Transport and Logistic News – August 2012 – September 2015

NSW freight at the cross(rail)roads

September 23, 2015

The NSW Ports Consortium, led by IFM Investors, and also comprising Australian Super, QSuper, Cbus, HESTA, HOSTPLUS and Tawreed Investments Limited, a wholly owned subsidiary of the Abu Dhabi Investment Authority, took ownership of Port Botany and Port Kembla in April 2013.

They paid a premium price for Port Botany being protected against competition from Newcastle port. In return, the NSW government agreed to pay this consortium more than $100 per container for throughput at Newcastle port in excess of 30,000 per year, plus a margin for growth.

The Newcastle port container throughput fee – over $100 per container for throughput more than 30,000 per year plus annual ‘organic’ growth – is economically unjustified. Should this anti-competitive fee be removed – secrecy prevents it from being examined for lawfulness and enforceability – the NSW government has no means for paying NSW Ports.

This fee is a job destroyer by preventing competition for Port Botany and denying northern NSW access to a container terminal on competitive terms. Well might Stephen Anthony, chief economist of Industry Super, claim that ”we need strong economic leadership to overcome shallow, short-term thinking emphasising speculation on financial assets and real estate”, as he wrote in the Australian Financial Review on 21 September, because the biggest single investment by Australia’s biggest industry super funds demonstrates otherwise.

The Commonwealth Government is equally at fault. It has transport requirements in Sydney due to the proposed Badgery’s Creek Airport and the proposed Moorebank Intermodal Terminal. Both projects require new rail infrastructure. Cost-effective rail services cannot be provided to either because of inadequate rail transport planning by the NSW government and lack of funds.
Consequently, the Badgery’s Creek Airport and Moorebank Intermodal Terminal projects should not proceed without rail transport infrastructure arrangements being in place which meet the transport needs of the residents of Sydney.

In order to provide a rail freight service between Port Botany and western Sydney intermodal terminals, including Moorebank, the NSW government is required to spend more than $7 billion: $1 billion is required for a new rail freight line into Port Botany; $1 billion is required for the Western Sydney Freight Line, between Chullora and Eastern Creek; and $5 billion is required for stages 2 and 3 of the Northern Sydney Freight Corridor, between Newcastle and Strathfield. The NSW government does not have the funds to build this infrastructure and the investment is not a Commonwealth responsibility, even if the funds were available, which they are not.

It is feasible for a rail freight bypass of Sydney, between Newcastle port and Glenfield, to be built and paid for by the private sector. Apart from replacing the need for rail freight upgrades costing $7 billion, the primary benefit is enabling all of Sydney’s existing rail infrastructure to be used for passenger trains by removing all freight from the network. There would be no rail freight service to Moorebank, therefore an intermodal terminal would not proceed. By converting the Southern Sydney Freight Line to passenger rail, it would be a short extension to Badgery’s Creek Airport.

An airport at Badgery’s Creek might not be required were Sydney Airport’s short (2,600 metres) parallel runway to be extended to 4,000 metres. This would enable all flight paths to occur over water, thereby eliminating aircraft noise from residential areas. Extending the runway within the airport is achievable if the displaced facilities are relocated to the Port Botany container terminal site after terminal operations are relocated to Newcastle port.

The rail freight line between Newcastle port and Glenfield would be paid for by railing containers between the port and western Sydney intermodal terminals, and converting general freight that currently enters Sydney by truck to rail.

The Port Botany/Port Kembla leaseholder, the Port Botany container terminal operators and the Newcastle port leaseholder, all stand to improve their financial returns by participating in the rail freight line, which would carry all containers for the Sydney market and replace trucks for Sydney-bound freight.

The Turnbull government should not permit the Moorebank Intermodal Terminal project and the Badgery’s Creek Airport project to proceed unless net public transport benefit to the residents of Sydney is demonstrated – and the economic reports are not heavily redacted, as with the Moorebank Intermodal Terminal business case.

For its part, the NSW government must demonstrate that the Newcastle port fee is economically justified, lawful and enforceable, before proceeding to remove the heavy rail line. This $340 million cost is funded from the lease of Newcastle port.

How the NSW Government could save $7 billion on the building of new railways

August 19, 2015
Building new rail freight capacity for Port Botany will cost $7 billion. This cost can be avoided by building a rail freight bypass of Sydney, between Newcastle port and Glenfield. Railing containers will enable a rail freight bypass line to operate profitably.

The government’s plan is to build the Northern Sydney Freight Corridor to provide the equivalent of a dedicated rail freight line between Newcastle and Strathfield. Stage 1 will be finished this year. Work must commence immediately on stages 2 and 3 costing $5 billion. These stages are required to be in place by 2028 to meet predicted demand.

The Western Sydney Freight Line, between Chullora and Eastern Creek and costing $1 billion, must be built if containers are to be railed between Port Botany and Eastern Creek. A new rail freight line into Port Botany must be built to increase freight capacity between the port and Chullora. This line will cost up to $1 billion.

The government leased three ports – Botany, Newcastle and Kembla – for $6.85bn without setting aside funds for upgrading rail capacity to service Port Botany.

The solution is to close Port Botany and relocate operations to Newcastle port. The cost can be met from a charge on container and general rail freight using the bypass line.

While the line is being built over 10 years, the southern section can be built immediately, connecting Glenfield and Eastern Creek. Container throughput at Port Botany can be railed to a new intermodal terminal at Eastern Creek via Glenfield.

One issue is the government’s container throughput cap on Newcastle port. This cap existed on 17 October 2013 when it was disclosed to parliament by The Hon. Duncan Gay MLC, in his then capacity of Minister for Roads and Ports. There can be little doubt that the purpose of this cap was to deter or prevent competition for Port Botany from a container terminal at Newcastle port.

Under Section 46 of the ”Competition and Consumer Act 2010” (CCA) it is unlawful to misuse market power to deter or prevent competition in a market. S46 did not apply to the NSW government if the cap was imposed as part of the government’s privatisation of the port. A government privatising an asset is not considered to be ”carrying on a business”.

However, the NSW government was carrying on a business – as Newcastle Port Corporation (NPC) – in 2008 when tenders were called for a 1-million TEU capacity container terminal at Newcastle port. The government was still negotiating with the successful tenderer, Anglo Ports Pty Ltd, when Mr Gay disclosed the container throughput cap on 17 October 2013.

The government’s negotiation with Anglo Ports concluded in November 2013, but the company said it did not withdraw from this negotiation, as later disclosed to the NSW parliament on 10 February 2015.

Had the container throughput cap existed for the purpose of the negotiation with Anglo Ports, the government would have been ”carrying on a business” and may have been required to comply with S46 of the CCA. The container throughput cap would still exist if it was imposed for the purpose of privatising Newcastle port.
Does this cap still exist?

Rid Sydney of containers

May 20, 2015

The container truck traffic choking Sydney’s roads, and the container trains holding up passenger services, could be easily removed, by establishing a container sea port in Newcastle.
All of Sydney’s intermodal terminal (IMT) requirements can be managed from a single IMT at Eastern Creek. Alternatively, buffer zone land surrounding the Badgery’s Creek airport site is also suitable for Sydney’s IMT.

Sydney’s existing and proposed IMT sites, such as Moorebank, are more valuable when used for residential or business park purposes.

The road network serving Liverpool and Moorebank is already at capacity and is unable to receive more traffic generated by an IMT at Moorebank.

Container trucks and light vehicles servicing the proposed Moorebank IMT will transfer road congestion from Port Botany to Moorebank.

Similarly, the expanded Enfield IMT will transfer traffic congestion from Port Botany to Strathfield.

By the government’s own estimate, the number of containers that will be moved by truck between Port Botany and western Sydney IMT will increase from 1.9 million TEU in 2013 to 6.9 million TEU in 2046.

The government also estimates that the number of containers moved by rail will increase from 0.3 million TEU in 2013 to 4 million TEU in 2046. The government refuses to explain how this increase will be accomplished.

However, the Sydney Morning Herald reported on 20 May 2015 that Minister Gay is “determined to build another rail freight line to Port Botany”.

It is inappropriate to devote any Sydney road or rail capacity to container transportation when a 6 million TEU capacity container terminal can be developed at the Port of Newcastle and will justify building a rail freight bypass of Sydney, using private capital, between Newcastle port, Eastern Creek, Badgery’s Creek and Glenfield.

A rail freight bypass would provide a second rail crossing of the Hawkesbury River.

The rail freight bypass would be funded by railing containers to western Sydney rather than trucking them to western Sydney from Port Botany.

Warehouses at Eastern Creek (or Badgery’s Creek) would enable the containers to be unloaded and the goods transported using light vehicles. This is world’s best practice.
No container in Sydney would be moved by truck.

No trucks need to enter Sydney, from north or south, because all Sydney-bound freight can be railed; and all through-Sydney freight can be railed, using the rail freight bypass.
Freight would be, could be removed from the Sydney rail network and the capacity used for increased passenger services.

Using existing rail capacity for passengers instead of freight, the north-west rail line can connect to the CBD via Epping and Strathfield, thereby removing the urgency for a harbour tunnel.
There would be no need to build the $1 billion Western Sydney Freight line, between Villawood and Eastern Creek – for which there are no funds available.

There would be no need to complete stages 2 and 3 of the Northern Sydney Freight corridor at a cost exceeding $4.4 billion (in present value terms) – for which there are no funds available.
The short (2,600m) parallel runway at Sydney airport can be lengthened to 4,000 metres, displacing a car park. With two runways of 4,000 metres, all flights could land and take-off over water, thus eliminating flight paths over residential areas and enabling maximum use of the largest, quietest and most fuel-efficient aircraft.

Displaced airport facilities can relocate to the container terminal site once vacated.

Industry located in western Sydney can relocate to outer western Sydney to take advantage of available industrial land and proximity to the IMT. There is more than 5,000 hectares of land in use by industry in inner western Sydney, which would make an extremely valuable contribution to future residential development. The value of this land would pay for the move, new facilities and leave a capital gain to boot.

Workers would commute from east to west, thereby reversing traffic flows.

Western Sydney’s long term development can be planned.

The financial incentive for relocating Port Botany operations to Newcastle port is supplying 100 per cent of container land transportation requirements. The fee charged for container movements by rail can be regulated to guarantee a return that is fair to all.

Suitable land is available at Newcastle port for a 6 million TEU capacity container terminal.

In addition, the T-4 coal loader site, or other coal loader sites that may become available, will provide future capacity for container terminal expansion, if required.
Freight is removed from the Newcastle rail network.

Newcastle becomes competitive with Melbourne for container movements by supplying a container service to Victoria by rail using the Inland Rail Line. This provides major opportunities for regional development in southern NSW and Victoria.

A world-class container terminal at Newcastle provides major regional development opportunities in northern NSW.

There is no pressing need to build Badgery’s Creek Airport if the Sydney second parallel runway is extended and passenger rail transportation is significantly improved.
The government does not comment on these initiatives.

Virtually all of the planning work has been accomplished by the present and previous governments. It is straightforward to pull all of the plans together.

NSW Government must come clear on port asset sales

November 4, 2014

Restrictions on ports asset sales in NSW have been raised by the ACCC. The ACCC is “concerned by any restrictions imposed by governments that have the purpose or effect of substantially lessening competition.”

The ACCC is “continuing its engagement with parties involved in the privatisation of ports in New South Wales.”

The ACCC raised the issues in its just-released Container stevedoring monitoring report no. 16.

“The ACCC encourages early engagement from state governments on any competition issues that may arise in relation to the proposed sale structures or sale conditions for any monopoly or near-monopoly assets, including any restrictions on competition proposed in the arrangements. Such restrictions may be unlawful and could be unenforceable,” the ACCC said.

A container terminal at the Port of Newcastle would compete with Port Botany initially for the northern NSW trade. It would also provide the base-load freight to build a rail freight bypass of Sydney, between the Port of Newcastle and Glenfield. A proposal in late 2010 to build a container terminal at the Port of Newcastle was investigated by the ICAC earlier this year.

Where Port Botany is a truck-based container terminal, Newcastle would be rail-based. The NSW Government forecasts a four-times increase in container truck movements between Port Botany and western Sydney by 2046. Trucks are forecast to carry 7 million TEU in 2046 and rail will carry 3.9 million TEU. No details have been offered as to how rail capacity will increase from the forecast 1.6 million TEU in 2031. But if the rail capacity target is not reached, there will be even more truck movements.

A cost-benefit analysis would show the worth of removing all freight from the existing rail network, so that it can be used 100 per cent for passengers.

Port Botany suffers a competitive disadvantage, because containers are trucked between the port and western Sydney, and goods are then trucked between western Sydney and northern NSW.
Newcastle’s natural advantage of proximity to market is defeated if a fee has been placed on container movements. The NSW Greens placed a series of questions on the parliament notice paper, two of which are:

Is compensation payable to the Port Botany leaseholder if container movements exceed an annual threshold at the Port of Newcastle?

Is the Port of Newcastle leaseholder required to pay the Government a fee for container movements through the Port of Newcastle on the same or similar terms as the Government is required to compensate the Port Botany leaseholder?

If a fee is payable on container movement at the Port of Newcastle, it is a reasonable conclusion that no-one is interested in developing a loss-making business. No-one understands this better than the ACCC.

In its report, the ACCC said that its attention was drawn to port lease arrangements from an article in The Newcastle Herald published on 11 May 2014. The Herald reported: ”The government has confirmed it leased Botany with a clause that prevented Newcastle from competing against it with a container terminal. And the Newcastle lease is believed to contain a similar undertaking.”
Leasing arrangements for Port Botany and the Port of Newcastle reflected the Coalition’s policy that Port Kembla will be the state’s next container terminal once Port Botany reaches capacity.
Under the government’s heavy vehicle transport forecasts, there is no container terminal at Port Kembla in 2046 when Port Botany container movements are set to reach 10.9 million TEU, up from 2.2 million TEU in 2013.

If any restrictions in any lease arrangements are unlawful, obviously, it is in the public interest that they are rectified. One solution to competition ‘issues’ would be for NSW Ports and Port of Newcastle Investments to combine their resources and become a rail freight operator for containers between Newcastle and an intermodal terminal at Eastern Creek or Badgerys’s Creek. General freight that currently enters Sydney by truck can also be carried by rail.

A rail freight bypass is NSW Government policy.

As The Newcastle Herald observed on 31 October: “The Coalition, far from undoing the wrong perpetrated on Newcastle by its political opponents, has simply set the inequity in stone by inserting terms into its port sale agreements that effectively shut Newcastle out of competing for a serious slice of the container trade.”
The challenge before the NSW Government is to clear the record.

New hope for Newcastle

October 30, 2014

The NSW Government has denied preventing a container terminal at world’s biggest coal port.

