Report warns against premature port investments

Port of Newcastle NSW Ports KPMG report

A new report from KPMG has found that a new container terminal in NSW will not be required until the mid-2040s, and that Port Kembla currently makes the most sense for containers.

The report found the NSW Government’s container port strategy, which would see Port Kembla developed as the next container port in NSW to augment capacity at Port Botany, still stands as the most efficient and effective way of meeting the state’s container export and import demands.

The report, Quay conclusions: Finding the best choices for additional port capacity in NSW, follows Newcastle Ports’ announcement of divisive plans to build a fourth container terminal in NSW.

The KPMG report proposed three main findings:

  • Premature port investments will result in higher costs for NSW businesses and families
  • Port Kembla makes the most sense for containers, but only once Botany nears capacity
  • Containers at the Port of Newcastle makes the least sense for NSW

KPMG found that new container terminal capacity is not needed in NSW for several decades, until at least the mid-2040s. Development of a new terminal prior to this time would increase costs across the entire NSW supply chain.

Secondly, the report found that Port Kembla makes the most sense for containers, but only once Port Botany nears capacity. Port Kembla offers the lowest overall costs and highest overall benefits for an additional container port.

However, this will only when it is needed in several decades as Port Botany still has a vast amount of excess capacity.

KPMG’s final finding was that containers at the Port of Newcastle makes the least sense for NSW. It warned that developing a container terminal at the Port of Newcastle would impose the highest overall costs and offer the lowest overall benefit for the state.

The report found that 80 per cent of containers are consumed within 40km of Port Botany, with massive Commonwealth, state and port investments made over the past 10 years to develop a major freight and logistics sector in Sydney’s west and south west growth areas.

According to KPMG’s research, the current proposal for a container port in Newcastle had significant issues including being furthest away from the freight consumption and employment growth in western Sydney and the most expensive to develop, connect and use for containers.

NSW Ports CEO, Marika Calfas, said the report was evidence that Port Botany is set to be the first choice in container freight.

“Port Botany is closer, better and cheaper for most container freight in NSW,” Ms Calfas said.

“Port Botany is less than half full, is directly connected to dedicated freight rail, road and intermodal infrastructure and is supported by modern warehousing and logistics facilities in Sydney’s west and south west.

“The KPMG modelling shows Port Kembla is the obvious next choice for the state’s next container port, once Port Botany nears capacity.

“It is less than half the distance to Sydney’s booming west and south west and has better existing and planned freight infrastructure connections than a container terminal at Newcastle.

“It’s the population and business needs of NSW that determine the most efficient container terminal locations. NSW container ports are most efficient when close to consumers and connected to the market by good rail, road and intermodal infrastructure.”

Ms Calfas said that Sydney and the south west population is set to grow from 5 million in 2019 to 6.5 million by 2036.

“Port Botany then Port Kembla make sense as the ports to service this growth and is the right decision for the people and businesses of NSW.”

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