Slower than expected Growth from Port Phillip channel deepening

The number of large ships visiting Melbourne failed growth expectations from the channel deepening project (CDP), according to a review made by the Victorian auditor-general. The full report regarding the said project was released on the third year of the CDP’s completion.

Authors of the report noted that the probable cause behind the lackluster performance of the project was the global financial crisis affecting trade and shipping companies. They added that the full benefits of the CDP cannot yet be seen as the project is only on the third year of its 25-year life.

A forecast estimated around 1,668 visits from larger vessels, while the reported number for 2010 and 2011 were just about 1,560.

Slower than expected growth from Port Phillip channel deepening

Lower trade growth

Another factor considered was the oversupply in shipping capacity which resulted to lower use of the extra draught capacity of larger vessels.

Meanwhile, practical realisation of cost savings from the use of larger ships and the CPD prove impossible to measure now considering the hostile market conditions that ship owners and operators are in. The authors also reported lower growth rate in trade volume after the CDP than forecasted.

Unforeseen, but significant developments

The developments, according to the authors, are “beyond the corporation’s direct control” and could not have been envisioned during its proposition stage. However, while the early results are not determining factors of the CDP’s failure to achieve its objectives in the long run, they are critical for the review of economic benefits assumptions from the said project.

About the Port Phillip channel deepening project

The Port Phillip channel deepening project (CDP) started in February 2008 and was to deepen the shipping channels leading to Melbourne. The project was to deepen channels to 14 metres to allow for an increase in access of container ships. Over $969 million was to be spent on the project with over $150 million funded by taxpayers. The works were done by Royal Boskalis Westminster (Netherlands company) at a cost of $500 million and was expected to be completed before December 2009.

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