Has the Port of Melbourne outgrown its prime slice of the city?

Melbourne is one of few places in the world that has a major container port right in the middle of the city.

There are upsides to this: goods – from furniture, clothes and toys to cars, groceries and building materials – can reach us faster and at a lower cost.

Yet to many Melburnians, the port is just a source of pollution and trucks.

Now, as the rapidly expanding operation begins to subsume neighbouring land, local communities and even the freight sector are asking: how big is too big for an inner-city working port?

Last financial year, the port – Australia’s busiest – broke a national record when it handled the equivalent of 3.4 million six-metre containers. This is projected to swell to 7.1 million by 2055, bringing more trucks to city roads.

More than nine in 10 shipping containers that are collected by the port are delivered within metropolitan Melbourne. The Age revealed on Thursday that none of these containers are going on trains, despite hundreds of millions of public and private money being spent on rail infrastructure.

Port of Melbourne chief executive Saul Cannon says population growth is fuelling the rise in imported goods. With the collapse of Australian manufacturing, the port injects $10 billion into Victoria’s economy each year.

“Every time there’s new housing development, all the building materials, furnishings, consumer goods, everything that goes with that comes in through the port.”

Saul Cannon, chief executive of the Port of Melbourne.Credit: Arsineh Houspian

Those living closest to the port cop the worst of the impacts of living and driving side-by-side with more trucks. Maribyrnong Council declared a health emergency two years ago due to the effects of air pollution.

Maribyrnong Truck Action Group president Martin Wurt says the port’s projections are alarming for communities of the inner west.

Wurt says the port’s truck dependency is archaic and unsustainable compared to global best practice. He wants the port relocated from the inner city altogether.

“The figures just scare the bejesus out of me,” Wurt said. “We know we’ve got one of the oldest, dirtiest truck fleets, so we know pollution is just going to keep getting worse.”

The port controls more than 500 hectares of prime real estate around Port Phillip Bay and the Yarra River, stretching from Williamstown to Port Melbourne and up to West Melbourne.

Once state run, it was privatised in 2016 when the Victorian government awarded a 50-year lease to Lonsdale Consortium, a group of international shareholders, in a $9.7 billion deal that would help pay for level crossing removals.

The consortium has created several entities to operate the port, and the only public glimpse into its finances is via a report filed with Australian Securities and Investments Commission by one of its companies. The statement says the company had a total revenue of $215.98 million last financial year and controls $5.59 billion worth of assets.

To support its expanding operation, the port is seeking to secure land parcels around its perimeter.

It has signed a new lease with the government for the 29-hectare former Melbourne Market site, which will be redeveloped for truck parking and container storage.

And Planning Minister Sonya Kilkenny is trying to secure the consent of the Port of Melbourne’s four neighbouring councils to reassign land to the port by excising sites from municipal boundaries.

To the port and the state government, the proposed shift in the Port of Melbourne’s planning scheme boundaries is purely administrative, as it reflects land it already leases.

But to Maribyrnong Council, stripping its authority over the identified sites puts residents at risk from the port’s plans to store bulk liquids – including crude oil, petrol and chemicals – 250 metres from homes.

“This is one of the most egregious actions I have seen by any government institution,” former long-standing councillor Michael Clarke told the chamber in September. “The port has no interest in the Maribyrnong community whatsoever.”

Anthony Tran, who was also a councillor until the October elections, chimed in: “I cannot describe how baffled I am … These are blast zones practically waiting to go off.”

Maribyrnong Council remains opposed to the proposal, while the City of Melbourne is not prepared to give up land at the mouth of the Moonee Ponds Creek, flagging its commitment to protect the waterway.

Of the two remaining councils, Port Phillip endorsed the government’s plan, and Hobsons Bay has yet to respond.

The port’s 2050 development strategy outlined its need to protect its ability to handle significant trade growth and more intensively use its land.

“We are faced with the complex challenge of urban development encroaching on the Port’s boundaries,” the document said.

A Victorian government spokeswoman says the proposed amendment seeks to consolidate planning responsibilities and is now on hold while discussions with councils continue.

Martin Wurt has been campaigning against trucks in the inner-west.Credit: Chris Hopkins

Wurt fears a lack of transparency around how precisely land will be used.

“As soon as it’s in the port’s hands, the community loses any control,” he said. “The Port of Melbourne has all the power. It’s vital to our economy and as a result, they seem to get whatever they want.”

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One of the Port of Melbourne’s big ambitions is to expand operations in Webb Dock with a new container terminal to boost overall capacity.

Ships are only getting larger, and Swanson Dock maxes out at 10,500 container ships, constrained by the height of the West Gate Bridge and the narrow bend of the Yarra River.

Webb Dock, however, is in the deeper, wider bay and can handle 14,000 container ships.

