[PPT] - Hunter Business Chamber Emerging Challenges to Port Development and PowerPoint Presentation

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Hunter Business Chamber

Emerging Challenges to Port Development and Sustainability

Newcastle, 19 September 2013 David Anderson CEO Ports Australia

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Ports Australia:

Long history (1916) under various guises

Typical business model for a peak industry body

Represent both private and publicly owned ports and regulatory

agencies Core business

Advocacy (primarily on national stage)
Advice to Members on statutory & regulatory developments

Sharing of information & best practice across 9 working groups with strong Member participation High level of agreement about what is important

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Board of Ports Australia

Gary Webb CEO, Newcastle Port Corporation Chairman (30 Sept 2013) Vincent Tremaine CEO, Flinders Ports South Australia Chairman Elect Chris Leatt-Hayter CEO, Fremantle Ports Deputy Chair Steve Lewis CEO, Dampier Port Authority Member Terry O’Connor CEO, Darwin Port Corporation Member Brad Fish CEO, North Queensland Bulk Ports Member Russell Smith CEO, Port of Brisbane Pty Ltd Member Stephen Bradford CEO, Port of Melbourne Corporation Member Jim Cooper CEO, Port of Portland Pty Ltd Member Grant Gilfillan CEO, Sydney Ports Corporation Member Paul Weedon CEO, Tasmanian Ports Corporation Member

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Total 70 Ports, of which 65 Regional
Main 16 Regional Ports handle 85% of Task
Main 20 Ports handle 95% of Task

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Emerging Challenges

1. The Conversation about Ports and Freight
2. Growth, Planning and Land Use Conflicts
3. Supply Chain Coordination and Productivity
4. Environmental Management and Regulation
5. Port Governance and Privatisation
6. Skills and Workforce
7. The Future of Coastal Shipping

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An initial and key goal for Ports Australia was to ramp up priority accorded to ports on the political and public policy radar

spreading the conversation about ports and freight among

key agencies and other stakeholders

safe and efficient movement of freight in communities is a

major public policy issue

transport networks is about moving freight as well as

moving people 1. Ports and Freight – The Dialogue

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GDP1 (2012) - $A 1,620 billion
Total Exports and Imports (2012) = $A 490.2 billion
Fourth largest shipping task in the world
Australia - 10% of global seaborne trade
Shipping growth in the order of 80% over next decade
42 commercial ports, 20 of significant scale
Emerging LNG trade (63 mt by 2016/17)

Australia – Why are Ports Important?

1. Source - Dept of Foreign Affairs & Trade

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Source: Draft NSW Freight and Ports Strategy, November 2012

2. Growth, Planning and Land Use Conflicts

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Source: BITRE

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Source: BITRE

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7,848,787 13,557,706 15,542,982

2,000,000

4,000,000 6,000,000 8,000,000 10,000,000 12,000,000 14,000,000 16,000,000 18,000,000

FY 95/96 FY 96/97 FY 97/98 FY 98/99 FY 99/00 FY 00/01 FY 01/02 FY 02/03 FY 03/04 FY 04/05 FY 05/06 FY 06/07 FY 07/08 FY 08/09 FY 09/10 FY 10/11 FY 11/12 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 FY 17/18 FY 18/19 FY 19/20 FY 20/21 FY 21/22 FY 22/23 FY 23/24 FY 24/25 FY 25/26 FY 26/27 FY 27/28 FY 28/29 FY 29/30 FY 30/31 FY 31/32 FY 32/33 FY 33/34 FY 34/35 FY 35/36 FY 36/37 FY 37/38 FY 38/39 FY 39/40

Total Container Trade

actual Low Growth Likely Growth Strong Growth

Sydney’s Growth Projections – 30 Year

Source: Sydney Ports

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Source: GHD

National container port requirements @ 5% compound growth

Capacity and growth

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Dampier

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Planning Failures and Land Use Conflicts

Residential Apartments 2.5 – 25m from rail freight line. Rail Freight Line

Rail Freight Line – Little High Street, Fremantle

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3. Supply Chain Coordination and Productivity

Getting the best from existing assets and skills
Fragmentation of supply chain interests, and lack of

transparency, drives inefficiency, and in some cases bad behaviours

Port authorities/corporations well positioned to make

"disinterested" interventions and drive cooperation

Building on Hunter Valley Supply Chain Coordination, and

Port Botany Landside Improvement Strategy

Application of Smart Technology to freight management
many examples of "single window" approach driving

transparency and eliminating unnecessary transactions

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Addressing both productivity of capital assets and workforces
move to automation a "classic" response
introduction of third stevedore – will it make a difference?
Combative IR environment a serious issue
FWA and tightness in sectors of labour market only part of

the cause

policy support from previous Federal Government to

unions regulating workplace

1990s demonstrated balance is achievable
engagement with newly elected Government may bring

changes.

