List of figures Figure 1. Land-bridging cost comparison Figure 2. Methodology overview Figure 3. Forecasts of total container trades volumes (TEU): central, low and high cases Figure 4. Historic demand forecasts for Victorian container demand Figure 5. Extreme high and low scenarios for container trade demand Figure 6. Port Phillip Bay channels Figure 7. Shipping channels through Port Phillip Heads Figure 8. Vessel tracks for successful transits of Port Phillip Heads by 14,000 TEU MSC Daniela in ship simulator Figure 9. Evolution of container ships and typical dimensions Figure 10. Global shipping routes Figure 11. Evolution of the world container fleet Figure 12. Forecast fleet spectrum for the constrained case Figure 13. Forecast fleet spectrum for the unconstrained case Figure 14. Forecast annual trade at Swanson and Webb Dock assuming 50/50 share of Asia trades Figure 15. Import supply chains at the Port of Melbourne Figure 16. Export supply chains at the Port of Melbourne Figure 17. Landside port capacity overview Figure 18. Exports origins by volume Figure 19. Port of Melbourne today Figure 20. Swanson Dock layout and possible capacity enhancement measures Figure 21. Possible capacity enhancements for berth, yard and landside at Swanson Dock Figure 22. Theoretical sequence of possible capacity upgrades at Swanson Dock Figure 23. Webb Dock layout and possible capacity enhancement measures Figure 24. Possible capacity enhancements for berth, yard and landside at Webb Dock Figure 25. Theoretical sequence of possible capacity upgrades at Webb Dock Figure 26. Proposed sequence of capacity upgrades for the Port of Melbourne Figure 27. Port of Melbourne surrounding land use Figure 28. Forecasts of total container trade, volumes (TEU): central, low and high cases Figure 29. Recommended decision pathway for providing additional container capacity in Victoria Figure 30. Existing Port of Hastings and surrounding land use Figure 31. ‘Along shore’ and ‘dig out’ concepts for Hastings Figure 32. Hastings concept – terminal and port environs Figure 33. Existing channels at the Port of Hastings Figure 34. Hastings concept, elements included in costing Figure 35. Bay West study area and surrounding land use Figure 36. Initial location concepts for Bay West Figure 37. Bay West concept terminal and port environs Figure 38. Bay West concept, elements included in
the environmental and social impacts of a port at either location. The economic analysis also considered the regional and state-wide impacts of expanding the container port or changing its location. All of these impacts were assessed together in a multi- criteria assessment, a commonly used tool for assessing quantitative and qualitative indicators of environmental, economic, social and amenity impacts. To ensure we understood the effect of different priorities on our results, we also ran the multi-criteria assessment with different weightings, to test whether focusing on a particular factor changed our assessment. An overview of how we prepared our advice is shown in figure 2.
