Corporation 2010-11 Melbourne Port of Annual ReportAnnual
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Letter to the Ministers
The Hon. Dr Denis Napthine MP Minister for Ports Level 16 121 Exhibition Street Melbourne Victoria 3000
The Hon. Kim Wells MP Treasurer 1 Treasury Place East Melbourne Victoria 3002
Dear Ministers,
Port of Melbourne Corporation 2010-11 Annual Report
I have much pleasure in submitting to you the Annual Report of the Port of Melbourne Corporation for the period 1 July 2010 to 30 June 2011, in accordance with the provisions of the Transport Integration Act 2010 (Vic) and the Financial Management Act 1994 (Vic).
Yours sincerely,
Bill Scales AO Chairman
26 August 2011
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 1 2 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 Table of contents
Letter to the Ministers 1 Our vision 4 Our goals 4 Our values 5 From the Chairman 6 From the Chief Executive Officer 7 Highlights of 2010-11 8 The Port of Melbourne – an overview 10 Corporate governance 12 Board of Directors 13 Board Meetings 17 Board Committees 18 Executive Management Team 20 Our people 22 Organisational structure 24 Trade performance 26 Finance in brief 28 Financial summary 30 Our stakeholders - customers and community 31 Port operations 33 Port planning 36 Port development 37 Sustainability 38 Port pricing 39 Additional information 41 Transport Integration Act 2010 (Vic) 41 Significant legislative changes 43 National Competition Policy 44 Victorian Industry Participation Policy 44 Victorian Government Risk Management Framework 44 Consultancies 45 Privacy 46 Whistleblowers’ protection 46 Freedom of information 47 Assets 47 Building and maintenance compliance 47 Availability of additional information 47 Statement of Corporate Intent 49 Financial statements 68 Certification of financial report 124 Auditor-General’s Report 125 Compliance index 127
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 3 Our vision
The Port of Melbourne will be the core of Australia’s premier maritime trade and transport hub, creating economic prosperity while sustaining environmental and social wellbeing for the people of Victoria and Australia.
Our goals
The goals of Port of Melbourne Corporation (PoMC) are focused on achieving the corporate vision and are responsive to the organisation’s charter ensuring a balanced and sustainable approach to the development and management of the port.
Our goals are:
• efficient and high quality facilities and services • integration of the port with land transport systems • trade and trade-related business facilitation and expansion • sustainable financial performance • a shared port city vision for sustainable growth and prosperity
4 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 Our values
PoMC’s values are a shared understanding of what we stand for as an organisation. They describe the things we strive for – with our customers, the community and each other.
Customer focus PoMC values its customers and the relationships that exist with them. We will strive to understand their businesses and expectations and work to achieve mutual benefits for our customers and PoMC. In our dealings Quality and service with our customers we will act Innovation fairly and equitably. excellence PoMC encourages the generation of new and innovative ideas PoMC will continually seek to and the creation of opportunities improve the quality of its services to improve our skills. We will through reviewing our performance be flexible and embrace new and amending our processes and practices, openly discussing practices. We will be accountable problems and developing for our commitments and deliver Valuing our people solutions. on our promises. Our people are our most valued resource. We will support their personal and professional development and maintain a safe and healthy work environment. At all times, we will operate on a basis of mutual respect, Openness, integrity trust and dignity. Teamwork and honesty PoMC is a team-oriented PoMC will operate in an open and organisation. We work as a team, honest environment, seeking the encouraging participation and input of others in decision making recognising the achievements and and sharing information. We will contributions of our colleagues. provide constructive feedback and Environment, safety We aim to fully utilise our collective respect individual differences and and social wellbeing skills, knowledge and experiences opinions. to achieve our goals. PoMC recognises the inherent environmental and social value of the port and will contribute to the social and economic wellbeing of our neighbours. By using best practice safety and environmental management systems, we will continually improve environmental and safety impacts to ensure the sustainable co-existence of the port and local communities.
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 5 From the Chairman
Servicing a wide area extending across south-east Working in cooperation with the Department Australia, the Port of Melbourne works to support of Transport, PoMC also contributed to the the commercial and lifestyle ambitions of a diverse preparation of the car trade relocation feasibility range of stakeholders from regional producers study announced by the Government. to consumers, through its efficient, safe and sustainable operation as an integrated logistics hub. The Board recognises that Melbourne is a city based port and we are mindful of the need to balance To accommodate future trade needs and the consequences of forecast trade growth with foster economic growth, the Board’s strategic the amenity and liveability expectations of our deliberations over the past year have focused on neighbours. Working collaboratively with industry, the need for ongoing port development, including Government agencies, local councils and the additional container capacity and the port’s role in community, the Board is committed to achieving the wider logistics network. a port city vision for sustainable growth and prosperity in keeping with PoMC’s corporate goals As a facilitator of Victorian and the nation’s and Government policy. international shipping trade, PoMC consciously takes a long-term view of customer and community In November, the Port of Melbourne was honoured needs as it to plans to meet future freight demand. to be given the opportunity to host a visit to the port by the United States Secretary of State To enable the Port of Melbourne to meet future Hillary Clinton and a number of other United freight demand, PoMC recently provided the States dignitaries. During this visit, the Secretary Government with a major study that outlined in of State reinforced the important role of ports in detail the need for increased container capacity in underpinning national prosperity. the Port of Melbourne. PoMC has also provided to Government a robust business case that outlines I would like to thank my Board colleagues for how this increased container capacity can be their outstanding work, valued contributions and efficiently and effectively achieved. Government support throughout the year. consideration of this proposal is expected in early 2011-12. On behalf of the Board, I would also like to thank Chief Executive Officer, Stephen Bradford, for his leadership of Port of Melbourne Corporation, together with PoMC’s management and staff for their commitment, dedication and professionalism.
Bill Scales AO Chairman
6 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 From the Chief Executive Officer
A buoyant trading environment helped PoMC In addition, PoMC delivered a dividend of $13.4 reach a new milestone by handling a record 2.39 million to the Victorian Government and invested million twenty-foot equivalent units (TEU) which a further $26.0 million in capital projects to ensure included five separate months where volumes the Port of Melbourne remains an efficient maritime exceeded 200,000 TEU. logistics hub, now and for future trade growth.
Total trade also reached record levels, increasing During the year, PoMC progressed and completed a 5.8% to 79.7 million revenue tonnes. With the wide range of port development projects including exception of new motor vehicles which were the remediation of 221 Whitehall Street, Yarraville, impacted by the tsunami in Japan, all cargo types maintenance dredging, rehabilitation of 33 South recorded strong increases, particularly dry bulk and Wharf and ongoing upgrades to Station Pier ahead containerised grain which benefitted from higher of the upcoming record cruise season with 56 ship than average rainfall. Exports remained strong visits scheduled. throughout the year despite the relatively high value of the Australian dollar. PoMC also delivered a suite of information technology applications including the port The robust trading performance in this first full management system PortView and the Dangerous reporting period following the global financial Goods Hub to contribute to a more efficient supply crisis enabled PoMC to deliver a solid after tax chain. profit of $39.0 million. This financial result is crucial for a self-funded agency to maintain its I would like to thank the Chairman, Bill Scales, and commitment to funding port infrastructure and the Board of Directors for their insightful guidance high quality services. and support throughout the year, together with the Executive Management Team and staff of PoMC Significant infrastructure such as the Channel who have diligently worked with our customers Deepening Project is already benefitting the and stakeholders to bolster the Port of Melbourne’s economy with at least one vessel every two days status as the nation’s leading container and general utilising the increased draught depth provided by cargo port. the successful completion of the project.
Stephen Bradford Chief Executive Officer
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 7 Highlights of 2010-11
Trade • Record total port trade of 79.7 million revenue tonnes • Record total container throughput of 2.39 million TEU • Record monthly throughput of 217,000 TEU in October • Record month of full container exports of 73,102 TEU in March • Hosted visit by US Secretary of State Hillary Clinton to mark US-Australia bilateral trade ties
Finance • Operating profit after income tax of $39.0 million • Net Assets amount to $1.5 billion including cash reserves of $41.2 million • Dividend of $13.4 million paid to the Victorian Government
Port development • Rehabilitation of the contaminated 221 Whitehall Street, Yarraville, site well advanced • Port capacity discussion paper prepared for Government consideration • Completion of the 2009-11 maintenance dredging program
Port operations • Total of 3,376 ship visits • At least one vessel every two days utilising the increased draught depth made possible from the significant investment to deliver the Channel Deepening Project • 36 cruise ship visits including the maiden visit of the Cunard vessel Queen Elizabeth
Sustainability • Ongoing baywide monitoring in keeping with the Channel Deepening Project Environmental Management Plan, including completion of two substantial reports, Great Sands and adjacent coast and beaches and Sediment transport modelling • Commenced purchase of 25% Greenpower for nine largest energy consuming sites
Customers • Regional workshops for customers and cargo owners • Industry liaison on port pricing • Worked with port customers to deliver new port management system, PortView, and Dangerous Goods Hub
Community • PoMC’s Port Education Program involved almost 4000 students and community members, together with six ship visits through the Schools on Board program
Our people • Pulse staff engagement program undertaken • Safety Culture program commenced
8 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 9 The Port of Melbourne – an overview
At the hub of a logistics network which extends Port infrastructure across south-eastern Australia, the Port of Melbourne is a critical supply chain interface for PoMC owns and manages around 510 hectares of the efficient movement of maritime cargo to and port land which hosts 34 commercial berths with from the region. a total berth length of nearly seven kilometres to handle a diverse range of containerised and non- An economic asset containerised cargo.
Handling 2.39 million TEU, equivalent to around Two modern purpose-built international container 36% of the nation’s container trade, with over 3,350 terminals at Swanson Dock are the centrepiece for commercial ship calls to the port each year, the Port Australia’s international container trade. of Melbourne is serviced by over 40 shipping lines. In addition, the port offers a number of multi- A major strategic asset of the Victorian economy, purpose terminals which handle a variety of the port is an important trading gateway and non-containerised pack types including automotive generates employment for tens of thousands vehicles, farm equipment and machinery, together of people directly and indirectly throughout with breakbulk commodities such as timber, paper, metropolitan Melbourne and regional Victoria. iron and steel.
Operations The port also provides specialised berths for dry cargo including cement, sugar, grain and gypsum, Communication centres at the Port of Melbourne as well as berths for handling bulk liquids from (Melbourne VTS) and Point Lonsdale (Lonsdale petrochemicals to crude oil and molasses. VTS) coordinate the port’s marine operations to provide safe and efficient marine and navigational Working with the community services across 101,242 hectares of declared port waters. This important service is supported by Melbourne is a port city with urban communities a professional asset management team which bordering the port’s operations. Recognising maintains channels and navigation aids to assist the the amenity expectations of these communities, safe passage of vessels to and from the port. PoMC works to foster a shared port city vision with our neighbours, including local councils PoMC also manages Station Pier, Victoria’s cruise and community groups through ongoing shipping gateway, and has upgraded facilities at the consultation and grassroots partnerships. This pier to meet the needs of international cruise liners work is supported by a coordinated program of and their passengers, TT-Line passenger ferries and sponsorship for eligible events and organisations other visiting ships including navy vessels. with a maritime, community or educational theme.
10 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 Planning for the future With a charter for undertaking the integrated management and development of the land and PoMC continues to work to accommodate forecast maritime functions of the port, PoMC has an increased trade volumes through the prudent ongoing commitment to providing high quality and responsible planning of a port which is facilities and services, facilitating private sector commercially viable, conducive to investment investment in the port and ensuring efficient certainty, considerate of our neighbours and fully access to the port by linking with, and working to integrated with the long-term strategic needs of our improve, the broader freight and logistics network city, our state and our nation. and services.
With a responsible strategic long-term planning approach, an ongoing infrastructure investment and renewal program and significant infrastructure already in place, PoMC is working to build on its competitive strengths and continue to add value to the customers who service Australia’s premier container port.
Strategic management
Established on 1 July 2003 to provide for the strategic management and development of the Port of Melbourne, PoMC conducts its business operations within the legislative framework provided for under the Transport Integration Act 2010 (Vic), referred to as ‘the Act’, (which sets out the statutory objectives, powers and functions of PoMC) as well as the Port Management Act 1995 (Vic) and other relevant legislation. The Administration of Acts General Order (gazetted on 22 February 2011) vests responsibility in relation to the Act primarily in the Minister for Ports while reserving and vesting responsibility for a number of specific sections of the Act in the Minister for Finance and the Treasurer.
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 11 Corporate governance
PoMC is governed by a Board of Directors. Board On 20 September 2010, the Board completed its seventh members are appointed by the Governor in Council annual audit of its compliance with the Victorian on the recommendation of the Minister for Ports, Government’s Financial Management Compliance made after consultation with the Treasurer, for a Framework through its Audit Committee. renewable term of up to three years. Directors hold office pursuant to the Act on terms and conditions Details of the number of Board and Committee specified in the instrument of appointment. The scheduled and additional meetings held, including Board has overall responsibility for the corporate the number of meetings attended by each of the governance of PoMC and may exercise the powers Directors of the Board during the 2010-11 period are conferred on PoMC. provided on pages 17-19.