A report by the Australian Financial Review that conditions for the sale of the Port of Newcastle ”prevent the world’s biggest coal port from building a container terminal” have been previously denied by the NSW Government. The newspaper reported that the ACCC had warned that ”restrictions on competition” inserted into sale conditions ”may be unlawful and could be unenforceable”.

Last week, the NSW Greens asked a series of questions of the NSW Government – see 143 and 144  of 23 October – which included this: ”Did the Government consult the Australian Competition and Consumer Commission when inserting compensation provisions into the leases for Port Botany, Port Kembla and Port of Newcastle?”

Australia’s industry super funds may be feeling a little jittery about their first big foray into Australian infrastructure after spending $4 billion acquiring their 80.1 per cent stake in NSW Ports, the leaseholder to Ports Botany and Kembla.

The super funds paid the NSW Government a premium price for the monopoly. Port Botany is the only NSW port with a container terminal. Should the Port Botany container terminal ever reach capacity, Port Kembla will be developed to preserve the monopoly.

The big incentive for a Newcastle terminal is transporting containers for the Sydney market by rail to a single intermodal terminal at Eastern Creek, or Badgery’s Creek. A rail freight bypass of Sydney, between Newcastle and Glenfield, can be paid for by railing containers from the Port of Newcastle plus general freight that currently enters Sydney mostly by truck. The highest economic and social return from Sydney’s rail network is to use all of it for passengers by removing freight – see my submission number 177  to the ”Select Committee on the Planning Process in Newcastle and the Broader Hunter Region”.

Port Botany container terminal depends on trucks. Last year, trucks carried 87 per cent of containers between the port and western Sydney and rail only 13 per cent.

For 2031, the NSW Government is forecasting 1.7 million truck movements between Port Botany and western Sydney, double the 850,000 truck movements in 2013.

But by 2046, container truck movements between Port Botany and Western Sydney will quadruple to 3.5 million per year. Clearly, it is NSW Government policy to increase container truck movements on Sydney’s roads.

The Hon. Duncan Gay, NSW Minister for Roads and Freight (formerly Roads and Ports), was asked in parliament on 17 October 2013, ”How much compensation will be paid to the private operator of Port Botany if a new container terminal is developed at Newcastle Port?”

Mr Gay answered ”we do not envisage that any compensation will need to be put in place”; and, that there was a ”cap on numbers” at the Port of Newcastle. My Gay was referring to a cap on container numbers.

The ”cap on numbers” was introduced into the guidelines for companies bidding for the leases to Ports Botany and Kembla. The government’s ”cap on numbers” at the Port of Newcastle was established before the government took the decision to lease the Port of Newcastle. In December 2011, the government hired Morgan Stanley to be its financial adviser. The ”cap on numbers” would have been imposed around that time.

The government did not reveal the ”cap on numbers” at the Port of Newcastle before Mr Gay’s statement to parliament on 17 October 2013 and there has been no mention of it since.

In parliament on 11 June 2014, The Hon. Gladys Berejiklian, Minister for Transport, and Minister for the Hunter representing the Minister for Roads and Freight, answered ”no” to two questions asked on 7 May 2014: ”Does the proposed lease of the Port of Newcastle contain any provision that prevents a container terminal being developed on the former steelworks site?”; and, ”Was it a condition of the Port Botany lease that there will be no container terminal built at the Port of Newcastle?”

Mr Mark Speakman SC MP, Parliamentary Secretary to Treasury, said on 1 July 2014 that the Port of Newcastle lease ”does not constrain container shipments passing through the Port”; and ”the lease also does not prevent a container terminal being developed on the former steelworks site.”

The government has not revealed the source of funds to pay compensation to NSW Ports if the ”cap on numbers” is exceeded. The most likely source is Port of Newcastle Investments, the Port of Newcastle leaseholder.

The government has not revealed how its obligation to compensate NSW Ports is legally enforceable. Nor has the government revealed how the requirement on Port of Newcastle Investments to pay the government for exceeding the ”cap on numbers”, if such a requirement exists, is legally enforceable.

Presumably, compensation is payable to NSW Ports for loss of business. With 1450 metres of quay line, a container terminal can be developed on the former Newcastle steelworks site with capacity up to 3 million TEU per year. This compares with Port Botany throughput in 2013 of 2.2 million TEU.

There must be a rail freight bypass of Sydney, between the Port of Newcastle and Glenfield, before a Newcastle container terminal will handle 3 million TEU. However, a Newcastle terminal would be competitive for up to 1 million TEU, providing a rail freight bypass of Newcastle alone is built. The long-proposed Hexham to Fassifern rail freight by-pass would enable a Newcastle terminal to achieve 1 million TEU.

On a positive note, NSW Ports is able to increase its return by relocating container terminal operations to Newcastle and investing in a rail freight bypass, along with other Australian super funds. Port Botany container terminal operations could be smoothly transferred to Newcastle.

Container trucking set to quadruple

Port Botany container movements are forecast to reach 10.9m TEU per year by 2046, comprising 3.7m TEU rail and 7.2m TEU road. Container truck movements between Port Botany and western Sydney will be four times more than in 2013. A container truck carries on average 1.93 TEU and one-third of all containers are transported empty.

The NSW Government forecasts that by 2031 the Australian Government’s proposed intermodal terminal at Moorebank will have capacity for 1.2 million TEU.

Liverpool City Council argues that the Moorebank facility should not be built and instead there should be a 1.2m TEU terminal at Badgery’s Creek on the Australian-government’s airport buffer zone land. The Council proposes the best use of the Moorebank site is for residential development, which would generate more income for the Australian Government than an intermodal terminal.

Similar logic applies to Sydney’s existing intermodal terminals at Enfield, Yennora and Minto. These large industrial sites are worth more for residential development than they are for handling containers. Moreover, the intermodal terminals still require trucks to carry containers to the end destination and return. Thus, Port Botany’s traffic congestion is simply being transferred.

Containers may be railed between Port Botany and Badgery’s Creek by building a rail freight line between Glenfield and Badgery’s Creek. The NSW Government forecasts that in 2031, 0.6m TEU will be railed between Port Botany and a new intermodal terminal at Eastern Creek. But the NSW Government is proposing to build a new rail freight line between Chullora and Eastern Creek costing $1 billion. The government forecasts that capacity at intermodal terminals will be:

  2031 (m TEU) 2041 (m TEU)
Moorebank 1.2 1.2
Eastern Creek 0.6 0.9
Enfield 0.5 0.5
Yennora 0.2 0.2
Minto 0.2 0.2
[Other] [0.3]
Total                           2.7          3.3

(Source: Bureau of Transport Statistics, Heavy Vehicle Forecasts, February 2014 Release, August 2014)

The forecast modal split in 2031 is 32% rail and 68% road. In 2031, the NSW Government estimates that total container movements at Port Botany will be 5.m TEU comprising 1.6m rail and 3.4m TEU road. Container truck movements between Port Botany and western Sydney will double by 2031. Total container movements in 2013 were 2.2 million – 13% rail and 87% road.

This is the first time that the NSW Government has disclosed the freight capacity of the rail network. Even though intermodal capacity in 2031 is forecast at 2.7 million TEU, only 1.6 million TEU will be railed.

The alternative to operating five or more small intermodal terminals is to build one major intermodal terminal at either Eastern Creek or Badgery’s Creek with sufficient warehousing to allow all containers to be unstuffed/stuffed on site. This will remove container trucks completely from Sydney’s roads to be replaced by lighter trucks that carry goods without the container.

A rail freight bypass of Sydney – between Glenfield and Newcastle – is NSW Government policy. There will be no need to build the Western Sydney Freight Line or to build stages 2 and 3 of the Northern Sydney Freight Corridor, between Strathfield and Newcastle, costing $4.4 billion, in present value terms.

Significantly, there are no funds are available for these projects.

NSW Government ‘slightly embarrassed’ – time to develop Newcastle container terminal

September 23, 2014

According to the Sydney Morning Herald, the NSW government is ”slightly embarrassed” at its inability to increase the number of containers moved by rail between Port Botany and western Sydney. In 2013, the government advised Moorebank Intermodal Company that there was only enough rail capacity to carry 1.2 million TEU per year between the port and Moorebank.

Premier Mike Baird should disclose the compensation payable to Port Botany leaseholder, NSW Ports, if a container terminal is developed at the Port of Newcastle. A container terminal may be developed at Newcastle under the terms of the government’s lease agreement with Port of Newcastle Investments.

A cap on container movements at the Port of Newcastle, however, means that a company developing a 1 million TEU container terminal would be required to limit its use to little more than 15,000 TEU per year.

The government has never disclosed what the cap is. In its 2013 development plan, Newcastle Port Corporation described the cap as being tied to population growth. It is believed the cap is an annual percentage increase on the current level of container movements, which are 15,000 TEU per year.

In 2010, the Grup TCB/Anglo Ports Consortium was ready to sign a development agreement with Newcastle Port Corporation for a multi-purpose terminal that included a 1 million TEU capacity container terminal. The former Labor government blocked the deal and the new Coalition government cancelled it.

A container terminal at Newcastle is commercially viable and would take business away from Port Botany.

All of the NSW Government’s objections to a container terminal at Newcastle are removed by building a rail freight bypass line. Travelling between Newcastle and Glenfield, the line would be paid for by railing containers to a new intermodal terminal at Eastern Creek, or even Badgery’s Creek using the airport site buffer zone land. It would enable all general freight that currently enters Sydney by truck to be railed.

In 2012, the government abolished the cap on container movements at Port Botany. The cap was imposed in 2005 because of insufficient rail capacity. But the government expects container movements to increase from 2.2 million TEU in 2013 to 7 million TEU in 2030.

The NSW Government declines to reveal the container carrying capacity of the Sydney rail freight network. Even if the capacity can be increased to 2 million TEU, this leaves 5 million TEU to be trucked in 2030. At an average of 2 TEU per truck, this suggests 2.5 million truck movements, compared with 1 million truck movements in 2013.

The NSW Government proposes building a new intermodal terminal at Eastern Creek to receive containers railed from Port Botany, once the Moorebank intermodal terminal had reached capacity. A Moorebank terminal would reach capacity as soon as it was built.

There are obvious failures in the NSW Government’s rail strategy.

First, there will be no rail capacity to supply an intermodal terminal at Eastern Creek if the Moorebank intermodal terminal takes all of the available capacity. The NSW Government proposes building a rail freight line between Chullora and Eastern Creek when there is insufficient rail capacity between Port Botany and Chullora if the Moorebank intermodal project is developed. The NSW Government has not revealed the source of $1 billion to pay for the Western Sydney Freight Line.

Second, if the Moorebank intermodal terminal is cancelled, containers can be railed between Port Botany and Eastern Creek via Glenfield by immediately building the southern section of the Sydney by-pass line, between Glenfield and Eastern Creek.

Third, the NSW Government’s objective is for containers to be railed between the port and intermodal terminals. This objective is best accomplished by railing 100 per cent of containers between Eastern Creek and the Port of Newcastle.

Fourth, the NSW Government must build stages 2 and 3 of the Northern Sydney Freight Corridor, between Strathfield and Newcastle, by 2028, when additional rail capacity will be needed. The NSW Government is asking the Australian Government to pay the $4.4 billion cost (in present value terms) but there is little prospect of the funds being provided.

Fifth, there is no need to use any Sydney rail capacity for freight if all containers for the Sydney market are railed between Eastern Creek and Newcastle. This allows for expansion of rail passenger capacity, including more express services for outlying areas, at virtually no cost.

Sixth, Sydney Airport can be expanded at little cost by increasing the length of the short parallel runway to 4000 metres. This is accomplished by extending the runway into the airport site and shifting displaced facilities to the Port Botany container terminal site. Most take-offs and landings can then occur over Botany Bay, with a significant reduction in aircraft noise over Sydney residential areas.

Seventh, removing freight from the Newcastle rail line allows for a re-assessment of the city’s light rail strategy, including reducing express travel time to Sydney.

Minister Gay hints at reduction in Moorebank container truck movements

August 28, 2014

A NSW Budget Estimates Committee hearing was told last Thursday August 21 that the State Government expected the Moorebank intermodal terminal to be operating between 2017 and 2019.
A development application is expected to be placed on public exhibition in mid-September. A notice was published in the local Liverpool Leader newspaper on August 27, announcing that the proposal does not have the consent of certain landowners and the NSW Planning Department has determined that the application may proceed anyway

The Hon Duncan Gay, Minister for Roads and Ports, hinted at a significant reduction in container truck movements. Last year, Moorebank Intermodal Company (MIC) said that 80 per cent of containers entering the site by rail would be removed by truck. But at last week’s committee hearing, Mr Gay said: ”The whole raison d’être about having Moorebank work to help the city and remove congestion and trucks and boxes off the road is to come to the port, onto a train and to the intermodal site. From there it will either go on by train elsewhere or go into smaller vehicles and onto the M7, the M5 or the M1. It will remove a lot of the traffic from the communities.”

Any reduction in container truck movements would require extensive warehousing on the Moorebank site.

The committee heard that there will be upgrades of roads around Moorebank, which will be dealt with through the statutory planning process. There are at least 35 traffic intersections that are affected by the intermodal terminal.

Mr Gay confirmed that the NSW Government is negotiating with the Australian Government for funds to complete stages 2 and 3 of the Northern Sydney Freight Corridor. Deloitte Access Economics estimated the cost, in present value terms, at $4.4 billion.

The committee heard that there will be no problem accommodating “metro-style trains” on the Sydney rail network because there will be dedicated freight corridors.

Last November, the NSW Government said that available rail capacity between Port Botany and Moorebank was 1.2 million TEU per year. Minister Gay confirmed that the NSW Government’s objective is to increase the Port Botany container modal split from 14% rail to 28%.

When Moorebank is full, at 1.2 million TEU capacity, the NSW Government proposes building a $1 billion Western Sydney Freight Line between Chullora and Eastern Creek for connecting Port Botany.

The NSW Government declines to reveal the container-carrying capacity of the rail freight line serving Port Botany container terminal.

Who will pay for Sydney’s $7bn white elephant ?

May 29, 2014

What number of container truck trips between Port Botany and western Sydney does the NSW Government expect in 2030?

To answer this question, the NSW Government will need to ask the Australian Rail Track Corporation to advise of the capacity of the Port Botany rail line. This information is not given to the public.

It is known that the line, even with augmentation, only has capacity for moving another 1.2 million TEU per year between Port Botany and Moorebank. This will create 565,000 container truck movements at the proposed intermodal terminal (i.e. one container truck per minute), because 80 per cent of the containers will be trucked to the end destination at an average of 1.7 TEU per truck. Regrettably, road capacity at Moorebank is inadequate.

