port of hastings - what it means for south east melbourne
DESCRIPTION
Port of Hastings CEO and Members of Parliament joined by business leaders to discuss opportunities that the development of this key piece of infrastructure will bring for the South East Region. Hosted by Committee for Dandenong and sponsored by Pitcher PartnersTRANSCRIPT
Port of Hastings
July 2014
What it means for the South East Region
Mel
ba H
wy
Hum
e Fw
y
South Gippsland Hwy
Calder Fwy
Western Fwy
Princes Fwy
Avalon Airport
Melbourne Airport
Port of Hastings
Port of Melbourne
Port of Geelong
Princes Fwy
SERL – Additional rail track Dandenong to Dynon
NE link road
E6 link road
BIFT – 2M TEU capacityand potential MIS Terminal
HPFV access to majorityof freeway network
Melbourne AirportOMR link road
Melbourne Airportwith fourth runway
OMR InterstateRail Bypass
Avalon withsecond runway
WIFT – 2M TEU capacityand MIS Terminalreplacing Altona
OMR link road
EW link road
MIS Terminal
Healesville-Koo Wee Rup Road Upgrade to Freeway
Port of Hastingsaround 9M TEU capacity
Full freewaylink to port
Dynon Rail Terminals relocatedPort of Melbourne up to 5M TEU capacity
MIS Terminal
Rail link to port
PAKENHAM
BELGRAVE
DANDENONG
DROUIN
MELBOURNE
MELTON
HURSTBRIDGE
SUNBURY
DEER PARK LILYDALE
WERRIBEE
QUEENSCLIFF
GEELONG
HASTINGS
FRANKSTON
N
Port Phillip Bay
Abbreviations: Source: www.transport.vic.gov.au
BIFT – Beveridge Interstate Freight Terminal, OMR – Outer Metropolitan Ring, SERL – South East Rail Link, WIFT – Western Interstate Freight Terminal
Principal Freight Network (PFN) Rail Road Bulk/General cargo port Container port Interstate rail terminal Metropolitan Intermodal System (MIS) Terminal Freight airport
Major Freight Network Developments Airport initiatives Intermodal terminal initiatives Port initiatives Major new rail link New road link
LEGEND
Non PFN features Urban area
Infrastructure for the future
It is well recognised and accepted that Victoria needs to invest heavily in some major infrastructure projects, evidenced by the commitment of the State Government in its recent budget, and the Federal Government’s committed funds for Victorian projects.
Growth predictions, particularly in container movements, is a key driver of the need for Australia to be more competitive in the global marketplace. Paramount to this will be boosting Australia’s exports and increasing productivity of our international gateways, and making sure they can meet the rapidly growing freight task without adverse impacts on community amenity.
As Melbourne is Australia’s largest container port, planning for long term growth in container trades is critically important to our productivity – at the national, state and local level.
The Port of Hastings (PoH) is pivotal to Plan Melbourne, the State Government’s strategy for Melbourne into the future. To transform a city, governments need to establish a pipeline of large-scale infrastructure projects that link to a city plan – and that is what the PoH is a part of.
Pitcher Partners wants to ensure our clients are in the best possible position to capitalise on the opportunities created through the transformational change that these infrastructure projects represent – particularly through the PoH development in Melbourne’s burgeoning South East Region, often cited as the engine room of Victoria.
Melbourne’s South East Region is already home to over 1.4m people and represents 21% of Victoria’s workforce. At the very least, people commuting via the Monash Freeway, or living within its catchment area, will have a greatly improved quality of living.
of Gross Regional Product representing 19% of Victoria’s Gross State Product and making Melbourne’s South East a key economic region.$63bn
priority infrastructure pipeline projects nominated for further detailed design and advancement by Infrastructure Australia including the PoH.28
of businesses are frustrated with Australia’s infrastructure. Australian Industry Group figures.70%
2
Mel
ba H
wy
Hum
e Fw
y
South Gippsland Hwy
Calder Fwy
Western Fwy
Princes Fwy
Avalon Airport
Melbourne Airport
Port of Hastings
Port of Melbourne
Port of Geelong
Princes Fwy
SERL – Additional rail track Dandenong to Dynon
NE link road
E6 link road
BIFT – 2M TEU capacityand potential MIS Terminal
HPFV access to majorityof freeway network
Melbourne AirportOMR link road
Melbourne Airportwith fourth runway
OMR InterstateRail Bypass
Avalon withsecond runway
WIFT – 2M TEU capacityand MIS Terminalreplacing Altona
OMR link road
EW link road
MIS Terminal
Healesville-Koo Wee Rup Road Upgrade to Freeway
Port of Hastingsaround 9M TEU capacity
Full freewaylink to port
Dynon Rail Terminals relocatedPort of Melbourne up to 5M TEU capacity
MIS Terminal
Rail link to port
PAKENHAM
BELGRAVE
DANDENONG
DROUIN
MELBOURNE
MELTON
HURSTBRIDGE
SUNBURY
DEER PARK LILYDALE
WERRIBEE
QUEENSCLIFF
GEELONG
HASTINGS
FRANKSTON
N
Port Phillip Bay
Abbreviations: Source: www.transport.vic.gov.au
BIFT – Beveridge Interstate Freight Terminal, OMR – Outer Metropolitan Ring, SERL – South East Rail Link, WIFT – Western Interstate Freight Terminal
Principal Freight Network (PFN) Rail Road Bulk/General cargo port Container port Interstate rail terminal Metropolitan Intermodal System (MIS) Terminal Freight airport
Major Freight Network Developments Airport initiatives Intermodal terminal initiatives Port initiatives Major new rail link New road link
LEGEND
Non PFN features Urban area
Long-term Metropolitan Freight Network Vision.Having access to an efficient freight network is absolutely vital for businesses and jobs relying on exporting and importing their products.
