As the landlord manager of Australia’s largest general cargo and container port, Port of Melbourne is responsible for the strategic planning, development and administration of the port’s operations under the terms of a 50-year lease that commenced in 2016.

To achieve this, we connect the various links of the supply chain – on and off port – to optimise the efficiency and effectiveness of the port, and we continue to invest significantly in improved infrastructure and facilities to support our tenants and port users.

PoM supports an industry-wide inquiry into optimising productivity and efficiency in the maritime supply chain. We have great respect for the regulatory framework the Victorian Government put in place at the time of the port lease in 2016 and we strongly believe the framework is working as intended.

Indeed, Port of Melbourne believes that having both the right investment and public policy settings in place are vital to ensuring Australia’s ports continue to be a vital trading hub and node in the port freight supply chain and contribute to the prosperity and well-being of our communities.

As we have done since the Inquiry was announced by the Federal Government, we will continue to openly participate in the process. To that end, we are considering in detail the specific findings and recommendations of the draft report and we will respond accordingly.

To download a PDF of this statement, click here.

To download PoM’s submission to the Inquiry, click here

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Port of Melbourne CEO Saul Cannon said the port is committed to stakeholder engagement that is inclusive, timely, genuine and transparent.

“Building new port infrastructure has long lead times, so we need to plan now for the longer-term future. For us, that means engaging with our stakeholders to understand their views in relation to the need for additional capacity,” he said.

The focus over the coming months is to engage with our stakeholders and seek feedback on the key drivers of capacity which are contained within the following independent expert reports:

• Port capacity
• Ship Fleet Forecast
• Demand Forecast

The reports will be discussed during information sessions with industry and the local community. These three key technical reports, a draft stakeholder presentation and information session booking links are available on the port’s website: www.portofmelbourne.com/facilities-development/port-capacity-enhancement-program/

There will be four online information sessions available:

• Tuesday 27 September 10:00 am – 12:00 pm and 4:30 pm – 6:30 pm
• Thursday 29 September 10:00 am – 12:00 pm and 4:30 pm – 6:30 pm

“These reports on Port Capacity, Ship Fleet Forecast and Demand Forecast are really important in helping us to determine if and when we need to provide additional port capacity,” said Mr Cannon.

Stakeholders are requested to submit written feedback on the three key technical reports by Tuesday 18 October 2022.

The findings and feedback from these reports will help us to inform a Cost Benefit Analysis (CBA). We will also engage with stakeholders between December 2022 and March 2023 to seek feedback on the emerging findings from the CBA.

ENDS

Click here for a PDF of this media release.

For more information contact

Linda Allison
Corporate Relations
M 0428 246 260
E linda.allison@portofmelbourne.com

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Swanson Dock West wharf services one of three International Container Terminals and was constructed in several stages between the 1960s and 1980s, and sections of the wharf are now close to or beyond the typical design life of 30 years.

Port of Melbourne CEO Saul Cannon said the existing wharf structures are now close to or beyond their typical design life. They have deteriorated to a level which must now be addressed for the ongoing safe and efficient operation of the terminal.

“As part of our important stewardship obligations of the port, we have to remediate and proactively protect the wharf structures to ensure it operates as intended for the next 50 years,” Mr Cannon said.

“We have worked closely with DP World Melbourne during the planning and design phase of the remediation project. We are now engaging with our other tenants and stakeholders about potential disruptions from the works,” he said.

Port of Melbourne will be holding two online information sessions about the project on:

• Tuesday 16 August 10:00 am – 11:00 am
• Thursday 18 August 4:30 pm – 5:30 pm

You can confirm your attendance by registering here: https://www.portofmelbourne.com/current-projects/

The Swanson Dock West Remediation Project will enable the infrastructure and international container terminal to continue receiving container vessels, delivering a significant portion of the Port’s container handling capacity.

Port of Melbourne is required under the Port Lease and Port Concession Deed to maintain port infrastructure in accordance with good operating practice and for the benefit of the Victorian economy.

For further information on the Swanson Dock West Remediation Project, please go to https://www.portofmelbourne.com/current-projects/

-ENDS-

To download a PDF of this media statement click here. 

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“The Strategy is a welcome recognition of the important role Victoria’s ports play in the economic wellbeing of Victoria and the surrounding regional areas of both mainland Australia and Tasmania,” Port of Melbourne CEO Saul Cannon said.