The Board is directly accountable to the Minister for Declaration of pecuniary interests Ports. All Directors and nominated officers have With the aim of achieving best practice, the Board completed a declaration of pecuniary interests. has developed and endorsed a set of governance principles which are in line with its responsibilities Ministerial Directions under the Act. As a result, the primary focus of the Board is on: No Ministerial Directions were received by PoMC from the Minister for Ports or the Treasurer • setting the strategic direction of PoMC including pursuant to section 141H of the Act. the approval and oversight of the corporate plan, annual operating and capital budgets, Port Transport Integration Act 2010 (Vic) Development Framework, Risk Management Policy and Strategy, corporate policies, all Section 27A of the Transport Integration Act 2010 delegations of authority including financial (Vic) requires PoMC, to develop a Strategy and delegations of authority made pursuant to section Implementation Plan (SIP) to outline the processes 170 of the Act and procedures that the organisation will put in place to have regard to the transport system objectives and • ensuring accountabilities to the Minister for Ports decision making principles in carrying out its functions and the Treasurer of Victoria under the legislation and in exercising its powers. are understood by PoMC • approving capital projects where the total project Business risks value exceeds $1 million (or any other sum approved from time to time) The procedures and policies established at Board • monitoring compliance with legislative and and management level are designed to protect regulatory requirements, ethical standards and PoMC’s assets and interests, uphold the integrity external commitments of its reporting systems, maintain its operational • appointing and reviewing the performance of the viability and ensure compliance with legislative Chief Executive Officer and requirements. These include financial reporting, environmental, risk management and internal • encouraging the business of the port. control policies and procedures. PoMC is managed through a comprehensive set of policies and procedures which are subject to regular audit review.
12 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 Board of Directors
Bill Scales AO
Bill Scales was appointed Brimbank City Council and Industry Commission, and Chairman of PoMC on 1 October a subsequent appointment as Chairman and Chief Executive 2005 and reappointed on the Interim Administrator of Officer of the Automotive 1 October 2008, having held a the City of Brimbank prior to Industry Authority. number of senior leadership the appointment of a Panel of roles in both the public and Administrators; an appointment Bill has also held senior private sectors. by the Australian Government executive positions in the to the Panel to review Australia’s manufacturing sector and Bill is also Chancellor of Higher Education Sector, and has been involved with many Swinburne University of subsequently to the Reference boards and committees over the Technology, a Council Member Group advising the Government past 40 years. of the Victorian Division of on regulation for the sector; the Australian Institute of an appointment as Chair of He holds a Bachelor of Company Directors (AICD) the Council of Australian Economics degree from Monash and a Member of the AICD’s Governments (COAG) review University and has completed National Education Advisory into Australia’s Energy Sector. the Advanced Management Committee. He is a Member of Program at the Harvard the Expert Panel established by Bill has also served as the Business School. the Australian Government to Chairman of the Australian conduct the Review of Funding Safety and Compensation In 1993, Bill was made an Officer for Schools and a Member of the Council and as a Board Member of the Order of Australia for his Panel appointed by the Victorian of the Australian Nuclear Science services to industry and in 2003 Government to inquire into and Technology Organisation. he was awarded the Centenary and report on Victoria’s child Medal for outstanding service protection system. He is also a Bill’s previous executive to Business and Commerce. Member of the Veolia Australia positions include Group Advisory Board. Managing Director – Regulatory, He is a Fellow of the Institute of Corporate and Human Public Administration Australia Bill’s recent advisory and Relations and Chief of Staff, and a Fellow of the Australian governance roles include an Telstra Corporation; Secretary, Institute of Company Directors. appointment by the Victorian Department of Premier and Government as an Inspector Cabinet, Victoria; Chairman of Municipal Administration and Chief Executive Officer, to monitor the activities of the Productivity Commission/
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 13 James Cain Paula Benson Jay Bonnington
James Cain was appointed Deputy Paula Benson was appointed as Jay Bonnington was appointed as Chairman of PoMC on 1 July 2010. a Director of PoMC on 1 January a Director of PoMC on 1 July 2010. 2008 and reappointed on 1 James has an extensive January 2010. Jay has a background as a background in project Chartered Accountant and development management in Paula is a leading corporate has extensive experience in property and infrastructure, affairs consultant with a corporate finance and the in both the public and private background in large media, provision of strategic and sectors. service and resource sector commercial advice in a range of organisations with extensive line management and consulting James’ professional experience experience in government and project management roles includes 12 years with property relations, community and across many industry sectors, and construction company stakeholder engagement, including the construction/ Lend Lease in various roles communications and issues engineering, financial services including General Manager for management. and energy industries. Victoria, Tasmania and South Australia, and five years with Paula holds a Master of Arts in Prior roles include senior the Victorian Government as Journalism from the University executive with the Transfield Executive Director of Major of Technology, Sydney. Group, CFO/Finance Director of Projects Victoria, the Victorian Yallourn Energy Ltd, and Head Government’s major capital Paula is currently the Chair of of Financial Services NEMMCO. works agency. Ovarian Cancer Australia and a Director of Regional Arts Jay has served on St. John of God Since 2006, James has developed Victoria. Healthcare Group since 2006 his interests in commercial, and sits on the board of HESTA Superannuation. Jay is also infrastructure and property on the boards of Metropolitan areas through his own Fire and Emergency Services, consulting business. Agriculture Victoria Services, Prince Henry’s Medical Research James is also Chair of the Institute, Lord Mayors Charitable Industry Superannuation Foundation and the Deakin Property Trust (ISPT). He University Council. was Chair of Port of Hastings Corporation prior to its Jay has a Bachelor of Commerce integration into PoMC, and was (Auck.) and an MBA (Monash). a Director of Victorian Rail Track She is a Fellow Certified (VicTrack) between April 2008 Practising Accountant and a and July 2010. Fellow of the Australian Institute of Company Directors.
14 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 David Cranwell Des Powell Ian Robins
David Cranwell was appointed Des Powell was appointed as a Ian Robins was appointed as a as a Director of PoMC on 1 July Director of PoMC on 1 July 2003 Director of PoMC on 1 August 2003 and reappointed on 1 July and reappointed on 1 January 2008 and reappointed on 1 July 2006, 2008 and 2010. 2005, 2008 and 2010. 2010.
David is a Director of Spencer Des has held a range of senior Ian previously served as the Stuart, a leading global senior executive management roles Chief Executive Officer of level executive search and in both the private and public Wyndham City Council from director recruitment partnership. sectors in Australia and Asia. 1995 to 2008, following senior appointments in a number of Before joining Spencer Stuart, Des operates his own local municipalities. David spent 11 years in a consultancy business with clients number of roles with Mayne across a range of industries With a professional career Group Ltd, including Director including transport, logistics, in engineering planning and of Development; CEO Asia forestry, education and water. extensive experience in local covering China, Thailand, government, Ian was the Malaysia, Singapore and Des is Chairperson of the Alpine inaugural Chair of the Western Indonesia; CEO of the global Resort Co-ordinating Council Transport Alliance and is a logistics business; and more and Chair of Edmund Rice former President of Institute recently, Group General Education Australia. of Municipal Engineering Manager of Pharmacy Retailing Australia. Ian was also the and Distribution. recipient of the Centenary Medal for Services to the Community During his time in the health through Local Government. sector, David played an active role serving as President of the Ian holds a Bachelor of Civil National Pharmaceutical Services Engineering and a Masters Association and Chairman, Degree in Urban Planning. Medicines Partnership of Australia.
David has a Master of Nautical Science degree from RMIT University, Melbourne, an MBA from the Graduate School of Management at Melbourne University, and qualified as a Master Mariner Class 1 with ANL.
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 15 Meredith Sussex AM Frank Williamson
Meredith Sussex AM was Frank Williamson was appointed appointed as a Director of PoMC as a Director of PoMC on on 1 January 2010. 1 July 2003 and reappointed on 1 January 2005, 2008 and 2010. Meredith joins PoMC’s Board having held senior positions in Frank is a maritime lawyer, both local and State Government a former Chairman of the including Deputy Secretary Victorian Sea Freight Industry of the Victorian Department Council, a peak industry of Premier and Cabinet and advisory body, and has Deputy Secretary in the Victorian extensive experience in freight Department of Education. and logistics. Meredith also led the Office of Commonwealth Games In 2002, Frank retired from Coordination from 2002 to 2006 “K” Line (Australia) Pty Ltd as Executive Director culminating and Kawasaki Australia Pty in the successful delivery of the Ltd where he held the position largest cultural and sporting event of Managing Director and ever hosted in Melbourne. Executive Director.
More recently, Meredith was Coordinator-General, Infrastructure, within the former Department of Infrastructure before taking up the post of Executive Director of Integrated Transport Planning within the revamped Department of Transport. She is also a member of the Council of Australian Governments’ Expert Panel on capital city planning.
In 2007, Meredith became a Member of the Order of Australia for service to sports administration through contributions to the planning and coordination of the Melbourne 2006 Commonwealth Games, and to education and training.
16 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 Board meetings
Non-scheduled Scheduled Director meetings attended Total no. of meetings held meetings attended (ad hoc)
Bill Scales AO 10 1 11 (Chairman) James Cain 10 1 11 (Deputy Chairman)
Paula Benson 10 1 11
Jay Bonnington 10 1 11
David Cranwell 9 1 11
Des Powell 9 1 11
Ian Robins 9 1 11
Meredith Sussex AM 10 1 11
Frank Williamson 10 1 11
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 17 Board Committees
Audit Committee
This Committee supports the Board by reviewing PoMC’s policies and processes arising from statutory and regulatory obligations and other business requirements for financial reporting, internal controls and external and internal audit. Committee members, David Cranwell, Jay Bonnington and Ian Robins, are regarded as independent members in accordance with the requirements of Section 2.2(f) of the Standing Directions of the Minister for Finance under the Financial Management Act 1994 (Vic).
Director Scheduled meetings attended Total no. of meetings held
David Cranwell (Chair) 4 4
Bill Scales AO 3 4
Jay Bonnington 3 4
Ian Robins 3 4
Planning and Investment Committee
This Committee supports the Board by reviewing PoMC’s policies and processes relating to compliance with its statutory and regulatory obligations, capital investment and management, property, infrastructure development, land acquisition and use, pricing, corporate planning and also private investment in the port.
Director Scheduled meetings attended Total no. of meetings held
Des Powell (Chair) 4 4
Bill Scales AO 3 4
Paula Benson 4 4
James Cain 4 4
Meredith Sussex AM 3 4
Frank Williamson 4 4
18 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 Remuneration and People Committee
This Committee supports the Board by reviewing PoMC’s policies and processes relating to compliance with its statutory and regulatory obligations, remuneration of employees and the development of human resources.
Director Scheduled meetings attended Total no. of meetings held
Frank Williamson (Chair) 2 2
Bill Scales AO 2 2
Paula Benson 2 2
Des Powell 1 2
Risk Committee
This Committee supports the Board by reviewing PoMC’s policies and processes arising from its statutory and regulatory obligations and, other business requirements for risk management including occupational health and safety, port security, the protection of the environment and insurance
Director Scheduled meetings attended Total no. of meetings held
Ian Robins (Chair) 4 4
Bill Scales AO 3 4
Paula Benson 4 4
Jay Bonnington 4 4
James Cain 4 4
David Cranwell 3 4
Meredith Sussex AM 4 4
The Chairman is an ex-officio member of all Board Committees.
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 19 Executive Management Team
Stephen Bradford Caryn Anderson James Berry Chief Executive Officer Executive General Manager Executive General Manager Business and Planning Port Capacity Stephen took up his role as Chief Executive Officer of Caryn is accountable for James is responsible for leading PoMC in January 2004 and has a diverse portfolio that is PoMC’s Port Capacity Division. played a key leadership role in responsible for leading the This division is responsible shaping and steering the new strategic considerations for the planning, approval, organisation during its first of PoMC, formulating the management and development seven years of operation. preferred direction for the of PoMC’s short to medium- organisation and developing term container and automotive With an extensive background and maintaining appropriate capacity. James is also responsible in the wider logistics industry, strategies to deliver the long- for the interim management of Stephen previously served as term growth, capacity and activities associated with the Port Managing Director Transport integration objectives of the of Hastings. of Serco Australia Pty Limited port. (subsidiary of the UK-based Having joined PoMC in 2008, Serco Group plc). Stephen was Joining PoMC in 2006, Caryn James has many years of also the Chief Executive Officer draws on over 15 years commercial experience from of Great Southern Railway, experience in the Australian and his previous roles as Chief operator of iconic passenger rail international ports and shipping Financial Officer with a global services including The Ghan and sectors. technology company and the Indian Pacific. a corporate consulting and In addition to her practical finance background. Amongst his many related industry experience, Caryn industry appointments, holds formal qualifications in James holds a Bachelor of Stephen is a Director of science, law and business. Economics and is a member Through Transport Mutual of the Australian Institute of Insurance Association Limited Chartered Accountants. (TT Club – London). Stephen is also a past Deputy Chairman of the Tourism and Transport Forum (TTF) Australia Ltd and a past Chairman of the Australasian Railway Association (ARA).
Stephen holds a Bachelor of Commerce degree from the University of New South Wales and is a Fellow Certified Practicing Accountant (FCPA).
