction except Tasmania” on public sector cash deficits averaging 2.7% of gross state product during the past three years.
“Victoria hasn’t benefited from higher commodity prices in recent years in the way that Queensland and NSW (coal) and especially WA (iron ore, copper and other commodities) have,” Mr Eslake said.
As a result, Victoria has become a relatively ‘poor’ state during the past decade or so, to the point where in 2023-24 and 2024-25 it had the third lowest per capita gross state product in the nation.”
Mr Eslake notes Victoria’s fiscal woes being partially due to its “hugely expensive, and entirely debt-funded, infrastructure program”, for which the Suburban Rail Link was the talisman.
“The Victorian government has always been very ‘cagey’ about the rationale for this mega-project, with the ‘business case’ having always been cloaked in ‘commercial-in-confidence’ restrictions. It may well be that a future state government decides not to proceed with the second and subsequent stages of it,” he said.
Mr Eslake notes opportunities in cheap housing, international education and advanced manufacturing.
Victorian Transport Association chief executive Peter Anderson sees the state’s freight sector as being “at a pivotal turning point".
Shaping the sector are supply‑chain pressures, regulatory reform, workforce shortages and the accelerating shift towards cleaner energy.
VTA chief executive Peter Anderson argues high‑productivity freight vehicles are key to greater efficiency and productivity. Image: VTA
“Strengthening supply‑chain resilience — particularly through the repeal of outdated competition settings distorting freight costs — remains a central priority, alongside embedding fair and consistent industrial standards through recent Fair Work reforms,” Mr Anderson told DCN.
“At the same time, operators are navigating the transition to alternative fuels, underscoring the need for a national freight decarbonisation strategy and investment in scalable solutions such as hydrogen, biodiesel and electrification.”
He sees growth opportunities through greater access for high‑productivity vehicles, digital transformation and expanding the workforce — supported by targeted training programs that are already delivering job‑ready drivers.
“The West Gate Tunnel will further reshape Melbourne’s freight landscape by improving network efficiency, but real benefits will depend on clear access arrangements, cost‑sensitive tolling settings and strong policy coordination,” he said.
“The sector continues to contend with major challenges including high transition costs for clean technologies, industrial relations complexity, supply‑chain vulnerabilities created by global shipping practices and persistent skills shortages across technical and driving roles.
“Lifting productivity will require smarter regulation, reduced red tape, national harmonisation of access rules, accelerated technology adoption and government support to de‑risk early investment in new fuels and infrastructure.”
Long‑term success will depend on coherent national frameworks, realistic timelines and policies that balance environmental goals with the economic sustainability of freight operators
Peter Anderson, VTA CEO
Mr Anderson said Victoria is making meaningful progress towards a cleaner transport system — with growing trials of alternative fuels and increased collaboration across the supply chain — but the transition remains in its early stages.
“Long‑term success will depend on coherent national frameworks, realistic timelines and policies that balance environmental goals with the economic sustainability of freight operators,” he said.
Mr Anderson said the West Gate Tunnel will significantly reshape freight movement in Melbourne, delivering both opportunities and challenges.
For the VTA, its implications centre on:
“The tunnel presents a much‑needed opportunity to modernise Victoria’s freight corridors, but the industry must be supported with policy settings that maximise productivity and minimise unnecessary cost impacts,” Mr Anderson said.
He sees a key opportunity in the area of high-productivity freight vehicles (HPVs).
“High‑productivity vehicle operations, enabled by better road access, clearer regulation and removal of inconsistent permit requirements — something VTA advocacy has successfully progressed, including the removal of Victorian permit costs from January 2026,” he said.
A spokesperson for the Port of Melbourne said the port’s meat exports, particularly beef, recorded “significant growth in 2025”, continuing the upward trend from the prior year.
“This was largely driven by drought-induced herd reductions in the U.S, which is both a major importer of Australian beef and a key competitor in global markets,” the spokesperson said.
“As a result, demand for Australian beef surged in the U.S. and other key destinations, including China, Japan and South Korea.”
Fruit exports also experienced strong growth in 2025, supported by a robust citrus season. Favourable growing conditions enabled consistent supply, with Japan remaining the leading market.
“Efficient road and rail connections to the port, combined with direct shipping services to key protocol markets (Japan, China, South Korea), were critical for cost efficiency, speed to market and compliance — contributing to strong year-on-year performance,” the spokesperson said.
“Nut exports recorded strong growth in 2025. The almond season delivered a record crop, significantly boosting supply. Export volumes to China remained robust, while exports to India surged, supported by reduced tariffs for Australian almonds under the AI-ECTA quota.”
Rice exports through PoM also recorded notable growth in 2025, underpinned by an excellent harvest during recent years and rising demand in Middle Eastern markets and Japan.
“On the import side, strong growth was seen from China, particularly in consumer goods such as furniture, domestic appliances and clothing,” the spokesperson said.
Container trade is forecast to more than double during the next 30 years driven by Victoria’s increasing population.
"To cater to this growth, port development will be critical to Victoria’s economic prosperity,” a spokesperson said."