What is the source of funds for the $7 billion that is required for additional rail and road freight capacity to maintain Port Botany container terminal operations? Without the investment, there will be more freight trucks on Sydney roads and freight will continue to occupy precious suburban rail capacity that should be used for passengers, to limit the increase in car use.
Funding sources for the respective projects have not been identified as yet, because the return on investment is unsatisfactory. The unfunded rail infrastructure projects are Northern Sydney Freight Corridor stages 2 and 3 ($4.4 billion); Western Sydney Freight Line ($1 billion); and the Maldon-Dombarton freight line (connects Port Kembla to Southern Sydney Freight Line, $600 million). In addition, a $1 billion road connection between Port Botany and the M5 East is required to handle a threefold increase in container truck trips by 2030 (assuming capacity of the Port Botany rail line is 1.8 million TEU).

Will the NSW Government confirm that there is no rail capacity for any increase in container movements through Port Botany?

The solution would be to build a rail freight bypass of Sydney – between Newcastle, Eastern Creek and Glenfield – and pay for it by railing all Sydney-bound containers between a container terminal at the Port of Newcastle and an intermodal terminal at Eastern Creek.

The government can then keep its $6.8 billion from leasing Port Botany, Port Kembla and the Port of Newcastle, and the private investors in these ports will profit from investing in the new container terminal, intermodal terminal and rail freight bypass line, should they so wish. All Sydney-bound freight can be railed to Eastern Creek. Everyone benefits.

Finally, NSW Treasury prepared a Briefing Paper entitled ”Review of Proposed Uses of Mayfield and Intertrade Lands at Newcastle Port”, dated 4 February 2011. This Briefing Paper advocated against a container terminal at the Port of Newcastle. Extracts were leaked to Newcastle media before the March 2011 state election. The leak occurred to discredit the (former) member for Newcastle, The Hon. Jodi McKay, who was supporting the (former) government’s tendering process for a container terminal. The Briefing Paper contains Treasury’s reasons for opposing a container terminal at the Port of Newcastle.

Will the NSW Government release the Briefing Paper so that Treasury’s advice to government can be examined?

http://www.tandlnews.com.au/2014/05/29/article/moorebank-decision-carries-7-billion-cost-who-will-pay/

More Moorebank madness

May 22, 2014

The chairwoman of Moorebank Intermodal Company (MIC) Dr Kerry Schott has announced MIC intends to begin negotiation with Qube and Aurizon (together the Sydney Intermodal Terminal Alliance, SIMTA) – about the development and operation of the Moorebank intermodal terminal.

The decision was made by MIC’s Board of Directors after an evaluation of interest from potential operators and developers of the terminal. Expressions of interest received were assessed against the Australian Government’s objectives, in particular that the terminal must handle import-export (IMEX) and interstate freight, be open access for rail operators and other users, minimise impacts on the environment and community, and minimise any Government support.

“The response from SIMTA was so strong in comparison to the other respondents that it warrants a period of direct negotiation” Dr Schott said. “This would determine whether suitable terms for the development and operation of the terminal can be agreed. SIMTA’s proposal included development of both IMEX and interstate terminals as soon as possible, significant capital investment by SIMTA, and a willingness to take risk on the freight volumes that would use the terminal. Any arrangement reached must meet the government’s objectives, including in particular common-user open access.”

The negotiations will be subject to controls to ensure that any agreement reached maximises the value of the Government land being used for the terminal and any other support provided. The highest levels of probity will be maintained.

If a detailed agreement with SIMTA cannot be reached within six months, MIC will consider other options. Two other respondents to the request for expression of interest have been asked by MIC to remain on standby.

Bu it doesn’t add up

Industry analyst Greg Cameron has long been a critic of the Moorebank development and has raised a number of salient questions that undermine the wisdom of the project.

“Moorebank’s proposed intermodal terminal will have IMPEX capacity of 1.2 million TEU per year because that is the maximum available rail capacity from Port Botany after servicing the existing terminals at Minto, Yennora and Enfield,” Mr Cameron noted.

“Both the NSW and Australian Governments decline to reveal the total capacity of the Port Botany rail freight line, which is managed by Australian Rail Track Corporation. However, the NSW Government is continuing to claim that there will be a ‘significant increase’ in the proportion of containers carried by rail. At present, 0.3 million TEU, or 15 per cent, of Port Botany containers are carried by rail, the rest by truck.

“It is unknown what the ‘significant increase’ in rail will amount to,” he said.

The intermodal terminals at Minto, Yennora and Enfield have combined capacity of 0.6 million TEU. Judging by the above, this suggests that the capacity of the Port Botany rail freight line is 1.8 million TEU.

“In 2030, Port Botany’s throughput is expected to reach 7 million TEU. If the rail freight line’s capacity is 1.8 million TEU, the proportion railed will be 26 per cent.
In 2030, the number of container truck movements between Port Botany and western Sydney will increase to 2.6 million from 0.85 million now. A container truck using the M5East westbound tunnel is the equivalent of six passenger cars. 2.6 million container trucks will require about 25% of the tunnel’s capacity.

“Eighty per cent of containers railed to Moorebank will be trucked to the final destination. On average, a container-carrying truck serving MIC’s proposed facility will carry 1.7 TEU. The Moorebank intermodal terminal will add 564,000 truck movements a year to local roads, excluding interstate transfers.

“Moorebank simply does not have adequate road capacity,” Mr Cameron said.

Servicing Moorebank from Port Botany by rail will require investment in rail and road infrastructure of $7 billion.

Building stages 2 and 3 of the Northern Sydney Freight corridor by 2028 will cost $4.4 billion (in present value terms). Building the Western Sydney Freight Line to Eastern Creek will cost around $1 billion. Building the Maldon-Dombarton rail line will cost around $600 million (the line is needed for Port Kembla after Port Botany reaches capacity). Connecting Port Botany to WestConnex for container trucks will cost around $1 billion.

“Who is paying $7 billion to maintain container terminal operations at Port Botany?

“If the $7 billion investment is not made, what will be the increase in road freight transport in Sydney?” Mr Cameron asked.

Background
(Provided by the Moorebank Intermodal Company.)

Moorebank Intermodal Company was established in December 2012 to develop an intermodal terminal at Moorebank. MIC is wholly owned by the Commonwealth Government.

The proposed Moorebank intermodal terminal will manage freight containers carried by rail to and from Port Botany as well as freight containers carried on the interstate rail network. The proposal is intended to increase the proportion of containerised freight carried by rail, in comparison to containers carried by truck.

Once fully developed, the Moorebank Intermodal Terminal will handle around 1.2 million TEU of IMPEX freight and 0.5 million TEU of interstate freight each year. The terminal will enable more freight to be carried by rail, which will ease the pressure on Sydney’s roads.

The government land that will be used for the development is currently used by the Department of Defence School of Military Engineering, which will vacate the site in 2015. It is located next to a smaller site owned by SIMTA. A ‘whole of precinct’ approach is expected to be more efficient and will provide more space for onsite warehousing and other related terminal facilities.

Development of the terminal will include actions to reduce any negative impact of the terminal on the local community and environment. Job opportunities for local employees will be provided. NSW and Commonwealth environmental and planning approvals are required before the terminal can be built.

http://www.tandlnews.com.au/2014/05/22/article/more-moorebank-madness/

Port of Newcastle lease leaves many questions unanswered

May 1, 2014

NSW Premier Mike Baird MP, who apart from being the premier of NSW is also the Minister for Infrastructure and the Minister for Western Sydney, has very proudly announced the lease of the Port of Newcastle, for 98 years at a total return of $1.75bn, has however not addressed a number of important questions.

“The NSW Government (edited) press release declares: [The NSW Government] has agreed to lease the Port for 98 years to Port of Newcastle Investments, a consortium which comprises Hastings Funds Management and China Merchants.

“The long-term lease will deliver gross proceeds of $1.75 billion. This result means an extra $1.5 billion will be invested in NSW infrastructure, with 30 per cent to be directed toward projects in rural and regional NSW.

“Mr Baird confirmed $340 million from the proceeds will be used for the revitalisation of the Newcastle CBD, in addition to the $120 million the Government has already allocated to the project, which includes a new light rail service.

“The remainder – more than $1.2 billion – will be invested in the NSW Government’s dedicated infrastructure fund, Restart NSW.

“The NSW Government reached an agreement with Port of Newcastle Investments for the lease following a competitive five-month bidding process.

“Treasurer Andrew Constance said the Port of Newcastle lease is the latest in a series of successful asset recycling projects, including the sale of Eraring Energy and Delta Electricity’s western power stations, the long-term lease of Port Botany and Port Kembla, and the refinancing of the Sydney Desalination Plant.

“This is a sensible and sustainable approach to fulfilling our commitment to the people of NSW to build the infrastructure of the future and return quality services,” Mr Constance said.
“Hastings Funds Management and China Merchants are equal partners in Port of Newcastle Investments. Hastings has been involved in many government asset transactions, including the Sydney Desalination Plant and Cairns and Mackay Airports.

“China Merchants has a 140-year history as an owner and operator of ports and transport businesses. It has been operating in the trading and retail sector in Australia for more than 20 years. In 2010, it acquired leading Australian-based container pallet logistics provider, Loscam.

“The NSW Government will continue to retain regulatory oversight of the Port of Newcastle as well as responsibility for a range of maritime safety and security functions, including emergency response, Harbour Master, Port Safety Operating Licence and pilotage functions.

“The state will also continue to manage Nobbys Head in recognition of its significance to the local community.”

The government has not, however, declared if the proposed light rail will utilise the current (freight) rail tracks. Nor did it say how much longer the NSW Government intends to use the rail line through Newcastle for freight.

Nor did it answer whether the agreement provides for a freight rail bypass of Newcastle accessing the port.

And, most importantly, Transport and Logistics News was unable to get an answer to the burning question: “Does the agreement include an undertaking by Port of Newcastle Investments not to build a container terminal?”

Readers will be reminded of our contributor Greg Cameron’s sensible suggestion of turning Newcastle into Sydney’s primary container port via an inland terminal at Eastern Creek, however, the closest answer we could get to this, from several NSW Government spokespeople was the learnt-by-rote response along the lines of “The Pot of Newcastle Leasing Agreement was drawn up in accordance with the NSW Government’s openly stated freight policy of maintaining Port Botany as the state’s primary container port until it’s full, with Port Kembla designated to take the overflow once Port Botany is full. Newcastle will be further developed once Port Kembla is full. Newcastle container throughput is, in the meantime, fully able to grow organically.”
Read: but is not to develop a separate, new container terminal (for example on the former BHP Steelworks site, as Mr Cameron is suggesting).

Watch this space.

http://www.tandlnews.com.au/2014/05/01/article/port-of-newcastle-lease-leaves-many-questions-unanswered/

An open letter to the Hon Barry O’Farrell MP: why the secrecy over the Port Botany rail line?

April 1, 2014

In the interests of transparency, would you re-consider your decision not to disclose the container-carrying capacity of the Port Botany rail line? As you are aware, the Australian Rail Track Corporation, the line’s operator, declines to disclose the line’s capacity.

Based on available evidence, the line’s capacity is less than the current number of containers moved through Port Botany, which is 2 million TEU per year. If so, all future growth in container movements will occur by truck. This means that Port Botany’s capacity will be determined by the traffic capacity of roads used by container trucks.

NSW Government policy is that Ports Botany and Kembla will be fully developed before consideration will be given to developing a container terminal at the Port of Newcastle. According to NSW Treasurer, the Hon Mike Baird, a scoping study for leasing the Port of Newcastle “confirmed it was in the best interests of the people of NSW”. Since this study is confidential, the claim cannot be independently verified.

The NSW Government leased Port Botany and Port Kembla to NSW Ports Consortium in 2013. Did the NSW Government give NSW Ports Consortium an undertaking that a container terminal would not be developed at the Port of Newcastle until after Ports Botany and Kembla became fully developed?

At present, 85 per cent of Port Botany containers are moved by truck. Northern NSW is significantly disadvantaged. Imported containers are trucked from Port Botany to destinations in western Sydney, where the goods are unloaded from their containers, loaded onto other trucks, and then trucked to northern NSW. Firms manufacturing for export face the significant burden of trucking their goods to western Sydney, where they are loaded into containers that are then trucked to Port Botany. By relying on trucks, the NSW Government is knowingly disadvantaging northern NSW.
In 1997, BHP proposed building a container terminal at Newcastle to service northern NSW. But the NSW Government prevented the container terminal being built when it accepted ownership of the site from BHP Billiton, in June 2002. A confidential cost/benefit study was conducted of the transfer.

Responsibility for contamination contained within the site was transferred to the NSW Government. Any damage caused by the contamination after June 2002 is now vested in the NSW Government.

• Will the NSW Government release the cost benefit study so that it may be examined?
• How does accepting liability for damage caused by the contamination after June 2002 serve to benefit the people of NSW?
• Does the proposed lease agreement for the Port of Newcastle prohibit a container terminal being developed on the former steelworks site before Ports Botany and Kembla are fully developed?
• If so, how does this benefit the people of NSW?

Yours faithfully,

Greg Cameron

Governments oppose privately-funded rail freight bypass of Sydney

Feb 21, 2014

A privately-funded rail freight bypass of outer western Sydney is opposed by the NSW and Australian governments.

Operating between Glenfield and Newcastle, the bypass line is commercially viable when used for railing containers between a container terminal at Newcastle and an intermodal terminal at Eastern Creek. Container trucks would be removed from Sydney’s roads.

But both governments oppose a container terminal at Newcastle. A condition of the lease to the Port of Newcastle currently being sold by the NSW Government is that there will be no container terminal.

A bypass line would remove the need to increase Sydney’s rail freight capacity, which is adequate until 2028. The Australian Government is considering a $4 billion request from the NSW Government to fund the capacity increase. The best economic use of Sydney’s limited rail infrastructure is more passengers, not more freight.

The Australian Government is waiting for the Port of Newcastle lease to be sold, at a price expected to be around $1 billion, before announcing that no funds are available for the $4 billion upgrade. Both governments support maintaining the Port Botany monopoly over container movements in NSW.

In 1997, BHP demonstrated that a container terminal on its soon-to-be-vacated Newcastle steelworks site was commercially viable by servicing the northern NSW economy. The state government took ownership of the site in 2001 in order to prevent a container terminal. The state was aware that Port Botany’s commercial viability would be challenged by a Newcastle container terminal generating the base-load freight to pay for a rail freight bypass of Sydney.

The $4 billion rail freight upgrade is required to service the Australian Government’s proposed intermodal terminal at Moorebank. The government is waiting for the Moorebank project to be privatised before announcing that there are no funds available for the upgrade.

An intermodal terminal at Moorebank will require all available rail capacity between Port Botany and western Sydney. This rail capacity is insufficient for handling the current volume of container movements through Port Botany, let alone growth. Both governments support increasing the number of container trucks on Sydney’s roads.