20 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 Katrina Excell Keith Gordon Jason Price Executive General Manager Executive General Manager Executive General Manager Commercial Port Operations Corporate Services
Katrina oversees the financial, Keith oversees a wide range Jason leads a diverse legal and property functions which of operational departments corporate support division support the daily operations and including marine and navigation overseeing the departments leadership of PoMC. services, environment services, of information technology asset and spatial data services, infrastructure projects, These services include management, cruise shipping capital program, people and financial management, port and port security, safety and culture, corporate affairs and pricing, planning and analysis, emergency management. administration services. investment evaluation, taxation, insurance, treasury and financial Before joining PoMC in 2006, Joining the Executive team in operations, legal services and Keith held a number of senior June 2009, Jason has extensive Board support and corporate management roles including experience in service delivery governance arrangements. that of Chief Executive Officer of in complex environments and Geraldton Port Authority. Keith over 17 years of professional In addition, Katrina is also also served as General Manager practice in project and contract responsible for managing PoMC’s Ports for Toll Holdings with management. property holdings including the responsibility for the ports of strategic development of property Geelong and Hastings for almost Prior to joining PoMC in 2007 assets, commercial use of land a decade. as General Manager Projects , and improvements, together with Jason held a number of senior leasing arrangements and liaison With over 25 years experience management positions with with port tenants. in the shipping and logistics international building and industry, Keith has a strong construction materials supplier Having joined PoMC in 2008, understanding of the port’s Boral Limited, and construction Katrina has worked in senior and mining equipment commercial and operational finance roles for over a decade and manufacturer Caterpillar. requirements and obligations. holds a Bachelor of Commerce Jason holds a Bachelor of and is a fully qualified Certified Engineering and postgraduate Practicing Accountant (CPA). management qualifications.
PoMC acknowledges the recently for the Port Capacity With more than 30 years outstanding contribution of Division, Nick Easy worked experience in the construction, two long-serving Executive for PoMC and its forerunner rail and port industries, General Managers who for over 13 years in various Brendan Power worked for sought new opportunities senior management positions. PoMC and its predecessor during the year. Nick was appointed to organisation for over 14 years the role of Chief Executive before his departure to pursue As the Executive General Officer of the Metropolitan a wide range of personal Manager for the Channel Fire Brigade and took up his projects and interests. Deepening Project, and more position in June.
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 21 Our people
Staff at 30 June 2011
2011 2010
Male Female Total Male Female Total
Full-time Permanent 118 56 174 122 52 174
Full-time Temporary 10 9 19 9 12 21
Part-time 1 5 6 0 4 4
Totals 129 70 199 131 68 199
People and Culture initiatives Workplace Relations Policy, Learning and Development Policy and compulsory compliance PoMC remains focused on our most important training for relevant staff in key areas. Appropriate asset, our people. The framework in place from the workplace behaviour training is compulsory for all three-year people and culture strategy continues staff to attend annually. to ensure the organisation attracts, retains and develops our staff. Staff initiatives
An enhanced induction process has seen staff PoMC’s Movers and Shakers Team (MAST) joining PoMC undertake a comprehensive organised a range of activities throughout the year orientation program which provides new starters aimed at promoting staff health and wellbeing, greater access to the Executive team and an and work-life balance including sessions on health opportunity to interact with more departments matters. MAST also continued to coordinate across the organisation during their first few PoMC’s Recognition and Reward Program and months of employment. People and Culture Service Recognition Awards. Advisors have introduced 100 day catch- ups, recognising that the first few months of Reflecting our empathy with flood-affected employment are crucial for new staff. regional Victorian communities, particularly those farming and agricultural areas for which the port In October and November, staff volunteered is their export gateway to the world, PoMC staff to participate in a facilitated engagement coordinated a fundraising activity which was process. These sessions allowed groups of matched by a contribution from MAST. In addition, employees to have open and honest discussions PoMC donated a further $25,000 to the Victorian about their working experience, and helped Red Cross as part of TT-Line’s efforts to raise funds management to focus on areas of opportunity for flood relief in conjunction with radio station while also recognising the positive aspects of the 3AW during the Spirit of Tasmania tour of the north organisational culture and benefits. of the bay on Australia Day.
People and Culture Policies were reviewed throughout the year, and included an updated
22 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 Occupational health and safety
PoMC takes a proactive approach in managing our Occupational Health and Safety (OHS) responsibilities. There were no reportable incidents and no lost time injuries during the year.
In supporting improved safety outcomes, PoMC continues to deliver programs designed to support learning and the sharing of safety knowledge including Safety Leadership Training for managers, and an e-learning module on Hazard, Risk and Incident Management training for all employees. These programs are coordinated by PoMC’s OHS Committee which meets quarterly.
Employee/Industrial Relations Statement
No industrial disputes were lodged during 2010- 2011 and no time was lost through industrial relations activities. PoMC commenced Enterprise Agreement negotiations in May, with the view to having a new enterprise agreement in place prior to the expiry of the current agreement on 23 August 2011.
Statutory compliance
PoMC complies with all applicable statutory requirements in relation to employment legislation. During the year PoMC continued to review its current conditions of employment and related policies to ensure compliance with the National Employment Standards (NES), and Fair Work Act 2009 (Cwth). PoMC has a Code of Organisational Values and Behaviour of Employees document, otherwise known as the Code of Conduct.
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 23 Organisational structure
Stephen Bradford Chief Executive Officer
Ruth Hunnisett Executive Assistant to the Chairman and Chief Executive Officer
Caryn Anderson Katrina Excell Jason Price Executive General Manager Executive General Manager Executive General Manager Business and Planning Commercial Corporate Services
Gareth Gaffney Costa Lakoumentas Anthony Donald General Manager General Counsel General Manager Strategy and Planning Infrastructure Projects Sally Murray Chris Ryan Board Secretary Peter Harry Manager Trade and Business Head of Corporate Affairs Matthew O’Meara John Riley General Manager Finance Derrick Wheeler Manager Land Use Planning General Manager Bill Eykman Information Services Gilbert Richardson General Manager Manager Transport and Property Steve Wallace Logistics Investment Program Manager
Jenny Bygrave Dixean Walker Manager Community Relations General Manager People and Culture (Acting) José Terraza Risk Systems Coordinator Vicki Wilson Manager Christopher Ong Knowledge Management and Manager Port Planning (Acting) Administration Services
24 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 James Berry Keith Gordon Executive General Manager Executive General Manager Port Capacity Port Operations
Jeff Bazelmans Dominic (Mick) Lo Bianco General Manager General Manager Port of Hastings and Assets and Spatial Data Approvals and Compliance David Shennan John Bennett General Manager General Manager Marine and Navigation Services Bid Management Steven Sullivan Nick Van Amstel General Manager General Manager Security, Safety and Emergency Asset Delivery Management
Ken Leigh Peter Gibb General Manager General Manager Commercial Environment Services
Greg Russo Evda Marangos Executive Communications Manager Manager (Acting) Cruise Shipping
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 25 Trade performance
In a record trade year for the Port of Melbourne, Non-container trade all cargo types showed positive growth with the exception of motor vehicles which were impacted Total non-containerised trade increased 4.5% to by the natural disaster events in Japan. In the 22.1 million revenue tonnes (10.1 million mass first full reporting period following the global tonnes) with all cargo types contributing positive financial crisis, trade volumes have moved closer growth with the exception of motor vehicles. to their long-term average growth rates. Imports of non-containerised cargo increased 2.7% Total trade to 15.7 million revenue tonnes (8.1 million mass tonnes), and total exports increased 9.3% to Total trade through the Port of Melbourne 6.4 million revenue tonnes (1.9 million mass tonnes). increased to a record 79.7 million revenue tonnes (32.3 million mass tonnes), an increase of 5.8% over The main non-containerised commodities exported the previous financial year. were motor vehicles, accompanied passenger vehicles, miscellaneous manufactures, cereal grains Overseas imports increased 4.9% to 33.6 million and petroleum products. revenue tonnes while overseas exports increased 11.0% to 23.5 million revenue tonnes. Coastal The main non-containerised commodity imports imports increased 3.4% to 11.2 million revenue were motor vehicles, crude oil, cement, petroleum tonnes and coastal exports recorded a modest 0.7% products and transport equipment. increase to 11.3 million revenue tonnes.
The growth surge in new motor vehicle trade fell Container trade away dramatically in the latter part of the year as a shortage of parts due to the earthquake and Throughput for the port’s core container trade set a tsunami in Japan impacted the global automotive new national record rising to 2.39 million TEU, up 7.0% on 2009-10. During the year, the port handled supply chain. In total, the port handled 4.7 million over 200,000 TEU in six separate months, including a revenue tonnes (358,000 units), down 4.6% on last national monthly record of 217,000 TEU in October. year. Imports of new motor vehicles decreased 0.5% to 3.3 million revenue tonnes (251,000 units) The total number of loaded containers shipped to and and exports decreased 13.0% to 1.4 million revenue from the port increased by 5.3% to a record level of 1.90 tonnes (107,000 units). million TEU, including record full container exports in March amounting to over 73,000 TEU. Empty container Liquid bulk movements grew 14.0% to 496,000 TEU Total liquid bulk trade recorded a strong increase The top ten containerised commodity exports were of 6.5% to 5.2 million revenue tonnes (4.4 million miscellaneous manufactures, cereal grains, dairy mass tonnes). Exports of petroleum products were products, beverages, paperboards & fibreboards, the main contributor to the overall rise, increasing stockfeed, paper & newsprint, fruit & vegetables, 51.2% to 518,000 revenue tonnes. Crude oil imports, pulp & wastepaper and meat. which accounted for almost 53% of the port’s total liquid bulk trade, were almost static, increasing The top ten containerised commodity imports 0.7% to 2.8 million revenue tonnes, while petroleum were miscellaneous manufactures, electrical product imports also increased by 2.9% to equipment, furniture, fruit & vegetables, paper & 1.4 million revenue tonnes. newsprint, clothing, machinery, vehicle parts, metal manufactures and rubber manufactures.
26 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 Dry bulk Coastal trade
Boosted by higher than average rainfall, dry bulk Coastal trade increased 2.0% to 22.6 million revenue trade delivered strong growth of 13.2% to 3.5 million tonnes (8.2 million mass tonnes) and accounted for revenue tonnes (3.4 million mass tones). Imports 28.3% of total port trade in 2010-11. Shipments to and were up 4.5% overall, with the main commodities from Tasmania, which make up for the majority of this being cement, gypsum and sugar. The main export coastal trade (76.1%), increased 1.8% to a total of commodities were wheat, barley and scrap metal, 17.2 million revenue tonnes (5.0 million mass tonnes). which together were up 74.0%. This “Bass Strait” trade comprised 55.6% containerised, 39.8% non-containerised general and 4.6% bulk Overseas trade cargo. The main export commodities to Tasmania were miscellaneous manufactures, accompanied China remained the Port of Melbourne’s main export passenger vehicles, miscellaneous food preparations, market for containerised commodities in 2010-11, motor vehicles, and stockfeed. The main commodities accounting for 21.7% of that trade. This was followed imported from Tasmania were accompanied passenger by New Zealand (11.3%), Japan (9.5%), the USA (6.7%), vehicles, fruit & vegetables, cement, paper & newsprint, South Korea (4.2%), Taiwan (4.0%), Indonesia (4.0%), and miscellaneous manufactures. Hong Kong (3.7%), Vietnam (3.3%), and Thailand (3.3%). Export markets to record significant gains in 2010-11 Mainland coastal trade increased 2.6% to 5.4 were Russia (+ 94.6%), Italy (+ 87.6%), Germany million revenue tonnes (3.2 million mass tonnes) (+ 46.7%), Egypt (+ 43.2%), Vietnam (+ 37.2%), and comprised primarily containerised cargo Papua New Guinea (+ 36.4%), South Africa (+ 36.2%), which accounted for 51.3% of the trade followed Sri Lanka (+ 33.3%) and India (+ 24.9%). by dry bulk (26.1%), liquid bulk (15.6%) and non- containerised general cargo (7.0%). China was again the port’s major source of containerised commodity imports, representing 36.9% of the trade Trade definitions in 2010-11. Other leading countries of origin for containerised imports were the USA (9.6%), 1. Trade volume is measured in: New Zealand (6.7%), Thailand (5.1%), Japan (3.4%), • Revenue tonnes – a quantity measure based on the Malaysia (3.2%), Germany (3.0%), South Korea (2.9%), greater of weight in mass tonnes and volume in Hong Kong (2.7%), and Indonesia (2.6%). Relative cubic metres strong growth was recorded in imports from • Mass tonnes – a quantity measure based on the Czech Republic (+ 127.5%), Finland (+ 37.1%), weight of cargo United Arab Emirates (+ 32.1%), Spain (+ 27.7%), 2. Trade information can be broken down into: Singapore (+ 20.7%), Belgium (+ 12.8%), Italy (+ 11.6%), • Overseas trade – trade between Melbourne and Vietnam (+ 11.0%), South Korea (+ 10.7%) and non-Australian ports Thailand (+ 10.4%). • Coastal trade – trade between Melbourne and other Australian ports The leading countries of destination for non- • Total trade – the sum of both overseas and coastal containerised exports were Saudi Arabia (25.9%), trade. Singapore (10.1%), Vietnam (10.0%), Philippines (9.0%), 3. TEU is a twenty-foot equivalent unit, the and New Zealand (8.9%). international measure for standardising container The leading countries of origin for non-containerised throughput numbers. 4. Gross tonnage (gross tons) is a measure of the total imports were Japan (18.6%), Gabon (12.0%), Singapore enclosed space or internal capacity of a vessel, (11.3%), Indonesia (7.6%) and South Korea (7.3%). expressed in terms of tons of 100 cubic feet each.
