Fremantle harbour is facing unprecedented pressure as shipping volumes increase rapidly, but the port’s managers are confident it could handle more than double the current freight volumes.
Most ports around Western Australia are battling to cope with breakneck growth in exports, but Fremantle harbour faces the opposite problem.
Motor vehicle imports are up 30 per cent this year and are expected to total 100,000 vehicles.
Steel imports are up 17 per cent, heavy vehicle imports are up 46 per cent and other transport equipment imports are up 20 per cent.
The container trade has also grown substantially, up by nearly 10 per cent a year over the past decade and by 13 per cent in 2006-07.
The rapid growth has exposed bottlenecks in and around the port; during the build-up to Christmas last year, a 20 per cent surge in freight volumes caused significant congestion.
The port authority has convened a series of workshops during the past few months to try and ensure the same problems do not arise this year.
The acting chairman of the Sea Freight Council of WA and deputy chairman of Fremantle Ports, Bob Pearce, said strategies to minimise congestion would be essential during the peak Christmas period.
“In view of the continued strong growth in trade, there is real potential for a congestion problem in the forthcoming peak Christmas period unless early concerted efforts are made by all parties in the transport chain, including importers and exporters,” Mr Pearce said.
But the challenges facing Fremantle harbour are not confined to dealing with the Christmas peak season.
The port authority’s long-term plan is to more than double freight volumes going through Fremantle, despite the existing congestion around the port and the adverse social impact flowing from trucking activity.
The inner harbour handled 506,000 standard containers (TEUs) last year and the port authority believes it is capable of handling 1.2 million TEUs.
The big stevedoring groups – Toll/Patrick and DP World/P&O – believe the harbour could handle even more freight.
Against this backdrop, Fremantle Ports chief executive Kerry Sanderson says the key to success will be getting all players in the logistics chain working together more effectively.
“Supply chain coordination can often result in very big improvements without having to incur big costs,” she told WA Business News.
Mrs Sanderson acknowledged this would be a challenge for all parties, including stevedores, importers and exporters, trucking companies, warehouses and container parks, and the port authority itself.
Fremantle harbour is not alone in facing congestion and crowding challenges, however.
The House of Representatives standing committee on transport and regional services last month completed a report titled The Great Freight Task: Is Australia’s transport network up to the challenge?
The committee found that every port it visited had at least one serious infrastructure problem hindering access to the port area.
“What we discovered, as we moved from port to port, was a pattern of logistics or infrastructure failures in the access to, or the operation of, ports – a missing supply link, a lack of rail capacity, a need for bypass or ring roads, and rail loops, and the functionality of [shipping] channels to cater for larger or more frequent vessels,” committee chair Paul Neville said.
Like Mrs Sanderson, the committee concluded that all links in the supply chain needed to be properly integrated.
“In the end it is all about integration,” Mr Neville said.
“It is impossible to divorce one form of transport infrastructure or connectivity from another, as the report makes clear.”
The recent workshops convened by Fremantle Ports, in conjunction with Shipping Australia Ltd and the Sea Freight Council, were designed to start converting this rhetoric into tangible action.
Mr Pearce said 60 participants attended the container workshop, making it the first time representatives from all sectors had come together to discuss container congestion.
Mr Pearce said the workshops gave him confidence there would not be a repeat of the port congestion that occurred last year.
“I’m pretty confident we will manage better this year than we did last year,” he said.
Trucking industry group Transport Forum’s freight division chairman, and Jayde Transport Fremantle manager, Ray U’Chong, was more circumspect.
“If all the parties come to the party and understand the magnitude of the issue, then it will be okay,” Mr U’Chong said.
He is looking for the stevedoring companies in particular to focus on the task.
“They have got to come to the party, they need to understand what it is all about,” Mr U’Chong told WA Business News.
“If you ask me what we want from the stevedores, it is service, that is all we want.”
One of the biggest issues standing in the way of efficient freight movement is the shortage of trucks and truck drivers, with many drivers tempted away by high pay in the resources sector.
Mrs Sanderson said new security rules were compounding the problem since new drivers had to wait one month to get their clearance.
Stricter security procedures were also affecting the supply of casual stevedoring labour.
Mrs Sanderson suggested that importers and warehouses should stay open for longer hours to more closely align with the port’s extended opening hours.
This could include opening on Saturday mornings.
A long-running problem at Fremantle is that nearly one quarter of container trucks run empty one-way and many others run with only a partial load.
Mrs Sanderson said it was estimated that only about 60 per cent of trucking capacity was being utilised.
While this is an improvement from levels a few years ago, she believes there is scope for more to be achieved.
The development of container parks, or staging posts, was seen as one way to get containers out of the port more efficiently.
“I think there will be a need for a staging post,” Mrs Sanderson said.
The trucking industry believes container parks will allow drivers to pick up containers outside of normal working hours, including on weekends, and possibly use trailers to transport several containers together.
The containers could then be distributed to warehouses the following working day.
Mrs Sanderson is also hoping to implement a triangulation system so that importers and exporters can exchange empty containers directly.
Currently, empty containers have to be taken back to the port so they can be de-hired.
She agreed this was an ambitious goal but would prefer to aim high rather than continue with a mediocre system.
Increasing the amount of freight carried by rail is seen as another important goal.
About 10 per cent of freight into and out of the inner harbour is carried by rail, and the state government wants to lift that figure to 30 per cent.
Other initiatives discussed at the container workshop included longer container park hours, greater transparency in the vehicle booking system, more adequate notice of resource requirements, and further education of industry participants on supply chain efficiency.
Fremantle Ports has been contributing to the solution by implementing a substantial capital works program.
The most notable recent projects were the construction of a $32 million rail loop and rail terminal for the container trade at North Quay, and a $31 million infrastructure upgrade at the Kwinana bulk terminal.