Allocating rail capacity to Moorebank would leave no rail capacity available to service Eastern Creek. This rail capacity would be required for Eastern Creek until the bypass line was built to Newcastle. The government intention is to prevent an intermodal terminal at Eastern Creek replacing one at Moorebank.

An Eastern Creek intermodal terminal would have unlimited container handling capacity and goods warehousing. Goods, but not the container, would be trucked to the end destination. There would be a strong financial incentive for firms, which currently occupy 5500 hectares of land in inner western Sydney, to re-locate to outer western Sydney and take advantage of better serviced land, lower transport costs and new factories built using the capital gain from selling existing sites for residential development.

Railing containers between Newcastle and Eastern Creek would make Port Botany container terminal redundant. A potential use of the site is for expanding Sydney Airport.

The parallel runway can be extended and a second cross runway can be built into the container terminal site. Modern aircraft are fuel efficient and quiet but they require 4,000 metre-long runways.

Expanding Sydney Airport runway capacity will reduce noise and increase passenger capacity. A new cross runway will alleviate the major bottleneck that occurs when wind conditions prevent the parallel runways being used. Airport traffic congestion would ease by integrating the container terminal site into the road and passenger rail networks. The Australian and NSW governments, however, oppose improving Sydney Airport by increasing runway capacity.

Removing freight from Sydney’s rail network would allow all capacity to be used for passenger services. The North-West Link would be able to access the CBD using the freight line between Epping, Strathfield and White Bay. The rail freight line between Port Botany and Glenfield would instead provide a passenger service to Badgery’s Creek, should Sydney’s second airport be built there. The Australian and NSW governments, however, oppose increasing rail passenger capacity by removing freight from the network.

NSW Ports consortium, which purchased leases to Port Botany and Port Kembla, makes its money from the movement of containers through the port. The location of the container terminal is irrelevant. A rail freight bypass from Newcastle, with its monopoly over container movements, is an enhanced investment. The Port of Newcastle can be leased, minus the container terminal site (the state government acquired the site from BHP for nothing), which can be made available to NSW Ports. A good-faith negotiation would enable NSW Ports and the NSW and Australian governments to reach an accommodation acceptable to the people of NSW.

After the Port of Newcastle is leased, and the Moorebank intermodal terminal is committed, expect the Australian Government to decline the NSW Government’s $4 billion infrastructure funding request.

Is Moorebank running off the rails?

January 30, 2014

After three and a half years of planning, the Australian Government is changing its Moorebank intermodal terminal project.

Competition over rail capacity is behind the change. Although line capacity between Port Botany and Moorebank is 1.2 million TEU per year, there are two proposals, requiring 2.2 million TEU rail capacity in total.

There cannot be a 1.2 million TEU intermodal terminal operated by the Australian Government, alongside a 1 million TEU intermodal terminal operated by SIMTA – even if both proposals received planning approval.

Not only is rail capacity insufficient for current container demand, there is no rail capacity to meet future container demand.

In 2012, there were 0.85 million container truck movements between Port Botany and western Sydney, averaging 2 TEU per truck. The rail line between Port Botany and Moorebank has capacity to replace 0.6 million container truck movements. If an intermodal terminal is operating at Moorebank in 2020, there will be no change in the number of container truck movements between Port Botany and western Sydney.

The number of container truck movements in 2030 will be 2.6 million. By 2040, container truck movements will exceed 5 million should Port Botany throughput reach 13 million TEU. At this rate, container trucks will require 50 per cent of the capacity of the M5 East westbound tunnel and 25 per cent of the capacity of the eastbound tunnel. Why build WestConnex?

Port Botany’s effectiveness is already impacted by inadequate road and rail infrastructure. For example, traffic volumes in both M5 East tunnels have exceeded capacity for some years. The NSW Government lifted the cap on Port Botany container terminal expansion to maximise the lease price. The cap was 3.2 million TEU. Container movements are expected to reach 7 million TEU by 2030.
It is impossible for an intermodal terminal at Moorebank to improve the effectiveness of Port Botany container terminal by reducing use of trucks.

The Australian Government’s other justification for an intermodal terminal at Moorebank is for handling interstate freight entering Sydney.

It will cost $4.4 billion to upgrade the ”Northern Sydney Freight Corridor (NSFC)”, between Strathfield and Newcastle, to maintain an interstate rail service to Moorebank.
The NSW Government is asking the Australian Government to pay for the upgrade.

Federal Treasurer, Joe Hockey is obliged to reveal if the Australian Government is considering allocating funds for the project. NSW Treasurer Mike Baird is obliged to advise why the proceeds of leasing the Port of Newcastle should not be applied to the NSFC upgrade.

The alternative is a privately-funded freight rail bypass of Sydney, between Newcastle and Glenfield, carrying containers between Newcastle and Eastern Creek.

Port of Newcastle EoI closes

December 17, 2013

NSW Treasurer Mike Baird has said he was pleased with the response from potential bidders for the long-term lease of the Port of Newcastle following the close of Expressions of Interest.
Mr Baird said suitably qualified parties would now be invited to participate in a competitive bidding process for the port, which is expected to conclude by mid-2014.

“The market response to the Port of Newcastle reflects the confidence we have seen in the sale and lease of other State-owned assets under the NSW Liberals & Nationals Government,” said Mr Baird.

Mr Baird said if the transaction was successful, $340 million of the proceeds would be directed towards the revitalisation of central Newcastle, to which the Government has already committed $120 million.

Mr Baird said public access to the port would not change as a result of the lease, and existing regulatory oversight in areas such as price monitoring and the environment would remain in place.

Opinion: Decision to prevent a container terminal at Newcastle is economically destructive

Greg Cameron

There will be ”immense and lasting benefits” for the NSW economy from the sale of a long term lease to the Port of Newcastle, The Hon Mike Baird, NSW Treasurer said, when announcing a ”pleasing response from potential bidders”.

However, the decision to prevent a container terminal at Newcastle is immensely damaging.

Building a freight rail bypass of Sydney and railing containers between a Newcastle container terminal and an Eastern Creek intermodal terminal, would pay for all three.

While the NSW government accepts the need for a freight rail bypass of Sydney, it says construction can wait for another 10 or 15 years before starting.

During this time, the NSW government must build stages 2 and 3 of the Northern Sydney Freight corridor at a cost of $4.4 billion in present value terms. Its purpose is to rail freight 24 hours a day through the heart of Sydney to service Port Botany.

A new freight line is proposed – the Western Freight line – to service Port Botany. This line extends from Chullora to Eastern Creek. It is likely to cost up to $1 billion. But a freight rail bypass of Sydney would remove the need for both projects – saving at least $5 billion.

A container terminal at Newcastle would enable northern regions of NSW to have cost-effective access to a container terminal for the first time. It is too costly to truck containers, or their contents, between Port Botany and Newcastle. Moreover, any economy with export aspirations must have access to a container terminal: without it, a region is unable to engage in international trade in anything but bulk commodities, such as coal.

Northern NSW will permanently suffer for having no effective access to a container terminal.

Preventing a container terminal at Newcastle means a three-times increase in truck movements between Port Botany and western Sydney by 2030 – from 850,000 in 2012 to 2.6 million.
A container-truck carries two TEU containers on average. One ”forty-foot” container is two TEU and weight 4 tonnes. Every time two TEU are trucked the added weight is 4 tonnes (5 tonnes if there are two ”twenty-foot” containers). When there are 2.6 million truck movements, the unnecessary weight carried is 10.4 million tonnes. To carry 10.4 million takes at least 350,000 wasted truck movements.

Using Sydney’s freight rail capacity for passengers instead of freight and using a freight rail bypass to carry intra-state and inter-state freight, will save around $1.6 billion a year by 2028.

In light of these facts, what are the ”immense and lasting” benefits from government policy of preventing a container terminal at the Port of Newcastle?

The trouble with Moorebank

December 12, 2013

Long-time intermodal campaigner Greg Cameron says the plans for Moorebank are flawed as rail capacity is not sufficient to meet planned demand.

Under current NSW policy, Mr Cameron says, 98% of all containers will be trucked by 2030. At least 74% will be trucked through Port Botany and 24% will be trucked after being railed to an intermodal terminal.

This policy will generate 2.6 million container-truck movements between Port Botany and western Sydney by 2030, more than three times the 850,000 recorded in 2012 (based on average 2.01 TEU per truck),” Mr Cameron said.

NSW government policy supports building two intermodal terminals at Moorebank with total capacity of 2 million TEU import/export containers per year. After these terminals are full, the government supports building an intermodal terminal at Eastern Creek.

However, the NSW government has advised Moorebank Intermodal Company that rail capacity for transporting containers between Port Botany and Moorebank is around 1.2 million TEU per year. Clarification of rail capacity, obviously, is required.

When a 1.2 million TEU intermodal terminal is built at Moorebank, and with 0.6 million TEU capacity at three other intermodal terminals, total intermodal terminal capacity will be 1.8 million TEU. Of these containers, 93% will be trucked to and from the final destination.

The flaw in the government’s plan is that railing containers to an intermodal terminal at Moorebank will prevent containers being railed to an intermodal terminal at Eastern Creek, due to insufficient rail capacity.

An intermodal terminal at Eastern Creek can be scaled to handle all containers, with container movements expected to reach 3.2 million TEU by 2020, 7 million TEU by 2030 and 13 million TEU by 2050.

Land is available at Eastern Creek for ample warehousing to manage the de-stuffing/stuffing of all containers on site.

No container would enter or leave Eastern Creek intermodal terminal by truck. In other words, all container-carrying trucks can be removed from Sydney’s roads. This can be accomplished by building a freight rail bypass of Sydney and railing all containers between a container terminal at the Port of Newcastle and Eastern Creek.

Around 25% of all container movements involve empty containers. It is more efficient to rail empty containers to Newcastle, where they may be filled with export goods from northern NSW, than trucking them to Port Botany.

Whereas the Australian government is investing heavily in increasing Sydney’s freight rail capacity, little of this investment is for container transportation. The additional capacity will be used for freight entering Sydney from Queensland, Victoria and regional NSW.

$960 million was spent building the Southern Sydney Freight Line. Opened in January, this 36km single-track, bi-directional line between Macarthur and Chullora, allows up to 48 freight trains a day, compared with 16 trains previously.

$1.1 billion is being spent building stage 1 of the Northern Sydney Freight Corridor. When completed in 2016, the improvements will allow 44 freight trains a day to pass through northern Sydney, compared with 29 trains now. However, more capacity is required by 2028.

Last month, the Australian government announced work was starting on an inland freight rail line, between Melbourne and Brisbane. When this line opens in 2026, there will be little benefit for Sydney because 77% of inter-capital road and rail freight on the east coast corridor between Melbourne, Sydney and Brisbane, has Sydney as the end destination.

There are two reasons why freight is railed through the heart of Sydney.

First, there is no alternative. Second, to provide Port Botany with a rail service.

Sydney’s freight rail bypass would extend between Glenfield, Eastern Creek and Newcastle. Railing containers between Newcastle and Eastern Creek would remove the need for Port Botany container terminal. Consequently, there would be no need for a freight rail line to Port Botany.

Land must be secured for the freight rail bypass corridor. Since NSW government policy is to indefinitely defer identifying a corridor so that land may be secured, the policy intent is to prevent a freight rail bypass of Sydney.

Evaluating a freight rail bypass of Sydney would reveal the economic and environmental benefits from using all Sydney rail capacity for passenger services and removing container trucks from Sydney’s roads.

In particular, an evaluation would reveal how the extra capacity from the Southern Sydney Freight Line and Northern Sydney Freight Corridor, together with the Metropolitan Freight Line, would be better used for trains carrying people, not freight.

Funding the acquisition of land for the bypass corridor, rail line, container terminal at Newcastle and intermodal terminal at Eastern Creek, would be obtained by railing containers instead of trucking them. The funding strategy is to set a price on container movements to cover all costs, including financing.

The financing strategy is underpinned by the demand for containers and a single method of transporting them – by rail from Newcastle. (The NSW government’s decision to lease the Port of Newcastle is consistent with its policy of preventing a freight rail bypass of Sydney.)

At any time, the NSW government is free to provide its reasons for opposing a freight rail bypass of Sydney.

But by doing nothing, land for the bypass corridor will become unavailable as it is progressively developed, and will deliver the NSW government its policy objective.

Dear Premier: fix Sydney’s container traffic now – and save billions

December 4, 2013

Dear Premier,
I refer to proposals for two intermodal terminals at Moorebank in western Sydney.

Moorebank Intermodal Company (MIC) proposes a 1.2m TEU (twenty-foot equivalent unit container) terminal. MIC is owned by the Australian government.

SIMTA (Sydney Intermodal Terminal Alliance), a private company, proposes a 1m TEU terminal.

MIC has been advised by the NSW government that ”the freight rail line between Port Botany and Moorebank, even with augmentation, can only support an intermodal terminal with a capacity of around 1.2m TEU per year in import-export containers”.

On this basis, only one proposal can proceed.

Three existing intermodal terminals – Enfield, Minto and Yennora – are already supplied by Port Botany rail line. Their combined annual capacities is 0.6m TEU.

Is the Port Botany rail line’s capacity 1.8m TEU, or thereabouts?

Last year, the NSW government allowed unlimited expansion of Port Botany container terminal.

Container movements were 2m TEU in 2012 and are predicted to reach 7m TEU in 2030, and 13m TEU in 2050.

In 2012, the modal split was 1.7m TEU truck and 0.3m TEU rail.

In 2030, the modal split will be 5.2m TEU truck and 1.8m TEU rail.

In addition, 80 per cent of containers railed to Moorebank will be trucked to the final destination. At Enfield, Minto and Yennora, all containers are trucked to the final destination.
On average, a Port Botany container truck carries 2.01 TEU.

In 2012, Port Botany container terminal generated 0.85m truck movements.

In 2030, Port Botany container terminal will generate 2.6m truck movements.

MIC’s intermodal terminal at Moorebank would generate 0.63m truck movements (average 1.7 TEU per truck). The three other terminals will generate at least 0.3m truck movements.

Twelve months ago, the NSW government released its ”NSW Transport Masterplan”.

In relation to environmental and noise impacts of freight, the report said: ”If growth on freight networks is not managed and future networks are not well planned, increases in freight volumes will adversely impact the natural and built environment, particularly in the context of increased emissions and noise pollution. This will reinforce negative community views and perceptions about freight, potentially driving a less efficient outcome for all.”

The NSW government’s plan for transporting containers is more trucks.

The capacity of Port Botany container terminal is unknown.

After Port Botany container terminal reaches capacity, the plan is to build a container terminal at Port Kembla.

NSW Ports Pty Ltd, the operator of Port Botany and Port Kembla, has no plan for a container terminal at Port Kembla.

Should a container terminal be built, a 35 km section of rail line would need to be built to connect Port Kembla with the Southern Sydney Freight Line.