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 27 Finance in brief
PoMC delivered a strong financial result in Operating performance 2010-11 following solid trading conditions and a tight control of operating expenditure. PoMC PoMC recorded earnings before interest and tax continues to maintain the balance between (EBIT) of $90.1 million which was an increase of operating as a self sustaining, financially $21.6 million on the prior financial year. Revenue independent organisation while investing before interest income increased by $25.7 million in critical port infrastructure. primarily as a result of trade growth. Operating expenditure was broadly in line with 2009-10 Financial highlights for 2010-11 expenditure.
• $39.0 million operating profit after tax Earnings before interest and tax (EBIT)
• $13.4 million in dividends paid $M EBIT $M Wharfage Rental Channel Fees Other • $26.0 in capital expenditure 90 250 80 • Net Assets amount to $1.5 billion 70 200
including cash reserves of $41.2 million 60 150 • Total borrowings of $490.1 million and a 50 40 gearing ratio of 25.1% 100 30
20 50 Finance costs 10
0 0 Finance costs of $38.2 million were offset by interest 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009 2009/2010 2010/2011 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009 2009/2010 2010/2011 income of $2.4 million. The resulting net finance charge of $35.8 million is $3.5 million lower than the Profit previous year reflecting the full year impact of loans Operating profit after tax of $39.0 million was an drawn down to fund the Channel Deepening Project. increase of $11.5 million on the prior year total Cash flow of $27.5 million. Overall operating cashflows increased by $22.9 million over last year. Net cash inflows from operating activities were $106.2 million compared with $83.3 million in 2009-10. Cash outflows for capital expenditure were $29.8 million compared to $223.6 million in 2009-10 and $68.0 million in borrowings were repaid during the year. No new borrowings were required in 2010-11.
PoMC’s interest cover ratio was 3.7 times (2009-10: 3.3 times).
28 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 Revenue Balance sheet
Total revenue of $242.2 million represents an As at 30 June 2011, net assets of PoMC were increase of $23.8million on the previous year. $1.5 billion compared with $1.4 billion in 2009-10. Trade related revenue from wharfage charges of $156.0 million increased by $18.7 million on the The balance sheet comprised: previous year. This was a result of solid trading conditions that resulted in a 5.8% increase in trade • Cash assets of $41.2 million consisting of cash volume (revenue tonnes). on hand and term deposits and earned interest ranging from 4.3% to 4.9% during the year. Revenue from channel usage fees of $27.3 million • Infrastructure, property, plant and equipment grew by $3.8 million due to an increase in vessel assets of $2.3 billion including channels, port traffic through the channels for the year. land, buildings and infrastructure assets. • Borrowings of $490.1 million with a weighted Property rentals increased by 6.4% to $43.8 million average maturity of 5.7 years and fixed rates following rental determinations on specific port ranging from between 5.8% and 7.0%. Combined land parcels which reflect market conditions. with cash reserves, this resulted in a gearing ratio of 25.1% at 30 June 2011. Revenue by segment
EBIT $M Wharfage Rental Channel Fees Other $M Capital expenditure 250 CDP Other 350
200 300 PoMC undertook capital expenditure projects
250 totalling $26.0 million. Expenditure included: 150 200
100 150 • Channel maintenance dredging
100 • 221 Whitehall Street remediation works 50 50 • 33 South Wharf rehabilitation 0 0 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009 2009/2010 2010/2011 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009 2009/2010 2010/2011 •2004/2005 No.1 Maribyrnong2005/2006 2006/2007 deck 2007/2008 rehabilitation 2008/2009 2009/2010 2010/2011 • Port Management System replacement Expenses
Total expenses (excluding finance charges) were $149.7 million in line with the prior year spend of $145.6 million.
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 29 Financial summary
2011 2010 2009 2008 2007 Year ended 30 June $m $m $m $m $m
Operating results Operating revenue 242.2 218.4 202.6 170.8 142.1 Operating expenses (149.7) (145.6) (130.6) (103.1) (107.7) Finance costs (38.2) (36.6) (16.4) (7.6) (3.5)
Operating profit before income tax 54.2 36.2 55.6 60.1 30.9 Income tax benefit (expense) (15.2) (8.7) (14.3) (18.2) (8.9)
Operating profit after income tax 39.0 27.5 41.3 41.9 22.0
Financial status Total assets 2,343.5 2,380.2 1,929.1 1,653.3 1,024.3 Total liabilities 868.8 956.4 729.1 441.9 258.5
Net assets 1,474.7 1,423.8 1,200.0 1,211.4 765.8
Contributed capital and reserves 1,361.2 1,336.7 1,073.0 1,096.7 685.9 Retained profits 113.5 87.1 127.0 114.7 79.9
Total equity 1,474.7 1,423.8 1,200.0 1,211.4 765.8
Cash flows Cash flows from operating activities 106.2 83.3 77.8 72.3 62.3 Cash flows from investing activities (29.6) (219.4) (325.7) (141.9) (69.2) Cash flows from financing activities (81.4) 80.7 252.2 164.0 1.1
Net cash flow (4.8) (55.4) 4.3 94.4 (5.8) Capital works Total expenditure 26.0 186.1 332.9 167.2 59.9 Dividend Dividends paid 13.4 67.8 29.6 6.7 20.4 Financial strength Gearing ratio (%) 25.1 28.1 19.5 1.1 10.7 Interest cover ratio (times) 3.7 3.3 6.6 14.9 10.0 Leverage ratio (times) 3.1 4.0 3.7 1.2 1.6
30 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 Our stakeholders - customers and community
PoMC values and invests in our relationships contribution and supply chain connectivity and with our customers and the wider community efficiency. Representation at, and contribution by informing, assisting and supporting mutually to, a variety of industry groups and associations beneficial outcomes in trade and business and continues to be an extension of the team’s community understanding of our role and stakeholder engagement and promotion stategy. operations. Community engagement Customer engagement PoMC delivered an extensive community relations PoMC recognises that the relationships with our program to support the ongoing operations and customers are the key to the collective success of the development of the port in its city context, with a Port of Melbourne as a vibrant and efficient trade focus on fostering local partnerships, particularly gateway. In keeping with our commitment to high those communities which neighbour the port. standards of customer service, PoMC hosted and supported a number of strategic and operational Engagement with community stakeholders covered customer engagement activities throughout the key strategic issues including trade forecasts, year including regional workshops with cargo economic contribution, port development and the owners, logistics providers and business partners interaction between the port and wider transport in Adelaide, Mildura, Griffith, Wagga Wagga, network. Operational issues such as cruise shipping Horsham, Hobart, Devonport and Melbourne. at Station Pier, port infrastructure and heritage projects were also a focus. Activities included: With dedicated trade facilitation offices in Wagga Wagga, Adelaide, Hobart, together with • Guided boat tours of port facilities for community, our resourses in Melbourne, PoMC strives to education and local government stakeholders to understand the requirements and expectations provide a unique perspective on port operations of our customers and to benefit their businesses • Quarterly publication of Port Page in local press, by responding effectively to their needs and a full-page colour advertorial outlining PoMC’s identifying opportunities to facilitate trade. These operations, projects and community activities reciprocal relationships also provide important • Sponsorship of local events including the grassroots market intelligence which helps Yarraville Arts Festival , the Williamstown Literary shape effective port planning and strategic port Festival and the Big Bay Swim charity fundraising management to service our customers. event, in addition to support for local life saving clubs in Port Melbourne and Williamstown and As part of our regular calendar of events, PoMC friends groups around the port precinct hosted a stakeholder event for customers, port • The Port of Melbourne Community Information service providers, tenants, government agencies and Evening where PoMC staff from across the community representatives who were addressed by organisation answered community questions The Hon. Dr Denis Napthine MP, Minister for Ports. on topics including traffic, cruise shipping, port development and environmental sustainability Throughout the year, PoMC’s Trade and Business programs Team supported a diverse range of industry events and cargo-specific conferences with a focus on cargo • Continued Channel Deepening Project owners. Engagement with customers covered key engagement with meetings of the Community strategic issues such as port pricing, trade forecasts, Liaison Group continuing during the post- ship fleet forecasts, ITC solutions, economic construction phase of the project.
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 31 Port Education Program Across PoMC’s broad range of organisational objectives, functions and activities there are a Nearly 4000 students and community members diverse range of stakeholders. Each of these visited the purpose-built Port Education Centre stakeholder groups has various interests in PoMC’s (Port Ed) during the year, learning about the Port of business and various needs and expectations from Melbourne and the world of international shipping. the operations of PoMC and the port as a whole. PoMC must actively understand and respond During the year, the Port Education program reached to these different and sometimes competing a national audience by delivering a series of maritime- expectations to ensure a high level of stakeholder related education modules which featured on satisfaction. children’s television programs Scope and Totally Wild. In addition to engagement with Government, PoMC In collaboration with Patrick Corporation and several engages with two distinct stakeholder groups: shipping lines, PoMC coordinated six Schools on Board customers/business groups and community groups. ship visits, offering local students a hands-on learning experience on board a visiting container ship. The Within each of these groups there are various Schools on Board program also included a special visit organisations that either use the port’s facilities to the Cunard vessel Queen Elizabeth. directly or indirectly or have specific interest in the operation and development of the port. Where Shareholder engagement these organisations can have a direct influence on the port it is critical for PoMC to identify and As PoMC’s shareholder and policy maker, the understand the key interests. By doing so, these Victorian Government has a vested interest in how interests can be considered within PoMC’s strategic PoMC manages and develops the port, and how it planning context and help shape the future of operates as a business. Strong relationships exist the port. between PoMC, the Government, and its various agencies, and this has been achieved through an PoMC’s business to business engagement is open engagement process. supported by a strategic approach at the corporate level. Communication and engagement activities Stakeholder engagement relevant to each stakeholder group are driven through relevant corporate strategies such as While PoMC’s focus is on the management of the the Marketing and Customer Relations Plan and Port of Melbourne, the movement of maritime the Trade and Business Development Strategy. cargo requires considerations beyond the port PoMC’s community engagement is reflected in the boundaries. The introduction of the Transport Community Relations Plan. Integration Act 2010 (Vic) provides further opportunity for PoMC to work with Government An overview of the types of customer and and its agencies to deliver an integrated and community stakeholder groups is outlined below. sustainable transport system.
Shareholder: Victorian Government Customers Stakeholders • Import and export cargo owners • The wider Victorian community, producers and • Shipping lines consumers • Port tenants • Adjoining local Governments and communities • Customers of common user facilities • Business and industry groups and peak bodies • Cruise ships, passenger ferries and visiting vessels • Recreational, commercial and tourism vessel operators • Port service providers • Suppliers, consultants and contractors • Shipping agents • Employees • Transport providers
32 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 Port operations
The safe navigation of vessels, together with port Maribyrnong Rivers, Webb Dock, Ann Street Pier and security and safety and infrastructure management, Station Pier. A total volume of around 325,600 cubic is a core focus of PoMC’s port operations which metres of sediment was dredged and disposed of in play a pivotal role in facilitating trade to and from the Port Melbourne Dredge Material Ground (DMG). Australia’s largest container and general cargo port. Security, safety and emergency Marine operations management
The Port of Melbourne hosted 3,376 ship visits PoMC is fully compliant with relevant legislation during the year – an increase of 6.9% over the relating to security, safety and emergency management, previous year, while vessel tonnage increased including the Maritime, Transport and Offshore Facilities 7.4% to 96.6 million gross tons. On average at least and Security Act 2003 (Cwth), the Emergency Management one vessel every two days utilised the additional Act 1986 (Vic), the Port Management Act 1995 (Vic) draught depth made possible by the completion of and the Marine Act 1988 (Vic). PoMC operated under the Channel Deepening Project. Maritime Security level 1 throughout the year which is the lowest designated security alert level. Of the total visits, 3,313 were by commercial vessels, an increase of 251 or 8.2% over 2009-10. Working in collaboration with Victorian and Commonwealth Government agencies, PoMC Container vessel visits increased 13.0% to 1,233 participated in, and contributed to, a wide variety visits due to several new shipping lines entering the of collaborative forums and committees to share trade in early 2010-11. Despite the overall increases expertise and knowledge to monitor and safeguard in both visits and total tonnage, the average gross infrastructure, together with maintaining an tons of vessels calling in 2010-11 was almost static, appropriate incident response capability. increasing just 0.4% to 28,626 tons. During the year, PoMC continued to coordinate and To facilitate safe and efficient navigation, marine chair the quarterly Port Security Committee (PSC) communications were upgraded with two VTS which comprises over 60 members representing radar scanners and replacement of the microwave various Victorian and Commonwealth Government communications network and VHS radio equipment. agencies and authorities, together with maritime security plan owners which include port tenants Melbourne VTS also played an active role in and service providers. managing shipping traffic throughout upgrade works to the West Gate Bridge during which time a In addition, PoMC played an active role in the reduced air draught was in place. following security and safety forums:
Maintenance dredging • Melbourne Port Emergency Management Plan Committee PoMC successfully completed its 2009-11 routine • Port Phillip Region Marine Pollution maintenance dredging program ahead of time and Contingency Plan within budget. Commencing in November 2009, the • Municipal Emergency Response Committees staged project included dredging and sweeping of the dredged material before capping this sediment • Security Continuity Network with clean sand after a period of settling. • VICPLAN Committee • Ports Australia Security Working Groups The program involved the removal of a build up of • Maritime Security Strategic Forum silt in berths and berth approaches in the Yarra and • Maritime Industry Security Consultative Forum
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 33 Safety and Environment Whole of Port Health Safety and Management Plan Environment Committee
The Safety and Environment Management Plan The Whole of Port Health Safety and Environment (SEMP) is an important framework for identifying Committee (WoPHSEC) was established in March and mitigating safety and environmental risks 2006 to foster a coordinated approach in achieving across the port. Prepared as a high level plan continuous improvement in health, safety and complying with the ministerial guidelines environmental outcomes in the Port of Melbourne. within the Act, the SEMP has high-level organisational commitment. The SEMP is a Convened by PoMC, the WoPHSEC met four times significant management component in enabling throughout the year bringing together a diverse PoMC to achieve the highest level of safety and range of representatives from the port community environmental standards. including stevedores, tenants, towage operators, peak shipping bodies and unions. The SEMP is underpinned by operational systems and processes, in particular PoMC’s ‘Steer Clear’ boating safety Safety and Environment System (SEMS) which is campaign aligned with AS 4801-Occupational Health and Safety Management Standard and ISO 14001 – PoMC continued its emphasis on educating boat Environmental Management Standard. owners about the risks of anchoring or drifting in shipping channels, particularly in the warmer Originally developed in 2005, the SEMP is months. Having led an extensive print and radio externally audited every two years and recertified communications safety campaign, PoMC worked against legislative requirements every four years. alongside enforcement authorities including Victoria Water Police and Parks Victoria by In addition to the SEMP, PoMC has also mobilising the rapid response vessel MV Tim Muir commenced implementation of a Safety Culture to conduct bay patrols. Program to embed safety as a core business behaviour across the organisation. The MV Tim Muir was deployed at Queenscliff during the month of January to patrol the entrance to Port Phillip Bay and South Channel as part of a total of 1700 hours of dedicated patrols across the bay. In its twin role of educating boat owners and providing enforcement, authorised officers distributed over 400 education packs and issued 84 infringement notices.
