It's a case of when not if a container terminal will be established at the Port of Newcastle, according to the co-author of a major report on global trends in containerised trade.
HoustonKemp economist Adrian Kemp said his view was informed by his team's research that identified compelling economic reasons for the Newcastle facility.
Their 2019 report, Containerised trade trends and implications for Australian ports, found that containerised trade volumes had been growing steadily since 1980.
Despite a dip in container movement during the pandemic, container growth has bounced back strongly.
"The ongoing growth in containerised trade is placing pressures for expansion at Australia's major ports," the report, which was commissioned by the Port of Newcastle, said.
"Current total port throughput at Australia's east coast container ports equals 7 million TEU (twenty-foot equivalent unit). Given current growth, this means that port capacity expansions are needed as soon as 2032."
The funding, which former Prime Minister Scott Morrison had personally fought for, had been approved by the Expenditure Review Committee and Cabinet and was allocated to the $4 billion Regions Package.
But the announcement, which was due to take place on May 6, was pulled at the last moment due to pressure from the project's opponents who cited concerns about Chinese influence at the port, the impact of a container terminal on coal industry access and the State Government's opposition to the project.
HoustonKemp's modelling showed that the establishment of a container terminal in Newcastle would offset the need to expand the Port of Botany.
"There's quite a competition for expansion (among Australian ports) and I think the creation of a container terminal at Newcastle would bring significant benefits to the Australian economy," Mr Kemp said this week.
"There is a need for expansion and the question is what's the best way to expand. The prevailing view from a planning perspective is you just expand where you currently are because there are significant economies of scale associated with that. However, what our work demonstrates is that that prevailing view no longer applies."
The team cited the example of the Port of Tauranga in New Zealand and the Port of Auckland, which are about 200 kilometres apart, as an example of how a container terminal at Newcastle could complement Botany. Tauranga effectively doubled its container throughput between 2011 and 2018. A large part of the growth was driven by constraints at the Port of Auckland, which is located next to the central business district.
"Tauranga both captured significant containerised trade away from Auckland but also lowered overall port related costs in New Zealand," Mr Kemp said.
"It's a good example of a regional competition effect that delivers significant economic benefits and given where we are at in terms of our economy, anything that improves productivity efficiency would have to be a good idea."
As part of its supply chain analysis the team modelled the impact of congestion on Sydney roads to calculate how long it would take to travel from Botany and Newcastle to the container warehouses in western Sydney.
They found that the travel time from Botany to western Sydney was on average 20 minutes quicker when traffic congestion was factored in.
"Twenty minutes from a cost perspective is actually not that much in a supply chain. What's more relevant to a firm that's importing or exporting goods is reliability. We found that a Newcastle container terminal would be potentially very cost effective in that regard. If I know my truck is going to show up at 10am every day with certainty I can manage my labour workforce at my warehouse effectively," Mr Kemp said.
The team also identified spare capacity on the Sydney to Newcastle rail line which had the potential to significantly reduce road-based container traffic.
"There is quite a bit of existing and anticipated capacity that I think gets overlooked," Mr Kemp said.
"We went into this project as objective researchers, but when you got into the modelling it became obvious that there were compelling reasons for it (a container terminal at the Port of Newcastle).
"I think it's fair to say there will be a container terminal in Newcastle. It's really a question of timing."
