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  • 1. FREIGHT, WIDER POLICY CONSIDERATIONS AND IMPLICATIONS FOR TASMANIA’S PORTS Gary Swain - Deputy Secretary Strategy and Policy Department of Infrastructure, Energy and Resources Presentation to the AusIntermodal 2013 Conference Thursday 10 October 2013
  • 2.  Public funding scarcity.  Rising community expectations/demands for transparency.  Greater need for integration/optimisation of investments.  Incremental demand but lumpy supply.  Low returns to government from ownership.  Community resistance to price increases and use of developer charges.  Calls for greater private sector involvement (super funds). INFRASTRUCTURE TRENDS IN AUSTRALIA 2
  • 3.  The Tasmanian Government plays a lead role in providing road, rail and ports infrastructure; rail services; Bass Strait passenger shipping services and to a lesser degree freight services; and public bus transport. TASMANIA’S TRANSPORT SYSTEM 3Data sources: Department of Infrastructure, Energy and Resources 2011-12 Tasmanian Freight Survey and TasPorts 2011-12 Import / Export data
  • 4.  The on-island freight system is characterised by a dominant freight corridor with a finite number of major feeder routes.  Forecast compound annual economic growth of 1.7% per annum, compared to mainland equivalent growth of 2.4% per annum. TASMANIA’S TRANSPORT SYSTEM 4Data sources: Department of Infrastructure, Energy and Resources 2011-12 Tasmanian Freight Survey and TasPorts 2011-12 Import / Export data
  • 5.  Generally little road congestion.  Urban congestion is time and location specific.  The average peak delays in Hobart are around six minutes.  Some Tasmanians believe we have congestion but clearly it cannot be compared with other capital cities. TASMANIA’S TRANSPORT SYSTEM 5Graph shows average AM peak travel times for Hobart’s arterial routes and the difference from off-peak (day) travel times. 27km 26km 18km 17km 25km 03:10 05:46 06:31 05:03 06:22 00:00 05:00 10:00 15:00 20:00 25:00 30:00 Brooker East Derwent South Arm Southern Outlet Tasman TravelTime(minutes) Travel times for AM peak and off peak inwards journeys with peak/off-peak delay - 2011 AM Peak In Peak Delay (from off peak) Off Peak In
  • 6.  Major business focus on freight service availability and cost, particularly for international exports.  Around two thirds of Tasmania’s total freight task is goods moving into or out of the state.  85 per cent of the shipping task is through Port of Melbourne  Due to physical separation, Tasmania’s freight system relies on air and sea links - 99% of goods by volume are moved by sea.  The Tasmanian Freight Equalisation Scheme (TFES) is critical to alleviating the sea freight transport cost to shippers of eligible goods. The TFES is embedded in the system including business models of companies. TASMANIA’S FREIGHT TASK 6
  • 7.  Freight ports located at Burnie, Bell Bay, Devonport and Hobart - with a total throughput (imports and exports) of 11,214,930 tonnes in 2011/12.  Changes in demand and port throughput between 2007/08 and 2011/12: • Total tonnes (import and export) from 16,222,533 to 11,286,566; • Total TEU from 491,485 to 456,825; • Decline in TEU throughput through Bell Bay from 89,458 TEU to 5,885 TEU. Increases in Devonport (171,036 to 200,695) and Burnie (227,237 to 242,284).  Burnie Port capacity expansion project to commence 2014: • Estimated increase in capacity up to 350,000 TEU per annum; Burnie predicted to reach capacity in approximately 2020. WIDER POLICY CONSIDERATIONS 7
  • 8.  The Freight Logistics Coordination Team (FLCT) was established in November 2012 by the Tasmanian Government with funding support from the Australian Government.  The FLCT is an independent expert advisory body comprised of 19 senior industry representatives and is chaired by Phil Clark AM.  The FLCT has a clear focus on outcomes that deliver improved freight efficiency for Tasmanian businesses and support business growth. FREIGHT LOGISTICS COORDINATION TEAM (FLCT) 8
  • 9.  Individual commodity supply chains efficient but there are opportunities for system-wide improvement based on greater collaboration.  Sample arc/node diagram (Aurecon). FLCT KEY FINDINGS TO DATE 9