The NSW government proposes building an intermodal terminal at Eastern Creek after a terminal at Moorebank, should it be built, reaches capacity.

With Port Botany container movements increasing to 3.2m TEU around 2020, it is likely that a 1.2m TEU intermodal terminal at Moorebank will reach full capacity immediately.

The government’s plan is to build a rail link between Eastern Creek and Port Botany by extending the existing line at Villawood.

But if the capacity of the line between Port Botany and Villawood is around 1.8m TEU, extending it, obviously, is useless.

If Eastern Creek is selected as the location for an intermodal terminal for Port Kembla, a new freight rail line can be built between Glenfield and Eastern Creek.

A line from Glenfield to Eastern Creek can be extended to Newcastle for a freight rail bypass of Sydney, as discussed by the NSW and Australian governments.

All container movements for all of NSW can then be through the Port of Newcastle.

A primary benefit is removing container trucks from Sydney’s roads.

Container trucks would be replaced by lighter trucks.

Hazardous emissions, noise, road damage and traffic congestion, would be measurably less.

Intermodal terminals at Enfield, Yennora and Minto can be closed.

An intermodal terminal at Moorebank would not be built.

Rail can be used for moving 1.8m TEU between Port Botany and Eastern Creek, via Glenfield.

Construction of a container terminal at Newcastle, an intermodal terminal at Eastern Creek and the freight rail bypass section between Glenfield and Eastern Creek, can all proceed simultaneously.

Container movements through Port Botany will decline by 25% when Newcastle container terminal commences operations, assuming around 25% of the NSW population live north of the Hawkesbury River and their demand for containers is around 25% of Port Botany throughput.

When the bypass line is completed between Eastern Creek and Newcastle, Port Botany container terminal operations can relocate to Newcastle.

All road freight entering Sydney, north and south, can be transferred to rail, further reducing truck movements.

There would be no need for a container terminal at Port Kembla to serve Sydney.

Removing all freight from the Sydney rail network releases 100% of capacity for passenger services, worth at least $1bn a year in savings to the economy.

The proposed north-west rail line can access the CBD via Strathfield, using the freight rail line from Epping.

The rail corridor to White Bay can be used for passengers.

There would be no need to rail freight 24 hours per day through northern Sydney.

$4.4 billion can be saved by cancelling stages 2 and 3 of the Northern Sydney Freight Corridor, since all rail freight will use the bypass line.

Private enterprise can finance, build and operate the container terminal at Newcastle, the intermodal terminal at Eastern Creek and the freight rail line between Newcastle and Glenfield.
The total cost would be met by railing containers, instead of trucking them.

The only real impediment is a willingness by superannuation funds and the NSW government to evaluate this alternative strategy, in the interests of the people of NSW.

Yours faithfully,

Greg Cameron

No funds for rail means 220% increase in container trucks

October 8, 2013

Sydney is on track to have 5.5 million TEU trucked between Port Botany and western Sydney each year by 2030, unless the NSW government finds $1 billion to build a rail spur linking a new intermodal terminal at Eastern Creek with Port Botany container terminal.

This compares with a ‘mere’ 1.7 million TEU trucked last year between Port Botany and western Sydney, while 0.3 million TEU were railed.

Container movements through Port Botany are expected to reach 3.2 million TEU by 2020. By then, the Australian government plans to have its proposed intermodal terminal at Moorebank operating at full capacity of 1.2 million TEU. With a further 0.3 million TEU to be railed to the intermodal terminal at Enfield, this leaves 1.7 million TEU to be moved by truck in 2020.

Therefore, the Moorebank intermodal terminal will not produce a decrease in the number of truck movements compared with today.

However, by 2030, estimated container movements through Port Botany are 7 million TEU. To meet this demand, the NSW government proposes to build an intermodal terminal at Eastern Creek.

Eastern Creek has several key advantages. There is land available for expansion to meet container demand into the next century. The design can accommodate unlimited truck movements, as compared with Moorebank, where road capacity is inadequate. Most importantly, Eastern Creek is closer to the main demand areas for freight than either Moorebank or Port Botany.

At present, the NSW government has no funds for building a freight rail line connecting Eastern Creek with the metropolitan freight network. Therefore, the intermodal terminal would not be built. Reliance on Moorebank intermodal terminal will result in 5.5 million TEU movements by truck in 2030. (This number may be reduced by 1 million TEU if a second intermodal terminal is built at Moorebank by the private SIMTA consortium, which would add to Moorebank’s traffic woes.)

An additional $4.4 billion, in present value terms, is required to upgrade the Northern Sydney Freight Corridor to carry more freight by 2028. The primary reason for upgrading the corridor is to service Moorebank and Port Botany. Since the NSW government has no funds for upgrading the corridor, it is obliged to abandon its freight rail strategy for Sydney.

It would be possible for private enterprise to fund and build a freight rail bypass of Sydney and Newcastle, by building a container terminal at the Port of Newcastle and railing containers between Newcastle and Eastern Creek. Commercial viability would be achieved by fixing a charge to cover principal and interest over a period up to 50 years. A use for the Port Botany container terminal site is for expanding Sydney Airport including extending the parallel runway to 4000 metres.

The freight rail bypass would extend to Glenfield and containers would be railed between Port Botany and Eastern Creek via Glenfield until the bypass was completed, in around 10 years’ time.
100 per cent of Sydney rail capacity can be used for passenger services when freight is removed from the metropolitan network.

Given that the NSW government has no strategy, perhaps it might see the sense in examining a viable [alternative] proposal?

Greg Cameron is a former BHP manager and specialises in economic modelling.

28 questions for the NSW Government

October 1, 2013

When it comes to freight rail infrastructure and planning there seems to be more than meets the eye, and long-term campaigner Greg Cameron is asking the NSW Government 28 questions to help clear the air. We will let you know if Transport and Logistics News hears back from the government with the answers.

Mr Cameron says a scoping study commissioned by the NSW government to assess its plans for the long-term lease of the Port of Newcastle will be delivered in November.

In August, Roads and Ports Minister Duncan Gay said that the government’s policy was for Port Botany and Port Kembla to be fully developed “before Newcastle develops a dedicated container terminal”.

Questions for the NSW government are:

1. Will the NSW government prohibit a container terminal at Newcastle until Port Botany is ”fully developed”?
2. When will Port Botany be ‘fully developed’?
3. Is compensation payable to the operator of Port Botany if a container terminal is developed at Newcastle before Port Botany is ”fully developed”?
4. How does it benefit Newcastle, the Hunter and northern NSW, to move containers by truck between Newcastle and Port Botany until Port Botany is ‘fully developed’?
5. Is a container terminal a pre-requisite for participating in international trade?
6. Is a container terminal a key driver of economic infrastructure and producing for world markets?
7. Is it correct that the state government has no funds with which to build stages 2 and 3 of the Northern Sydney Freight Corridor including a freight rail bypass of Newcastle?
8. Can a container terminal at Newcastle be funded by railing containers to an intermodal terminal at Eastern Creek?
9. Is it correct that the state government has no funds to build a freight rail line connecting Eastern Creek with Port Botany?
10. Will it cost $4.4 billion, in present value terms, to build stages 2 and 3 of the Northern Sydney Freight Corridor?
11. Will it cost up to $1 billion to build a freight rail line connecting Eastern Creek with the metropolitan rail network?
12. Without an intermodal terminal at Eastern Creek, will Sydney have insufficient container-handling capacity by 2020?
13. Given that the Sydney freight rail plan is unfunded, will the government now abandon this plan, including the intermodal terminal at Eastern Creek?
14. Will abandoning the freight rail plan mean substantially increased numbers of container-carrying trucks on Sydney’s roads and the F3?
15. Are there economic advantages to be gained by increasing Sydney’s passenger rail capacity by removing freight?
16. Is it irresponsible to dismiss the opportunity of increasing Sydney’s passenger rail service without so much as an evaluation?
17. Can a freight rail bypass of Sydney be paid for by railing containers between Eastern Creek and the Port of Newcastle?
18. Can the cost of building a container terminal at Newcastle be met by servicing the needs of northern NSW (let alone Sydney)?
19. Are three infrastructure projects – a Newcastle container terminal, a freight rail bypass of Sydney and an intermodal terminal at Eastern Creek – commercially viable and can they be funded, built and operated by private enterprise?
20. Is Eastern Creek closer to the main demand areas for freight than Port Botany?
21. Allowing for sea transport, would it be faster to rail containers between Newcastle and Eastern Creek than between Port Botany and Eastern Creek?
22. Would the cost difference be negligible?
23. Will the operator of Port Botany benefit by transferring container terminal operations to Newcastle: isn’t it against the interests of the superannuation funds involved, and their members, to harm the NSW economy?
24. Will an economic analysis reveal the returns achievable by the government, the port investors and port logistics operators, by relocating container terminal operations to Newcastle?
25. By preventing a container terminal at Newcastle, isn’t the NSW government’s policy detrimental to the interests of northern NSW?
26. Will the opportunity to build a Sydney freight rail bypass will be lost forever because land currently available in western Sydney for the rail corridor will be developed for other purposes, while the land acquisition cost will become prohibitively high over time?
27. Are the government’s decisions in relation to leasing NSW ports motivated by short-term financial considerations rather than by sound economics?
28. Is the government willing to consider the economic impact that a freight rail bypass of Sydney would have when funded by railing containers between a container terminal at Newcastle and an intermodal terminal at Eastern Creek?

NSW Budget confirms Port of Newcastle will be privatised

June 18, 2013

While the NSW Budget handed down by the O’Farrell government contained no big surprises (only more commitment to road building), it has confirmed the government’s intention to privatise the Port of Newcastle.

Of the $700 million the government expects to receive for the 99-year lease, $340 million has been committed to the ‘revitalisation’ of Newcastle.

Long-time Newcastle container port campaigner Greg Cameron believes the government’s refusal to investigate the port’s potential is bad policy. Below is Mr Cameron’s response to the budget announcements.

New South Wales Premier Barry O’Farrell is unable to justify his government’s policy that there will be no container terminal at the Port of Newcastle.

Shipping containers are the standard form of distribution for goods worldwide. It is irrational for there to be no container terminal at the Port of Newcastle and it is irresponsible for the NSW government to lease Port facilities, including the former steelworks site, when that means there will never be a container terminal.

Private enterprise is willing to build a container terminal at Newcastle. Additionally, private enterprise is willing to build the critical freight rail by-pass of Newcastle.

Removing freight from the Newcastle rail system would allow for urban revitalisation, including:

• Transitway links along former rail corridors linking Belmont, Glendale, West Wallsend, Wallsend and University to Newcastle City Centre.
• Urban development opportunities to ecologically sustainable standards to support the usage of transport corridors and to create “value capture” benefits through integrated planning.
• Preparation of transport and economic models to demonstrate the regional, social and environmental benefits of stimulating freight flows through Newcastle and into northern NSW.

Modern container terminals are served by railways, which transport the containers to intermodal terminals, where they are lifted onto trucks for short distance haulage to warehouses and factories. A Newcastle container terminal would reduce traffic in the Port area. The concept of a Hunter Economic Zone would be re-born.

With a container terminal at Newcastle, the immediate benefits are lower transport costs and saved time. More importantly, economic growth in northern NSW would increase because a container port drives new supply chains, markets and infrastructure.

The NSW government’s opposition to a Newcastle container terminal has crippling economic implications for the Hunter and northern NSW for the rest of 21st century, including:

• Requiring imported goods to be trucked from Sydney.
• Requiring export goods to be trucked to Sydney.
• Discouraging exports from northern NSW because of inadequate access to a container terminal.
• Discouraging jobs in northern NSW because of inadequate access to a container terminal.
• Discouraging firms relocating from Sydney to northern NSW because of inadequate access to a container terminal
Whilst a container terminal at Newcastle offers profound economic benefits to Newcastle and northern NSW, there are even greater benefits for Sydney.

The NSW government intends to procure a land corridor in outer western Sydney for a road/rail by-pass. It would be possible to pay for the rail component of this by-pass by transporting containers between Newcastle and Eastern Creek. Financing would be provided by private enterprise. Every container transported on the freight rail line means one less container that is trucked from Port Botany. It would be possible to transport 100% of containers by rail between Newcastle and Sydney.

The NSW government is asking the Australian government to provide $4 billion, in present value terms, to upgrade the Main Northern Line between Sydney and Newcastle, to carry more freight. This $4 billion upgrade would not be required, obviously, when there is a freight rail by-pass of Newcastle and outer western Sydney.

The NSW government supports the proposed intermodal terminal at Moorebank in western Sydney. With container handling capacity of 1.2 million TEU, this terminal is too small and will be full as soon as it opens, around 2017, when there will be a net increase in the number of trucks carrying containers. Traffic congestion at Port Botany will be transferred to Moorebank as a result of the intermodal terminal. A better use for the Moorebank site is for a business park, as recommended by Liverpool City Council, over many years.

The NSW government supports an intermodal terminal being built at Eastern Creek. Eastern Creek is a better location for an intermodal terminal than Moorebank because it is closer to the main demand areas. It can be designed to handle 100% of container movements in Sydney for decades to come.

The NSW government would be able to use 100% of the Sydney metropolitan rail system for passenger services by removing freight. Economic productivity would be enhanced by at least $1 billion a year.
Greater productivity would be achieved at SydneyAirport by extending the second parallel runway to 4000 metres. This would be possible by relocating Port Botany container terminal operations to Newcastle after the Newcastle-Sydney freight rail by-pass was completed, around 2025.

A container terminal at Newcastle would significantly benefit NSW.

Moorebank intermodal gets praise, and condemnation

May 23, 2013

The federal government’s opening of the tender process for the Moorebank Intermodal Terminal(as reported on Transport and Logistics News) has drawn praise from the rail industry, but also attracted criticism for its questionable numbers.

Rail industry

The Australasian Railway Association welcomed the federal government’s calling for registrations of interest into the development and operation of the Moorebank Intermodal Terminal.

“This project alone will remove significant numbers of trucks from Sydney’s roads, reduce the cost of transporting goods and create further export opportunities,” said Australasian Railway Association (ARA) CEO Bryan Nye.

“The market failure of our supply chains that has resulted in more and more trucks blocking up local Sydney’s roads, particularly around Port Botany, is being somewhat rectified by this project, which will generate economic and environmental benefits long into the future.”

The project involves construction of a port shuttle to take containers direct from the Port of Botany by rail to the Moorebank facility, where they are then loaded onto local or interstate rail as well as trucks. This effectively improves efficiencies and reduces costs along the entire supply chain, from the port to the final destination and vice versa.

“Well-run intermodal terminals create advantages of scale that allow rail to demonstrate its substantial competitive advantages over other forms of freight transport,” Mr Nye added.
All around the world, governments and the private sector are realising that taking the time to properly plan and design supply chains that utilise rail’s inherent economies of scale is well worth the investment, and the Moorebank Intermodal Terminal is certainly a good example of that.

