Report Final June 2012

FREIGHT AND LOGISTICS COUNCIL OF
WESTERN AUSTRALIA
NORTH WEST INBOUND FREIGHT
MOVEMENTS: A CONSULTANCY TO
IDENTIFY THE POTENTIAL FOR A PARTIAL
SHIPPING SOLUTION
FINAL REPORT
June 2012

Pilbara Inbound Logistics and Coastal Shipping Review
Hyder Consulting Pty Ltd-ABN 76 104 485 289 Page i
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Hyder Consulting Pty Ltd
ABN 76 104 485 289
Level 5, 141 Walker Street
Locked Bag 6503
North Sydney NSW 2060
Australia
Tel: +61 2 8907 9000
Fax: +61 2 8907 9001
www.hyderconsulting.com

FREIGHT AND LOGISTICS COUNCIL OF
WESTERN AUSTRALIA
NORTH WEST INBOUND FREIGHT
MOVEMENTS: A CONSULTANCY TO
IDENTIFY THE POTENTIAL FOR A PARTIAL
SHIPPING SOLUTION

Author Phil Rosser
Checker Natalie Wilson
Approver Neil Matthews

Report No. 08
Date 19 June 2012

This report has been prepared for the Freight and Logistics
Council of Western Australia in accordance with the terms
and conditions of appointment for the Pilbara Inbound
Logistics and Coastal Shipping Review dated 19/06/2012.
Hyder Consulting Pty Ltd (ABN 76 104 485 289) cannot
accept any responsibility for any use of or reliance on the
contents of this report by any third party.

Page ii Hyder Consulting Pty Ltd-ABN 76 104 485 289

CONTENTS

1 EXECUTIVE SUMMARY............................................................................................................... 2
2 INTRODUCTION ........................................................................................................................... 5
2.1 PURPOSE ......................................................................................................................................... 5
2.2 OUTLOOK FOR THIS REPORT ....................................................................................................... 5
2.3 RELATIONSHIP WITH THE WESTERN AUSTRALIAN REGIONAL FREIGHT PLAN ..................... 6
2.4 APPROACH AND METHODOLOGY ................................................................................................. 6
2.5 ACKNOWLEDGEMENTS .................................................................................................................. 8
2.6 STRUCTURE OF THIS REPORT ..................................................................................................... 8
3 PILBARA REGION PRODUCTION DRIVERS ............................................................................. 9
3.1 IRON ORE SECTOR ......................................................................................................................... 9
3.2 LIQUIFIED NATURAL GAS SECTOR ............................................................................................. 10
3.3 A CONSOLIDATED VIEW OF OUTPUT ......................................................................................... 11
4 THE PILBARA LOGISTICS PRECINCT .................................................................................... 12
4.1 A SUPPLY CHAIN MODEL ............................................................................................................. 12
4.2 PRODUCTION HUBS...................................................................................................................... 13
5 THE INBOUND FREIGHT TASK ................................................................................................ 16
5.1 MEASURING THE TASK ................................................................................................................ 16
5.2 PATHWAY ANALYSIS FOR INBOUND FREIGHT .......................................................................... 23
5.3 THE CONTESTABLE FREIGHT MARKET ...................................................................................... 25
6 THE ROAD FREIGHT TASK ...................................................................................................... 31
6.1 KEY ROAD PATHWAYS ................................................................................................................. 31
6.2 FORECASTING ROAD FREIGHT DEMAND .................................................................................. 32
6.3 OPERATIONAL ISSUES ................................................................................................................. 33
7 SHIPPING ................................................................................................................................... 35
7.1 ROLE OF SHIPPING SERVICING THE PILBARA .......................................................................... 35
7.2 KEY SUCCESS FACTORS ............................................................................................................. 37
8 SYNOPSIS OF EXISTING PORTS ............................................................................................. 42
8.1 FREMANTLE ................................................................................................................................... 42
8.2 AUSTRALIAN MARINE COMPLEX - HENDERSON ....................................................................... 44
8.3 PORT HEDLAND ............................................................................................................................ 45

Pilbara Inbound Logistics and Coastal Shipping Review
Hyder Consulting Pty Ltd-ABN 76 104 485 289 Page iii

