Port of Melbourne

Blame it on the Panama Canal; ships size growth costly for Port of Melbourne

It was good to see Port of Melbourne CEO Brendan Bourke address the matter of ship sizes in his presentation to the Rail Futures Conference  recently. I know that Port of Melbourne is doing as much as they can to accommodate larger ships as soon as possible, and I commend them on their efforts, but the fact is that the physical limitations of the Yarra River, Swanson Dock and the Westgate Bridge just can’t be overcome with the current port layout. So, while their substantial efforts will see bigger ships than the present being able to dock at Swanson, we probably won’t ever see 48 metre beam ships getting up the Yarra. Blame it on the Panama Canal, but that is exactly what the major shipping lines are now asking for. Such ships will be confined to Webb Dock which limits their choice to stevedore to a single provider, not something that shipping companies are comfortable with.

I have been giving this matter a lot of focus recently, since the report of Infrastructure Victoria was released and concluded that a new container port was not required until 2055. Our members were falling over laughing as Melbourne is the only east coast port that can’t accommodate the ships that some of the major shipping companies want to bring now, let alone in 30 or 40 years. It’s disappointing that the new port timing estimate of Infrastructure Victoria’s “Advice On Securing Victoria’s Ports Capacity” was so out of date as soon as it was written. But in short, you can blame it on the Panama Canal (or at least the widening of it), and their lack of current consultation with shipping companies. They have overlooked the fact that the size of ships coming to Melbourne is more driven by global factors such as consolidation, cascade down from other routes (as east/west ships sizes increase) and the ships currently held on lines’ global inventories than it is by Victoria’s rate of increasing demand for import capacity (which the report heavily relied upon). There have been seven shipping company consolidations in the past two years, this makes bigger ships even more attractive.

Fundamentally, container ship design has changed dramatically in the last 15 months since the artificial 32m beam limitation of the old Panama Canal locks has been lifted. Ships are now larger capacity but shorter and beamier, and it seems that beam is the limiting factor. The next size that lines are looking at are in the range of 8000-8500 TEU, the lengths vary from 300m to 335m, beam of 42-48m, draft of 14m and a height of between 50-60m – very few of these vessels will get up the Yarra River. Therefore Infrastructure Victoria’s estimate that Port of Melbourne can grow to 8.5 million TEU, with 4m TEU at Webb Dock and 4.5m TEU at Swanson dock is tenuous. If the new ships can’t get up the river, the 4.5m TEU at Swanson Dock is a pipe dream.

That being said, the report makes very sound recommendations in relation to corridor protection, urban encroachment, keeping the option open for an earlier second port development, environmental monitoring, development of a comprehensive Ports Strategy, and monitoring of indicators to confirm new port timing. But the fact is that at least two of these key indicators, ship size, and capacity enhancements at other Australian ports, have already been reached. Sydney can already take 10,000 TEU ships at each of its stevedores and some terminals could take up to 12,000 TEU ships depending on draught but they are not tide limited in entering or leaving the port. The Port of Tauranga in New Zealand already accepts 9500 TEU ships on a routine basis, it seems the Kiwis don’t only beat us at rugby.

The Port of Melbourne is Australia’s largest container port but they won’t stay that way if they don’t find a solution quickly. With only one terminal able to take the larger ships, Melbourne is already the limiting factor for the size of ships coming to Australia’s east coast ports and is preventing Australians benefiting from the efficiencies of larger ship operations. The risk is that shipping lines may consider by-passing Melbourne for Adelaide or Sydney and use rail, or a smaller ship feeder service (possibly from New Zealand) to make the connection. This would ultimately cost the Victorian consumer, the Port of Melbourne and the state economy.