“We believe the Strategy provides a strong framework for the ongoing operational success and development of the Port of Melbourne, and in turn this will help ensure we can continue to meet the trade needs of Victoria for decades to come.”

Mr Cannon welcomed the State Government’s commitment to continuing to work with Port of Melbourne to support planning for the next tranche of container capacity.

“Based on our current assessment the next tranche of international container terminal capacity will be required at the port around 2030 if we are to meet Victoria’s forecast trade demand and we will be working closely with the Government and port stakeholders in the years ahead to deliver the infrastructure needed.” Mr Cannon said the Port would continue to work closely with the State Government to support growth for the benefit of Victoria’s economy and the wellbeing of its people.

The State Government has a key role in ensuring that Victoria’s transport system is capable of meeting the rapidly growing freight task.

“Port of Melbourne will continue to invest along with industry and government to maximise the efficiency and effectiveness of the port supply chain,” Mr Cannon said.

“Port of Melbourne has already invested more than $370 million inside the port gate and we anticipate further capital investment of an estimated $2 billion over the next 10-15 years.”

The Strategy also supports Port of Melbourne’s objectives for land use planning for new road and rail network capacity needed to support the growth of trade volumes at Webb Dock.

“Port of Melbourne supports the Government’s objective for more freight on rail with a number of projects underway, we look forward to continuing our work with Government to build a successful port rail supply chain.”

Increased use of rail to move containers that come into Webb Dock would reduce truck movements on the road network – where one truck hauls 1-4 containers, one train can move up to 84 containers. Port of Melbourne is already investing more than $125 million in the Port Rail Transformation Project in the Swanson Dock Precinct to increase port rail capacity.

-ENDS-

To download a PDF of this media statement click here.

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PoM’s Undertaking has been accepted by the ESC Minister and is legally binding until 30 June 2027, in line with the ESC’s next review.

The undertaking responds to matters on which the ESC found significant and sustained non-compliance by PoM. The undertaking:

• Commits to the approaches that will be applied by PoM to calculate the Weighted Average Cost of Capital (WACC), which addresses the ESC’s findings on Return on Capital and Aggregate Revenue Requirement.
• Outlines PoM’s commitment to develop and publish a Pricing Order Engagement Protocol which will, among other internal process initiatives, improve PoM’s engagement practices under the Pricing Order.

PoM considers that this Undertaking will provide the appropriate degree of certainty to PoM and to port users for the next five years until the ESC completes its next review of PoM’s compliance with the Pricing Order.

The Undertaking can be found in the Public Summary of the PoM Response to the ESC Review Findings, available on the PoM website. In addition, PoM has implemented a range of measures that respond to matters that were raised by the ESC which were considered sustained but not significant. A summary of these measures can also be found in the Public Summary.

As recognised by the ESC there were no price impacts on port users during the review period as a result of the findings of non-compliance.

“Port of Melbourne has great respect for the regulatory framework the Government put in place at the time of the port lease in 2016 and we strongly believe the framework is working as intended,” PoM CEO Saul Cannon said.

“The intent of the framework was to provide price certainty for users of the port while also creating certainty and facilitating investment that is critical to the Victorian economy. This is being achieved.

“Over the five-year review period the Port has reduced controllable operating costs by more than 40 percent from pre-lease levels and resolved issues on WACC through considering and responding to feedback provided by the ESC in its interim commentaries.”

PoM is committed to the integrity of the regulatory regime as originally intended which will enable it to continue to invest in and operate the port in the long-term interest of all Victorians.

-ENDS-

To download a PDF of this media statement click here.

Background information on the regulatory framework under which PoM operates

The Pricing Order is a regulatory instrument issued by the Governor in Council under section 49A of the Port Management Act 1995 (PMA) to regulate the setting of tariffs for prescribed services. The Pricing Order came into effect on 1 July 2016 and regulates the setting of tariffs for prescribed services, which relate to the provision of services by investing in wharves, berths and channels for shipping.

In June 2021 the Essential Services Commission (ESC) commenced an inquiry into PoM’s compliance with the Pricing Order as required by section 49I of the Port Management Act 1995 (Vic) (PMA) in relation to the review period 1 July 2016 to 30 June 2021. On 28 January 2022, the ESC released the final report of the inquiry in accordance with s 49I(4) of the PMA and identified non-compliance with the Pricing Order that was, in the ESC’s view, non-compliance in a significant and sustained manner (Adverse Compliance Report).