GeelongPort CEO Brett Winter is looking to support the
clean energy transition. Image: GeelongPort
Further south, the port at Geelong, now known as GeelongPort, is keen to play a central role in Victoria’s offshore wind industry and the state’s clean energy transition.
Chief executive Brett Winter cites the port’s strong sustainability performance, proven renewable energy credentials, and infrastructure already designed for offshore wind needs.
In 2025, GeelongPort achieved a perfect score and the global number one ranking in the GRESB Infrastructure Asset benchmark for ports and transport infrastructure.
This result recognises a 91% reduction in Scope 1 and 2 emissions since 2018, including a further 7.3% reduction over the past year.
At the heart of GeelongPort’s offshore wind capability is the proposed Geelong Renewables Terminal (GRT) at Oyster Cove, a 25-hectare site with an existing 12.3-metre deepwater berth pocket requiring no dredging.
Designed specifically for offshore wind construction activity, the GRT is targeting operational readiness in early 2029 and has been recognised by the City of Greater Geelong as a priority project of regional significance. Victoria is progressing the nation’s first offshore wind industry, including the announcement of Australia’s first offshore wind auction in August 2026 and the development of the Electricity Services Entry Mechanism to create future market pathways for renewable energy projects.
GeelongPort brings extensive renewable energy credentials to Victoria’s clean energy future. Since 2018, the port has handled more than three million tonnes of onshore wind farm cargo, including more than 500,000 tonnes of components for the Golden Plains Wind Farm, currently Australia’s largest onshore wind project.
This track record in safely receiving, storing and moving some of the country’s tallest and most complex turbine components demonstrates that GeelongPort has the capability, capacity and industry partnerships required to support large-scale renewable energy project delivery.
As Victoria’s second largest port and a critical gateway for the state’s economy, GeelongPort stands ready to play a leading role in delivering Australia’s offshore wind industry
Brett Winter, GeelongPort CEO
With the Geelong Renewables Terminal endorsed as a priority regional project, GeelongPort is well positioned to support Australia’s first offshore wind auction cycle and deliver the multi-port infrastructure and logistics capacity Victoria will require to realise its clean energy ambitions.
“As Victoria’s second largest port and a critical gateway for the state’s economy, GeelongPort stands ready to play a leading role in delivering Australia’s offshore wind industry,” he said.
“The Geelong Renewables Terminal offers a purpose-built, cost-effective and reliable pathway to deliver offshore wind at the scale Victoria requires.
“It is the right infrastructure, in the right location at the right time.
“These recent policy settings reinforce how important multiport capability will be as large, offshore wind projects move from planning to delivery.
“With the Geelong Renewables Terminal recognised as a regional priority, GeelongPort is exceptionally well positioned to support Australia’s first offshore wind action cycle and the significant infrastructure demands that will follow.”
Rail and particularly the Inland Rail project is set to play an important role in the movement of freight, linking Melbourne with Brisbane via regional New South Wales.
The Commonwealth is developing the Beveridge Interstate Freight Terminal (BIFT) to support Inland Rail operations, while the private sector is also expanding its terminals across Melbourne.
These new terminals are expected to handle interstate freight and import and export container trade.
In a statement from the Victorian government, it was noted that these Commonwealth and private sector terminals would “provide sufficient capacity to handle forecast interstate freight volumes in Melbourne over the medium term”.
“While the Western Intermodal Freight Terminal (WIFT) remains a priority for the Victorian government, its delivery will be deferred until when it’s needed,” the government said.
“The government will now look at protecting land at Truganina for WIFT. This process may also help unlock land not required for WIFT for industrial development in the short term. To ensure industry certainty, we’re extending the interstate rail freight operations in the Dynon precinct beyond 2031.”
Meanwhile Inland Rail management talked of last year as being a “year of major construction delivery: for the section of the project between Beveridge (just north of Melbourne) and Albury”.
Rail generates $6.8 billion for the Victorian economy each year and creates more than 30,000 jobs across the state
Caroline Wilkie, ARA CEO
Inland Rail Beveridge to Albury project director Russell Hamilton said 2025 had been a year of “remarkable progress”.
“Eighteen months after contract award, the Beveridge to Albury project is transforming the rail corridor into a future-ready double-stacked freight route,” Mr Hamilton said recently.
“From Wandong to Benalla new tracks, culverts and bridges are redefining connectivity for generations to come.”
Late last year, chief executive of the Australasian Railway Association Caroline Wilkie highlighted the importance of continued investment to support Victoria’s growth.
“Rail generates $6.8 billion for the Victorian economy each year and creates more than 30,000 jobs across the state,” Ms Wilkie said.
As the construction of new projects neared completion, Ms Wilkie said it was important the state maintained “a clear and certain pipeline” that included a focus on maintenance and upgrades.
“Maintenance and upgrades should form part of the pipeline to ensure the rail network continues to be as productive as possible over time,” she said.
Ms Wilkie highlighted Victorian Freight Plan benefits.
“Moving more freight on rail is critical to the productivity and efficiency of the state’s freight and supply chain,” she said.
“Achieving greater use of rail will require clear targets as well as incentives and policy levers to support their achievement.”