CRAIG Carmody, the man the privatised Port of Newcastle has hired to lead the organisation in its quest to build a state-of-the-art container terminal on the old BHP site at Mayfield, swings his legs under the desk for the first time, officially, today.
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And he has arguably one of the most important jobs in the region in front of him.
When the port announced Mr Carmody’s recruitment at the end of May, it stressed two areas of experience in his CV: his existing role as head of strategy and corporate affairs for the Australian arm of global tug company Svitzer – itself a subsidiary of the Danish container shipping giant Maersk – and his eight years of high-level government work in industrial relations and transport policy, including a 2010-13 stint as deputy chief to Anthony Albanese, when Albo was infrastructure and transport minister.
Read more: Former Port boss Geoff Crowe resigns
Mr Carmody, 48, also holds the sort of post-graduate qualifications that chief executives tend to have nowadays: three single-year masters degrees in industrial relations, business management and public policy.
But it’s another item on Mr Carmody’s CV – 10 years in the Army where he rose to the rank of Lieutenant Colonel – that might prove as useful as anything when it comes to fighting the array of forces that are lined up against him in his effort to “future-proof” the port with a container terminal.
As is well known in the Hunter, the Coalition NSW government privatised Botany and Port Kembla in 2013 with a secret protection against container competition from Newcastle, which was privatised in 2014 to a consortium that is 50 per cent Australian and 50 per cent Chinese.
The secret container cap – set out in a document called a port commitment deed – was exposed by the Newcastle Herald in 2016 after repeated denials in and out of parliament that any such limits on Newcastle’s container trade existed.
Although the government is still defending the deal, there’s a growing concern about its anti-competitive nature, and the Australian Competition and Consumer Commission confirmed in April that it was investigating the situation, with a report due by Christmas.
As Mr Carmody explained in an interview last week with the Herald, the ACCC investigation is vitally important in building as it seeks to diversify its operations.
“Right now, we just want the rules changed,” Mr Carmody said. “We want that port commitment deed out of the way so we can start having conversations.”
The port is hoping the ACCC will find the Botany leasing illegal because of its anti-competitive nature, something that will involve the NSW government, the two port-owning consortia and possibly even the federal government, in a solution.
"One of the points I'm trying to make is that this is not a zero-sum game,” Mr Carmody says. “We are not trying to take a container terminal from Port Kembla. If Kembla wants one, that's great. We just want one also.
"We want to build ours with private money so I don't get why anyone wants to get in the way.”
Read more: Port sets sight on container terminal
Asked whether the investors are there, Mr Carmody says: “Indeed. This is why I've been hired. I've been hired because the owners of this port are saying they want a container terminal and we believe people will build it.”
A Newcastle container terminal was first proposed in Newcastle by BHP as the ideal use of the steelworks site, which is still mostly vacant more than 15 years after it was cleared.
Various terminal proposals have come and gone over the years. The port’s private owners showed little interest in containers during the first three years of their 98-year lease, but things changed late last year when Roy Green, a former University of Newcastle academic who had risen to head Queensland’s version of the ACCC, was appointed Port of Newcastle chair in December. He, in turn, tapped Mr Carmody.
Although Mr Carmody was still working for Svitzer until yesterday, he has had time to absorb the Newcastle situation and says the port’s owners already have a very clear idea of what they want, in conceptual terms.
The global standard measure for containers is the TEU, which is short for 20-foot equivalent unit. Australia’s two biggest container terminals, Melbourne and Botany, both handle more than 2 million TEU a year.
Mr Carmody says the port has already received a number of proposals from potential terminal builders, on the understanding that Newcastle would have to move between 350,000 TEU and 500,000 TEU a year to break even.
There are plenty of terminals around the world of such a size, and Mr Carmody says this would likely be simply the first stage of a business that could eventually handle 2 million TEU a year or more.
"For us to be able to compete, we will have to have the most efficient container operation, which means that a lot of it will be automated,” Mr Carmody says. “My background is heavy IR. I’ve already had conversations with the relevant unions to explain to them that we are not saying there will be robots running the port but it’s going to be a very heavily automated port. Their reaction is we’ll have that conversation at the time, as long as what jobs there are, are union jobs.”
Mr Carmody won’t be drawn on the cost of such a venture beyond saying the first stage would always be the most expensive because all of the infrastructure – road and rail access, and the “intermodal” facility to unpack the containers – is all needed, regardless of size.
But recent international examples – a 1-million TEU dock in Liverpool, UK, at $700 million, and a larger terminal in Dubai for $600 million – show the sort of investment that will be needed in Newcastle. As mentioned earlier, none of this can happen until the handcuffs on Newcastle – which effectively double its handling costs through compensation that would need to be paid to Botany – are removed.
The port already believes it has Labor support at a state and federal level, with NSW opposition leader Luke Foley and Mr Carmody’s old boss Albanese as federal Labor infrastructure spokesperson both saying the Newcastle container cap of about 30,000 TEU a year should be removed.
But federal Coalition support would probably prove harder. As part of this push, Mr Carmody and his team will be off to Canberra to talk to government officials about having a Newcastle container terminal included in a national freight and supply chain strategy being worked up by the Department of Infrastructure, Regional Development and Cities.
Mr Carmody says that while ports are constitutionally a state responsibility, Australia needs an over-arching federal plan to guide development over the coming decades.
"Ultimately, anyone will tell you that Newcastle needs a container terminal,” Mr Carmody says. “Just look at the volumes of stuff that are being produced in the north and north-west of NSW that are going out through either Botany or Brisbane.”
Federal involvement is also crucial because the port believes that Newcastle should be connected to the 1700-km inland rail line being built between Brisbane and Melbourne by the government-owned Australian Rail Track Corporation.
Indeed, the way that some northern NSW grain is handled in Newcastle stands as a metaphor for Mr Carmody as to why the container terminal is a necessity.
“At the moment there’s grain arriving here at the port grain terminals that is put into containers on the wharf and then railed south for shipping from Botany,” Mr Carmody says.
“We have two grain terminals here but grain and other bulk cargoes are increasingly going out in containers. We have to be able to capture that change here in Newcastle. And then there’s Tomago Aluminium’s product by-passing Newcastle altogether and being taken to Botany for export when it could be going from here.”
Mr Carmody is under no illusions as to the enormity of the task in front of him and over the coming weeks and months, he and the organisation he heads will be trying to build a community-wide coalition of support as part of the all-important effort to clear the way for the Mayfield project.
“This is a long-term project, but we are absolutely determined to make this idea a reality, and to fulfil the promise that was made to the Hunter all those years ago.”
Comment: The port and competition laws
Ian Kirkwood
Reporting journalist at the Newcastle Herald since 1987. Editorial writer, general reporter, industrial relations, industry and coal.
Reporting journalist at the Newcastle Herald since 1987. Editorial writer, general reporter, industrial relations, industry and coal.