34 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 Cruise shipping
Station Pier enjoyed another busy season with a total of 36 ship visits, including eleven turnaround visits.
A highlight of the 2010-11 cruise season was the arrival of the Cunard vessel Queen Elizabeth on her maiden round-the-world voyage and inaugural visit to the Port of Melbourne. Amid widespread public interest in this visit, PoMC coordinated a community information program for local residents and businesses, together with the broader Melbourne community.
In addition to traffic management, ground handling, customs, quarantine and on-pier logistical operations, the 2010-11 season saw PoMC trial a community relations front-of-house program, assisting disembarking passengers to smoothly exit the pier precinct on select turnaround days.
In the winter months, PoMC continued upgrades to the heritage-listed Station Pier as part of a long- term maintenance program to ensure this valuable heritage asset continues to function as a working port facility to add value to the experience of cruise lines and their passengers.
PoMC remains committed to the cruise industry through its involvement with the Melbourne Cruise Ship Committee which comprises key government, industry and transport stakeholders to coordinate resources, enabling Melbourne to deliver an international standard cruise shipping experience.
With 56 vessels scheduled to call at Station Pier in 2011-12, PoMC is undertaking the necessary planning and preparation for a record season.
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 35 Port planning
PoMC continues to plan and develop a port which Container Logistics Study recognises its urban location and builds on its strategic infrastructure and logistics advantages. Released by the Minister for Ports in February, PoMC completed the Container Logistics Chain Study with the support of the Department of Port capacity Transport and Essential Services Commission. With the growing volume of container trade, PoMC Tracking over 75,000 container movements, the has maintained a focus on the requirement for study provides the most comprehensive analysis to additional container handling capacity in the port. date of container logistics moving through the Port Having recognised the need for additional capacity, of Melbourne and Dynon rail terminals. PoMC undertook an extensive market sounding to ensure the requirements of all stakeholders were The key findings of the study include: understood and the options for development of • 87% of full containers imported through the further capacity had been identified. Port of Melbourne were destined for a location within metropolitan Melbourne PoMC also undertook a targeted automotive industry • 71% of imports were staged at a transport depot engagement. A discussion paper was prepared for • the two regions from which export containers Government, evaluating the delivery options for mostly originate are the western suburbs certainty of container capacity in the short to medium (26%) and regional Victoria (23%) term. To supplement this, design works, reviews and • 90% of imported containers taken by road travelled assessments were undertaken to prepare and submit a less than 50 kilometres to their initial destination detailed Business Case to Government to provide the scope for accommodating the future growth. Port Interface Master Plan Port of Hastings Focusing on the port environs and interface spaces in between the port’s operational areas During the reporting period, the previous and the community, PoMC has engaged widely Government legislated to integrate the Port of to prepare a Port Interface Master Plan (PIMP). Incorporating historic community infrastructure, Hastings with the Port of Melbourne with the the plan enhances ‘liveability’ close to the port passage of the Transport Legislation Amendment and promotes an awareness and appreciation of (Ports Integration) Bill in August. The Bill provided the port’s contribution to the local community and for the abolition of the former Port of Hastings its core role in shaping Melbourne. The plan also Corporation and for PoMC to assume responsibility creates the necessary security and safety buffer in for the governance and management functions of an aesthetically pleasing and functional manner the Port of Hastings. This integration came into which adds intrinsic value to the surrounding area. effect on 1 September. Port Heritage Trail Following the change of Government in November, the new Government introduced legislation in As part of the PIMP, PoMC is currently constructing June to separate the Port of Hastings from the Port a Port Heritage Trail which recognises the of Melbourne. The legislation provides for the significant role of the port and the city’s maritime establishment of the Port of Hastings Development history. By describing the story of Melbourne’s port Authority to plan for that port’s future development from the mid-nineteenth century, the project aims to reconnect the community with its development. As a result, PoMC’s responsibilities port using interpretive signage designed from old for Hastings will be transferred to the new entity. timber piles at 12 sites around the port’s boundary.
36 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 Port development
Ongoing infrastructure development is a key focus 33 South Wharf of PoMC’s commitment to providing high quality facilities to our customers and port users. PoMC continues the extensive rehabilitation of the With total capital investment of $26.0 million in structure at 33 South Wharf which involves the 2010-11, PoMC completed and progressed a diverse replacement of tie rods, installation of new anchors, range of projects during the year, including: strengthening of the sheet pile wall structure, upgrading the capping beam, improving drainage 221 Whitehall Street remediation and reinstatement of pavement.
After extensive investigations and independent Station Pier environmental audits, remediation of the 221 Whitehall Street, Yarraville, site is well advanced PoMC progressed its maintenance program for Station having completed demolition of old sheds and Pier with over 1000 piles now replaced or rehabilitated concrete structures. Stormwater and drainage over the last two years alongside deck replacement, works have commenced alongside the introduction upgrade to the ceiling inside the passenger terminal, of clean fill with landscaping and fencing to follow. upgrades to the air conditioning equipment and conversion of former lift shafts into storerooms. Rehabilitation of this site is being undertaken in accordance with the Remediation Action Plan agreed No. 1 Maribyrnong with the Environment Protection Authority. The project is expected to be completed in the first quarter of 2011- Rationalisation of the complex manifold network 12 in order to release valuable land for port-related use, which services the liquid bulk facilities at Coode Island adding value to the supply chain. was completed. Working closely with tenants, deck replacement, lighting improvements and an upgrade to Footscray Wharf the earthing infrastructure was undertaken.
Removal of the old deck and demolition of fishing Appleton Dock sheds were completed as part of the redevelopment of Footscray Wharf which is scheduled for Concrete deck rehabilitation was progressed with completion towards the end of 2011. completion due in the first quarter of 2011-12 to facilitate the roll-on/roll-off and breakbulk trades In a major overhaul of Footscray Wharf, PoMC has at Appleton Dock following the demolition of already undertaken procurement of gangways and Shed C last financial year. pontoon structures as part the wharf’s redevelopment into a commercial mooring facility which will also accommodate port-related support vessels.
Further works include the construction of rock revetment, the construction of a publicly accessible viewing platform, fencing and landscaping.
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 37 Sustainability
Working closely with stakeholders and staff, During the year, separate recycling and organic PoMC developed a range of initiatives and disposal bins were introduced to divert organic programs in keeping with our commitment waste from landfill and an automated computer to ongoing sustainable operations in project shutdown was initiated to reduce energy monitoring and delivery, in the workplace and the consumption – the latter program arising directly port more generally. from ideas generated from PoMC’s Carbon Savers Competition where staff submitted potential carbon Channel Deepening Project saving initiatives.
Throughout the year, PoMC fully complied with Port initiatives the obligations under the Channel Deepening Project Environmental Management Plan (EMP) Following the adoption of PoMC’s Climate Change by conducting ongoing baywide monitoring Strategy, a broad Sustainability Framework is which was regularly reported to the Office of the being prepared. The Sustainability Framework Environmental Monitor (OEM), the independent will redefine how we do business in keeping with auditor for the project, and made publicly available. our values with regard to the social, economic and environmental systems in which we operate. The EMP required PoMC to coordinate two substantial projects which culminated in the public Looking beyond the organisation’s office-based release of two reports in April: Great Sands and environmental impacts, as the strategic manager adjacent coast and beaches and Sediment transport of the port, PoMC commenced a review of the modelling. carbon footprint of wider port activities. The review examines emissions by tenants and port users such The reports brought together the extensive as shipping, trucking, rail and other port-related monitoring data on tides, waves, currents and activities. The work being undertaken will give bathymetry of the Great Sands region in the PoMC a better understanding of the contribution south of the bay before and after the dredging of by port users to the local and regional generation of the Entrance and South Channel. All evidence carbon. was consistent with the limited effects that were predicted, and these limited effects were not To help reduce emissions at specific facilities, PoMC considered sufficient to cause the beach erosion commenced purchasing 25% Greenpower for the seen in the bay. nine largest energy consuming sites. Workplace initiatives
To help foster organisational behavioural change and collectively reduce our environmental impacts while at work, PoMC continued its commitment to Sustainability Victoria’s ResourceSmart program which included setting targets and best practices for waste management, energy reduction, paper consumption and procurement. To support this program, a waste audit for PoMC’s offices was conducted.
38 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 Port pricing
PoMC’s pricing of facilities and services reflect Reference Tariff Schedule the need to preserve a robust and prudent self- funding business model from which to develop From 1 July 2010, PoMC’s Reference Tariff Schedule and maintain quality port infrastructure and provided for tariff increases of: services for port users. • Wharfage fees for loaded and empty twenty- Price determination foot containers increased by 5.5% and 4.3% respectively The prices charged by PoMC for the provision of • Wharfage fees on motor vehicles increased by Regulated Prescribed Services are subject to price 20.0% to reflect the costs incurred by PoMC in monitoring by the Essential Services Commission providing infrastructure and services for the (ESC). Regulated Prescribed Services provided by motor vehicle trade PoMC include the provision of shipping channels • Wharfage fees on liquid bulk, dry bulk and non- and infrastructure that serve containerised and containerised/general trade increased by 15.4%, motor vehicle cargoes. 9.2% and 7.7% respectively • Channel fees increased by 4.1% Following a review of Victorian ports regulation in 2009, the ESC issued a revised Price Monitoring • CPI increase of 2.5% on the infrastructure levy to Determination that sets out the regulatory recover costs for the Channel Deepening Project. framework for period 2010 to 2015. The key features of this framework include: From 1 July 2011, PoMC’s revised Reference Tariff Schedule will become effective with tariff increases • The Port of Melbourne is currently the only in the range of 3.0 - 4.5%. Victorian port to be subject to price monitoring Details of PoMC’s Pricing Policy Statement and the • Regulated Prescribed Services are restricted to the Reference Tariff Schedule are available on PoMC’s shipping channels administered by PoMC and website www.portofmelbourne.com. Details of infrastructure that serve the containerised and the ESC’s Price Monitoring Determination and motor vehicle trades Price Monitoring Reports are available on the ESC • PoMC publishes an annual reference tariff website www.esc.vic.gov.au. schedule that sets out the standard terms and conditions applicable for that year • PoMC issues a Pricing Policy Statement that sets out the principles and structure by which PoMC will set prices for the Regulated Prescribed Services over the regulatory period.
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 39 Charges
PoMC’s principal charges consisted of land and infrastructure rental, wharfage, channel fees, berth hire, area hire and security, as detailed below:
Land and infrastructure rental – rent charged to port tenants is reviewed to market, CPI or fixed increases as set out in the tenancy agreement.
Wharfage – charged per unit of quantity, volume or weight of cargo for all cargoes, including empty containers, loaded on, or discharged from vessels or between vessels, in the Port of Melbourne.
Channel Fees – charged for the provision of channels for use by vessels in Melbourne port waters and the provision of associated services. Channel fees are levied on the gross tons (GT) of vessels using the channels or in other manners specified for the provision of channel related services.
Berth Hire – a time-based charge for the provision of berths for the purpose of loading or discharging specialised cargo (including passengers) and lay-up or other purpose approved by PoMC.
Area Hire – a fee charged for the provision of a common user area within the Port of Melbourne for the purpose of storage of cargo discharged from, or to be loaded on to, a vessel.
Security – charged for the provision of security services related to prescribed maritime security zones managed directly by PoMC within the Port of Melbourne precinct.
40 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 Additional information
Transport Integration Act 2010 (Vic)
The Transport Integration Act 2010 (Vic) (the Act) commenced on 1 July 2010. Its purpose is to create a new framework for the provision of an integrated and sustainable transport system in Victoria consistent with the vision statement contained in section 6 which reads:
“The Parliament recognises the aspirations of Victorians for an integrated and sustainable transport system that contributes to an inclusive, prosperous and environmentally responsible State.”
