On 9 September 2022, the Australian Government’s Productivity Commission released a draft report analysing the performance of Australia’s maritime logistics system. While the final report is not yet due till the end of this year, it is still worthwhile to take a look at the key points highlighted by the Commission.
Why port performance matters:
A recent study by the World Bank led to the development of the Container Port Performance Index (CPPI) to compare the quayside performance of 351 container ports across the globe in 2019-20. Shockingly, most of the Australian container ports ranked in the lowest 20% of the ports examined in the report. These ports were found to be lacking in turn-over times and were heavily congested.
In the second edition of the CPPI released in May 2022, Australian container ports remained around the same positions in the lower ranks. Most of the reasons for lack of a good port performance emerged due to the Covid-19 pandemic, which triggered many disruptions such as shipping delays, demand exceeding supply by a great margin, inflation, and lack of worker availability.
Ports are significant to the maritime systems – they are the pivot around which seaborne trade revolves. Hence, a poor port performance has a domino effect on other parts of the maritime system and the larger supply chain.
The World Bank (2021) explained:
Maritime transport carries more than 80 percent of global merchandise trade by volume, and any impediment or friction at the port will have tangible repercussions for their respective hinterlands and populations.
The effects of port performance on the people of Australia:
Majority of Australia’s trade is handled through maritime routes, meaning that the imports and exports are dependent entirely on container ports. Therefore, the efficiency and dependability of these ports greatly impact the cost of trading goods to and from other countries. Port performance plays a massive role in determining the competitiveness of many large-scale Australian businesses in the international market, as well as the expenditure of Australian households on most goods, thereby affecting the standards of living of all people in the country.
As per the Productivity Commission, port inefficiencies directly cost the economy of the country an estimated $605 million every year.
Steps taken to face the challenges and enhancing port performance:
- Private stakeholders of container ports have already started addressing the infrastructure needs to accommodate bigger ships in the Australian ports. The government has also been making investments in projects to reduce port congestion and speed up the administrative processes at the ports.
- Rail projects have gained momentum to decrease the burden of trucks on metropolitan roads and increase the movement to and from most of the major container ports. A prominent one is the Port Rail Transformation Project of the Port of Melbourne, which aims to increase the rail connectivity in and around the Melbourne port. It will fasten the process of freight movement and reduce congestion in Melbourne caused by long haul trucks.
- State governments have taken initiatives that focus on infrastructure requirements of the container ports, such the 2050 Port Development Strategy for the Melbourne port. Many other similar freight and transport strategies are under way for the major ports of Australia.
- Technology innovation and adoption is on an upward trajectory to improve port performance, perfectly in line with international standards and best practices.
The solution is simple: remove the bottlenecks in turn over time and speed up the quayside operations since these are the two main factors for lowering port efficiency. The draft report on maritime logistics performance by the Productivity Commission has highlighted the gaping issues thoroughly and it shall serve as an effective guide for stakeholders looking for ways to improve the state of container ports in Australia.