The excursion on Tuesday the 8th of October was to the Port of Melbourne. With a group mainly consisting of Traffic- and Water Engineering and Management students, it is a place that is interesting for virtually the entire group. Cristina Gallichio (Port Education officer) and Miriam Kappel (supply chain officer) gave the group an extensive presentation about the Port of Melbourne, how the port is organized, its logistics, their vision for the future and the challenges that the port is facing.
The presentation started with an acknowledgement of the country. This acknowledgement focuses on the use of the land of Aboriginals and the wrongdoings against them in the past. The acknowledgement is a very common way to start a presentation in Australia.
The Port of Melbourne was Victorian Government-owned until 2016. In that year, they needed money to transform one-level crossings of trams and roads into two-level crossings. The way, they generated the money was by privatising public infrastructure, such as ports. The Port of Melbourne organisation leased the port for 50 years until 2066. This organisation consists of four shareholders, namely QIC, Future Fund, Global Infrastructure Partners and OMERS. These shareholders are all infrastructure investors or pension funds, from Australia or abroad. The Port of Melbourne organisation acts as the landlord and manages the different companies that work in the port. After these 50 years, the organisation needs to give back the port to the government in good working condition.
The Port of Melbourne’s facilities consist of liquid bulk, international containers, dry bulk and breakbulk, dry bulk, Tasmanian trade and breakbulk, international containers and motor vehicles terminal. In these terminals, the main export products are grain (9568 tonnes per day), and meat export containers (142 per day). The main import products are containers for furniture, clothing, shoes, toys and sporting goods. This gives a combined a total of 616 containers per day. Of the total trade composition for FY24 based on revenue tonnes, 76% was shipping containers. Furthermore, in FY24, 3000 ships visited the Port of Melbourne, in comparison, in Rotterdam 28000 seagoing ships and 90000 inland vessels visited the port in 2023.
For both the import and export from the port, China is the main partner. However, the products imported are packaged in a different way than what is exported. Australia mainly imports daily used products that can be shipped in containers, but the export from Melbourne and its hinterland mainly consists of grain that does not need containers. The result of this is that the containers brought in, tend to stockpile in the Port of Melbourne. However, these containers are necessary for new import shipments. Therefore, ships often cannot export grain but need to bring back empty containers to China for new import shipments with more valuable products. This was especially the case during the COVID-19 pandemic when the prices for containers increased very steeply.
During and after the COVID-19 pandemic the political relations between China and the Australian government deteriorated and the Chinese government placed restrictions on the import of several products from Australia (e.g. timber and coal). This meant that Australia was forced to diversify the countries it exported products to. The opportunity was taken to decrease the dependency on China and trade agreements with several countries were made, the biggest one with India. However, once the restrictions were lifted, export to China resumed like it was before the restrictions for the simple reason that China is willing to pay the most. This means that the dependency on China is back to the level it was.
During the excursion, it was addressed that the Port of Melbourne is landlocked, meaning that there is no space around the port to extend, mainly due to housing at the borders of the port. This situation leads to friction with local stakeholders, slowing down the development of the port. Therefore, in our opinion, the only way to significantly improve the amount of trade within the harbour is by moving the harbour outside the city. Doing this, will create space for new housing projects and by selling the ground, a new harbour can be developed. Since they told us that a small house on a former piece of land at the port costs around 3 million euros.
The majority (94%) of the transport between the Port of Melbourne and the hinterland is done by trucks. Recently, the new Victorian government has been pushing for a more sustainable way of transportation. The way the Port of Melbourne wants to achieve this is by transferring the transportation to rail. They are facing many challenges in achieving this. One of these challenges is that in Victoria the rail network consists of two different gauges, which means that a large part of the rail network cannot be used easily. Moreover, the rail network in Australia is quite dated and through difficult terrain, which means that the rail network will need to be significantly improved to be ready for frequent freight traffic by rail. Another challenge is that decision-making in Australia takes very long and the push for sustainability is recent. Therefore, current projects, like the West Gate tunnel, are still focused on improving the accessibility of the port by truck. This will make transport via rail even less of an interesting option.
All in all, the Port of Melbourne faces significant challenges in sustainability, expansion, transportation between the port and the hinterland, and dependency on China.