8.4 DAMPIER ........................................................................................................................................ 46
8.5 ANKETELL ...................................................................................................................................... 48
8.6 ASHBURTON NORTH .................................................................................................................... 48
8.7 BROOME ......................................................................................................................................... 49
9 SCENARIO ANALYSIS .............................................................................................................. 51
9.1 SCENARIOS ................................................................................................................................... 51
9.2 INPUTS ........................................................................................................................................... 51
9.3 ASSUMPTIONS .............................................................................................................................. 55
9.4 OUTPUTS ....................................................................................................................................... 56
9.5 SENSITIVITY TESTING .................................................................................................................. 56
10 SUMMARY KEY ISSUES AND NEXT STEPS ........................................................................ 58
10.1 ROADS ............................................................................................................................................ 58
10.2 CO-ORDINATING/COMMUNICATING............................................................................................ 58
10.3 SHIPPING ....................................................................................................................................... 59
10.4 PORTS ............................................................................................................................................ 60
10.5 FUNDING ........................................................................................................................................ 60
10.6 GOVERNANCE/LEGISLATION ....................................................................................................... 61
11 APPENDIX .................................................................................................................................. 62

Page 2 Hyder Consulting Pty Ltd-ABN 76 104 485 289

1 EXECUTIVE SUMMARY
In February 2012, the Freight and Logistics Council of Western Australia commissioned Hyder
Consulting to examine the potential for a partial coastal shipping solution in the North West
(Pilbara) inbound logistics task as it relates to iron ore and liquefied natural gas (LNG)
production.
The study encompassed several significant considerations, namely around viability, support
requirements, and capacity to alleviate pressure on road networks; it found there is a prima
facie case for supporting a coastal shipping service to play a greater role in the Pilbara inbound
logistics task.
Both the iron ore and LNG sectors in the Pilbara are experiencing unprecedented growth with
current mining and LNG outputs totalling 470 million tonnes per annum (Mtpa) and forecast to
reach over 1.2 billion tonnes per annum (Btpa) by 2030. This increasing output will foreseeably
drive the inbound logistics task for mining and LNG in the Pilbara; it is forecast to climb from 67
Mtpa and reach 1012 Mtpa by 2030. Inflows will predominantly comprise fuel, ammonium
nitrate, mobile mining equipment, mine consumables and project cargo.
To date, road transport has dominated the Pilbara inbound logistics task with some recent
increases in domestic and international shipping. Both here and abroad however, there is
growing concern over the social and economic implications of road-dominant transport. Work
being undertaken to develop the Western Australian Regional Freight Strategy recognised the
potential growth in the Pilbara inbound logistics task, as well as implications for Western
Australias roads and ports infrastructure.
This study finds there is a prima facie case for supporting a coastal shipping service to
the Pilbara.
In principle, a coastal shipping service can be an attractive alternative to land transport when
large cargo volumes and long distances are involved. This study confirms that based on net
tonnes per kilometre, sea freight rates are lower than both road and rail line-haul freight rates
and offset some of the externalities for the community and the environment. The coastal
shipping option whilst subject to other ancillary costs, is comparable with road services.
Using a Net Present Value (NPV) approach, the study found that an alternative coastal shipping
pathway provides a marginally lower NPV cost, thus supporting the case for a coastal shipping
service catering to the Pilbara inbound task. Analysis indicates that coastal shipping can be cost
effective for movements into the Pilbaras coastal region, however the Pick Up and Delivery
(PUD) costs for movements from ports to mines near Newman and Tom Price are significant
at about 35 per cent of the direct road cost from Perth to Newmanand may therefore, still
favour road transport.
That said, the matter of converting current (and potential) modal preferences from road
transport to coastal shipping is a strategy facing considerable commercial and operational
challenges, including a highly competitive and entrenched road transport market. Part of the
challenge arises from inbound flows being less integrated than outbound flows owing to the mix
of goods involved, differences in cargo origins, as well as varying terms of trade between
different suppliers and customers; all of this influences who has control over the transport
process and the chosen transport mode.
Furthermore, not all cargo groups are contestable. Commodity groups sourced from overseas
(e.g. fuel and most construction/project cargo) can be immediately discounted along with most
general freight cargo, which tends to be highly price-driven. This study identified three key cargo