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Despite the current $1.6 billion expansion project for the PoM, by 2030, it is due to reach capacity, with Victoria needing to handle around 6,000,000
Twenty-Foot Equivalent Units (TEUs), more than double current volumes, and by 2035 it will need to handle 8,000,000 (almost quadruple current volumes).
A competitive and sustainable commercial PoH is critical to preserving the South East Region’s export and manufacturing industries and supporting the liveability and economic growth of Victoria, and ultimately Australia. It will provide a major boost to the region’s social and economic wellbeing while also ensuring the state’s rightful position as Australia’s leading container hub.
Current limitations of the Port of Melbourne (PoM) has driven the government to seek alternative port options for two critical reasons:
The development of the PoH will complement growth at the PoM and provide an alternative container port which will generate more competition and economic flow on benefits for all of Victoria and Australia.
Melbourne’s South East Region drives the state’s container traffic:
• 33% of full import containers end up in the South East Region not taking into account products unpacked in Melbourne’s west and moved across to the South East Region
• Dandenong is the number one destination for containers going to or from the PoM, amounting to around 132,000 TEUs.
• By 2034, the South East Region is forecast to take more than 1.5 million TEUs; by 2051 this is expected to increase to 2.5 million TEUs (equivalent to all trade currently passing through the PoM)
Connected roads, rail and airwaysTo future proof the local, state and national economies, it is incumbent upon government to deliver the essential transport infrastructure that supports the impending increased demand on the container, freight and logistics sector.
Qube Logistics noted that 500,000 TEUs moved by rail would take 860,000 truck movements off the roads
Currently, daily truck movements are close to 300,000 truck trips per day and by 2046 this is expected to more than double. There is a long term strategy to improve freight efficiency, grow productivity and better connect Victorian businesses with markets – local, national and international.
Greater Dandenong currently has the highest internal freight movement activity of all metropolitan Local Government Areas (LGAs). It is the largest generator of freight movement overall, with over 1,800 individual truck trips in the morning peak alone. The volume of freight in the South East Region is predicted to further increase as more industrial land is opened up in Greater Dandenong, Frankston, Casey and Cardinia, with more activity centred around logistics and warehousing, and more investment is attracted to the PoH.
The PoH will be supported by integrated links with other government commitments and agendas, critical to the success of ensuring the PoH operates at maximum efficiency and the business benefits are optimised.
This includes the Freight & Logistics Plan to ensure the capacity of Ports and Airports can handle the growing volume of goods and growing numbers of passengers.
Rationale
Increasing size of container ships. By 2036 the mean capacity of all international container vessels visiting Victoria is expected to be greater
than 8,000 TEUs and by 2045, greater than 10,000 TEUs, on ships carrying between 8,000 and 18,000 containers each.
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Road and rail upgrade and other complementary infrastructure projects for improved efficiency and connectivity.
Impact beyond containersThe economic effects of the PoH extend well beyond the ability to move containers. Planned capital expenditure on Hastings alone is expected to provide the region with an average of $60 million per annum, in Gross Regional Product (GRP), over a 30 year period and an average 400 jobs per annum over the same period.
The direct, and flow on benefits are likely to range from $1 billion in GRP and 5,700 jobs in the mid 2020s/30s rising to $3 billion in GRP and 15,200 jobs in the early 2050s.
For Victoria, the economic benefits for job creation are expected to be in the vicinity of 6000+ in the initial early stages of development.
Road Rail Other
Freeway upgrades:– Monash– Hume– Western Port– Princes– Mornington Peninsula– EastLink and – South Gippsland
Increased train capacity and upgrades to existing rail system including a rail link between Dandenong and the PoH and new rail loading facilities at Hastings
Intermodal terminal
Grade separations Dedicated dual standard gauge line rail connection (reservation set aside for the Western Port Highway)
Third airport for Melbourne in the South East – potential target site is KooWeeRup
6-lane Western Port Freeway South East Rail Link with a dedicated rail freight link between Dandenong and Dynon
Largest supply of pre-zoned industrial land with land use buffers where required
Facilitation of Metro train tunnel allowing for better passenger trains on Dandenong line, freeing up space for freight trains
Regional Rail Link which includes the East/West link and Cranbourne-Pakenham rail corridor
Land surrounding the PoH has been reserved for port related activities since the late 1960s
The release of the Victorian Freight & Logistics Plan, which
seeks to provide an alternative cross-city freight route, is another example of what needs to be done to counteract the cost of congestion and lost productivity.