  • 10.  Bass Strait shipping is around 24% more expensive than similar European services; however, identifiable costs (labour costs and fuel) are estimated to be 23% more expensive than European costs.  The loss of a direct international shipping service is hurting exporters.  The Tasmanian Freight Equalisation Scheme plays a critical role in adjusting domestic freight costs. FLCT KEY FINDINGS TO DATE 10Source: Aurecon ‘Supply Chains in Tasmania’, prepared for the FLCT
  • 11.  Freight demand is approaching the limit of existing vessel capacity during peak periods of the year.  All current shipping services across Bass Strait are high frequency and high quality and do not provide for low-cost, infrequent needs of many shippers. FLCT KEY FINDINGS TO DATE 11 Supply Chain Name Commodity Perishable Overnight Time Sensitive Price Sensitive Volume FY 2011/12 (TUE) Volume % Fresh Vegetables, Fish, Fruit X X X 35,000 15% Low Cost Zinc, Aluminium, Scrap Metal, Pulp and Waste Paper, Furniture, Timber X 30,000 13% Low Inventory Newsprint, Paper, Misc. Manufacturers, Beer, Crude Fertiliser and Minerals, Animal Foods X 52,000 23% Perishable Confectionary, Butter and Cheese, Misc. Food Preparations, Livestock, Meat, Frozen Vegetables X X 29,000 13% Empty Empty Containers X 74,000 33% Unclassified Various 7,000 3% Total 28% 15% 51% 46% 227,000
  • 12. FLCT KEY FINDINGS TO DATE 12  Tasmanian shipping services are regarded by the market as efficient, timely and reliable.  Coordination with transport services means products can get to mainland markets within 24 hours.  Many businesses have designed their supply chains around this level of service with minimal on-island warehousing (‘make and ship’ logistics model a feature of the market).  There is some market interest in direct international shipping services which is being explored.
  • 13. • Structural change is occurring in the Tasmanian economy, which are likely to produce modest growth in freight demand. Share of Gross Value Added by Industry, Tasmania, 1991-92 to 2011-12, original annual data (excluding ownership of dwellings) WIDER POLICY CONSIDERATIONS 13Source: Tasmanian Department of Treasury and Finance ‘ Structural Change in the Tasmanian Economy’. Data: Australian National Accounts: State Accounts, ABS Cat No 5220.0
  • 14.  Significant public/private investment in irrigation; dairy and acquaculture expansion; several new mining operations.  Expanded arrangements with Asia on the Government’s agenda based on export oriented economy.  Transport infrastructure is an enabler for productivity, economic growth and social amenity.  Concentration in infrastructure service provision is a potential issue in a regional economy. WIDER POLICY CONSIDERATIONS 14
  • 15.  Freight is on the agenda to stay.  A transparent long-term ports strategy is needed that aligns with road and rail arrangements, and critically, customer needs.  Ports specialisation occurring already: • Bulk minerals at Burnie and dry bulk terminal at Bell Bay; • Specialised terminal (passenger, cement) at Devonport; • Priority container terminal (location still being developed). • Hobart increasingly being used as a port for Antarctic and cruise vessels.  TasPorts strategy involves the short term development of container terminal and intermodal capacity at Burnie to meet 0-5 year volume forecasts. IMPLICATIONS FOR TASMANIA’S PORTS 15
  • 16. • Improved commercial returns through cost reductions required to create enhanced options for private sector involvement. • Governance arrangements for government owned entities provides for joint venture arrangements with third parties and long-term contracting for capex and opex projects. • Need to maximise existing capacity while planning for long-term capacity increases under multiple scenarios. • Government has levers it can/does/could use – performance benchmarking linked to KPI’s through its shareholder role; economic regulation and structural reform – but changes need to be carefully thought through. IMPLICATIONS FOR TASMANIA’S PORTS 16
  • 17.  Policy thinking in this space is developing now, we are open to ideas/suggestions/engagement that: • supports the growth and diversification of the economy; • reduces future funding requirements without creating unmanageable market design risk; and • meets long-term community and stakeholder needs. IMPLICATIONS FOR TASMANIA’S PORTS 17