GRAIN and meal exporters are leading early demand for container slots out of the Port of Newcastle.

This comes as the PoN completes its second service since the New South Wales Government passed legislation which would commence a process to remove financial impediments on the company to operate regular containerised trade.

Currently PoN is offering a monthly container-vessel service, with a view to increase to a fortnightly service based on demand.

PoN executive manager business development Matthew Swan said agricultural producers and agribusinesses have been key drivers in attracting a dedicated container service to Newcastle.

“Grain and meal exporters have been leaders at this point with established trade relationships between NZ and the South Pacific aligned with the existing service,” Mr Swan said.

“There remains strong interest from grain, cotton and meat exporters for regular services from Newcastle to realise landside efficiencies.

“Transshipment options through other Australian east coast ports can provide opportunities for shippers to access Asia, the US and beyond.”

Grain Producers Australia northern region director and Moree grain grower Matthew Madden said the initial services had created hope for growers and processors in his region.

Mr Madden said he had spoken with a processor who was looking to ship containers out of Port Botany, but found the process cost prohibitive.

“More services and construction of a container terminal will be beneficial for growers in the north and into central western New South Wales,” Mr Madden said.

“In Moree, we have secondary processing and we have got bulk storage which could go into containerisation if the freight rates are good.”

Carroll Cotton runs Australia’s eastern most cotton gin, and its managing director Scott Davies said bales from the Liverpool Plains site were exported from Brisbane, Sydney and sometimes Melbourne.

He said the prospect of regular container services from PoN could reduce costs for growers and buyers.

“I have been in consultation with the Port of Newcastle around what the potential opportunities are,” Mr Davies said.

“Regardless of whether it’s cotton or grain, any further opportunities for export are a positive thing for everyone.”

More work needed

Despite early interest, PoN are still months if not years away from developing a substantial container trade, which would include moving forward with plans to construct a Deepwater Container Terminal.

This could depend on compensation PoN would pay NSW Ports as part of the Port of Newcastle Extinguishment of Liability Act 2022 passed in the NSW Parliament late last year.

Independent valuer IPART is currently in the process of determining what one-off payment PoN should make to NSW Ports, operators of Port Botany and Port Kembla, to enable it to handle containers above a cap.

IPART initially had up to nine months to issue a draft determination.

However, the organisation has requested an extension and expects to finalise a determination by either March 2 or June 2 next year.

Freight & Trade Alliance director Paul Zalai said the outcome of this process could impact PoN’s future as a major container port.

“It will be fascinating to see the outcome of the IPART deliberations and the quantum of the upfront compensation payable by the Port of Newcastle to the state,” Mr Zalai said.

“It may be the case that the compensation payment is cost prohibitive meaning that we will be left with status quo.

“If the Port of Newcastle commits to making the compensation payment and proceeds with large-scale containerised cargo handling, it leaves the question as to where this leaves the decade-old State Government NSW Container Port Policy and furthermore, what does this uncertainty do in terms of much needed private and public infrastructure investment?”

Mr Zalai said the ideal outcome for growers and industry would be for PoN to effectively compete with NSW Ports for containerised trade.

He said it was currently unclear what impact PoN’s container ambitions would have on existing services and whether both could coexist as financially viable operations.

“There is no doubt that effective competition is the most effective way to meet customer’s needs and keep a lid on costs.

“Whether this will offset the arguments to maximise use of existing assets is to be determined.”

Mr Swan said PoN was aware of the work that was ahead of it to make containerised trade a permanent fixture of the facility.

“Port of Newcastle is focusing on engaging with customers to support the existing Multipurpose Terminal trade opportunities and understands supply chain requirements for the future Deepwater Container Terminal.

“We have also considered infrastructure improvements required to support rail and road connectivity from the Central West and north-west of NSW to the port, and are continuing to engage with stakeholders around how this can be achieved.”