The terminal will directly lead to 3,300 fewer trucks travelling on Sydney’s roads each and every day, creating countless benefits to local communities.

“This project is a clear example of government’s use of alternate funding mechanisms to build infrastructure that have a net positive economic benefit,” Mr Nye continued

“In a tightening fiscal climate, finding innovative ways to remove bottlenecks to economic productivity will be increasingly important, and we certainly welcome projects such as this as a big step along the way.”

Do the numbers add up?
Long-time Newcastle container terminal and Eastern Creek intermodal campaigner Greg Cameron has questioned the numbers behind the Moorebank terminal.

“The Australian government’s Moorebank intermodal terminal will have 1.2m TEU IMEX capacity,” Mr Cameron said. “Port Botany container movements are predicted to increase from 2M TEU in 2012 to 3.2M TEU before 2020.

“’The terminal is due to commence operations in late 2017 and will be Sydney’s major rail freight solution for decades to come,’ according to Mr Albanese.

“Surely Mr Albanese’s statement means that Moorebank will only handle the growth in TEU movements between 2012 and 2020, and that over this period, 1.7M TEU or 85% will continue to be moved by truck!

“When will the Eastern Creek intermodal terminal be built? If not by 2020, how are the additional containers to be handled?”

Mr Cameron also questioned the NSW government’s commitment to efficient container movements.

“Shipping containers are the standard form of distribution for goods worldwide,” Mr Cameron said.

“It is irrational for there to be no container terminal at the port of Newcastle and it is irresponsible to use the vacant container terminal site for other purposes, as the New South Wales government now intends.

“NSW Premier the Hon Barry O’Farrell MP is unable to explain how the state’s productivity is enhanced by using Port Botany container terminal instead of Newcastle to service the import and export needs of northern NSW.

“The NSW government’s policy to prevent a container terminal at Newcastle is without justification.

“Modern container terminals are served by railways, which transport the containers to intermodal terminals, where they are lifted onto trucks for short distance haulage to warehouses and factories. They are returned overseas the same way.

“Newcastle’s lack of a container terminal requires imports and exports for northern NSW to be transported by truck, between Newcastle and Port Botany.

“With a container terminal at Newcastle, the immediate benefits are lower transport costs and saved time. More importantly, economic growth in northern NSW would increase because a container port drives new supply chains, markets and infrastructure. Road congestion and air pollution in Sydney would be lower.

“The NSW government’s long-term plan to rail containers between Port Botany and Newcastle is ridiculous when a container terminal can operate at Newcastle.

“The government plans to reserve a corridor for building an outer western Sydney freight rail by-pass. The route would include Eastern Creek, where an intermodal terminal would be built. The government plans to build a dedicated freight rail line between Eastern Creek and Villawood to complete the freight rail line from Port Botany.

“Port Botany container movements are predicted to steadily grow from 2 million TEU in 2012 to 7 million TEU in 2030.

“The Australian government’s proposed Moorebank intermodal terminal, in southwest Sydney, will handle just 1.2 million TEU. The Moorebank intermodal terminal would be full as soon as it was completed, around 2017. There would be no change in the number of containers moved by truck compared with 2012. An intermodal terminal at Eastern Creek is required from 2017.

“By 2030, when container movements are 7 million TEU, about 70% would be railed to Eastern Creek intermodal terminal.

“By eliminating the sea journey between Newcastle and Port Botany, a container terminal at Newcastle would enable containers to be railed between the port and Eastern Creek faster than from Port Botany. The difference in cost, due to distance, would be trivial.

“Instead, the NSW government is providing a 99-year monopoly to the ‘NSW Ports Consortium’, the company purchasing the lease to Port Botany container terminal.
“No NSW politician speaks in favour of the Port Botany monopoly.

“All politicians are silent, because the monopoly disadvantages northern NSW and diminishes productivity in NSW,” Mr Cameron said.

Still waiting to hear back on Newcastle container terminal

May 7, 2013

A container terminal at Newcastle would be good for people living in northern NSW because the cost of transporting goods to and from the port will be lower, obviously, than with Port Botany.

Low-cost access to a container terminal is a vital ingredient in the successful future of any economic region worldwide – container ports drive new supply chains, markets and infrastructure.

If there are valid reasons for not building a container terminal at Newcastle, they are yet to be identified by either the NSW government or the Australian government.

It is relevant to consider why the former Newcastle steelworks site is owned by the NSW government.

Sixteen years ago, BHP was proposing to build a container terminal on the site but, unexpectedly, gave it to the NSW government, in 2001, which dumped the proposal.

The state government accepted ownership of the site’s industrial contamination after 84 years of steelmaking.

Last year, the Australian government claimed that a Newcastle container terminal ”would add costs to the entire supply chain”. The claim is contained in the Moorebank Intermodal Terminal Project, Detailed Business Case, 6 February 2012, on page 62.

No evidence has been provided in support this claim.

The Australian government says its 1.2 million TEU intermodal terminal at Moorebank is necessary for expanding Port Botany container terminal.

The intermodal terminal ”would provide a major boost to national productivity, helping to reduce business costs and the adverse environmental and social impacts of road transport, as well as creating jobs in south west Sydney”.

These claims are said to be backed by a “significant amount of research”. Unfortunately, this research has been redacted from the ”Moorebank Detailed Business Case”.

Consequently, it is not possible to test the Australian government’s claims for the proposed Moorebank intermodal terminal.

Moreover, Port Botany’s traffic congestion is simply being transferred to Moorebank – seeMoorebank Intermodal’s Key Assumptions Requires Deeper Scrutiny, April 2013.

Other than for the area served by the small Enfield intermodal terminal, western Sydney is better served from Eastern Creek – because it is closer to the main demand areas – than from Moorebank.

By 2030, annual container movements are expected to be 5 million TEU – up from 2 million TEU in 2012 to 7 million TEU.

At 1.2 million TEU, the Moorebank intermodal terminal is too small and will be unable to cope with Port Botany throughput, which in 2020 is estimated to be 3.2 million TEU.

Both the Australian and NSW governments support an intermodal terminal at Eastern Creek; and both support a freight rail by-pass of Sydney and Newcastle.

The likely route is from Glenfield in south western Sydney, Eastern Creek, across the HawkesburyRiver, west of the CentralCoast, and Newcastle.

Eastern Creek would be capable of handling all of Sydney’s intermodal terminal requirements for the rest of the century. Ample land for warehousing is a further, decisive, advantage of Eastern Creek.

It would not be necessary to maintain multiple, small-scale intermodals scattered throughout Sydney’s west in cramped conditions.

Paying for the freight rail line between Glenfield and Newcastle would be achieved by railing containers between Newcastle and Eastern Creek.

The outer wester Sydney freight rail by-pass would enable the removal of freight from the Sydney rail network, which in turn would allow all rail capacity to be used for passenger services.
If rall was to absorb 30% of the forecast growth in Sydney urban travel, the savings would be $1 billion a year by 2025.

Since the Australian and NSW governments are unwilling to examine the economic implications to NSW of a freight rail by-pass of Sydney and a single intermodal terminal for all of Sydney’s requirements at Eastern Creek, and they cannot justify their opposition to a Newcastle container terminal, perhaps it’s time for the Australian Productivity Commission and Australian Competition and Consumer Commission to take an interest.

Port Botany, Port Kembla fetch $5 billion

August 16, 2013

Following a six-month competitive bidding process, the 99-year lease of state-owned port assets at Port Botany and Port Kembla has been awarded to the NSW Ports Consortium for $5.07 billion, with net proceeds of around $4 billion to be invested in the NSW Government’s infrastructure fund – Restart NSW.

$4.31 billion came from the Port Botany transaction package and A$760 million from Port Kembla.

Net proceeds from the two leases will be invested in the government’s infrastructure fund, Restart NSW, with 30 per cent of funds reserved for projects in regional areas and a further $100 million dedicated for infrastructure projects in the Illawarra.

Mr Baird said: “There are now vital funds for the delivery of WestConnex, Bridges for the Bush, the Pacific Highway and the Princes Highway. The government has now funded its commitment to WestConnex and there is $100m for spending on new infrastructure projects in the Illawarra region.”

NSW Ports Consortium comprises Industry Funds Management (IFM), Australian Super, QSuper and Tawreed Investments Limited, a wholly-owned subsidiary of the Abu Dhabi Investment Authority (ADIA). QSuper’s investment in Port Botany and Port Kembla will be managed by Global Infrastructure Partners (GIP).

The NSW Government will retain regulatory oversight of the ports as well as responsibility for a range of maritime safety and security functions, including the role of Harbour Master, the dangerous goods function and pilotage.

Mr Baird said a small number of Sydney Ports Corporation and Port Kembla Port Corporation employees would transfer to the port lessee.

“Enterprise agreement employees will receive a two-year employment guarantee, a transfer payment of up to 30 weeks pay, continuation of current superannuation arrangements, transfer of all sick leave and the ability to transfer or cash out annual and long service leave. These employees will transfer on the same terms and conditions.

“Remaining Sydney Ports Corporation and Port Kembla Port Corporation employees will continue to manage and administer those important maritime functions which will remain with the State,” Mr Baird said.

The transaction is expected to close on 31 May 2013.

Bouquets and brickbats

As can be expected, the decision drew a variety of responses from industry.

Greg Cameron: a bad deal

The bi-partisan political decision that there will never be a container terminal at Newcastle is for the purpose of preventing the Hunter and northern regions of New South Wales benefiting from a container terminal. It is a sad reflection on the quality of representation.

In 1997, BHP proposed a container terminal on the company’s steelworks site as a commercially viable future use of the site after steelmaking. In 2000, confidential negotiations took place between BHP and the state government to transfer the site into government ownership, as revealed in a Question On Notice from the (former) member for MyallLakes, Mr John Turner, on 11 October 2000 (enclosed).

The NSW government took ownership of the container terminal site in 2001 to prevent competition with Port Botany Container Terminal.

Last year, the number of containers moved through Port Botany Container Terminal was 2 million TEU. Eighty-five per cent of these containers were packed or unpacked within 40 km of Port Botany. Fifteen per cent of containers were transported by rail and 85% were transported by truck.

When container movements through Port Botany reach 7 million TEU a year in 2030, between 4 million and 5 million will be sent by train and truck to intermodal terminals in outer western Sydney. Containers, or their contents, destined for northern NSW will then be sent from western Sydney. For the Hunter and northern NSW regions, the impost in both cost and time is unjustified.

But transporting containers by rail between Newcastle and outer western Sydney is faster and at comparable cost compared with using Port Botany.

In 1997, BHP’s motivation was economic development – jobs. BHP was replaced by the state government. Then, as now, there is bi-partisan political support against using the container terminal site for economic development and job creation .

Selling the long-term lease to Port Botany Container Terminal for $4 billion does nothing to benefit the Hunter or northern Regions of NSW. The cost of completing the Northern Sydney Freight Corridor alone is $4 billion.

FTA: wait and see

As per the experience at other ports subject to privatisation, potential exists for the consortium to increase rates on incumbent tenants at bulk liquid berths and container terminals. Industry and public concerns centre on the downstream implications on increased petrol prices and fees associated with international trade through the ports.

Director of Freight & Trade Alliance (FTA) Paul Zalai said assurances have been received by the NSW Treasurer that pricing safeguards are in place: “The consortium will have to notify the government of any charge increase, allowing the Minister to seek further detail and/or refer the matter for consideration by the Independent Pricing and Regulatory Tribunal.”

Mr Zalai also said that avenues exist via the National Competition Council under Commonwealth legislation in the event of a pricing dispute.

Mr Zalai acknowledged the rationale to privatise Port Botany and Port Kembla, allowing the NSW government to gain much needed revenue, adding that it also provides potential benefits for commerce: “It is envisaged that the new port operators will focus on efficiency gains through better use of existing assets and co-ordination of resources.”

Mr Zalai also highlighted the importance of the Port Botany Landside Improvement Strategy (PBLIS), which has significantly reduced truck queues, delays to deliveries and waiting time detention fees. “We need to know how this important reform initiative will be managed under the new port arrangements to ensure that we build on the results achieved to date.”

How will the Northern Sydney Freight Line be funded?

April 9, 2013

Will $4 billion be allocated in the federal budget for upgrading the Northern Sydney Freight Corridor to carry more freight by rail?

The New South Wales government has nominated no other source of funds for this upgrade, which must be finished before 2028 to meet forecast demand.

While the NSW government expects to raise $2 billion by selling a 99-year lease to Port Botany Container Terminal, none of this will be spent on the Northern Sydney Freight Corridor. And yet the sale commits the NSW government to the $4 billion upgrade to maintain rail access to Port Botany Container Terminal and the intermodal terminals planned for Moorebank and Eastern Creek, in outer western Sydney.

The NSW government will not permit a container terminal at Newcastle and considers that northern NSW is adequately served by the container terminal at Port Botany. More likely, a container terminal at Newcastle would attract business away from Port Botany terminal by providing a better service to northern NSW. This would reduce the sale value of the Port Botany lease.

Additionally, a container terminal at Newcastle would justify a freight rail by-pass of Sydney, with containers as the base commodity. They would arrive in Eastern Creek or Badgery’s Creek faster and at similar cost compared with Port Botany.

An outer western Sydney freight rail by-pass would make the two intermodal terminals proposed at Moorebank redundant. The Southern Sydney Freight Line would enable containers to be railed between Port Botany and a single intermodal terminal at either Badgery’s Creek or Eastern Creek, until the freight by-pass to Newcastle was built. The current customers of Port Botany container terminal that receive 1.7 million TEU a year by truck could continue to do so until they were encouraged to relocate to outer western Sydney, in 10 years’ time. Removing freight from the Sydney rail network would enable 100% of capacity to be used for passenger trains. As pointed out by Deloitte Access Economics, if rail absorbed 30% of the forecast increase in Sydney urban travel then congestion, safety and carbon emission costs could be reduced by around $1 billion a year by 2025.

When removing freight from the Sydney rail network is worth $1 billion or more a year, is it sensible to sell a 99-year lease to Port Botany Container Terminal, especially if the $4 billion funding required to upgrade the freight rail capacity is not provided by the Australian government?

NSW freight future swings on Port Botany Container Terminal sale

March 12, 2013

Tony Abbott’s coalition opposition could be playing a decisive role in the future of freight transportation in New South Wales.

Does the coalition agree with taking freight off Sydney’s metropolitan rail network, to enable more passenger services?

If not, would a future coalition government pay $4 billion for upgrading the metropolitan rail network to increase freight, as has been requested by the New South Wales government? Mr Abbott’s decision is needed before the New South Wales government sells a 99-year lease to Port Botany Container Terminal.

The Australian government is able to purchase Port Botany Container Terminal from the New South Wales government at the market price of $2 billion. Since BHP paid the NSW government $100 million in 2001 to take ownership of the Newcastle container terminal site, the Australian government should acquire it for $1.