The results of forecasting the central, high and low cases Figure 3 shows that in the 2031 financial year, total containerised demand will reach 4.3 million TEU under the central case, 4.2 million TEU under the low case and million TEU under the high case. Thereafter demand grows notably less under the low case compared to the central and high case. By the 2046 financial year, container demand is expected to reach 6.5 million TEU under the central case, 5.6 million under the low case and 8 million TEU under the high case. This demand forecast provides a guide for when new port capacity is required by comparing a forecast against the capacity of the current assets. Demand forecasts need to be regularly checked as a surge in demand may bring forward the need for a capacity investment and these investments have very long lead times. Figure 3. Forecasts of total container trades volumes (TEU): central, low and high cases Source: Deloitte, Infrastructure Victoria Second Container Port Advice container trade forecasts for Victoria, 2017
Before the Global Financial Crisis in 2008, Victoria had experienced ten years of very strong growth in container demand of about 7 per cent on average. After 2008, the rate of growth of container demand was much less, and has remained at a lower rate of about 1–2 per cent on average. For a government, the decision it would have made regarding investment in new port capacity in early 2007 would be very different from the decision it may have made in early 2009. Figure 5. Extreme high and low scenarios for container trade demand A government’s view of future demand will vary depending on whether it is forecasting demand in a high or low growth environment. Figure 5 shows how demand forecasts would have looked had the trade continued on the basis of the high growth up to 2007, as well as the low growth post- 2008, and our central, high and low forecasts. This stark difference between the extreme high and low scenarios show why it is important to balance the impact of outlier demand movements in the long-run demand forecasts. Our demand forecasting has done this. Source: Prepared by Deloitte for Infrastructure Victoria, 2017 Which technical reports should I look at for more information? Deloitte, Infrastructure Victoria Second Container Port Advice container trade forecasts for Victoria, 2017
The channels in Port Phillip Bay have different dimensions and constraints, as summarised in table 2. Some of these constraints can be relatively easily unlocked (for example by dredging to widen a channel) but others are much harder (for example raising the West Gate Bridge). The capacity and constraints of Webb Dock, the Yarra Channel and Swanson Dock are discussed in the Capacity of the Port of Melbourne section. Table 2. Port Phillip Bay channels and constraints for various ship sizes Container ship class Area Old Post Panamax 7,000 TEU Old Post Panamax Plus 8,500 TEU Old Post Panamax Plus 9,500 TEU New Post Panamax 14,000 TEU Ultra Large Container Ship 18,500 TEU Comment on existing limitations Great Ship Channel (Heads) Y Y Y Y N Width of channel South Channel Y Y Y Y Y Port Melbourne Channel Y Y - - N Width of channel Williamstown Channel Y Y - - N Width of channel Webb Dock Swing Basin Y - - N N Size of swing basin Webb Dock Y Y Y - - Width of northern section, southern section adequate Yarra River Channel Y N N N N Width of channel West Gate Bridge Y Y - N N Air draught Swanson Dock Swing Basin Y N N N N Size of swing basin Swanson Dock Y N N N N Width of basin Source: GHD, Infrastructure Victoria Second Container Port Advice – Estimated Capacity of the Port of Melbourne, 2017 Key Y: Vessel size can operate in channel or through constriction -: Borderline. Vessel size should be able to operate with minor adjustments or some restrictions N: Vessel size cannot operate
Ship simulation – Port Phillip Heads To better understand the size of ship that could safely access the Heads, our navigation study included a ship simulation at the Australian Maritime College Maritime Simulation Centre in Tasmania. The ship simulation was to determine two things: What size vessel could safely transit the Heads with its current configuration? What channel upgrades would be required to allow some of the largest vessels in the world – 18,500 TEU capacity and 400 metres long – to safely transit the Heads? The ship simulator is analogous to a flight simulator. It consists of a full size mock-up of a ship’s bridge with a wrap-around video screen showing the view forward and to either side and includes all navigation instruments, steering and engine controls. Our simulations were piloted by professional Port Phillip Sea Pilots, who specialise in guiding ships in and out of Port Phillip Bay. These pilots are familiar with the conditions in the Heads and how real ships behave. They are also familiar with the Australian Maritime College simulator and its limitations, for instance the simulator’s inability to introduce random currents or sudden failures of a ship’s gear. Both of these situations have occurred during transits of the Heads. The pilots are able to consider the simulator limitations when deciding if a simulated transit was a success. We conducted