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Trend and Forecasts for Australian Container Ports Dr Gary Dolman Head of Bureau Bureau of Infrastructure, Transport and Regional Economics Canberra Email: [email protected] Importance of trade • Australia is heavily reliant on trade for its prosperity • In 2012-13, total merchandise trade totalled $A502.4 billion ($A248.0 billion exports and $253.5 billion imports) • Merchandise trade was approximately 33 per cent of GDP in 2012-13 • Shipping accounts for over 99 per cent of Australia’s total trade, by weight Trend in Australia’s container throughput • Growth in container throughput in Australian ports has been faster than GDP growth • Containerisation of trade expands due to unification of container handling and declining costs of their use on a global scale Productivity of container handling – wharf side • Wharf side reforms were implemented in Australian container ports around 2000 • Productivity growth has since slowed Productivity of container handling – comparison • Container handling productivity has improved relatively to economy-wide productivity measures • The rise in the ‘ship rate’ while the ‘crane rate’ remains relatively constant can be attributed to an increase in the ‘crane intensity’, which is the number of cranes working on a vessel on average Productivity of container handling - landside • Landside productivity, as measured by truck and container turnaround times, has been improving slowly over the period 2006 to 2013 • A slight increase in handling times can be noted in 2013 Truck Turnaround Time Container Turnaround Time Port-interface cost index • Historically, container handling costs have been declining in Australia while the general price level across the economy (measured by the GDP deflator) has been increasing • Beginning around 2010, the container handling costs reversed this trend and started rising Australian port trade volumes: 2011-12 Australian port trade values: 2011-12 BITRE shipping forecasts • The forecasts have been updated on the basis of: • Re-estimated econometric models of containerised and noncontainerised export and import demand &sea passenger demand • The most recent economic outlook and population growth for Australia and its major trading partners • Main drivers of growth in containerised and noncontainerised trade: • Population • Real income • Exchange rates • Real export prices • Real import prices Forecasts: Containerised trade • Containerised trade doubling over the next 20 years: From 7.2 m TEUs in 2012–13 to 19.4 m TEUs in 2032–33 Forecasts: Containerised trade • Projected average annual growth rate: Brisbane: 6.2% Melbourne: 4.8% Other Ports: 5.0% Fremantle: 5.8% Sydney: 4.5% All ports: 5.1% Adelaide: 5.4% • Projected volume of containerised trade in 2032-33 Melbourne: 6.4 m TEUs Brisbane: 3.6 m TEUs Adelaide: 1.0 m TEUs All ports: 19.4 m TEUs Sydney: 5.2 m TEUs Fremantle: 2.1 m TEUs Other Ports: 1.2 m TEUs Forecasts: Containerised trade by port Forecasts: Sea passengers (cruise ships) • The total (inbound plus outbound) number of sea passengers increased by 2.5 per cent a year over the last 30 years: from 20 000 in 1983–84 to 41 000 in 2012–13 Forecasts: Sea passengers • The long-term outlook for the cruise shipping industry is also positive, largely due to the projected economic growth in source countries of cruise passengers, particularly the USA • Total sea passenger number projected to increase by 1.8% a year over the next 20 years to 59 100 in 2032–33 – Inbound increasing by 2.9% a year to 27 300 in 2032–33 – Outbound increasing by 1.1% a year to 31 800 in 2032–33 Sensitivity analysis on economic growth • Two alternative economic growth scenarios: High-growth scenario: Average annual GDP growth in Australia and all OECD countries was assumed to be 0.5 percentage points higher than in the base case. Low-growth scenario: Average annual GDP growth in Australia and all OECD countries was assumed to be 0.5 percentage points lower than in the base case. Sensitivity analysis on economic growth: Total containerised trade Sensitivity analysis on exchange rates • Two alternative exchange rate scenarios High exchange rate scenario: The Australian dollar remains at par with the US dollar over the forecast period Low exchange rate scenario: The Australian dollar gradually declines from its current level to US 50 cents per Australian dollar in 2029–30 and remains at that level Sensitivity analysis on exchange rates: Total containerised trade Comparison with previous forecasts: Total containerised trade • Current forecasts consistent with the previous BITRE forecasts – Slightly lower than those published in 2006 and – Slightly higher than those published in 2010 • Annual average growth rate: Current: 5.1% BITRE (2006): 5.4% BITRE (2010): 4.2% • Differences are largely due to: – Changes in the estimated demand parameters due to changes in the historical model estimation period and – Revised population and economic outlook for Australia and its trading partners Comparison with previous forecasts: Total containerised trade Landside movements – Assigned import container road flows, Sydney, 2009-10 • Over 88 per cent of containers imported through Sydney Ports to first destination within Greater Metropolitan Area • Fairfield-Liverpool area first destination for approx. 34% of GMA import containers • Outer Western Sydney (e.g. Blacktown) region first destination for approx. 24% of GMA import containers • Inner Sydney and area around Port Botany accounted for further 14% of GMA import containers Landside movements – Assigned import container road flows, Melbourne, 2009-10 • Over 85 per cent of containers imported through Port of Melbourne to first destination within Greater Metropolitan Area • West Melbourne area (Altona, Sunshine, etc.) first destination for approx. 33% of GMA import containers • Dandenong region first destination for approx. 21% of GMA import containers • Tullamarine, Campbellfield & surrounds, to the north, accounted for further 14% of GMA import containers Concluding remarks • Australia is heavily reliant on trade for its prosperity • In 2012-13, total merchandise trade totalled $A502.4 billion, accounting for 33 per cent of GDP • Shipping accounts for over 99 per cent of Australia’s total trade, by weight • Containerised trade has been growing faster than GDP since 1990s • Container port productivity also improving faster than whole economy • Real container import and export costs, declining until 2010, have risen slightly since • Forthcoming BITRE Report 138 updates BITRE long-term forecasts of containerised and non-containerised trade for Australia’s five largest capital city ports and, in aggregation, all other ports, to 2032–33 • The report also presents the updated national-level forecasts of Australia’s inbound and outbound sea passenger numbers Concluding remarks • Forecasts are unconstrained—no inclusion of supply-side parameters related to port capacity or commodity availability • Containerised trade volume and the number of sea passengers will continue to increase but at lesser rates than historical trends • The forecasts are more sensitive to GDP growth than exchange rates • Current BITRE forecasts consistent with the previous BITRE forecasts – They fall in between those published in 2006 and 2010 • Models are being developed of import container movements through cities