Nation wins from fixing Port Botany – Australian Financial Review

Australian Financial Review: PUBLISHED: 12 SEP 2012 12:49:00 | UPDATED: 18 OCT 2012 16:18:34

• The Port Botany Landside Improvement Strategy aims to boost productivity by making better use of infrastructure.
• Computer programs, back loading and off-peak pick-ups have cut truck turnaround times.
• Greater use of rail will help the port reach forecasts without clogging up the road network.
• The NSW Minister for Roads and Ports has a useful working relationship with the federal Transport Minister.

Australia’s biggest city is facing a dilemma made of its own success: either spend billions refitting its port infrastructure, or face decades of price increases as goods bound for Sydney are first shipped to other cities.

“We’ve certainly got our work cut out,” says the NSW Minister for Roads and Ports, Duncan Gay.

“Container throughput at Port Botany will double between now and 2020. It’s something this government is very focused on.”

This sense of urgency comes from forecasts for container throughput at Port Botany, measured in 20-foot equivalent units (TEUs), which will increase from just 2 million TEUs in 2011 to 13.6 million in 2040.

All those containers have to be carried to or from the port, and in Sydney that usually means on the back of a truck. How can Port Botany in Sydney’s south expand its operations when it is surrounded by Australia’s most traffic-choked city?

Run by the government-owned enterprise, Sydney Ports Corporation, Port Botany has just finished building its third container terminal, which will be tenanted by Hutchison Port Holdings in 2013.

The $1 billion container terminal will boost the capacity of the port in the short term and allow the entire port to move from the current 2 million TEUs a year towards the 7 million TEUs that Sydney Ports is planning for in 2030.

But Gay is mindful that simply building large-scale infrastructure does not resolve all the issues.

“Increasing the capacity of Port Botany is the headline,” says Gay. “But the broader project is to expand the entire port supply chain. The port side is the part we all see, but it’s the landside that makes it work.”

In Sydney, landside infrastructure means juggling road and rail freight with competing passenger demands.

It means finding the billions of dollars to not just connect freeways such as the M4 Western Motorway and M5 South West Motorway with the port precinct, but renovating the creaking rail infrastructure so containers can be taken off crowded roads.

The resulting Port Botany Landside Improvement Strategy (PBLIS) includes rail and road operators, stevedores and freight companies, in an attempt to drive better productivity out of the existing infrastructure.

“The obvious solution is to spend on construction,” says Gay.

“But PBLIS is about better practices, greater efficiencies, improved productivity.”

PBLIS has concentrated on improving truck turnaround times at the port, which this year improved by 30 per cent to an average time of 32 minutes. Operators use computer programs to ensure there is more back loading of trucks, and trucking companies have been encouraged to move drop-offs and pick-ups to off-peak times and weekends.

This year, both stevedores at the port – Patrick and DP World – installed weigh-in-motion bridges to speed up the weight verification of trucks, and a new truck park inside the port precinct so trucks can stay off the roads while they wait for their loads.

One of the measures Gay is focusing on is the target of increasing the Port Botany rail-borne container traffic from just 14 per cent of movements, to 28 per cent – a crucial element in Port Botany reaching its forecasts without clogging up the road system.

“The rail target is not just a part of PBLIS,” says Gay. “It’s the KPI that the Premier has set me. When you look at the growth of Port Botany and the growth of Sydney road traffic, we can’t go forward with such a high percentage of containers carried on trucks.”

The NSW government isn’t just working with the commonwealth to shift truck movements onto trains; there is a rumoured big announcement in the wings which concerns the M4 East, its possible linkage with the M5 East, and a link to the port.

Duncan Gay has an unlikely ally in the form of the federal Minister for Infrastructure and Transport, Anthony Albanese. The two have formed a working relationship as the job of resolving the Port Botany infrastructure dilemma falls to governments.

“The solutions we’re talking about do not really come from private enterprise,” says Albanese, whose electorate, Grayndler, is in the crowded inner-west of Sydney.

“It requires a national strategy and national planning, because Port Botany’s importance will only grow: its container throughput will quadruple in the next 20 years.”

Albanese oversees the National Ports Strategy and the National Land Freight Strategy. He says Port Botany’s growth within a burgeoning Sydney has to be dealt with because Sydney’s port performance affects national productivity.

The commonwealth has committed billions of dollars to fixing the impending rail bottleneck around Port Botany. The projects include a revamped southern Sydney freight line, a dedicated freight-only northern Sydney corridor to Newcastle, duplication of the track into the port and providing the land and project leadership for a massive inland port – or intermodal terminal (IMT) – at Moorebank in Sydney’s south-west.

The Moorebank IMT will take 3300 trucks off Sydney roads each day and create an estimated $10 billion in economic benefits, largely by creating a road-rail distribution hub for containers shuttled by train to and from Port Botany.

The Moorebank IMT will be run by a Government Business Enterprise board, which Albanese says will protect taxpayers’ interests as well as the national interest.

However, IMT business activity will be managed by the private operators that design and build it and sub-lease sites to freight companies.

The question of how to pay for these Botany-focused infrastructure projects has yet to be answered but much of the rail build-out funding will come from commonwealth investment via the Australian Rail Track Corporation, while the NSW government has put Port Botany on the auction block, asking for potential operators to bid on a 99-year lease.

Gay will not confirm what the NSW government will accept for such a deal, but market analysts say the price could be more than $2 billion.

The commonwealth will offset some of the massive costs of the Moorebank IMT by selling off-site management rights to private operators.

Albanese is aware that Sydney is perceived as absorbing too much attention from governments. But he says planning and spending for Sydney now will reap benefits in the future.

“You don’t do projects like this to either make Sydney more liveable or to build national productivity,” says Albanese. “You do it for both. You do it because the efficient working of Port Botany is so important to the economic wellbeing of Australia.”