Global Ports Forum

NSW CONTAINER STRATEGY: DON’T DISMISS NEWCASTLE

Photo courtesy of heraldsun.com.au.

Opinion – Greg Cameron

The NSW government is preparing a container terminal strategy for NSW as part of its ‘scoping study’ for the long-term lease of Port Botany terminal. It is due for release mid-year without public consultation. In December, the NSW government revealed its intention to approve a 350% increase in Port Botany container terminal operations, from 2 million containers a year to 7 million. The only container option the NSW government is studying is continued expansion of Port Botany.

An investigation of the Newcastle container option would include relocating all current and future Port Botany container operations to Newcastle. Sydney airport can be expanded, including a third parallel runway, using the Port Botany terminal site. Since new aircraft are 60% quieter than existing aircraft, sound pollution may no longer be a deciding factor in relation to growth of Sydney airport. The installed infrastructure at Port Botany can be moved by barge to Newcastle.

The decision to reject Newcastle for a container terminal is long-standing. After the NSW government assumed ownership of the former BHP steelworks site in 2000, it based all feasibility studies on the existing Newcastle urban rail system. However, it was known in 1998 that the existing system was unsuitable for rail freight. When BHP proposed a rail freight by-pass of Newcastle, from Fassifern to Hexham, it was rejected by the NSW government.

The NSW government’s decision to reject the Newcastle option is based on the assumption that the Fassifern to Hexham rail by-pass will never be built. Surely the assumption is false?

The Fassifern to Hexham by-pass is economically viable. Instead of spending $200 million to upgrade the rail freight line from Port Botany, the funds can be re-allocated towards the cost of the Fassifern to Hexham line. By reducing travel time between Sydney and Brisbane by up to 35 minutes, the line permanently contributes to lower freight costs. By allowing the Newcastle urban system to be re-developed using light rail, significant urban development opportunities are enabled. Empty containers – currently 50% of all containers are exported empty – can be railed into northern NSW for back loading through Newcastle with coal, agricultural products and, in time, value added products. An optimally designed Newcastle terminal will deliver containers into Sydney at a competitive cost compared with Port Botany. A container terminal at Newcastle provides most regional areas of NSW with cost-effective access to a container terminal, for the first time.

Any strategic economic examination of a Newcastle terminal would include an intermodal terminal. Newcastle’s advantage is that 100% of containers will be railed to an intermodal terminal north of Sydney. This compares with shipping the containers to Port Botany and moving them by truck and rail to Moorebank, 30km west of Port Botany. At present, 86% of containers from Port Botany are trucked. The NSW government’s plan is to reduce that to 72% within 10 years. The Newcastle option clearly benefits Sydney’s road system.

Is there evidence to support the NSW government’s assertion that the Newcastle container terminal option is unviable? If so, where is this evidence?

It would make good economic sense to rigorously investigate the costs and benefits to the NSW economy of a container terminal at Newcastle, before decisions are taken.

Greg Cameron is a former BHP manager and specialises in economic modelling.
Tags:
container-shippingcontainer-transportmoorebanknewcastleport-botany

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This entry was posted on Friday, June 1st, 2012 at 2:25 pm and is filed under Port Finance, Ports Investments, Ports Management. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.