With the government having withdrawn from ports and shipping ownerships, Australian states have become short-sighted when it comes to the port and shipping policy, the Port of Newcastle’s CEO has claimed.
Craig Carmody said that national and state policy makers have created a policy misalignment by ceding the space to the private sector which has created risk for Australia’s future.
Being part of global trade, especially for Australia where approximately 98% of its trade travels by sea, is critical to a nation’s economic development and its population’s increased quality of life.
Carmody said: “For an island nation primarily reliant on sea trade, shipping policy forms very little of the national lexicon around the international freight challenges and opportunities.
“Even when we do discuss shipping policy in Federal politics, it is always domestic and very insular.”
According to a report by Houston Kemp reported that over the next 15 years, Australia’s container ports will see volume growth of 4.2% per year.
Global container trade has grown by 8.1% per year since 1980 and this growth in containerisation is reflected in the growth of the size of vessels built to carry containers.
Ultra Large Container Vessels (ULVCs) with a capacity of 20,000 teu and above offer a reduction in the cost of shipping one container (slot cost) as it can replace up to three conventional ships.
In Europe, a ULVC has a slot cost 52% lower than a 5,000 teu vessel because the more boxes on a vessel creates a lower unit cost per box.
At present, Australia’s East Coast ports – which facilitate 80% of the country’s container trade – typically accept container ships of 5,000 teu and Port Botany reported in its December 2018 half-year report that 86% of ship visits were 6,000 teu or below.
The introduction of the International Maritime Organisation’s (IMO) 2020 sulphur regulations could lead to shipping lines older ships and an increase in slot prices in Australia due to its reliance on the smaller container vessels.
Carmody said: “ULVCs are not a novelty – something that is 45% of the global ship new build programme cannot be called a passing phase.”
He explained that Australia is not equipped to deal with these new vessels as some of its channels are not big enough and the available land area around existing ports is constrained by urban encroachment.
The ports would need to significantly upsize infrastructure to be able to handle the larger vessels but, according to the CEO, that would require “courageous governments”.
Carmody said: “Policy should recognise that Australia needs the capacity to trade with the large, low-cost ships, and those ships come from other countries. Trade is global.
“So a good starting point for port policy is that we – Australia – are competing or cooperating with other countries and their ports, to get the most efficient supply chains.”
A good port policy, in Carmody’s opinion, would encourage regional ports with an abundance of land and good channels to develop secondary ports for the ULVC trade.