Colliers International // Research & Forecast Report // Industrial
Two primary destinations for inbound freight: Two primary sources of outbound freight:
Manufacturing Manufacturing
Wholesale and ultimately retail trade Agriculture
South East Region accounts for 44% of Victorian Manufacturing
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Growth in abundanceAcross the South East Region, population growth over the past five years has averaged 1.7% per annum, while the number of households has increased by 1.6% per annum outgrowing both Victoria and national averages. Cranbourne East tops the South East Region’s fastest growing areas and Victoria was named the second-hottest housing region for the nation in a recent Housing Industry Association report.
South East Region industriesThe PoH is considered critically important to the economic development of the South East Region and will be a major enabler for future investment. The economic development plans of all the LGAs in the South East Region have identified the PoH as a key economic driver in terms of the productivity increases it will bring to manufacturing, trade, technology and employment.
The key South East Region industries include:
Many of these industries rely heavily on export and import trade and the PoH supports the expansion of these industries across the South East Region including Gippsland and local logistics services, critical to Gippsland’s economic resilience. However, Manufacturing and Agriculture represent the greatest opportunities and impact for the PoH.
ManufacturingManufacturing alone employs 101,000 full time equivalents (FTEs) and is the largest single economic activity for the South East Region, operating significant port related activity. It accounts for 14% of the region’s GRP.
The industry in the South East Region:
• Produces 44% of Victoria’s total manufactured product
• Contributes 13% of the region’s value added
• Provides the largest number of jobs in the region
• Exports just under $16 billion worth of products
Food manufacturing is the largest component of the manufacturing industry in the South East Region.
AgricultureThe region’s diverse agriculture contributed 1.4% of the region’s gross value added (GVA), 1.4% of employment and 1.4% of exports. However, the figures belie the importance of agriculture in the outer regions where direct GRP accounted for by agriculture in Cardinia, Casey and the Mornington Peninsula was 11.4%, 4.1% and 4.5% respectively.
The importance of agriculture has grown in the region’s peri urban areas. Between 2011 and 2013 it was the second fastest growing industry sector in the Southern Melbourne RDA.
Victoria, the largest food and fibre exporting state, earns around $9 billion each year, with the South East Region being a major contributor to its success.
In recent years, the sector has performed strongly, with GVA increasing by 4.8% per annum between 2006 and 2011 and 3.2% per annum between 2011 and 2013. In the later period, it was the second fastest growing industry sector in the southern Melbourne RDA.
The dramatically reduced compound freight and delivery
times have boosted business efficiency and profits right along the corridor bordering these roadways. Proposed upgrades to sections of the Western Port Highway and the development of Port of Hastings will further enhance the attractiveness of the area to business investment.
Opteon // Australia’s Property Advisors
Manufacturing
Agriculture
Wholesale trade
Retail trade
Property and construction
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Business uptake has been quickBusinesses are already jockeying for prime position to capitalise on the many tangible benefits to be derived from the PoH. Of the 255,783 square metres of industrial space leased in Melbourne in the year to March 2014, the south east accounted for 57% of transactions.
Salta Properties has developed land close to the inland port, comprising 180 hectares, called Portlink, in Dandenong South. This new development sees in excess of 600,000 square metres of warehouse space alongside a major rail and road transport hub.
Qube has been secured as an anchor tenant, along with Bunnings who has taken a long term lease of over 43,000 square metres of space for its new distribution centre.
Other recent deals include:
Over 2013, sales activity in the region is also on the rise, with 26 sales totalling $361.2 million worth of industrial property (+$5 million exchanged in the six months to September 2013, compared to 11 sales totalling $231 million over the previous six months).
Each job in manufacturing generates on average between
two and five jobs in the rest of the economy.
Goran Roos // Global manufacturing expert
Reece Australia
Second major South East Region site.
Former L’Oreal distribution facility.
Deal valued at $2m per annum
L’Oreal
Prelease of new facility of around 30,000 square metres.
Ego Pharmaceuticals
Purchased 9.5 hectares to build a $100 million manufacturing facility representing the biggest development by a manufacturer seen in the market for some years.
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David Knowles Pitcher Partners
South East Region PartnerDavid has been instrumental in realising our south east strategy to better service our clients in this burgeoning region. He brings this high level strategic thinking to the benefit of his clients which include large private and ASX listed public companies. He assists clients get ‘investor-ready’, pursuing growth opportunities that realise optimal value for the business and its owners.
South East OfficeManaging Partner John Brazzale and South East Partner David Knowles at Pitcher Partners’ south east office.