In the face of declining coal exports from the port, the NSW Port of Newcastle has announced plans to open a new 2 million TEU container terminal. It had problems at the outset as the NSW government had a legal agreement with the two Sydney based container ports to charge the Port of Newcastle for every container it moved beyond 30,000 containers a year. The Australian Competition and Consumer Commission (ACCC) is challenging this, announcing in December that it would be taking legal action to remove the charges.
Diversify or die
The Port of Newcastle is currently the biggest coal terminal in the world, with a capacity to shift 145 million tonnes of the stuff every year. Whatever your views on climate change, you cannot push against markets and there is a major forecast decline in demand for coal in the coming years as countries look for cleaner energy generation technologies and fuels.
If the Port of Newcastle were to sit back and whistle as this happened then soon enough the coal port would go bust. This is why it has announced plans to build a 2 million TEU capacity container port. Its deepwater channel can currently take mid-sized, 10,000 TEU containerships, though there are plans to dredge to take the very biggest ships (currently these can carry around 20,000 TEUs).
Speaking to Maritime Executive, Craig Carmody said, “As a global gateway for regional Australia, the Port is ready to go,” says Carmody. “We have cost effective landside connectivity, interested shippers and a deep channel port that is operating at less than half its capacity. With freight growth in NSW expected to double by 2040, a fully utilized Port of Newcastle with a world-class container terminal will provide efficiencies and competition to meet the future logistics and freight task.”
You can see a video about the plans below:
Competition
The new container terminal at the Port of Newcastle may be seen as a good alternative to the other NSW container terminals of Botany Bay and Port Kembla near and in Sydney. When the two ports were privatised in 2013 the NSW government wrote into the deeds that should another port nearby go into competition with them they would be eligible to surcharge all containers moved above 30,000 containers a year (three ships worth at Newcastle, basically).
This raised the eyebrows of those in power and the Australian Competition and Consumer Commission (ACCC) investigated the issue. In December 2018 the ACCC Chair Rod Sims announced, “We are alleging that making these agreements containing provisions which would effectively compensate Port Kembla and Port Botany if the Port of Newcastle developed a container terminal, is anti-competitive and illegal.”
Further, the Chair of the ACCC said,“We are taking legal action to remove a barrier to competition in an important market, the supply of port services, which has significant implications for the cost of goods across the economy, not just in New South Wales. The impact of any lessening of competition is ultimately borne by consumers.”
He pointed out that unless the ACCC acted now NSW would only be able to take in containers via the existing ports for the next 50 years.
What next?
Whether the Port of Newcastle has a new container terminal, and is able to survive the death of coal exports as a result, is in the hands of the courts now. In all likelihood they will win but not until after a vigorous battle with those who have vested interests in keeping the containers flowing through their own ports.
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