With these purchases, the Australian government can invite private enterprise to finance and build a freight rail line between Glenfield and Newcastle, otherwise known as the freight rail component of the ‘Outer Western Sydney Orbital’.

There would be no need to upgrade the Northern Sydney Freight Corridor by building a dedicated freight rail line between Strathfield and the HawkesburyRiver, costing $4 billion in present value terms, because only the orbital freight rail line would be required.

All Sydney metropolitan rail capacity could be devoted to passenger services if north-south rail freight was transported on the orbital freight rail line. The economic benefits would be up to $1 billion a year.

The Australian government can invite private enterprise to add a freight rail line to the South West Rail Link, currently under construction between Glenfield and Leppington. Extending the line 10 km to Badgery’s Creek would provide a dedicated freight rail line between Port Botany and Badgery’s Creek, enabling all containers to be railed from Port Botany.

There would be no need for heavy trucks to access Port Botany Container Terminal.

The Australian government can invite private enterprise to finance and build an intermodal terminal on government-owned land at Badgery’s Creek. The terminal’s design would allow for orderly expansion to meet demand for the next 100 years.

The Australian government can cancel its plan for building an intermodal terminal on its Moorebank site and can release the land for use as a business park. A business park would be financed and developed by private enterprise to provide for up to 15,000 jobs.

The Australian government can facilitate a new era of economic development in northern NSW by inviting private enterprise to build and operate a major container terminal at Newcastle.

The Australian government’s $2 billion investment in acquiring the Port Botany and Newcastle container terminal sites can be recovered by leasing the sites to private enterprise. After container terminal operations were transferred to Newcastle, the Port Botany site could be used for improving passenger and cargo services at SydneyAirport. In addition, $970 million would be saved by cancelling the Moorebank intermodal terminal project. A contribution of $1 billion already offered by the Australian government towards a road project aimed at reducing traffic congestion in the Port Botany and SydneyAirport precinct, would not be needed when all containers were transported by rail.

A freight rail by-pass of Newcastle, as part of the orbital freight rail line, would enable re-development of government-owned land along Newcastle’s existing rail corridor. Light rail would replace the existing heavy rail.

All of the infrastructure projects can be financed and built by private enterprise – at no net cost to the Australian or NSW governments – by moving containers and general freight by rail between Newcastle, Badgery’s Creek and Glenfield.

The alternative is more trucks on more roads.

Prime Minister’s $1 billion can remove container trucks from Port Botany

March 5, 2013

This week, the Prime Minister offered the NSW Premier $1 billion towards a road project for reducing traffic congestion caused by trucks accessing Port Botany Container Terminal. Premier Barry O’Farrell rejected the offer because the NSW government was not willing to commit its own funds to the proposed project. In all of the debate, no mention was made of the $4 billion needed to maintain rail access to Port Botany Container Terminal from the north. A dedicated freight rail line between Strathfield and the HawkesburyRiver must be built within 15 years before capacity of the Northern Sydney Freight Corridor reaches its limit.

Given that the Prime Minister’s objective is to reduce traffic congestion around Port Botany, her government’s $1 billion would be better spent on building a dedicated freight rail line to Badgery’s Creek and progressively moving all containers by rail. With the Southern Sydney Freight Line now open, the missing link is a dedicated freight rail line between Glenfield and Badgery’s Creek. The South West Rail Link, which is currently under construction, is a passenger service between Glenfield and Leppington, only 10 km from Badgery’s Creek. $1 billion should be sufficient to add a freight rail component and extend the line to Badgery’s Creek.

Work can start immediately on building an intermodal terminal on a small portion of the site owned by the Australian government at Badgery’s Creek for a future airport. The terminal would be designed to expand in line with long-term growth in container movements. This would release the Australian government’s Moorebank site for a business park and create significantly more jobs than the current proposed use, which is a small-scale intermodal terminal servicing Port Botany and interstate rail freight.

It is common sense that freight entering Sydney from the north should not be railed through Strathfield when the destination is Badgery’s Creek. A more practical approach is to transfer freight onto rail at Newcastle for the journey via outer western Sydney to Badgery’s Creek. Such a line would cost many billions of dollars. But no government money is needed if the line is funded by private enterprise.

The line would be paid for by setting an appropriate charge for moving containers between Badgery’s Creek and a container terminal at Newcastle. Private enterprise would pay for both the Newcastle container terminal and the Badgery’s Creek intermodal terminal. Containers would reach Badgery’s Creek faster from Newcastle than they would from Port Botany.

By removing freight from the Sydney metropolitan rail system, all capacity would become available for passenger services. A constructive use of $4 billion saved in not building the Strathfield-HawkesburyRiver freight upgrade would be to improve metropolitan passenger services. Such an investment would be self-sustaining by reducing growth in commuter road trips. A productive use of Port Botany Container Terminal site would be to improve passenger and cargo services at SydneyAirport.

http://www.tandlnews.com.au/2013/02/26/article/2-billion-port-botany-container-terminal-lease-deal-is-bad-economics/

$2 billion Port Botany container terminal lease deal is bad economics

Feb 26, 2013

Selling a 99-year lease to Port Botany Container Terminal for $2 billion is bad economics.

The deal requires Australian taxpayers to pay $4 billion for upgrading Northern Sydney Freight Corridor, in addition to improvement work costing $1.1 billion now underway. Sydney’s Metropolitan Freight Network would need to be retained just to service Port Botany Container Terminal.

But allocating metropolitan rail capacity to freight comes at great cost. According to Deloitte Access Economics, ”if rail absorbed 30% of the forecast increase in [Sydney] urban travel then congestion, safety and carbon emission costs could be reduced by around $1 billion a year by 2025.”

Optimum financial, economic and social benefits would be realised when 100 per cent of Sydney’s metropolitan rail network was utilised for passenger services.

Operating Port Botany Container Terminal for the next 99 years means that the crippling effects on traffic caused by container-carrying trucks in the airport precinct, and on the M5, would only worsen, as truck numbers steadily increased over time.

There is an alternative to selling the lease to Port Botany Container Terminal. It is to lease the container terminal site at Newcastle for a state-of-the-art container terminal. The Port Botany Container Terminal would close after the Newcastle terminal opened. The Port Botany site would be leased for airport use to improve air freight and passenger services.

A freight rail line would be built between Newcastle and Badgery’s Creek by private enterprise. This would save taxpayers $4 billion by not upgrading Northern Sydney Freight Corridor and up to $1 billion a year when 100 per cent of the metropolitan rail network was used for passenger services. Containerised goods would reach their ultimate destinations in Sydney faster when containers were unloaded from ships at Newcastle, than when they were unloaded from ships at Port Botany.

Maximum advantages of road transport would be achieved by better planning short journeys and point-to-point distribution from warehouses in western Sydney and suburban distribution hubs.
An intermodal terminal could be built at Badgery’s Creek immediately. It would be located on a small part of the government-owned 1,700 hectare site already zoned for airport and industrial use. This terminal would be serviced by rail from Port Botany by extending the South West Rail Line, currently under construction, between Glenfield and Leppington – a mere 10 km from Badgery’s Creek. Freight capacity would be added to the line.

Communities affected by container truck activity would benefit immediately as rail became the dominant form of container transportation between the port and the intermodal terminal.
The $970 million bill to Australian taxpayers for building Moorebank Intermodal Terminal would be avoided if Badgery’s Creek Intermodal Terminal and dedicated freight rail line from Port Botany were to be completed around the same time as planned for the Moorebank project.

Last year, four heavyweight reports by the NSW government recommended identification and preservation of the Outer Western Sydney Orbital Road/Rail Corridor: NSW State Infrastructure Strategy, NSW Long-Term Transport Masterplan, Draft NSW Freight and Ports Strategy, and Joint Study on Aviation Capacity in the Sydney Region.

An earlier report, the 2007 Pearlman Review of the F3 to M7 Corridor Selection, found that “there are strategic reasons why an additional corridor to the north will be justifiable at least in some time in the future. These reasons arise from the vulnerability of the F3 to closure because of accident, bushfire and the single HawkesburyRiver crossing.”

Construction of the freight rail line between Newcastle, Badgery’s Creek and Glenfield could be completed before the freight capacity of the Metropolitan Freight Network reached its limit in 2028.
There would be no cost to taxpayers because the projects would be privately funded. This covers: Newcastle Container Terminal; Newcastle to Glenfield freight rail line; and Badgery’s Creek Intermodal Terminal. All costs would be covered by setting an appropriate, long term, charge for container transportation.

A container terminal at Newcastle would enable goods destined for northern NSW to be dispatched from Newcastle. Container terminals provide strong economic benefits when established in regional areas. Economic growth in northern NSW would also help stem population drift to Sydney.

For western Sydney, it would be possible to create long term economic development plans based on the certainty of rail freight and intermodal terminal services, at Badgery’s Creek.

Intending purchasers of the 99-year Port Botany Container Terminal lease would be well advised to find out whether the Australian Government had set aside $4 billion for upgrading the Northern Sydney Freight Corridor, before they signed up. If the Australian government has agreed to provide the funds, an outer western Sydney freight rail line would not be built because Sydney does not require two freight rail lines.

However, if the Australian government has not allocated the funds, and if the Coalition will not commit the funds should it win office in September, why do Labor and the Coalition decline to investigate the Newcastle alternative?

Crunch time for Western Sydney/Newcastle rail freight

February 19, 2013

Electoral candidates in western Sydney and Newcastle face some stark policy choices about transport infrastructure that will have profound economic and social implications well into next century. Unusual in federal politics, the opportunity currently exists to make local politicians accountable for policy decisions before an election. Policy questions for candidates are:

1. Do you support the building of a dedicated freight rail line between Strathfield and the HawkesburyRiver before 2028, at a cost to Australia’s taxpayers of $4 billion?
2. Do you support the building of a dedicated freight rail line between Glenfield, Badgery’s Creek and Newcastle along an outer western Sydney alignment before 2028, at no cost to Australia’s taxpayers?
3. Do you support the building of an intermodal terminal on a portion of the 1700 hectare Badgery’s Creek airport site, immediately?
4. Do you support the use of rail to move all containers between Port Botany and Badgery’s Creek?
5. Do you support the relocation of container terminal operations from Port Botany to Newcastle, and the use of rail to move all containers between Newcastle and Badgery’s Creek, before 2028?

The freight carrying capacity of the Northern Sydney Rail Corridor will reach its limit by 2028. Additional capacity must be built before this. However, only one option is being considered by the NSW and Australian governments: building a dedicated freight rail line between Strathfield and the HawkesburyRiver. The line would occupy priceless rail capacity. The opportunity cost of not using all metropolitan rail capacity for passenger services is up to $1 billion a year.

The option of building the freight rail component of the Outer Western Sydney Road/Rail Orbital Corridor is not being considered by either government. Although work may be undertaken to identify and preserve corridor land, a freight rail line would probably never be built because of the more pressing need to recoup the investment in the Northern Sydney Corridor over the long term.

However, by building a dedicated freight rail line between Glenfield, Badgery’s Creek and Newcastle, there would be no need to build a dedicated freight rail line between Strathfield and the HawkesburyRiver. Two dedicated freight rail lines are not required.

An intermodal terminal can be built at Badgery’s Creek without compromising future airport options. There would be no need for the Moorebank intermodal terminal, with a saving to taxpayers of $970 million.

All containers would be moved by rail between Port Botany and Badgery’s Creek by extending the South West Rail Line by 10 km from Leppington, and adding freight.

Private investment funds would be used for financing construction of the dedicated freight rail line between Glenfield, Badgery’s Creek and Newcastle; Badgery’s Creek intermodal terminal and associated roads; and the Newcastle Container Terminal. By financing the projects collectively, this would enable a charge to be applied to the movement of containers and interstate freight that recouped all costs.

The Newcastle Container Terminal site can be leased by the Australian government for the same amount as the NSW government expects to receive for selling the lease to Port Botany Container Terminal. The lease, less development costs, can be on-sold to the private sector.

The Port Botany Container Terminal site can be leased for airport purposes. These funds can be applied to the cost of building new facilities at Newcastle and compensating, if required, the current tenants of Port Botany Container Terminal.

When containers are transported by rail to an intermodal terminal Badgery’s Creek, the advantages of road transport can be employed on short journeys and point-to-point distribution from warehouses and suburban distribution hubs. But there would be no need for toll-paying, container-carrying trucks on the M5 East. In addition, there would be no need for trucks to carry goods from Sydney to Newcastle, if containers were unloaded at Newcastle.

Is it better to transport containers by rail or by road?

Should container transportation pay for railway or roadway?

Port Botany terminal sale set to cost taxpayers $4 billion

February 14, 2013

Australia’s taxpayers will book a net loss of $4 billion when the New South Wales government sells a 99-year lease to Port Botany Container Terminal.

The NSW government is asking taxpayers for $4 billion to build a dedicated freight rail line between Strathfield and the Hawkesbury River. But if container terminal operations were transferred to Newcastle, a dedicated freight rail line could be privately funded and built between Newcastle and a new intermodal terminal (IMT) at Eastern Creek in Sydney’s outer west.

Sydney does not require two north-south dedicated freight rail lines. Cancelling the proposed line between Strathfield and the Hawkesbury River would save taxpayers $4 billion.

One of the advantages of eliminating freight from the Sydney metropolitan rail system is that all rail capacity could be used for passenger services, which would reduce growth in commuter road trips. According to Deloitte Access Economics, if rail was to absorb 30% of the forecast increase in passenger transport demand in Sydney, this could create benefits of over $1 billion a year by 2025. If rail was to take a 40% share in north-south freight movements, there would be a reduction in accident and carbon costs of around $630m a year by 2030.

A dedicated freight rail line between Newcastle and Eastern Creek would connect with the South Sydney Freight Line at Glenfield. It would become the rail component of the ”Outer Western Sydney Orbital Road/Rail Corridor”. However, a commitment to building this line is required immediately because it would have to be operational well before 2028, when freight capacity of the Sydney metropolitan rail system reached its limit.

Combining three major infrastructure projects – Newcastle container terminal, freight rail line to Eastern Creek/Glenfield, and, IMT at Eastern Creek – would allow a price to be set for moving containers that covered construction, financing and operating costs of all three projects. By leasing the government-owned Newcastle site for a container terminal, and leasing or selling the Port Botany container terminal site for airport use, the NSW government would likely achieve its revenue target.

Australia’s superannuation funds are capable of providing the long-term finance.

Construction of Eastern Creek’s IMT must start immediately if there is to be sufficient IMT capacity to cope with future growth in container movements. The Australian government’s IMT at Moorebank would be operating at full capacity of 1.2 million TEU soon after it commenced operations around 2017. If an IMT can be built at Eastern Creek in similar time frame, and a rail link can be built from Port Botany, there would be no need for Moorebank IMT.

