Botany operator NSW Ports says Newcastle too far from major Sydney markets for container terminal
A report to be launched in Sydney today calls into question Newcastle’s push for a container terminal, saying Port Botany had sufficient capacity for decades and that Port Kembla was the “obvious choice” for a second terminal if needed.
Quay conclusions: finding the best choices for additional port capacity in NSW, was prepared by consultants KPMG and commissioned by NSW Ports, which holds the long-term leases to Botany and Port Kembla.
Although its findings are unsurprising – given the vested interest that NSW Ports has in maintaining its monopoly – the report highlights the resistance that Newcastle will have to overcome if it is to get the green light for its long-held ambitions.
The report will be launched in Sydney today by Jim Betts, head of the state agency Infrastructure NSW, and Marika Calfas, head of NSW Ports.
Speaking to the Newcastle Herald, Ms Calfas said the report was commissioned in response to Port of Newcastle’s public campaign for a terminal.
“For the past 12 months or so PoN has been putting out a lot of claims about what it can do with a container terminal, really putting out a lot of messages about what it can offer and what the benefits are for the broader state,” Ms Calfas said.
“We questioned the facts around that. We questioned whether that evidence was credible. We felt we needed to get a report done on strong evidence, that is transparent, to see whether there is credibility to the claims being made.”
A spokesperson for the Port of Newcastle said it was difficult to comment without having seen the report.
“We can say, though, that regional exporters and importers will be looking on with some interest given the high costs being experienced in a Sydney-centric supply chain along with the growth opportunities for NSW in the light of global shipping and containerisation trends.”
The 57-page report uses economic modelling to canvas container trade between now and 2046 under four scenarios: Botany by itself, Botany with Kembla, Botany with Newcastle and the three ports operating together.
“Despite the current public affairs focus, detailed analysis shows that developing a container terminal at the Port of Newcastle would impose the highest overall costs, and offer the lowest overall benefit,” the report concludes. Of the four scenarios, the Newcastle proposal made “the least sense” for NSW.
Reports commissioned last year by the Port of Newcastle claimed major economic advantages for developing the terminal, and chief executive Craig Carmody has said repeatedly – including at a recent NSW parliamentary inquiry – that its $1.8-billion proposal would not require any taxpayer contribution.
But NSW Ports says “massive taxpayer investments in road and rail projects” would be needed to make the Newcastle terminal viable.
“A container port at Newcastle faces substantial transport challenges, because of the paucity of existing rail connections to Sydney,” the report says. “Current spare capacity would not be sufficient to accommodate a substantial level of container movements by rail, without significant taxpayer investments.”
Port of Newcastle has said its terminal can be serviced by the existing rail network but KPMG says a Newcastle terminal delivering container volumes “of any substance” would require a new rail link to Sydney, which would be as “challenging as it was expensive” because of the terrain around the Hawkesbury, costing billions of dollars.
The report does not mention the compensation that Newcastle must pay to compete with Botany – which is under challenge as “anti-competitive” by the Australian Competition and Consumer Commission – but Ms Calfas confirmed it was not added to Newcastle’s costs in the modelling used in the report.
Although it agrees the Newcastle proposal would help regional exporters – taking up to 14 per cent of outward bound trade, the report says Newcastle would still only be shifting 400,000 containers a year in 2046.
While this figure is in line with Newcastle’s first-stage ambitions, it is well short of the million-plus containers it has expressed as a long-term ambition.
NSW Ports says that with Botany operating at less than half its 7-million container capacity, the KPMG report shows Kembla is the logical second port, once Botany nears capacity.
“It’s the population and business needs of NSW that determine the most efficient container terminal locations,” Ms Calfas said.
“Container ports are most efficient when close to consumers and connected to the market by good rail, road and intermodal infrastructure.”
As well as Botany and Kembla, NSW Ports also manages intermodal hubs – which are used to unpack containers – at Enfield and Cooks River.
Source: The Herald