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groups deemed contestable for a coastal shipping service: (i) mobile mining equipment (such as
dump trucks and parts/tyres); (ii) ammonium nitrate; and (iii) industrial consumables.
To ensure a viable offering, a coastal shipping service must secure a minimum share of the total
annual southnorth volumes across all three contestable markets, in addition to the potential for
north-south movements. Analysis found these thresholds to be: 10 per cent share for mobile
mining equipment; 15 per cent share for ammonium nitrate; 15 per cent share for industrial
consumables. On its own however, high market share will not provide the basis for a
sustainable service. A more holistic view, in the first instance, requires consideration for capital
and operating costs, service offerings, and market pricing. With regard to market prices, coastal
shipping will need to compete with road transport pricing on a door-to-door basis yet still cover
associated PUD costs in addition to quay-to-quay sea freight rates.
In its current configuration, the existing Government-supported North West coastal shipping
service into the Pilbara Region (at 22 sailings per year) competes poorly on both cost and
service in contrast to road transport, which offers a highly cost-competitive and well-established
daily service. It should be noted however, that the Government subsidy is directed at the
Kimberley Region and not the Pilbara. A viable, sustainable and competitive weekly coastal
shipping alternative must at a minimum employ two ships operating on a 14-day rotation and
transporting 0.5 Mtpa of Pilbara inbound freight. This volume equates to around 15 per cent of
contestable cargo. With a higher market share, voyage frequency and service could be further
improved.
Appropriate vessel choice will play a large part in providing surety of service within fixed
arrival/departure schedules needed to win market share from road transport. In view of this, the
study compared suitable vessel types, noting their relative advantages and disadvantages, as
well as their capacity to accommodate the requirements of the target cargo markets. In carrying
out this comparison, the study also considered some specific port, land-side and other
associated infrastructure requirements. Achieving desired service levels will depend heavily on
required port infrastructure being in place and also being capable of accommodating forecast
levels of inbound activity and various vessel types. Inbound freight would include out-of-
dimension, oversized, modular or pre-assembled cargo as found in some target contestable
markets.
In examining existing port options (including roads into and out of port areas) and the
requirements to support a coastal shipping service, this study found that current general
capacity for the Pilbara inbound logistics task is highly constrained in terms of berth capacity,
terminal/lay-down facilities and port road access. While there is better likelihood for participation
at some facilities (e.g. Australian Marine Complex and Fremantle Port), others that are
proposed for development or are currently in early development offer only a small window in
which to consider the needs of a coastal shipping service. Planning and development decisions
will therefore need urgent resolution in order to remain relevant to industry aspirations and
timeframes. At present, a number of proposals that may boost port participation in coastal
shipping services lack approval and/or funding.
At the strategic level, there is a potentially significant role for government to play as seen
overseas where short-sea shipping programs have been executed. Forms of support in
Western Australia to effect similar conditions conducive to a viable, sustainable and competitive
coastal shipping service may include: policy and legislation; funding mechanisms;
communication and governance initiatives.
Government also has a role to play in ensuring the right transactional/commercial arrangements
are established among supply chain participants and that road and infrastructure access pricing


has been targeted effectively. It should be noted that the Governemnt does not see any need
for funding support in respect of a future Pilbara shipping service of the sort underpinning the
current Kimberley service.
A key task for Government, perhaps through the WA Freight and Logistics Council is to
undertake a market sounding phase with potential and interested shipping operators to review
and refine tha analysis conducted to date.


2 INTRODUCTION
In February 2012, Hyder Consulting was engaged by the Freight and Logistics Council of
Western Australia to review the potential for a partial coastal shipping solution specific to the
North West (Pilbara) inbound freight task.
This posed several strategic considerations:
What is the viability of coastal shipping playing a more significant role in the inbound
logistics task for the Pilbara;
Assuming there is a viable role, what requirements (including port infrastructure and land-
side logistics) are needed to support those shipping services;
Would these services and associated pertinent investment help to alleviate the need for
increased investment into road networks?
Historically, much of the inbound freight into the Pilbara has been transported by road along the
Great Northern Highway but recent trends indicate an increasing proportion is travelling along
the North West Coastal Highway or arriving as maritime shipments originating from Australian
and overseas destinations.
The contestable market for coastal shipping therefore, is only that freight moving by road from
Perth to the Pilbara, currently around 4.6 Mtpa and forecast to grow to 7.0 Mtpa by 2030.
Despite general agreement that coastal shipping could play a more significant role, it is a
strategy faced with considerable commercial and operational challenges including a highly
competitive and entrenched road transport market.

