Hunter Business Chamber Emerging Challenges to Port Development and Sustainability Newcastle, 19 September 2013 David Anderson CEO Ports Australia
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 2
Board of Ports Australia Chairman Gary Webb CEO, Newcastle Port Corporation (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 3
• Total 70 Ports , of which 65 Regional • Main 16 Regional Ports handle 85% of Task • Main 20 Ports handle 95% of Task 4
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 6
1. Ports and Freight – The Dialogue 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 7
Australia – Why are Ports Important? • GDP 1 (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) 1. Source - Dept of Foreign Affairs & Trade 8
2. Growth, Planning and Land Use Conflicts 9 Source: Draft NSW Freight and Ports Strategy, November 2012
10 Source: BITRE
Source: BITRE 11
10,000,000 12,000,000 14,000,000 16,000,000 18,000,000 2,000,000 4,000,000 6,000,000 8,000,000 Sydney’s Growth Projections – 30 Year Source: Sydney Ports - FY 95/96 FY 96/97 FY 97/98 FY 98/99 FY 99/00 FY 00/01 FY 01/02 actual FY 02/03 FY 03/04 FY 04/05 FY 05/06 FY 06/07 FY 07/08 FY 08/09 FY 09/10 Total Container Trade Low Growth 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 Likely Growth 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 Strong Growth FY 31/32 FY 32/33 FY 33/34 FY 34/35 15,542,982 FY 35/36 13,557,706 FY 36/37 7,848,787 FY 37/38 FY 38/39 FY 39/40 12
Capacity and growth National container port requirements @ 5% compound growth 13 Source: GHD
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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 22
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 23
• 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. 24
Transaction Pattern pre-Port Community System 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 Transaction Pattern post – Port Community Hamburg, Rotterdam and Antwerp . Erasmus System University Rotterdam 25
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Comparison of International Stevedoring Salaries (Real 2012 AUD) Country 2012 Annual Remuneration at Current 2012 Annual Remuneration at 2005 Exchange Rates Exchange Rates 61,450 United Kingdom 37,929 88,552 United States of America 62,574 84,065 New Zealand 71,886 Approx. 100,000 Australia Approx. 100,000 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 n ot inflated as it was only given as a broad estimate. 27
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 28 Source: Hays Oil & Gas Salary Guide
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) 29
• 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 30
• Active monitoring programs • eg dust off stock piles • water quality • Biofouling and marine pests increasing in significance • ports taking pro-active approach to harmonising standards and developing capacity to monitor for marine pests. 31
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 ownership, 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 32
• 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 33
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