Major upcoming projects include a $190 million dredging program so the port can cope with the global trend toward increasingly large ships.
The dredging will allow the port to accept vessels with a 14-metre draft, up from 12.5m presently.
Ms Sanderson said that, by 2020, it was anticipated that 63 per cent of vessels visiting Fremantle would have a draft requirement above the current limit.
Another big upcoming project is an upgrade of berth 10, which will allow the port to accommodate one extra vessel on North Quay.
For its part, the House of Representatives standing committee concluded that Fremantle Ports is doing an excellent job.
“Over a number of major inquiries, the committee has been enormously impressed by Fremantle Ports and feels that it should press on with planned efficiencies and expansion plans,” the report says.
One company that will not be so impressed is Mediterranean Shipping Company, one of the biggest users of the port.
It wanted to redevelop berths 11 and 12 so it would have its own container terminal on north quay.
“While it sees merit in the MSC proposal, Fremantle Ports has concluded that it is not prepared to progress with it at the current time,” a briefing paper for the June workshop stated.
“A major factor bearing on Fremantle Ports’ decision is the significant growth in break bulk trade in the port and the need for berths 11/12 to accommodate this trade in the absence of any upgrade to berths 1/2.”
A recent initiative by Fremantle Ports was the awarding of a new operating contract for the North Quay rail service to Intermodal Link Services, a joint venture between agribusiness co-operative CBH Group, Stevenson Logistics Pty Ltd and Kewdale-based South Spur Rail Services Pty Ltd.
The service was previously provided by Fremantle Link Services, which was owned by transport and stevedoring group Toll/Patrick.
Intermodal is pursuing a range of initiatives to improve the efficiency of its service, which includes terminals at North Quay and Forrestfield.
CBH Group manager supply chain strategies Rob Voysey said a trial of the service during the past few months revealed many teething problems.
“The object was to flood the supply chain, to find the choking points, and there were multiple ones,” Mr Voysey told WA Business News.
The constraints included track works between Cockburn and the Fremantle passenger terminal, container availability and capacity issues at CBH’s terminal, as well as equipment availability and operational activity at North Quay.
The biggest long-term issue facing the port authority is its proposed outer harbour development in Cockburn Sound, which will be needed when the inner harbour reaches its capacity of 1.2 million standard containers.
Fremantle Ports estimates this will happen sometime between 2015 and 2017, based on growth of container trade at the rate of 8 per cent per year.
If growth in the container trade continued at the rate of the past decade (i.e. about 9.3 per cent per year) the inner harbour would reach capacity much sooner.
The stevedores believe the inner harbour’s capacity is substantially higher than 1.2 million containers. They say the industry will invest a lot more in efficient equipment and systems as volumes expand, allowing them to handle even more freight.
Mrs Sanderson said the port authority and the state government were carefully evaluating development options for the outer harbour to ensure they could put in place additional capacity before the inner harbour reached its capacity.
Rival port plans face off
Private port developer, James Point Pty Ltd, and Fremantle Ports have traded charges over their competing projects for Cockburn Sound, with James Point claiming its project could be built at a fraction of the cost of the port authority plan.
James Point, which is 45 per cent owned by BGC boss Len Buckeridge, has estimated that its general cargo and container ports could be built for about $270 million.
In comparison, stage 1 of the competing port authority project has an estimated cost of $1.3 billion.
James Point chairman Hans Moonen believes the wide cost differential, and the congestion issues already affecting the inner harbour (see page 12), make a strong case for his project to proceed.
“There is an urgent need for additional port capacity and James Point is the party best positioned to expeditiously deliver that capacity,” Mr Moonen said.
Fremantle Ports chief executive Kerry Sanderson disputes the cost comparison, arguing that the two projects are not comparable.
“It is not much good if you build port facilities which cost less but find that they cannot operate effectively as a port in the longer term,” Mrs Sanderson said.
The James Point project dates back to 1997 when the Court government called for expressions of interest from the private sector to build, own and operate a new port at Kwinana.
James Point signed a formal operating agreement with the Court government in 2000.
Following the change of government, Planning and Infrastructure Minister Alannah MacTiernan wrote to James Point in September 2001, notifying it that the commencement date for the operating agreement was January 25 2001.
The terms of the operating agreement included the operator using its best endeavours to get stage 1 operating within two years.
Despite this, the project has been unable to obtain the relevant approvals and been subjected to vigorous criticism by Ms MacTiernan, who told parliament earlier this year it should be the subject of a royal commission.
James Point’s prospects suffered another blow recently when Ms MacTiernan revealed the government had changed its own plans for the outer harbour.
In July 2006, the government said its preferred option was the construction of an island wharf one kilometre offshore and linked to the mainland by a bridge.
In July this year, it decided to evaluate a second option involving a partially land-backed wharf with an island component.
Mrs Sanderson said the island wharf was preferable from a marine and environmental perspective, while the second option was preferable from a land transport perspective.
Both options would have a capacity of 1.4 million standard containers.
The $1.3 billion first stage would have a capacity of 700,000 containers and two general-purpose berths.
The problem for James Point is two-fold: the second option overlaps its own project area; and the government expects to take another two years before making a final decision.
Mr Moonen believes James Point would be much cheaper because it is a land-backed wharf development rather than an island.
He has estimated that the fill requirement, the reclamation area and the seawalls are all much smaller.
In addition, dredging would not be needed because the seabed drops steeply to a natural depth of 14 metres.
Ms Sanderson believes this would limit James Point because ships are getting larger and need deeper water. She has also questioned the adequacy of its breakwater protection and noted that its costs do not include road and rail links.
Mr Moonen said the state is required to provide these links under the operating agreement, and believes they would be much cheaper for land-backed wharves.