a number of simulator runs to account for different ship sizes and different tidal conditions. In all, 28 transits of the Heads were simulated with three different ship sizes, including at different times in the tidal cycle: in-bound, flood tide and ebb tide. Table 3 describes the result of these navigation simulations. The 8,500 vessel could safely transit the Heads using existing channels in low current window around slack water. Slack water is the point in the tidal cycle where the level of water inside the bay and outside the bay are equal, resulting in very low tidal currents. Slack water occurs approximately every six hours. Table 3. Results of navigation simulations Vessel Length (m) Beam (m) Draught (m) TEU Result Ital Cortesia Old Post Panamax plus 334 48.2 13 8,500 Vessel could safely transit the Heads using existing channels in low current window around slack water. Current limit: 3 to 4 knots, depending on tide and direction MSC Daniela New Post Panamax 366 51.2 13.5 14,000 Vessel could safely transit the Heads using existing channels in low current window around slack
The navigation simulations show that vessels up to about 14,000 TEU can safely transit the Heads, if they time their transit for the low current period around slack water. As vessels get larger, the length of the window around slack water that the vessel can safely access the Heads becomes smaller. Figure 8 shows the vessel tracks of the 14,000 TEU ship in the simulator for multiple successful transits of the Heads. A number of simulations were carried out to test the effects of deepening or widening the Great Ship Channel. These showed that enlarging the channel did allow larger ships to transit, but they were still restricted to the low current window around slack water. Given the nature of the Heads we think that even with channel upgrades, access for large ships will always be constrained to certain tidal windows around slack water. On the basis of these simulations, a 14,000 TEU ship would be a reasonable future design vessel for Bay West, although it may be many years before these vessels come to Melbourne – see the discussion of ship size and future fleet forecast below. Although access is restricted to certain tidal conditions, this is not unusual. Many ports have similar restrictions including Fremantle and Brisbane, where deep draught ships cannot access the port at low tide. Although we have carried out ship simulations with a deepened and/or widened channel through the Heads, we are not recommending that any dredging in the Heads is required at this stage, and this dredging may never be needed. If in the future the option to expand the channel through the Heads was considered then more detailed studies would be required to assess the environmental and social impact. These issues are discussed further in the Bay West – Potential environmental and social impacts section. Figure 8. Vessel tracks for successful transits of Port Phillip Heads by 14,000 TEU MSC Daniela in ship simulator Source: AECOM, Infrastructure Victoria Second Container Port Advice – Navigation Study, 2017
Rail access The main rail services at or adjacent to the Port of Melbourne include: regional intermodal trains grain trains some steel train operations associated locomotive provisioning and maintenance movements. Victoria’s main interstate rail facilities are located at Dynon, just north of Swanson Dock. Port rail facilities are linked to Dynon where there is a mix of port and non-port rail freight operations. Rail mode share at the Port of Melbourne is about 10 per cent. Currently there is no significant movement of containers around metropolitan Melbourne on rail. The amount of network capacity available for more port freight trains in the future depends on growth in the public transport system and in interstate and regional freight trains. Trains to the south-east have to use the broad gauge system mainly used by public transport. Trains to the west and north use the standard gauge network mainly used by freight. A key interface point and potential network constriction is the Sim Street Junction just north of Footscray Road and the port. This junction is an interface for freight trains to and from the port, interstate freight trains to the Dynon Terminals and interstate passenger trains to Southern Cross. The implementation of the metropolitan intermodal system or rail port shuttle operations has been the subject of significant planning, although minimal services currently operate to the port. Current capacity to the west of Melbourne on standard gauge can provide for about eight (one way) daily trips and at least this capacity is also available on the broad gauge to the south-east of Melbourne, providing capacity for 300,000 to 400,000 TEU in the short term and the period to about 2025. Key issues for scheduling of port rail shuttle trains on the existing networks involve avoidance of peak periods and agreed schedules around passenger and potential higher priority trains. The capacity available on the networks is likely to provide some challenges in the future. If the port rail shuttle system can be established, however, projects to increase capacity may be viable when demand for services nears capacity limits. We believe that an important part of increasing capacity at Swanson Dock requires the establishment of the Metropolitan Intermodal System, also known as the Port Rail Shuttle. Rail should become part of the network that moves containers around metropolitan Melbourne. Which technical reports should I look at for more information? Deloitte, Infrastructure Victoria Second Container Port Advice supply chain assessment methodology, 2017 GHD, Infrastructure Victoria Second Container Port Advice – Estimated Capacity of the Port of Melbourne, 2017 Jacobs, Infrastructure Victoria Second Container Port Advice port landside transport modelling, 2017