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Smit, Suzanne (2003/2004) A Comparison of Port Community Systems: A framework to compare Port Community Systems and an application of the Port Community Systems of Hamburg, Rotterdam and Antwerp. Erasmus University Rotterdam

Transaction Pattern post–Port Community System Transaction Pattern pre-Port Community System

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Sources: UK Office for National Statistics, Salary.com, Ernst & Young, SupplyChainReview.com.au, www.oanda.com Notes: Numbers represent the full stevedoring remuneration package. UK salary is for 2011 and is inflated at the average of the previous two years’ increases, Australian salary is 2011 but is not inflated as it was

nly given as a broad estimate.

Comparison of International Stevedoring Salaries (Real 2012 AUD)

Country 2012 Annual Remuneration at Current Exchange Rates 2012 Annual Remuneration at 2005 Exchange Rates United Kingdom 37,929 61,450 United States of America 62,574 88,552 New Zealand 71,886 84,065 Australia

Approx. 100,000
Approx. 100,000

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Salary levels and Future Competitiveness

Hays Oil and Gas predict if wages rise further some projects might be delayed. Local wage levels second highest in sector.

Top 10 oil & gas salaries by country ($) Contractor day rates ($ per day)

Average annual salary Operator/ Local Imported technician 1 Norway 180,300 122,800 1 Australasia 630 2 Australia 164,000 173,100 2 North America 410 3 Brunei 140,500 94,400 3 Northern Europe 410 4 Netherlands 138,500 n/a 4 Western Europe 350 5 Canada 128,700 123,300 5 West Africa 310 6 US 124,000 119,200 6 North East Asia 310 7 Brazil 119,600 106,700 7 South America 300 8 New Zealand 116,500 112,400 8 CIS 300 9 Saudi Arabia 102,900 67,100 9 North Africa 280 10 France 92,100 118,400 10 East/South Africa 280

Source: Hays Oil & Gas Salary Guide

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4. Environmental Management and Regulation

Sovereign risk now emerging as more prominent in Australian

context

accept community expectations are high re environment

standards

Agency culture and capricious regulation a significant cost to the

economy

detached from macro-economic goals of governments
Emerging ideological underpinning of environmental movement
anti-development per se rather than conservation minded
goal is to close down supply chains (Queensland)

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Dredging subject of particular
channels are key pieces of national economic infrastructure

and their capacity determines supply chain performance

dredging is not an indulgence, it is an economic imperative
in Queensland currently under-focussed attack with little

scientific foundation

Ports Australia undergoing project to better inform

community about impacts of dredging

Ports community using best endeavours to work constructively

with environmental agencies

takes highly precautionary approach to risk
looking for better processes, not less rigour

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Active monitoring programs
eg dust off stock piles
water quality
ports taking pro-active approach

to harmonising standards and developing capacity to monitor for marine pests.

Biofouling and marine pests increasing in significance

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5. Port Governance and Privatisation

Good governance is a pre-condition for getting other key things

right, such as planning, pricing and investment

Historically the prevailing Australian model has been public
wnership, with ports acting as landlords and strategic managers

subject to statutory and government oversight

have subsequently been structural and other changes
Ports Australia does not have a position that advocates

privatisation, it has a position that advocates sound governance models

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As a general rule state governments have not been good

shareholders

and the cost of government ownership has been high
eg. if the port business is sitting on the state balance sheet it

can result in poor, or sub-optimal investment expenditure decisions and port balance sheets that do not attract private investors

This has lead to a discussion about governments providing better

governance models

with lukewarm results
Consequently the debate has leaped to privatisation
Current motivation more about budget deficits and selling mature

assets to fund new infrastructure

recent Queensland Commission of Audit Report has

enlivened discussion in that state around Gladstone and Townsville

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7. The Future of Coastal Shipping Tonnage (million tonnes) Freight task (billion TKM) Coastal Shipping 52.1 114.7 TOTAL 2,959.6 565.7 Percentage of coastal shipping 1.8% 20.3%

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