The Age was permitted to visit the port last month and gained rare insight into the scale of the operation.

Brand-new SUVs and sedans are driven one by one off a ship into a parking lot holding the 1100 cars that arrive each day.

Automated landside cranes manage containers for trucks at Webb Dock.Credit: Luis Enrique Ascui

Across the water, Webb Dock’s southern facility feels much like a sci-fi film set. On the day The Age visits, enormous vessels from Hong Kong and Liberia are being unpacked by machines.

The entire system, completed eight years ago by shipping giant International Container Terminal Services Inc, is automated, with only a handful of human operators sitting in an office away from the wharf.

Twenty-six cranes, about 20 metres tall, sort and pluck containers from an ever-rotating pile of about 20,000.

These containers are either placed on trucks in a narrow assigned pick-up lane, or they are moved waterside, where they are lifted by even taller cranes back onto ships.

The Port of Melbourne hopes to replicate this operation, which moves 1.1 million containers a year, in another part of Webb Dock over the next decade.

This dock can only be accessed by truck, putting its expansion in conflict with the Fishermans Bend urban renewal project, expected to bring 80,000 new jobs and 80,000 residents to the precinct by 2050.

The number of trucks visiting the port each weekday has been predicted to triple to 34,000 in 2050, with Webb Dock to carry the bulk of the growth.

Maritime logistics expert Peter Van Duyn says attempts to move away from trucks are failing dramatically. Less than 6 per cent of containers handled by the port were moved on trains last financial year, all destined for regional and interstate areas.

“There are about a million [containers] currently going from Webb Dock along Lorimer Street, Wurundjeri Way and then onto the West Gate, all by truck. And they are going to double that traffic, with not much prospect that they will ever have a rail connection to Webb Dock.”

Freight trains at the Port of Melbourne’s Swanson Dock in front of a CBD backdrop.Credit: Port of Melbourne

Victorian Transport Association chief executive Peter Anderson, who represents the truck industry, criticises the lack of a government-led masterplan for the future of freight.

“If you can imagine twice as many trucks on the road, twice as much freight, that’s what we’re talking about here,” he said.

“We have third-partied the responsibility of operating that port to a consortium of investors who are looking for a return. They’re not looking to better the environment of Melbourne. It used to be run by the government for the people of Victoria.”

Logistics contribute to about 13 per cent of the cost of consumer goods, Anderson says.

“If we were to do rail in a far better, more efficient way, then we would probably find things would become cheaper.”

The multibillion-dollar debate over where to build Melbourne’s second container port tends to land on Bay West, near Werribee, as the preferred option due to its transport connections.

The idea has been broadly backed by the logistics industry, state government and independent advisory bodies Infrastructure Victoria and Infrastructure Australia. Former treasurer Tim Pallas said in 2017 there was a case for starting the planning process, but work has yet to begin.

Rail Freight Alliance CEO Reid Mather wants to see more containers handled by rail.Credit: Alex Coppel

Rail Freight Alliance chief executive Reid Mather says that with the Port of Melbourne forecast to hit maximum capacity in the 2050s, planning for Bay West must commence with trains prioritised.

“We’ve never seen [freight growth] like this in the history of Victoria,” Mather said.

“The challenge is to maintain a livable city, with good air quality and not congested … and to have a viable port. There is nothing that can shift as much freight in a small land space and with fewer emissions than a train.”

Van Duyn agrees, arguing a second port must happen sooner rather than later. He points to the Western Australian government recently deciding to relocate the state’s primary container port from Fremantle to Kwinana, in outer Perth.

“That’s a long-term plan but at least they are doing something about it,” Van Duyn said. “The port in Fremantle is still owned by the government, while the Port of Melbourne is privately owned, so they will obviously try to sweat the assets and maximise their lease until 2066.”

Record numbers of containers are being handled at the Port of Melbourne.Credit: Luis Enrique Ascui

Infrastructure Victoria chief executive Jonathan Spear says the state government should begin early planning work for Bay West now to protect transport corridors, implement buffers for new housing and monitor environmental conditions.

Cannon says his priority is to keep developing the capacity of the port to ensure that goods destined for Melbourne are not shipped into Sydney and transported down, raising the cost of goods for consumers.

The Port of Melbourne has invested more than $800 million in port infrastructure since taking on the lease in 2016, including $125 million on a new rail line at Swanson Dock to connect to a future metropolitan freight rail network.

“The city location, while it has challenges in terms of being a very busy city port, it actually has also a lot of benefit,” Cannon said.

Cannon says truck pressures will be eased with the completion of the West Gate Tunnel Project this year. The new tollway directly connects to Swanson Dock and will bring new truck bans to inner-west streets.

A state government spokeswoman says the port’s central location is advantageous and an updated Victorian Freight Plan will be released later this year to chart a path forward for the sector.

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