PoMC is defined as a ‘transport body’ under the Act which means that PoMC is governed by the Act as well as the Port Management Act 1995 (Vic) (previously named the Port Services Act 1995).
Under section 24 of the Act PoMC is required to have regard to the ‘transport system objectives’, ‘decision- making principles’ and any ‘specified policy principles’ when performing its functions or exercising its powers under any ‘transport legislation’ (including the Port Management Act).
The transport system objectives provide for:
• Social and economic inclusion; • Economic prosperity; • Environmental sustainability; • Integration of transport and land use; • Efficiency, coordination and reliability; and • Safety, health and wellbeing.
The decision making principles provide for:
• Integrated decision-making; • Triple bottom line assessment; • Equity; • Transport system user perspective; • The precautionary principle; • Stakeholder engagement and community participation; • Transparency.
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 41 Section 141D Objectives
The primary object of PoMC is to manage and develop the PoMC ports (being the port of Melbourne and the port of Hastings) consistent with the vision statement and the transport system objectives.
The primary object includes: a. to ensure, in collaboration with relevant responsible bodies, that the PoMC ports are effectively integrated with the transport system and other systems of infrastructure in the State; b. to facilitate, in collaboration with relevant responsible bodies, the sustainable growth of trade through the PoMC ports; c. to ensure that essential port services of the PoMC ports are available and cost effective; d. to establish and manage channels in port of Melbourne waters and port of Hastings waters for use on a fair and reasonable basis.
Section 141E Functions
The functions of PoMC are to: a. plan for the development and operation of the PoMC ports; b. provide land, waters and infrastructure necessary for the development and operation of the PoMC ports; c. develop, or enable and control the development by others of, the whole or any part of the PoMC ports; d. manage, or enable and control the management by others of, the whole or any part of the PoMC ports; e. provide, or enable and control the provision by others of, services for the operation of the PoMC ports; f. promote and market the PoMC ports; g. facilitate the integration of infrastructure and logistics systems in the PoMC ports with the transport system and other relevant systems outside the ports; h. manage and, in accordance with standards developed by the Director, Transport Safety, to dredge and maintain channels in port of Melbourne waters and port of Hastings waters; i. provide and maintain, in accordance with the standards developed by the Director, Transport Safety, navigation aids in connection with navigation in port of Melbourne waters and port of Hastings waters; j. generally direct and control, in accordance with the Marine Act 1988, the movement of vessels in port of Melbourne waters and port of Hastings waters; k. perform functions in accordance with a direction given by the Minister under section 141H of the Act; l. perform any other functions or duties conferred on PoMC by any other Act or any regulations under any other Act.
In performing its functions, PoMC must: a. carry out its functions consistently with State policies and strategies for the development of the Victorian port and freight networks; and b. to the extent that it is possible to do so consistently with paragraph (a) above, operate in a commercially sound manner having regard to: i. the benefits of increased competition between persons and bodies that provide services related to the operation of the PoMC ports; ii. the persons living or working in the immediate neighbourhood of the PoMC ports; iii. the need to conduct research and collect information relating to the performance of the functions and the operation of the PoMC ports so as to enable PoMC to meet its primary object; iv. the need to deal efficiently with any complaints relating to the performance of its functions.
42 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 Section 152 Powers
As a ‘transport corporation’ under the Act, PoMC has power to do all things that are necessary or convenient to be done for or in connection with, or as incidental to, the achievement of its object and the performance of its functions.
Significant legislative changes
Marine Safety Act 2010 (Vic)
The Marine Safety Act 2010 (Vic) was passed by the Victorian Parliament and received the Royal Assent on 28 September 2010. The Act will come into effect either by 1 July 2012 or upon earlier proclamation. The Act replaces the current Marine Act 1988 (Vic) with an updated regulatory framework which, amongst other things:
• imposes a range of safety duties on port management bodies to ensure, so far as is reasonably practicable, the safety of marine safety infrastructure operations carried out by the port management body or supplied to that body; • imposes safety duties on owners of commercially operated vessels to ensure the safety of vessel design and supply activities, marine safety equipment and vessel operations carried out by or supplied to them; • establishes a new framework for regulation of navigation and marine safety; and • sets out a new process for making waterway rules for port waters.
Transport Legislation Amendment (Port of Hastings Development Authority) Bill 2011 (Vic)
The Bill was introduced recently and a second reading was moved in the Legislative Assembly on 1 June 2011. The purpose of the Bill is to promote increased capacity and competition in the container ports sector in Victoria.
Specifically the Bill establishes the Port of Hastings Development Authority (PoHDA) to manage and operate the port of Hastings and to facilitate the development of the port of Hastings as a viable alternative to the port of Melbourne.
The Bill transfers responsibility for the port of Hastings land from PoMC to PoHDA, and transfers responsibility for the port of Hastings channels and waters from PoMC to the Victorian Regional Channels Authority.
The Bill makes associated changes to the Transport Integration Act 2010 (Vic), the Port Management Act 1995 (Vic), the Marine Act 1988 (Vic), the Marine Safety Act 2010 (Vic) and other Acts for related purposes.
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 43 National Competition Policy
PoMC has complied with the Victorian Government’s requirements in respect of the National Competition Policy by adopting the following behaviours and principles:
• clear and non-conflicting objectives; • managerial responsibility, authority and autonomy; • independent and objective performance monitoring; • performance-based rewards and sanctions; • competitive neutrality in input and output markets; • clear delineation of commercial and non-commercial activities; • clearly defined financial reporting requirements; • separate accounting for and funding of non-commercial activities; • appropriate return on assets used in the commercial activity; • application of a tax equivalent regime; • debt guarantee fees; • arrangements for allocation of profits from commercial activities.
Victorian Industry Participation Policy
The Victorian Industry Participation Policy Act 2003 (Vic) requires the Victorian Government to develop and implement a Victorian Industry Participation Policy (VIPP) that aims at promoting employment and business growth, providing contractors with increased access to local industry capability, exposing local industry to world’s best practice and developing local industry’s competitiveness and flexibility in responding to changing global markets.
During the year, no projects were commenced or completed by PoMC to which the VIPP applied.
Victorian Government Risk Management Framework
In accordance with Standing Direction 4.5.5 of the Minister for Finance, I Bill Scales certify that Port of Melbourne Corporation has risk management processes in place consistent with the Australian/New Zealand Risk Management Standard and an internal control system is in place that enables the executive of Port of Melbourne Corporation to understand, manage and satisfactorily control risk exposures. The Board verified this assurance and that the risk profile of Port of Melbourne Corporation has been critically reviewed within the last 12 months.
Mr Bill Scales AO Chairman
44 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 Consultancies
Details of consultancies under $100,000
During 2010-11, 65 consultancies of under $100,000 in value (per consultancy) were engaged. Total fees payable was $1.1 million (excluding GST).
Details of consultancies over $100,000
The following table lists consultants engaged by PoMC during 2010-11 where the cost of the engagement exceeded $100,000 (excluding GST).
Consultant Projects Total approval Expenditure Future project fees 2010-11 expenditure ($000) ($000) ($000) Minter Ellison Legal Services and Advice 2,274 2,274 AECOM Engineering Consulting / 1,659 1,659 Environmental Site Assessments GHD Australia Engineering Design/ 925 616 309 Environmental Consulting PricewaterhouseCoopers Financial Modelling, Taxation 759 759 Services and Business Case Cardno Ecology Lab Aquatic Environmental 446 446 Consulting Deloitte Access Economics Economic Consulting 328 328 Integrated Management Transport Design and 261 261 Information Services Consulting Cardno Lawson Treloar Environmental Consulting 259 259 Hyder Consulting Infrastructure Design 227 227 Drewry Shipping Maritime Consulting 221 221 Consultants Aurecon Australia Engineering Consulting 216 216 Kellogg Brown & Root Engineering Consulting 188 122 66 KEEZZ Business Improvement 187 187 Consulting Ernst & Young Financial Modelling and 143 143 Taxation Services Skyhigh Traffic Data Traffic Survey, Research, Data 117 117 Australia Collection ISG Environment Environmental/Resource 117 117 Management Consulting
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 45 Privacy
The Information Privacy Act 2000 (Vic) requires the responsible collection and handling of personal information in the Victorian public sector. The Act applies to PoMC and therefore PoMC has responsibilities under the Act which include:
• to provide individuals with access to information about them held by the Corporation and by its contracted service providers • to provide individuals with the right to request the Corporation to correct information about them held by the Corporation and its contracted service providers • to set out in a document clearly expressed policies on its management of personal information and making the document available to anyone on request.
During 2010-11 there were no complaints by an individual to PoMC or the Victorian Privacy Commissioner about an act or practice of PoMC that may be an interference with the privacy of an individual.
Whistleblowers’ protection
The Whistleblowers Protection Act 2001 (Vic) (WPA) provides for the protection of people who make disclosures about improper conduct by public bodies or public officers. PoMC has developed procedures for managing any such disclosure about the Corporation or any of its officers. These procedures provide for appropriate receipt, assessment and investigation of disclosures and appropriate action to be taken after investigation. They also provide for managing the welfare of the whistleblower and the person against whom a disclosure had been made.
Any disclosures about PoMC can be made by letter, telephone, facsimile or email to the Corporation’s delegated Protected Disclosures Coordinator. The Protected Disclosures Coordinator was required to liaise with the Chief Executive Officer on these matters.
The following table summarises disclosures for the period:
2010-11 2009-10
Public interest disclosures 0 0
Protected disclosures 0 0
The number of disclosures referred by PoMC to the Ombudsman for determination as 0 0 to whether they are public interest disclosures The number and types of disclosed matters referred to PoMC by the Ombudsman for 0 0 investigation The number and types of disclosures referred by PoMC to the Ombudsman for 0 0 investigation
The number and types of investigations taken over from PoMC by the Ombudsman 0 0
The number of requests made by a whistleblower to the Ombudsman to take over an 0 0 investigation by PoMC
The number and types of disclosed matters that PoMC has declined to investigate 0 0
The number and types of disclosed matters that were substantiated upon investigation 0 0 and the action taken on completion of the investigation
Any recommendations made by the Ombudsman that relates to PoMC 0 0
Recommendations regarding file security and management 0 0
PoMC’s procedures for managing disclosures made pursuant to the WPA are available on PoMC’s website www.portofmelbourne.com.
46 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 Freedom of information
The Freedom of Information Act 1982 (Vic) (FoI Act) enables members of the public to obtain information held by PoMC. The Chief Executive Officer was the principal officer for the purpose of administering the requirements of the Act during the 2010-11 period. Requests for documents under the FoI Act during the period 1 July 2010 to 30 June 2011 were made in writing to the Freedom of Information Officer of PoMC.
During 2010-11, there was one valid request made to PoMC under the FoI Act.
Outcome of requests Number of requests
Access granted in full 1
Access granted in part 0
Access denied 0
Not processed as at 30 June 2011 0
Assets
All assets of PoMC were noted on a register maintained by the organisation in accordance with the Financial Management Act 1994 (Vic).
Building and maintenance compliance
PoMC buildings were maintained in accordance with the relevant building and maintenance provisions in the Building Act 1993 (Vic) and Building Regulations 2006.
All PoMC owned buildings were audited in accordance with Part 12 of the Building Regulations 2006.
Availability of additional information
The following information relating to PoMC, relevant to the period 2010-11, has been prepared and is available to the Minister, Members of Parliament and the public on request:
• declarations of pecuniary interests duly completed by relevant officers; • details of publicly available documents produced by PoMC about the port of Melbourne and the places where these publications can be obtained; • details of changes in prices, fees and levies charged by PoMC; • details of any major external reviews carried out on PoMC; • details of major research and development activities undertaken by PoMC; • details of overseas visits undertaken including a summary of the objectives and outcomes of each visit; • details of major promotional, public relations and marketing activities undertaken by PoMC to develop community awareness of the organisation and the services it provides; • details of assessments and measures undertaken to improve the occupational health and safety of employees; • a general statement on industrial relations within the PoMC and details of time lost through industrial accidents or disputes; • list of committees sponsored.
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 47 48 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 Statement of Corporate Intent
Introduction
Port of Melbourne Corporation (PoMC) is responsible for the strategic management and development of the Port of Melbourne. PoMC’s business operations are governed by the Transport Integration Act 2010 (Vic) (TIA), the Port Management Act 1995 (Vic) (PMA) and the Marine Act 1988 (Vic). The TIA sets out PoMC’s objectives and functions and the PMA and Marine Act outline its operational and regulatory responsibilities.
PoMC’s vision
PoMC’s vision is that ‘the Port will be the core of Australia’s premier maritime trade and transport hub, creating economic prosperity while sustaining environmental and social wellbeing for the people of Victoria and Australia’.
PoMC’s goals
PoMC’s goals are focused on achieving its vision for the port and emulate the objectives specified in the TIA. Achieving these goals will ensure a balanced and sustainable approach to the strategic management and development of the Port of Melbourne.
Goal 1 Efficient and high quality port facilities and services within a competitive environment Goal 2 Integration of the port with land transport systems Goal 3 Trade and trade-related business facilitation and expansion Goal 4 Sustainable business performance Goal 5 A shared port-city vision for sustainable growth and prosperity
PoMC’s values
PoMC’s values define how we do business and how we interact with our customers, shareholders, stakeholders and our people. These values guide our behaviours and decision making and inspire PoMC employees to continually improve and perform.
