Thinking domestically at our ports

by Mike Gallacher, Chief Executive Officer, Ports Australia

When people look at ports they think international trade, and they wouldn’t be wrong as 98 per cent of everything we bring in and out of this country goes through our ports. But what is missing from this vision is domestic sea freight or coastal shipping — moving goods around our country via the blue highway.

Mike Gallacher, Chief Executive Officer, Ports Australia

My view and the view of our membership is a simple one, we can improve the efficiency of our country by balancing its supply chain. That means we need to take advantage of our coastal waterways to move freight around the country, which in turn will create regional job opportunities by diversification at these regional centres.

This is not a fight between the modes of transport, it is about being smart, it is about understanding the strengths of each mode and using them appropriately to meet the incoming freight tsunami and tame the geographical vastness that is Australia.

The volume of freight going in and out of the country is going to be the same whether we have coastal shipping or not. However, using the blue highway to its potential brings so many benefits to Australians.

That balance is combining the flexibility of our roads, the connectivity of our railways and the capacity of our ports.

Utilising the blue highway
Governments around the nation are investing billions into road and rail to relieve congestion, improve road safety outcomes, connect inland regional communities directly with capital cities to improve quality of life, freight efficiencies and invest in the nation’s economic growth. The Commonwealth alone is investing $75 billion in the next 10 years, with funding dedicated to road, rail and airports.

The blue highway doesn’t need to be built, expanded or maintained. It is free and it already connects all our major cities and many of our regional centres.

Analysis conducted for the Inquiry into the National Freight and Supply Chain Priorities suggests that while the freight task is projected to double in the next 20 years, even with extra investment, Australian transport infrastructure will be hard pressed to meet this demand without including the ports.

Furthermore, the NSW Government estimates that a one per cent increase in freight efficiency could save the national economy $1.5 billion.

This country will continue to grow whether we are prepared or not. State and federal governments are taking steps to understand and lead this growth. My question to them is how can we use the over 70 ports strategically located right around our country to their full potential to the benefit of the country?

The role of ports in domestic shipping
Which is why Ports Australia has commissioned Deloitte Access Economics to help us understand exactly the role our ports can play in the domestic shipping mix.

There is a freight tsunami heading our way and this country is not yet ready to meet it. Australia has the highest growth rate of any major OECD country growing at a steady 1.6 per cent per annum with our population expanding from 24 million to 30 million. Our capital cities are home to 69.3 per cent of the entire population this number will increase to almost 75 per cent in the next 40 years.

As this population rises so does demand. We know through the government’s National Freight and Supply Chain Priorities Discussion Paper that the total road freight task in all capital cities is forecast to increase by 2.33 per cent per annum, from 40 billion tonne kilometres back in 2008 to 66.60 billion tonne kilometres within the next 12 years.

To put that into perspective, Australia’s shipping container freight movements are expected to grow by 165 per cent over the same period. Non-containerised freight is projected to grow by 138 per cent over the same period.

Most of the containerised freight will be delivered to one of four capital city ports: Melbourne, Port Botany, Brisbane or Fremantle, with Sydney and Melbourne accounting for around 70 per cent of containerised freight.

In 2016, our domestic freight task totalled 738 billion tonne kilometres — 15 per cent of this was moved by sea freight, rail 56 per cent and road 29 per cent. And of those figures, coastal shipping contribution to the domestic freight task has grown over the last 25 years by just one per cent — rail has grown by 210 per cent and road 61 per cent.

Opportunity for wider reform
Ports are the gateway for over 98 per cent of Australia’s imports and exports, yet no strategic focus or funding is allocated towards improving the maritime network of this country to facilitate further economic growth and ensure the sustainability of our cities and regional centres.

Clearly, the impact of the nation’s increased freight task will hamper the long-term benefit of infrastructure investment if we, as a nation fail to think of alternate ways to move freight and increase the longevity of government sector investment.

There is currently a bill in the Senate intended to address some of the challenges in the current legislation. Whilst Ports Australia welcomes these minor adjustments to the current regime, we believe there is an opportunity for wider reform.

It is my firm belief that embracing the use of our nation’s coastal sea routes, the blue highway, we can deliver sustainability of existing cities, grow existing regional towns and cities, while saving billions in the process.

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