Environmental and social considerations Why is this important? Considering the social and environmental impacts of increasing capacity at the Port of Melbourne, alongside the economic costs, is critical to ensure our advice is comprehensive and balanced. We recognise this is a significant issue for nearby communities, which was reflected in the submissions we received on our September 2016 discussion paper Preparing advice on Victoria’s future ports capacity. Social There are several social factors related to increasing Port of Melbourne capacity. These factors are not hard constraints on development, but should be considered, assessed and potentially mitigated as part of any future development. We recognise that if social factors are not mitigated or managed appropriately, they may influence a decision about whether to increase capacity at the Port of Melbourne or invest in a second port. Traffic, amenity and health Without significant investment in landside transport networks, the Port of Melbourne operating at 2-5 times its existing capacity would place significant pressure on transport infrastructure and reduce amenity for those living near the port. We heard during consultation that some local residents feel the Port of Melbourne’s operation is not complementary with surrounding land uses, and has a social impact on nearby residents. The Port of Melbourne generates significant truck traffic, with close to 90 per cent of containers entering or leaving the port on trucks. Trucks can impact on residential areas through noise and vibration, the potential health impacts of diesel fumes, and safety concerns about heavy vehicles driving on suburban streets. The main interaction between port related trucks and residential areas is in the inner west. As the international terminal container at Webb Dock becomes busier there could be more interaction between trucks and residential areas around Port Melbourne. In the west, some truck traffic travels through residential areas in Footscray, Yarraville and Seddon to access transport yards and empty container parks in the inner west. There are increasing competing land use demands between the Port and residential uses. Both have been there for over 100 years and have developed together, but it is not sustainable to substantially increase the number of trucks servicing the Port without addressing these land use issues. The Environment Protection Authority measured major air pollutants associated with motor vehicle emissions on Francis Street, Yarraville in 2013. The final report of this monitoring program indicates the air quality and noise levels in Francis Street are worse than surrounding areas. Increasing rail mode share may be part of the solution, but even 30 per cent rail mode share (an aggressive target) will still not stop an increase in Port capacity from also increasing truck numbers.
Design vessels For the Bay West concept we have considered two design vessels. The first is a 14,000 TEU vessel, the largest vessel that can transit the existing channels through Port Phillip Heads, as established by navigation simulations carried out at the Australian Maritime College. The second scenario is a larger 18,500 TEU vessel, included for direct comparison with Hastings. Navigation simulations indicated that for vessels of this size to safely transit the heads it would be necessary to widen the Great Ship Channel. This option is included for comparison purposes, at this stage we are not proposing any further dredging of the Great Ship Channel at the Port Phillip Bay Heads. Table 16 shows the vessel characteristics for the two scenarios we modelled. Bay West concept design Terminal location In the selected Werribee River concept the container quay and terminal are located on a reclaimed island in Port Phillip Bay, south of the Werribee River mouth and about 1.5 kilometres offshore of the Western Treatment Plant. There is a 4.1 kilometre strait quay line backed by a 600 metre deep terminal area, providing about 250 hectares of land and a capacity of 9 million TEU per year. The terminal area includes ship to shore cranes, a container stacking area and road and rail loading and unloading. The island also accommodates some port services and maintenance functions. Figure 37 shows the terminal location. Table 16. Design vessel characteristics for Bay West and Hastings SCENARIO 1: 14,000 TEU – Constrained by existing Port Phillip Heads SCENARIO 2: 18,500 TEU – Port Phillip Heads widened, not deepened 14,000 TEU New Post Panamax Based on MCS Daniela 366 metre LOA 51.2 metre beam 13.5 metre sailing draught 18,500 TEU Ultra Large Container Ship Based on Maersk, ‘triple E’ vessel. 400 metre LOA 59 metre beam 14.0 metre sailing draught Source: Infrastructure Victoria 2017
