DP World makes $400m investment to double Port Botany rail capacity amid productivity boost

The logistics giant will pour $400m into doubling rail capacity at Port Botany, with its local boss saying it will lift productivity and help workers generate greater value after a bitter pay dispute.

Global logistics company DP World will invest $400m over the next two years to expand the rail terminal at Sydney’s Port Botany, as Oceania executive vice president Nicolaj Noes says improvement in productivity will unlock greater value for workers.

The two year-long project will start in June and consist of five new rail sidings to accommodate 600-metre-long regional trains in what is being championed as being critical to boosting productivity at one of the country’s largest ports.

DP World Oceania executive vice president Nicolaj Noes told The Australian the investment will deliver more capacity, superior agility, seamless integration of processes, increased productivity and added reliability.

“This project will genuinely be a game changer in how Port Botany will operate,” he said.

“This investment will give us greater capability to lift productivity and that’s what this project represents not only for us, but also what we must do in Australia to lift output. Because of this investment suddenly we can have a train do something like three trips instead of two a day.”

“It is a very tangible lift in productivity without adding in the trains and hiring more people.”

A report from the Business Council of Australia says productivity — how efficiently labour can produce goods and services — needs to increase to an annual growth rate of at least 2.1 per cent until 2030 to avoid damaging living conditions. Current levels are at 0.5 per cent.

DP World will boost rail capacity at Port Botany

Mr Noes said the project was not without risk because of the financial and operational challenges of making substantial infrastructure investments in Australia’s high-cost environment, adding substantial price rises last year were needed to improve the port.

“It is costly to do business in Australia, particularly when construction is involved,” he said. “There’s been a narrative that it’s expensive to buy our services, and yes, our prices have gone up, but there is a correlation between that and for us to be able to make these investments that drive productivity increments which have a significant cost.”

“These investments cost a lot and give us no actual extra revenue from the beginning, which is the nature of our business where we must spend a lot to improve our services for customers without any guaranteed revenue going forward.”

In 2024, DP World charged $179.70 for every full container imported into Sydney, up more than 20 per cent on a year earlier, while fees on exported containers were $159.90, up 50 per cent over the previous 12-month period.

It comes one year after a bitter pay dispute between the Maritime Union of Australia and DP World cost the nation more than $84m per week at one stage. The fight was over pay and rostering, plus the wishes of the MUA to bring DP World enterprise bargaining agreements in line with rival Patricks.

DP World rejected the offer on the basis Patrick is far more productive due to greater port automation. Mr Noes said DP World was still on a journey with its broader colleagues and unions about how it created mutual benefit around pay and an increase in productivity.

DP World Executive Vice President Oceania, Nicolaj Noes says only by lifting productivity can workers generate more value, which can then be shared. Picture: Jane Dempster

“Productivity has got a bad name inside our industry. It is seen as about laying off people when instead lifting productivity creates real value, which then becomes about how do you share that with everyone,” he said.

“We try to say that lifting productivity means that we can do more with the same. And how, when we do that, how do we share that benefit? And I think that is an ongoing discussion.”

NSW Ports will also fund $148m for the new rail facility, which will service both the Container Terminal and the Logistics Park. Annual rail capacity for DP World’s terminal will more than double once completed, increasing from 400,000 twenty-foot equivalent (TEUs) to 1 million TEUs, and reduce the number of trucks required to transport goods to the Botany Bay facility.

Mr Noes said the $400m investment would make the port more productive by allowing trains to do an extra trip than what is currently done, as well as reduce the amount of shunting required to squeeze the trains in.

A rendering of the upgraded facility.

“There is real productivity enhancement by allowing the train to do more trips a day,” he said. “That’s what we’re also talking (about) to our workforce is that as an industry if our volumes increase 10 per cent that doesn’t mean we need to hire 10 per cent more employees, as that makes it hard for us to share the value.”

“That’s the ongoing discussion we’re having, because if you lift productivity that creates a higher turnover with the same base, which means we are able to share that value generation.”

Port Botany is Australia’s largest common user bulk liquids facility, handling 2.8 million TEUs annually and contributing $10.7bn in gross domestic product to the NSW economy.

It is the only port in Australia with on-dock rail at all three of its container terminals and is directed to a network of intermodal rail terminals in Sydney and around the country.

DP World has terminals in Sydney, Melbourne and Brisbane, which are all privatised, and Fremantle, which is still owned by the state government and has caps on price rises stevedores can charge.