• Customer focus • Quality and service excellence • Innovation • Valuing our people • Openness, integrity and honesty • Environment, safety and social wellbeing • Teamwork
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 49 Overview of additional terminal capacity to meet the port’s growing trade levels in the short to medium term. The economic activity of Melbourne and Victoria is supported by the ability of the Port of Melbourne Concurrent with the need to increase capacity to move cargo efficiently and in a cost-competitive to accommodate the expected trade growth is manner. PoMC is firmly focused on achieving the ability to effectively and efficiently move this outcome and on ensuring that the port’s this trade through Victoria’s transport system. future development will provide the capacity to PoMC recognises that the port is part of a larger accommodate trade growth. logistics network and that the operation and future development of this network is crucial to the port’s PoMC’s 2011-12 to 2013-14 Statement of Corporate future. PoMC’s role in facilitating the efficient Intent provides a summary of the strategic movement of maritime freight beyond the port is direction and outcomes that PoMC has established a significant focus of the Corporate Plan and will for the operation and development of the Port ensure that Melbourne, as Australia’s premier of Melbourne over this period. These strategic container port, maintains its competitive and directions and outcomes are detailed in PoMC’s logistical advantages. Achieving these objectives 2011-12 to 2013-14 Corporate Plan and accord with requires an integrated and cooperative approach by the objectives and functions established for PoMC PoMC and the port’s stakeholders. in the TIA. In addition, there are a range of other factors that The TIA outlines PoMC’s objectives as follows: have been taken into consideration in determining PoMC’s strategies and initiatives, all of which • manage and develop the PoMC ports consistent provide context and support for the strategic with the vision statement and the transport direction. These include: system objectives (of the TIA) • ensure, in collaboration with relevant responsible • an evolving policy environment bodies, that the PoMC ports are effectively • the greater involvement of the federal integrated with the transport system and other government in port and freight planning systems of infrastructure in the State • the drive for competition, productivity and • facilitate, in collaboration with relevant efficiencies responsible bodies, the sustainable growth of • the need to meet environmental sustainability trade through the PoMC ports benchmarks and expectations • ensure that essential port services of the PoMC • shipping reform initiatives ports are available and cost effective • major cities/urban planning • establish and manage channels in Port of • the allocation of trades across ports Melbourne waters for use on a fair and reasonable basis. • the growing focus on the integration of ports and land use planning PoMC is committed to achieving each of these • the need to strengthen relationships between the objectives, and in particular to ensuring that the port and surrounding communities port can accommodate future trade growth. A focus • resolving traffic congestion in the port precinct. of the Corporate Plan is therefore the provision
50 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 All of these factors influence PoMC’s ability to In summary, PoMC’s 2011-12 to 2013-14 Corporate achieve its goals and reinforce the need for it Plan sets out the challenges, opportunities and to ensure a sustainable approach to the port’s strategies for PoMC to realise a successful future, operation and development. and effectively manage and develop the Port of Melbourne for the benefit of the State economy, In pursuing PoMC’s strategic direction for the port, port users, stakeholders and surrounding PoMC’s Board recognises that PoMC will need communities over the next three years and beyond. to remain informed and guided by Government It is endorsed by PoMC’s Board and provides policy and as such, the structure and focus of the clear direction to guide management towards the Corporate Plan will need to remain flexible to achievement of its vision and goals. accommodate changes of substance as and when required. PoMC will also seek to work closely with Government to actively contribute to, and inform, relevant policy debates and to ensure that PoMC is in a position to respond accordingly where there are defined changes in focus and priorities.
This Statement of Corporate Intent outlines PoMC’s goals, strategies and activities to address the challenges and opportunities that currently exist and those that will eventuate over the planning horizon. Included are the financial, operational and whole-of-port outcomes to be achieved over the three years of the Corporate Plan. Also outlined are the Priority Projects established for the 2011-12 year. These projects will directly address the current and ongoing issues of strategic significance and include the development of new container terminal capacity, a review of the port’s long-term development strategy, the mapping of supply chain elements of key cargo types and the development of PoMC’s sustainability framework and engagement strategies. These projects are outlined on pages 58 to 61 of this document.
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 51 PoMC - Port of Melbourne strategic interface
52 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 53 Trade growth 100 20.0% 8.35% 10.44% 6.74% 5.54% 5.77% 90 0.0% -0.30% -5.70% Trade (measured in revenue tonnes) had an 80 -20.0% 70 -40.0% 79.7
60 75.7 -60.0% annualised growth of 6.2% over the period 2003-04 75.4 71.4 50 70.9 -80.0% 64.2 to 2007-08. However, the Global Financial Crisis 64.4
40 59.5 -100.0%
30 -120.0%
caused a 5.7% decline in trade throughput in tonnes (million) Revenue 2008-09. Trade growth recovered to 5.5% in 2009-10 20 -140.0% 10 -160.0% and 5.8% in 2010-11, and is now at record levels. - -180.0% 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
Revenue Tonnes (LHS) Annual % Change (RHS) Linear (Revenue Tonnes (LHS))
Ship visits
4000 120
In 2010-11 over 3300 ship visits were made to 3500 100 3000 the Port of Melbourne, providing importers and 80 2500 exporters with frequent and reliable direct shipping 2000 60
Ship Visits Ship 1500 40 access to over 140 international ports. Of these 1000 (million GRT) Tonnage 20 ship visits, over 98% were commercial visits and 500 0 0 36.5% of these were container vessels, representing 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
Ship visits (Port of Melbourne) Tonnage (million GRT) over 30 shipping lines. Since 2003-04 average ship size has increased by 26.6% to 28,618 GT and in 2010-11 some 232 vessels operated at a draught of 11.6 metres or more following completion of the Channel Deepening Project.
International trading regions East Asia Exports % share 2010-11 (container trade) Japan
Western Europe Imports % share 2010-11 In 2010-11 international trade represented New Zealand North America approximately 71% of the port’s trade throughput South-East Asia
(revenue tonnes) and 81% of container throughput China inc HK (TEUs). Of this trade, approximately 64% was with All Other 0 5 10 15 20 25 30 35 40 countries within the Asian region. The port’s main Percentage of Trade
trading partner was China.
54 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 Trade balance (container trade) 3,000,000
2,500,000 While full container import volumes consistently 20.7% 2,000,000 21.2% 19.5% 21.5% exceed full export volumes, since 2003-04, their 21.3% 21.1% 20.1% Empties 1,500,000 33.7 % 20.4% TEU respective percentages of the total throughput 34.3 % Full exports 33.0 % 32.2 % 33.4 % 34.7 %
34.2 % Full imports
have remained relatively stable. Since 2003-04, the 1,000,000 34.4 % 45.6% 46.3% 46.6%
share of imports has moved in the range 44.7% to 45.4% 500,000 45.3% 45.2% 45.2% 46.6% with lower percentages due to slowdowns in 44.7% 0 domestic demand. 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11
Non-containerised trade
5,500,000 35,000,000 Break Bulk
Non-containerised trade includes motor vehicles Dry Bulk 5,000,000 Liquid Bulk 30,000,000 New Motor Vehicles and bulk cargoes such as liquid, dry and breakbulk. 4,500,000 Total Trade - Mass Tonnes
Both dry bulk and liquid bulk have fluctuated over 4,000,000 25,000,000 recent years in response to market forces. Breakbulk 3,500,000 20,000,000 volumes have remained steady over the past 3,000,000 2,500,000 15,000,000 seven years. In 2008-09 new motor vehicle trade Total - Mass Tonnes 2,000,000 Mass Tonnes / Mass NewMotor Vehicles experienced its first decline (-23.4%) in volume 1,500,000 10,000,000 since 1999-2000. While imports of new motor 1,000,000 5,000,000 vehicles recovered in 2009-10 (24.6%), it fell again 500,000
0 0 in 2010-11 due to the disruption in supply from 99-00 00-01 01-02 02-03 03-04 04-05 05-06 06-07 07-08 08-09 09-10 10-11 Japan following the March earthquake/tsunami.
Container market share Pt Adelaide 4% Other 7% Melbourne handled approximately 35% of Fremantle 9% Australia’s container trade in 2009-10, the same Melbourne 35% share as in 2008-09. Only Sydney gained additional market share in 2009-10, while Brisbane, Port Brisbane 15% Adelaide and Fremantle recorded small decreases. Sydney 30%
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 55 PoMC’s values
PoMC’s values define how we do business and how we interact with our customers, shareholders and our people. These values guide our behaviours and decision making and inspire PoMC employees to continually improve and perform.
Customer focus PoMC values its customers and the relationships that exist with them. We will strive to understand their businesses and expectations and work to achieve mutual benefits for our customers and PoMC. In our dealings Quality and service with our customers we will act Innovation fairly and equitably. excellence PoMC encourages the generation of new and innovative ideas PoMC will continually seek to and the creation of opportunities improve the quality of its services to improve our skills. We will through reviewing our performance be flexible and embrace new and amending our processes and practices, openly discussing practices. We will be accountable problems and developing for our commitments and deliver Valuing our people solutions. on our promises. Our people are our most valued resource. We will support their personal and professional development and maintain a safe and healthy work environment. At all times, we will operate on a basis of mutual respect, Openness, integrity trust and dignity. Teamwork and honesty PoMC is a team-oriented PoMC will operate in an open and organisation. We work as a team, honest environment, seeking the encouraging participation and input of others in decision making recognising the achievements and and sharing information. We will contributions of our colleagues. provide constructive feedback and Environment, safety We aim to fully utilise our collective respect individual differences and and social wellbeing skills, knowledge and experiences opinions. to achieve our goals. PoMC recognises the inherent environmental and social value of the port and will contribute to the social and economic wellbeing of our neighbours. By using best practice safety and environmental management systems, we will continually improve environmental and safety impacts to ensure the sustainable co-existence of the port and local communities.
56 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 Strategic direction
PoMC is committed to meeting the challenges of its strategic direction and to continue its program for the sustainable growth of the port. It is essential that the port can accommodate and support Victoria’s future growth and this will be achieved by promoting additional capacity, maximising operational efficiencies, providing timely provision of port facilities and infrastructure, improving accessibility between the land and sea interface and understanding the needs of stakeholders. Further, this must be achieved in a sustainable manner and have regard to the impact of the port’s operations on surrounding communities.
Realisation of PoMC’s vision requires it to successfully achieve its goals. These encapsulate the Government’s objectives for PoMC, are responsive to government policies and priorities, and the changing business environment in which PoMC operates. They give focus to PoMC’s activities, and guide its decision making. The goals for the 2011-12 to 2013-14 period are as follows:
Goal 1 Efficient and high quality port facilities and services within a competitive environment
To develop fit for purpose services and facilities which are secure, reliable, technologically efficient, innovative, safe and meet customers’ needs within a competitive environment.
Goal 2 Integration of the port with land transport systems
To ensure that the port is fully integrated with land transport systems promoting the seamless transfer of cargo through the port.
Goal 3 Trade and trade-related business facilitation and expansion
To facilitate and expand trade and trade-related business opportunities.
Goal 4 Sustainable business performance
To operate a self-sustaining, financially independent and cost-effective organisation.
Goal 5 A shared port-city vision for sustainable growth and prosperity
To achieve a shared vision for the growth of the port and city, ensuring sustainable development, integrated land use planning and mutually beneficial outcomes for surrounding communities and stakeholders.
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 57 Priority Projects 2011-12
PoMC’s ever-evolving business and policy environments require it to identify and respond to continuously emerging issues. Consequently, the Corporate Plan includes a number of priority projects which have been established to address these issues. When considered together with PoMC’s budgeted financial and operational outcomes, these projects encompass a major thrust of PoMC’s 2011-12 Business Plan. The priority projects support the long-term achievement of PoMC’s goals, which are further supported by divisional objectives.
Priority projects Project description
Goal 1
Port Capacity Project PoMC has undertaken considerable research, market and stakeholder engagement to explore the preferred means through which to provide additional container terminal capacity in Melbourne in the short to medium term. The Port Capacity Project has considered a range of possible development and delivery scenarios and, in cooperation with Government, will determine the most appropriate means through which to provide certainty of capacity in Melbourne.
It is assumed that Government will make a decision on the next phase of container capacity in 2011-12. The Port Capacity Project will continue detailed planning and approvals, and commence works to deliver the next phase of container terminal capacity in Melbourne. Long-Term Melbourne Port In 2011-12 long-term planning for the development of the port will be progressed Development Strategy through the review of the Port Development Strategy (2009). This review will satisfy the requirements of Section 91K of the PMA which requires commercial trading ports in Victoria to prepare and update port development strategies every four years.
The project will critically evaluate the underlining assumptions of port development in Melbourne and in particular, will seek to review the trade and ship fleet forecasts and extend the planning horizon to 2050. It will build on the existing strategic planning frameworks and long-term development plans of the State and provide a clear direction for landside transport integration priorities.
The strategy will recognise that Government is exploring the accelerated development of the Port of Hastings for containers and is undertaking a feasibility analysis of the relocation of automotive trades to Geelong. Through the review of the PDS and consideration of alternative development scenarios, PoMC will work with Government to ensure that the implications of alternative trade allocations on the Port of Melbourne, such as the relocation of the automotive trade to Geelong, investment and pricing effects are well considered.
The PDS review program provides an intuitive approach to ensure that PoMC’s understanding of the supply chain cost and pricing effects can inform Government policy consideration and that the preferred outcome can be incorporated into the Long- Term Melbourne Port Development Plan.