Last year, 2 million TEU moved through Port Botany. By 2036, under a high-growth scenario, container movements will be 12.4 million TEU. A low-growth scenario sees container movements of 6.7 million TEU in 2036. Container movements will reach 3.2 million TEU per year before 2020. This is why construction of an Eastern Creek IMT, with expansion capability to meet long-term demand, needs to start immediately.

The NSW government proposes building a freight rail line between Chullora and Eastern Creek. An alternative is to build the line from Glenfield to Eastern Creek and use it to rail containers from Port Botany via Glenfield, until the Newcastle line and container terminal were completed.

The immediate question is whether the Australian government will commit $4 billion to funding the dedicated freight rail line between Strathfield and the HawkesburyRiver, and billions to the proposed West Connex motorways, as requested by the NSW government.

Neither the Prime Minister, nor the Leader of the Opposition, have declared a position.

Well might a decision inconvenience politicians, but it would benefit taxpayers, and voters.

Build an outer Western Sydney dedicated freight rail line

February 7, 2013

Work can start immediately to design and build outer Western Sydney’s dedicated freight rail line between Glenfield, Eastern Creek and Newcastle.

‘SydneyFreightWest’ is a proposal to privately fund and operate a container terminal at Newcastle; a dedicated freight rail line to Eastern Creek; and an intermodal terminal at Eastern Creek with a connection to Glenfield and the main rail line south. Taxpayers will be saved the $4 billion it would cost to build a dedicated freight rail line between Strathfield and the Hawkesbury River. SydneyFreightWest can be completed and operating before 2028, when the Sydney metropolitan rail system will reach capacity for freight train movements.

Last year, four heavyweight reports by the NSW government recommended identification and preservation of the Outer Western Sydney Orbital Road/Rail Corridor: NSW State Infrastructure Strategy, NSW Long Term Transport Masterplan, Draft NSW Freight and Ports Strategy, andJoint Study on Aviation Capacity in the Sydney Region. An earlier report, the 2007 Pearlman Review of the F3 to M7 Corridor Selection, found that “there are strategic reasons why an additional corridor to the north will be justifiable at least in some time in the future. These reasons arise from the vulnerability of the F3 to closure because of accident, bushfire and the single Hawkesbury River crossing.”

With SydneyFreightWest, it will be faster to rail containers between Newcastle and Eastern Creek than it will be to ship containers past Newcastle to Port Botany and move them by rail to Eastern Creek. The cost difference in rail transportation is trivial – it is the difference between a 400km round trip from Newcastle and a 120km round trip from Port Botany. The NSW government must build the proposed Western Freight Line, between Chullora and Eastern Creek, if containers are to be railed between Port Botany and Eastern Creek. The alternative is to truck containers. A better use for the western line corridor is for passenger rail.

An economic impact study will demonstrate that the benefits of the Newcastle/orbital option will significantly outweigh those of the Port Botany option. These include: reducing the growth in commuter trips by road by removing freight from the Sydney and Newcastle metropolitan rail systems and increasing passenger services; planning economic growth in western Sydney with reference to a long-term freight strategy, centred on Eastern Creek; progressively relocating warehouses, port-related industry and container handling facilities from expensive real estate in eastern Sydney to western Sydney, where superior facilities and logistics can be built and attractive capital gains realised; lowering the cost of freight for all of northern NSW; and providing a viable alternative to road freight transport in NSW (75% of interstate freight entering NSW has Sydney as its destination).

Construction of an intermodal terminal at Eastern Creek must start immediately to meet expected growth in container movements. By 2050, it is estimated that container movements will be 13 million TEU, compared with 2 million TEU movements in 2012. The proposed Moorebank intermodal terminal, with its 1.2 million TEU capacity, is undersized and will reach capacity before 2020.
Leasing Newcastle’s container terminal site would replace the NSW government’s current plan for leasing Port Botany container terminal. The Port Botany container terminal site can be used for more productive purposes, such as expanding passenger services for Sydney Airport, reducing airport traffic congestion, improving air cargo handling facilities and extending the second parallel runway to accept larger aircraft that carry more passengers.

Candidates for the September federal election can declare if they support or oppose the SydneyFreightWest proposal. However, if the dedicated freight rail line is to be built between Strathfield and the Hawkesbury River, Labor and the Coalition are obliged to respond to the NSW government’s request for the funds.

Is the NSW container terminal policy anti-competitive?

December 6, 2012

The NSW government policy to have only one container terminal for all of NSW at Port Botany is disadvantaging regional economies. Although the NSW government claims that Port Botany container terminal is adequate for the regions’ needs, accessing Port Botany from outside Sydney is most difficult. Good access to a container terminal is now essential for any region wanting to participate in world trade because containers are the dominant form of transport for non-bulk commodities.

But the NSW government claims that container terminals are not required in regional centres because 85% of containers that enter Port Botany are unpacked within 40 km of the port. Implicit in this argument is that the 36% of the NSW population who live in regional areas suffer no disadvantage from long-distance road freight. However, northern NSW is better served by a container terminal at Newcastle and southern NSW is able to be serviced from Port Kembla. Such terminals would be privately funded and operated and would compete with Port Botany container terminal for regional business. Competition between ports means importers and exporters can choose the terminal that best meets their needs.

However, competition between container terminals is not government policy. In 1998, BHP demonstrated the commercial viability of a container terminal on the Newcastle steelworks site after steel-making ceased. BHP’s initiative was blocked when the NSW government took ownership of the site in 2001. Astonishingly, it appears that the government accepted liability for the site’s contamination. NSW government policy is that there will be no container terminal at Newcastle.

The NSW government has now spent close to $1 billion to expand Port Botany container terminal. In 2005, a cap was put on container movements at 3.2 million TEU because of the environmental impact of port operations. TEU movements will reach 3.2 million in 2017, up from 2 million in 2011. The NSW government abolished the cap in November 2012 and will allow unlimited expansion of container movements without environmental assessment.

Unlimited expansion of Port Botany container terminal reflects the government’s determination to maximise its return on the $1 billion recently invested. However, in purely economic terms, it is likely that a much bigger return would be gained by allowing Sydney airport to expand into the container terminal site and re-locating container terminal operations to Newcastle.

Traffic congestion was one of the reasons given by the previous NSW government for capping container movements. But the current NSW government says that Port Botany container terminal is not the primary cause of traffic congestion on the M5 East. It points out that only 1.8% of M5 East traffic is port-related. One container-carrying truck in the M5 East westbound tunnel is the equivalent of six passenger vehicles; in the eastbound tunnel it is the equivalent of three passenger vehicles (due to empty containers and a gentler slope). These figures suggest that container trucks are 10.8% of the passenger vehicle capacity of the westbound tunnel and 5.4% of the eastbound tunnel. A three-fold increase in container movements is expected by 2030. Container trucks will need more than 30% of the westbound tunnel passenger vehicle capacity and 15% of the eastbound tunnel capacity. Therefore, the M5 East needs to be expanded to cater for the increase in container truck movements.

Rail freight is not capable of reducing Sydney traffic congestion caused by container trucks. Plans promoted by the NSW government are for increasing the rail share of container movements, from 14% to 28%, by 2020. In 2011, there were an estimated 1.3 million truck movements between Port Botany and south western Sydney. These will increase to 1.8 million in 2017 and 4.2 million in 2030. The Moorebank Intermodal Terminal (IMT), which is due to start operations in 2017, will reduce truck movements by only 200,000 per year, but the net increase in truck movements will still be 500,000. Moorebank IMT’s role in reducing truck movements therefore is largely irrelevant, except of course for the residents of Moorebank. At 1.2 million TEU movements per year, Moorebank IMT is too small. With unlimited expansion of Port Botany – 7 million TEU movements are estimated by 2030 – work needs to start immediately on additional IMT capacity.

Moorebank IMT is being built by the Australian government not only to handle containers from Port Botany but also from interstate. Northern freight shares the main northern passenger railway between Newcastle and Sydney. The Australian government is contributing 80% of the $1.1 billion stage 1 cost of the Northern Sydney Freight Corridor improvement program (NSFC), which will double the number of freight trains from 22 to 44 per day. Stage 1 will provide enough additional capacity to accommodate demand up to 2028, when further capacity will be required to accommodate subsequent growth. Stages 2 and 3 will transition to a dedicated freight line through metropolitan Sydney and a freight rail by-pass of Newcastle, costing $6.6 billion. Funding for stages 2 and 3 will be sought from the Australian government. But stages 2 and 3 are not required if a privately-funded freight rail bypass of Sydney and Newcastle is built, which would link Newcastle to Eastern Creek and Macarthur in the south.

According to the Australian and NSW governments, a freight rail bypass of Newcastle and Sydney is feasible and would cost ‘many billions’ of dollars. In deciding not to further consider the bypass option, the Australian and NSW governments are committing to funding stages 2 and 3 of the NSFC by default, because the opportunity to secure a freight rail corridor for a bypass will disappear soon, due to Sydney’s westward urban growth.

There is an alternative, called ”Sydney freight west”. This is a concept for a privately-funded three-part project comprising a container terminal at Newcastle; a dedicated freight rail line extending from Newcastle to Eastern Creek and Macarthur; and, a major IMT at Eastern Creek. Sydneyfreightwest would compete with Port Botany container terminal, unless the site was used for airport purposes and container operations transferred to Newcastle. Sydney freight west would enable containers to be railed between Eastern Creek and Newcastle faster and probably cheaper than if they were shipped through Port Botany. Sydney freight west would provide cost and scheduling certainty compared with the use of trucks to service Port Botany container terminal. Road congestion and pollution associated with Port Botany operations represent long term commercial and environmental risks.

Sydneyfreightwest has significant implications for transport policy. Moorebank IMT would not be required, because it would be supplanted by a much bigger facility at Eastern Creek. Port Botany container terminal would continue to operate while Sydneyfreightwest was under construction. If Port Botany container terminal site was used for airport expansion, the removal of container trucks would benefit all users of the M5 East. Stages 2 and 3 of NSFC would not be required, with a saving to government of $6.6 billion. Passenger capacity of the Sydney metropolitan rail network would significantly increase when freight was removed from the network. Removing freight from the Newcastle rail line would allow for re-development of degraded urban land along the rail corridor, and a new passenger rail service. The Sydney-Newcastle rail corridor is the single biggest impediment to sending more interstate freight by rail. According to a study by Deloitte Access Economics, if 40% of interstate freight shifted from road to rail, the saving to the national economy would be $630 million per year in 2030.

Politicians representing regional areas of NSW might care to re-consider the merit of regional container terminals, starting with Newcastle and Port Kembla.

2.9 million more container trucks by 2030

November 20, 2012

The O’Farrell government’s ‘NSW 2021’ plan has an objective to “double the proportion of container freight movement by rail through NSW ports by 2020” – from 14% to 28%. The baseline year is 2010-11.

The 28% rail target, if achieved at Port Botany, means more than 500,000 more truck movements a year in 2020 – from 1.3 million (in 2010-11) to 1.8 million. In 2030, the 28% rail target will involve 2.9 million more truck movements a year – from 1.3 million to 4.2 million.

Most container trucks use the M5 East. In 2009, the RTA reported that the M5 East was at capacity and was expected to be operating significantly above theoretical capacity by 2016 (114%), with performance deteriorating further by 2026 (120%). One loaded container truck in the M5 East westbound tunnel is the equivalent of six passenger vehicles and one truck carrying empty containers in the eastbound tunnel is the equivalent of three passenger vehicles.

No road congestion relief will be felt until the NSW government doubles the M5 East, which would not occur until 2023. However, there is no guarantee that M5 East congestion would decline even then because passenger rail capacity will be insufficient for a growing population, which in turn will drive more commuters to use their cars.

It is possible to move 100% of containers by rail if container terminal operations re-locate to Newcastle and a freight rail by-pass of Sydney and Newcastle is built, connecting to Eastern Creek and Macarthur. Metropolitan rail capacity currently used for freight can be re-allocated for passenger services. This will enable more people to switch from car to rail and ease congestion on roads.

In 2010-11, the number of twenty-foot equivalent unit (TEU) containers moved through Port Botany was 2 million. Of these, the number of TEU moved by truck was 1.7 million and, the estimated number of truck movements was 1.3 million (at an average of 1.3 TEU per truck).

In 2020, the number of TEU moved through Port Botany will exceed 3.2 million, assuming the NSW government abolishes the current limit on container movements under legislation currently before state parliament. By 2030, the NSW government expects container movements through Port Botany to reach 7.5 million TEU.

The government’s decision to lease out the Port Botany container terminal for 99 years ensures unlimited growth in container truck movements on Sydney’s roads and prevents a freight rail by-pass of Sydney.

How does this benefit NSW?

Renewed call for Newcastle to become container port

August 2, 2012

Former BHP executive and long-time exponent of Newcastle as the solution to Sydney’s container problems, Greg Cameron, has renewed his calls for Newcastle to be put back on the table in any serious discussion of Sydney’s container problems.

Mr Cameron said a container terminal at Newcastle would enable northern NSW communities to receive imported goods by rail instead of truck. Without rail access to a container terminal, prospects for regional exporters are severely constrained, particularly when the terminal is located at Port Botany. However, all of this was known in 1998 when BHP proposed a container terminal. The NSW government took ownership of the former steelworks site in 2000 to prevent competition with Port Botany. It is still succeeding, 12 years later.

Two facts about freight trains are that they travel faster than ships and cost less than trucks. While the NSW government declines to consider Newcastle providing container service to Sydney, it also declines to consider Newcastle providing a container service to the Hunter and other northern regions.

The Australian government is spending $175 million upgrading the Port Botany rail line to lift capacity from 700,000 containers a year to one million. When annual container movements in/out of Port Botany increase from the current two million to 3.2 million by 2017, there will be 2.2 million containers moved by truck. One container truck in the westbound M5 tunnel is the equivalent of six cars.

The NSW government will abolish the cap on container movements to increase the sale price of Port Botany terminal. But Infrastructure Australia expects container movements to reach 7.3 millions by 2031. On current evidence, that means six million containers by truck between Port Botany and western Sydney, compared with 1.7 million in 2011.

A new intermodal terminal (IMT) at Moorebank is required by 2017 just to service 3.2 million container movements. After that, more IMTs are required. However, Moorebank is one of the last remaining parcels of suitable land for an IMT in south western Sydney with easy access to road and rail infrastructure.

Instead, can a single IMT be built in north western Sydney to receive containers from Newcastle, thereby providing a permanent solution? The $1.1 billion upgrade of the Northern Sydney Rail Freight Corridor can be completed, thereby enabling the Newcastle Solution, funding by the Australian government reallocating the $559 million budgeted to relocate the School of Military Engineering from the Moorebank site.

Port Botany would make a fine naval base.