Economic evaluation scenarios: Bay West – design for 14,000 TEU ships. No upgrade of channel through the Heads. Required upgrades to the existing rail network completed in stage one. Hastings – design for 14,000 TEU ships, including rail connections and with Regional Rail East constructed in stage one. Hastings minimum rail – design for 14,000 TEU ships. The port uses the existing rail connection via the Stony Point and Frankston line. The new line from Hastings to Lyndhurst and Regional Rail East are not constructed. As a result, rail capacity is severely limited by the constraints of the existing network. Figure 39. Capital cost to expand capacity at Bay West Source: Deloitte for Infrastructure Victoria Figure 39 and 40 show the tranches of capacity expansion and capital cost profile for the economic evaluation scenarios at Bay West and Hastings. Figure 40. Capital cost to expand capacity at Hastings Source: Deloitte for Infrastructure Victoria
Impact on Gross State Product and employment Ports are critical international gateways for the import and exports of goods. Efficient supply chains support economic growth, help Victoria to maintain its competitiveness and increase its productivity. Gross State Product is the measure of Victoria’s overall economic output. It is the sum of the market value of all final goods and services produced by industries within Victoria. We assessed how moving the port to either Hastings or Bay West impacted Victorian Gross State Product relative to the investment required to build the port at these locations. The numbers presented were estimated against a base case of continuing to satisfy demand at the Port of Melbourne. Results Our modelling estimates that for every dollar of capital expenditure in a new port at Hastings there is an increase in Gross State Product of 44 cents. This is not an economically efficient investment, as the increase in Gross State Product is 56 cents less than the capital investment in the new port. For an economic asset such as a port, every dollar of capital expenditure would be expected to contribute more than a dollar in Gross State Product. By comparison modelling estimates that for every dollar of capital expenditure on a new Bay West port there in an increase in Gross State Product of $1.06. The impact of Bay West on Gross State Product is of marginal benefit, but it is much greater than Hastings. Table 23 summarises these results. Deciding to build a second port will affect state employment. The total level of state employment is impacted by the one- off investment during planning and construction of a port. There is also a long-term employment impact from changes in operating efficiency and traffic flows. Building a new port at either location will create around 2,000 direct jobs. In both locations, the ongoing operation of the port and related industries would attract thousands of jobs to the region the port is located in. Although our analysis demonstrated overall net job creation is not a significant differentiator between locations. See GHD Concept Options – Bay West and Hastings, Deloitte, Economic Advice, 2017, and Deloitte, Multi-criteria assessment (MCA), 2017 reports for further information. Table 23. Bay West and Hastings impact on Gross State Product Bay West Hastings Victoria Victoria Incremental capital expenditure ($ billion, PV) 3.30 B 7.73 B Impact on Gross State Product relative to investment required 1.06 B 0.44 B Source: Deloitte, Infrastructure Victoria Second Container Port Advice economic advice, 2017.
Table 27. Individual multi-criteria assessment criterion results Criteria Description and assessment methodology MCA result Summary justification Economic Cost effectiveness Estimate the total economic cost of providing container capacity at either location. Considers not only upfront capital and operating costs, but also supply chain and transport costs, and environmental and externality costs of transport. Tested with different discount rates – 4,7 and 10 per cent. Hastings is considered with and without rail, to understand if this significant capital cost affects the assessment. Bay West preferred Bay West has lower total operating costs than Hastings for transport and externality costs, mainly due to the shorter transport trips needed for most customers to use Bay West compared to Hastings. Gross State Product (GSP) GSP is the measure of a state’s overall economic output. It is the market value of all final goods and services made within the state in a year. This is used as an indicator within the economic analysis and was calculated using Computable general Equilibrium modeling of each port option. Bay West strongly preferred Average supply chain costs were smaller at Bay West than Hastings for all average supply chains assessed. Supply chain impact Supply chain costs are the costs associated with the movement of freight. This is Bay West strongly preferred Average supply chain costs were smaller at Bay West than Hastings for all average supply