58 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 Priority projects Project description
Goal 2
Port System Strategy PoMC has developed a Melbourne Port System Model (MPS) to inform the analysis (landside transport plan) of landside movements. The MPS enables the identification of the most efficient road and rail transport system today and in the future. It also quantifies the environmental and cost/benefit that an optimised port system could offer, compared to continuing the existing operations. During 2011-12, PoMC will continue to develop the MPS functionality to improve the understanding of landside transport and logistics systems and to enable improved integration of the port and landside connections as required by the TIA. The MPS development includes:
• incorporation of the container origins and destinations forecasts to 2050 • the ability to model multiple container terminal locations and capacities • modelling freight terminal locations • incorporating access charges and rail mode share assumptions.
Subsequently, the impact of port freight on the metropolitan road and rail network will be assessed, infrastructure constraints identified, future transport costs analysed, and potential solutions identified for Government consideration. The MPS will support the landside analysis for the Long-Term Melbourne Port Development Strategy, contribute to the development of the Metropolitan Intermodal Strategy and Growing Freight on Rail Strategy. Community Cargo System The Community Cargo System (CCS) originated though PoMC’s involvement in a number of information technology solutions aimed at improving efficiencies and transparency within the supply chain. In 2010-11, this project saw the delivery of specific program elements such as the eDIT Pilot, Dangerous Goods Hub and PortView. PoMC will take the lessons learned from these program elements and combined with an increased understanding of the port supply chain, further explore opportunities to improve supply chain efficiency and transparency through the flow of information. In 2011-12, PoMC will continue to work with supply chain participants, other ports and Government to further explore CCS opportunities. Some of the major issues to be examined include supply chain transparency, reducing data entry requirements, opportunities for real-time data access, and information flows across the supply chain. PoMC will seek to explore these issues based on a thorough understanding of existing information flows and identify possible opportunities for engagement with supply chain participants.
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 59 Priority projects Project description
Goal 2
Port System Performance Landside efficiency and effectiveness is a major component of the total port-related Monitoring Framework supply chain, but there is limited performance information available. The data sources currently used for monitoring key landside performance indicators include:
• PoMC truck utilisation survey (focused on truck utilisation rates at port precinct exit areas) • Bureau of Infrastructure, Transport and Regional Economics (BITRE) Landside Performance Indicators (a total cost indicator for delivery) • total throughput carried by rail.
During 2011-12, PoMC will develop a Performance Monitoring Framework. It will include a review of existing key performance indicators, comparison with domestic and international peers and recommend revised key performance indicators and efficient/ practical collection methods that will appropriately inform decision making and assist in ongoing monitoring of the Melbourne Port System.
Goal 3
Supply Chain Cost Model Throughout the supply chain there are a number of participants that develop and determine their respective cost and pricing structures independently. The cumulative effect of these structures has the potential to affect the overall competitiveness of Victoria’s international supply chain.
The development of a supply chain cost model will seek to map the supply chain cost elements of key commodities and pack types and develop a framework for regular review and analysis. It will be available to guide decisions on prices, understand supply chain cost implications of public investment beyond the port gate and monitor the supply chain competitiveness of Victoria compared to other states.
Goal 4
Alternative Revenue PoMC is a cost-effective, sound and independent enterprise and is fully committed to Opportunities Investigation maintaining its business and financial sustainability. The organisation is continually looking to maximise port efficiency and productivity while delivering high-quality facilities to port users. With the freight task continuing to grow, the development of additional port capacity is becoming a critical issue for the Port of Melbourne. Funding of this significant infrastructure as well as the possibility of other ‘outside the port gate’ activities requires careful consideration. It is important that PoMC maximises its commercial opportunities by exploring available alternative revenue opportunities.
This project will look at existing land use to investigate whether alternative commercial arrangements or development opportunities could provide additional revenue streams. In addition, other Australian ports and selected international ports will be reviewed to look at the various different approaches to generating revenue.
60 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 Priority projects Project description
Goal 5
Sustainability Framework PoMC has adopted a range of individual initiatives that contribute to the overall sustainability of the port. These initiatives have generally evolved as priority projects in response to specific business drivers such as community relations, climate change and cohesive management of the port environs.
In developing a Sustainability Framework, PoMC is seeking to provide an overarching approach to business that focuses individual goals and provides unified direction for decision making.
The Sustainability Framework will take PoMC’s current work in sustainability to a new level, reconceptualising how it does business and defining how PoMC values and accounts for the ecological, social, and economic systems in which it operates.
The project will take a whole of organisation approach, developing an understanding of how PoMC’s people value sustainability within their own lives to build a shared vision for the future of the organisation and structure PoMC business choices. PoMC Positioning Strategy As a Government-owned Corporation, there are a diverse range of often competing external interests in the port’s activities, operations and development plans. These interests may broadly be defined as PoMC’s shareholder, employees, business (customers), community and other stakeholders. In responding to these various interests, PoMC has developed a number of complementary strategies and is seeking integration through a corporate positioning strategy.
Significant progress has been made in developing PoMC’s position over recent years and it is now considered appropriate to review individual engagement approaches and integrate these into a Positioning Strategy.
The PoMC Positioning Strategy aims to identify key external interests (business, community and Government), specific interests and points of influence and map these interests against PoMC objectives. This will be used to prepare PoMC’s corporate and functional stakeholder story and key messages, development and identification of specific stakeholder engagement and positioning initiatives, tactics and KPIs that would be used to develop the Positioning Strategy.
The Positioning Strategy will provide a framework through which to optimise touch points and ensure that every point of engagement is contributing to PoMC’s reputation.
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 61 Services provided
PoMC’s key functions involve the planning, development, management and provision of a wide range of services to support the efficient and effective operation of the port. These are described below and indicate the depth and extensive nature of PoMC’s involvement in the day-to-day operation and development of the port. In delivering these services, PoMC uses the extensive knowledge and skills of its staff and the strong relationships built up with port users and operators.
The services include:
• The provision of specialised, high quality port • Value added services, including trade facilities in the form of berths and storage development, customised port facilities and facilities for both cargo and passenger vessels logistics advice on cost effective transport • The provision of channels with adequate depth • Overseeing the implementation of the Port of within port waters Melbourne Maritime Security Plan, the Port • Safe and efficient shipping control in port waters. of Melbourne and TT-Line Joint Maritime Security Plan, and security procedures that fully • Safe navigation for shipping comply with Commonwealth legislation and • Provision and management of road, rail and international standards associated transport infrastructure within the port •Integrated management of port safety and • Planning and facilitating the connectivity environmental risks between the port and the State’s land transport • Community engagement and education programs. systems for the movement of maritime cargo
Shareholder, customers and stakeholders
PoMC’s principal responsibilities are to the interest of its shareholder, the Victorian Government, which represents the interests of all Victorians and the Victorian economy.
PoMC also interacts with a broad range of stakeholders many of which have diverse and sometimes conflicting needs and expectations. PoMC is responsive to the needs and expectations of our shareholder, customers, the community, its employees and other stakeholders, and recognises the influence that these exert over strategy formulation, evaluation and prioritisation.
PoMC strives to maintain interactive, constructive and strong relationships with its shareholder and each of its stakeholders. These relationships are fostered through a variety of means consistent with the strategies detailed in the Corporate Plan and are outlined in the following diagram.
62 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 Shareholder: Victorian Government Customers Stakeholders • Import and export cargo owners • The wider Victorian community, producers and • Shipping lines consumers • Port tenants • Adjoining local Governments and communities • Customers of common user facilities • Business and industry groups and peak bodies • Cruise ships, passenger ferries and visiting vessels • Recreational, commercial and tourism vessel operators • Port service providers • Suppliers, consultants and contractors • Shipping agents • Employees • Transport providers
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 63 Performance measures
2010-11 Projected outcomes Whole of Port outcomes Actual Projected 2011-12 2012-13 2013-14 outcome* outcome
Container crane rate - % of five mainland ports’ average 108% >100% >100% >100% >100% (Waterline issue 49)
Container ships delayed (berth not available) 2.2% <4% <4% <4% <4% - ‘on window’
- ‘off window’ 7.1% <15% <15% <15% <15%
Berth occupancy (SDE and SDW) 53.7% 50-60% 50-60% 50-60% 50-60%
TEU per berth metre 1,111 1,024 1,089 1,158 1,224
Number of vessels which operated at a 11.2%** 10% 10% 10% 10% draught > or = 11.6 metres (% increase on previous year)
Reportable incidents in the port 0 0 0 0 0
Port interface costs: $/ TEU ((Waterline issue 49) vs Sydney 99.2% <100% <100% <100% <100% - imports
- exports 100.7%1 <100% <100% <100% <100%
Average TEU per truck movement 1.15 2 1.26 1.25 1.27 1.28 (into or out of the port)
Trucks arriving outside peak times ^^ n.a. t.b.a. t.b.a. t.b.a. t.b.a.
Port throughput carried by rail (mass tonnes)^ 9.3% t.b.a. t.b.a. t.b.a. t.b.a.
Trade volume growth (revenue tonnes) 5.8% 5.1% 5.3% 5.5% 5.5%.
Cruise ship arrivals per season 363 38 56 61(est) t.b.a. Community/stakeholder satisfaction (social capital) 4.1 4.1 4.2 4.3 4.3 (Rating of out 5)
64 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 2010-11 Annual targets Operational outcomes Actual Annual 2011-12 2012-13 2013-14 outcome* target
Return on capital employed 2.6% 2.6% 2.6% 2.9% 3.2%
Interest cover (times) 3.7 2.8 3.9 3.1 2.5
Gearing ratio (Year end – PoMC definition) 25.1% 26.6% 23.7% 28.7% 35.7%
Leverage ratio (times) (Year end) 3.1 4.0 3.0 3.8 4.7
Expenses vs Revenue 34.9% 39.3% 37.0% 35.7% 35.6%
Capital Expenditure vs Budget 46.2%4 100% 100% 100% 100%
Security regulations (zero PoMC breaches) 0 0 0 0 0
Safety regulations (zero PoMC breaches) 0 0 0 0 0
Environmental regulations (zero PoMC breaches) 0 0 0 0 0
Navigational aids availability (vital) 100% 99.8% 99.8% 99.8% 99.8%
Customer satisfaction rating (each two years) n.a. n.a. 72% n.a. 75%
PoMC charges per TEU vs Sydney: weighted average 82.4% <100% <100% <100% <100% for international containers (Waterline issue 49)
Staff turnover 12.1% 12-15% 12-15% 12-15% 12-15%
Satisfaction level of staff n.a. n.a. 65% 70% 75%
Reduction in CBD Office energy use per FTE (year on year) -217MJ5 -228MJ -233MJ -233MJ t.b.a.
Priority Projects The 2011-12 Priority Projects are outlined in the Business Plan. PoMC will report on significant achievements with respect to strategic outcomes of the priority projects on a quarterly basis.
^^ Projected outcomes to be determined by the development of the MIS ^ To be determined 1Small variance is due to lower export wharfage charges by Sydney Ports Corporation compared to its import charges 2 Variance due to change in data collection methodology 3 Two visits were cancelled due to ship mechanical problems 4 Mostly due to the delay in the Port Capacity Project 5Lower reduction in energy use due to unbudgeted additional project activities **Base year-first full year of operation of deeper draught.
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 65 Target capital structure
PoMC’s target capital structure for the next three years is set out below:
2010-11 2011-12 2012-13 2013-14
Actual $m Budget $m Forecast $m Forecast $m
Total assets 2,343.5 2,3 07.3 2,483.3 2,745.1
Total liabilities 868.8 822.2 973.5 1,212.3
Shareholder equity 1,474.7 1,485.1 1,509.8 1,532.8
Equity/Total assets (%) 62.9% 64.4% 60.8% 55.8%
66 PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 Key business policies Price regulation
PoMC’s business is subject to a light-handed regulatory regime which is overseen by Victorian Basis of accounting Government’s Essential Services Commission (ESC). During 2009-10, the ESC undertook a PoMC’s financial statements are prepared as a Victorian Ports Regulation Review and made a general purposes financial report in accordance number of recommendations to Government, the with Australian Accounting Standards, Urgent majority of which were accepted. For the 2011-12 Issues Group Consensus Views, other mandatory financial year PoMC will set its prices in accordance reporting requirements and the Financial with the Pricing Policy Statement published as Management Act 1994 (Vic). a requirement of the ESC’s Price Monitoring Income tax Determination.
Pursuant to the State Owned Enterprise Act 1992 Business performance reporting (Vic), PoMC is subject to the National Income PoMC reports on its financial, operational and Tax Equivalent Regime. In accordance with this port performance to the Minister for Ports and the legislation, PoMC is required to pay the Victorian Treasurer on a quarterly basis. Government’s Consolidated Fund, an amount determined to be equivalent to the amount that would be payable by PoMC if it was subject to the Income Tax Assessment Act 1936 (Cwlth). Dividend provision
Section 161 of the Transport Integration Act 2010 (Vic) provides for the payment of a dividend by PoMC as determined by the Treasurer of Victoria after consultation with PoMC’s Board and the Minister for Ports. A dividend payout ratio of 50% of after tax operating profit has been allowed in the financial forecasts, adjusted for non-cash International Financial Reporting Standards (IFRS) adjustments.
PORT OF MELBOURNE CORPORATION ANNUAL REPORT 2010-2011 67