Under section 49M(1) of the PMA, the ESC Minister may accept a written undertaking given by a provider of prescribed services who is the subject of an Adverse Compliance Report in relation to the provider’s non-compliance with a Pricing Order if the ESC Minister is satisfied that:

1. the terms of the undertaking offered by the provider are appropriate to adequately address the provider’s non-compliance with a Pricing Order; and
2. the provider is reasonably likely to comply with the terms of the undertaking.

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Both the Western and Beveridge freight terminals are critical over the long term to support economic growth and livability by moving more freight on rail.

With 37 percent of containers imported through the port destined for the outer western suburbs1 the Port supports the Western Intermodal Freight Terminal (WIFT) as the immediate priority. WIFT provides the most effective consolidation point for the majority of the Port’s international import and export containers that are located to the west and north of Melbourne, as the Port’s 2020 Container Logistics Chain Study found.

“The port has always acknowledged the long term need for two Intermodal terminals in the Melbourne metropolitan, however we believe the immediate priority should be WIFT,” Port of Melbourne CEO Saul Cannon said.

“WIFT creates the most opportunity to shift more freight onto rail in the short to medium term.”

“More than one-third of Australia’s container trade comes through the Port of Melbourne, and with container trade expected to triple over the next thirty years it’s critical we get more freight movements on rail in the future, so this commitment to our national supply chain infrastructure is very welcome,” Port Melbourne CEO Saul Cannon said.

Port of Melbourne supports the increased use of rail to move freight, as evidenced by its investment of more than $125m in the Port Rail Transformation Project (PRTP) as part of a suite of major initiatives to sustain the Port’s standing as a world-class port facility. The PRTP is designed to enhance existing and build new rail infrastructure within the port precinct to connect to metropolitan and regional intermodal freight terminals.

Port of Melbourne CEO Saul Cannon said the Port will continue to invest along with industry and government to maximise the efficiency and effectiveness of the port supply chain.
“Inland Rail needs to connect efficiently with other freight infrastructure, including the Port of Melbourne and metropolitan and regional intermodal freight terminals,” Mr Cannon said. “Connection of Inland Rail to the Port of Melbourne, including a direct freight connection to Webb Dock, is essential if we’re going to meet the long term demands of consumers and business,” he said.

ENDS

Media enquiries

Simon Watson

0484 00 051

simon.watson@portofmelbourne.com

To download a PDF of this media release click here.

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There has been and will be no meaningful impact on prices paid by port users as a result of the matters raised by the ESC. Port tariffs have remained within annual CPI adjustments and will continue to do so under the Tariff Adjustment Limit that was set by Government at the time of the port lease. The ESC itself acknowledges that there has been no impact on prices paid by port users.

PoM is disappointed that the Essential Services Commission (ESC) report does not acknowledge that, over the past five years, we have worked to address and adapt our approach on a range of matters the ESC has raised with us. This demonstrates that the regulatory framework is working as it was designed to.

PoM has great respect for the regulatory framework that the Government put in place at the time of the port lease in 2016, and we strongly believe it is working as intended. The intent of the framework was to provide price certainty for users of the port while also creating certainty and facilitating investment that is critical to the Victorian economy. This is being achieved.

We continue to invest to support the growth of the Victorian economy. Over the last five years we have invested more than $370 million in port infrastructure, we have restructured how rail works at the port, and we have worked with industry to respond to the immediate needs of bigger ships calling at Melbourne.

While we respect the ESC’s observations for improvement and are keen to work with the ESC and State in this regard, we are deeply concerned that the ESC’s conclusions that the regulatory framework does not have adequate incentives for compliance is based on a number of incorrect facts and legal interpretations.

Port of Melbourne is five years into our 50-year port lease. We remain the most heavily regulated port in the country.

PoM is committed to working with the Government and the ESC on a path forward that maintains the regulatory certainty that will ensure PoM can make prudent and timely investment decisions in the long-term interest of the port, all users of the port freight supply chain and the people of Victoria.

-ENDS-

Media enquiries: 

Megan Fletcher
megan.fletcher@portofmelbourne.com
0409 806 757

To download a PDF of this media release click here.

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