1. BTRE Transport Colloquium Mr Michael Phillips, Chairman, Shipping Australia Ltd BTRE Transport Colloquium Canberra, 18-19 May, 2005 Mr Michael Phillips, Chairman, Shipping Australia Ltd Tomorrow’s Transport Infrastructure Challenge: A Maritime Perspective

2. www.shippingaustralia.com.au Effects of Increasing Demand  New orders for ships  First quarter 2005, 158 new orders of containers ships  cf. 58 oil tankers and 54 bulk carriers  Increased charter rates  eg. 3,500 TEU gearless container ship up 10% since last November to a record US$44,000 per day  1,700 TEU geared container ship US$32,000 compared with US$27,000 last November

3. www.shippingaustralia.com.au … Effects of Increasing Demand cont…  Rapid growth in demand for both containers and bulk exports over last few years fuelled in part by China’s ongoing economic development  Container growth in 2003/04 compared to the previous year in our five capital city ports was on average 9.2% Brisbane12.2 Sydney 9.4 Melbourne 7.9 Adelaide13.2 Fremantle 7.9 All 9.2 Source: AAPMA

4. www.shippingaustralia.com.au Challenge for Rail  If Port Botany reaches capacity around 3 million TEUs and if rail volumes remain static, the road transport task will treble in size by 2021 to 91% of the land transport task  NSW Government has a target share of 40% for rail; the Victorian Government a target of 30% for rail transport of containers to/from the port  BTRE predict that by 2020 road will have an 80% share of the inter-capital freight task if the trend of the past 30 years continues

5. www.shippingaustralia.com.au Infrastructure Provision  Need to deal with the detail of its implementation esp. the connectivity with ports  Avoid superficially attractive proposals  NSW Freight Infrastructure Advisory Board examining  The design of an inter-modal terminal network  Possible freight infrastructure charge which could encourage more efficient operations (eg. incentive for rail/after hours movements)  Possible changes to work practices

6. www.shippingaustralia.com.au  SAL agrees more efficient land transport arrangements in Melbourne essential if we are to deal effectively with rapidly increasing trade volumes  Simplified solutions are superficially attractive but stakeholders’ problems must be managed not ignored if the concepts are to be realised in practice Development of the Inter-modal Hub Concept in Victoria

7. www.shippingaustralia.com.au  Commercial viability/through-put  Cost effective of all participants  Ability to undertake container depot tasks  Ability to efficiently deliver MTs in large volume to the port with short notice Criteria for an Effective Inter-modal Hub

8. www.shippingaustralia.com.au  Lines must retain flexibility by exercising rigid control over the deployment of their own empty container stocks  One Line’s containers are not normally available for transfer to another Line  If containers were to build up in areas where there was insufficient export demand, exporters would face equipment shortages  Role of depots and their location  Presumably hubs will perform depot role as well but how many depots there be and for that matter, how many hubs? Problems to be Managed

9. www.shippingaustralia.com.au  Lines depend heavily on cost-effective depot services and the quality of the Depot’s interface with the Line’s clients  Services required include:  Lifts, storage, container survey and repairs  Washing, steam-cleaning, removal of dunnage  Food quality containers pre-tipping/power  AQIS/DPI inspections  Separate stocks for each shipping Line  Out-of-hours, bulk runs to terminals  EDI interface with Lines systems Problems to be Managed cont…

10. www.shippingaustralia.com.au  Need to balance number of hubs/locations with achieving a competitive edge/economies of scale  Must expect some depots to remain in port vicinity at least in medium term  Hubs must be able to compete  Volume of container from the port to the hub/s must be for distribution in the vicinity of the hub/s  Role of depots and their location  What additional costs will be incurred in the container terminal eg. additional sorting and stacking Location

11. www.shippingaustralia.com.au  There are many problems to overcome but these are not insurmountable  Simply passing costs along the chain is not acceptable  Eg. Bulk runs of MT’s only feasible if sufficient volume in the facility esp. if rail employed  Strong customer base in the vicinity of any hubs is also important  But depot services incorporated in the hub must be efficient and cost competitive with other depots.  The “final” solution must recognise that re-positioning of MT containers is an integral part of the efficient functioning of the through-transport chain  Serious disruption will occur if this is not properly managed The Challenge

12. www.shippingaustralia.com.au Quote from Patrick Forth, Managing Partner,Boston Consulting Group, Australia Conclusion “State and Federal Governments must commit to a radical policy overhaul to ensure that we drive up the trajectory of our infrastructure investments and increase the effectiveness of each dollar spent. This will entail an ambitious program of economic and policy reforms comparable in size and breadth to that of the 1980’s. Business and political leaders must rise to this challenge.”