2.1 PURPOSE
This report captures findings from the assessment of strategic options for coastal shipping in
light of the growing inbound logistics task. It considers inbound logistics flows based on
commodity group and also assesses each for transport by coastal shipping.
Using the scenarios developed for this study, a high level assessment of the scope, frequency
and vessel configuration for a coastal service was completed; it takes into account market
perceptions, as well as current modal choice. The inclusion of high level costs for coastal
shipping enables a ready comparison against the costs for road transport.
The study feeds a secondary purpose, namely to assess the high level requirement for port
infrastructure that would be needed to support increased volumes and services; this includes
different vessel types and their respective advantages and disadvantages.

2.2 OUTLOOK FOR THIS REPORT
This report captures findings specific to the Pilbara inbound freight task as it relates to iron ore
and liquefied natural gas (LNG) production. Currently, the Pilbara region generates over
470 Mtpa of mining and LNG outputs.


There is a high correlation between output and the inbound logistics task (inbound flow is
around 1.01.5 per cent of output) with some variance depending on the lifecycle of the mining
or the processing facilities in question.
Both the iron ore and LNG sectors are undergoing unprecedented growth. Increased production
within the LNG sector is expected in relation to the Gorgon, Wheatstone and James Price Point
Projects, while the number of iron ore mines is anticipated to double from 30 to 60 mines by
2030.
This combined expansion underpins the forecast production increase, expected to be over
1.2 Btpa by 2030. Accordingly, inbound flows are forecast to grow from the current 67 Mtpa to
reach 1012 Mtpa by 2030. This growth will predominantly involve fuel, ammonium nitrate,
mobile mining equipment, mine consumables and project cargo.

2.3 RELATIONSHIP WITH THE WESTERN
AUSTRALIAN REGIONAL FREIGHT PLAN
The WA Regional Freight Plan is a high level, whole-of-state review of the freight task. Its
deliberations have recognised that the Pilbara inbound logistics task will continue to grow and is
likely to raise pressures on the states infrastructure, particularly roads and ports.
This report is primarily concerned with the inbound logistics task facing the Pilbaras iron ore
mining and LNG sectors, as well as the potential role for coastal shipping in this task.

2.4 APPROACH AND METHODOLOGY
Industry stakeholders have acknowledged an underdeveloped body of research looking into
inbound logistics for the iron ore and LNG sectors, so while exact figures for the inbound task
are difficult to determine, this study adopted an approach and methodology that helped to
establish inbound volumes and the associated logistics task. The chosen approach also
reviewed the options for future investment in transport-related infrastructure encompassing
roads, shipping and ports.
Key steps of the approach were:
- review existing material including relevant prior studies;
- conduct face-to-face and/or telephone interviews with industry and government
stakeholders;
- collect data from a wide range of subject matters and sources including stakeholder
interviews, company websites, publicly available government and industry sources;
- use a tailored top-down/bottom up approach to help analyse the inbound task according
to commodity group and then determine inbound demand as a ratio of output (demand
was forecast to years 2020 and 2030)
- analyse the inbound task based on a subdivision of the region into several production
hubs in addition to supply chain models covering cargo origin/destination, current
transport modes and pathways, drivers of mode choice;


- examine the constraints of different transport modes and pathways and use comparative
cost models to analyse future investment options across roads, ports and shipping;
- examine the actions required (from shipping, ports and cargo perspectives) to ensure a
viable and sustainable coastal shipping alternative to road-dominant transport;
- examine the relative suitability of each cargo type for coastal shipping (contestable
cargo), produce relevant SWOT analysis of each based on a shipping cost model, and
determine the minimum market share needed to sustainably compete with road transport;
- identify next steps including the potential role of government and industry to deliver the
factors needed to support effective and viable coastal shipping services.

2.4.1 ANALYSING ROAD FREIGHT MOVEMENTS
The approach for the study considered road freight movements as part of the inbound logistics
task to the Pilbara, and a generalised approach was adopted to classifying road freight, so as to
avoid any underlying complexity of analysis. At its simplest; road freight movements were
considered as follows:
- Road trains, whether double or triple configuration that operate within the standard vehicle
dimensions and under a general access vehicle arrangements
- Road trains configured as above however have a heavier mass and operate under
restricted access vehicle arrangements; these vehicles carry more tonnes however appear
to be the same as the general access vehicles
- Vehicle movements which operate as high and/or wide loads, operating under an
approved permit, and may or may not require an escort
A generalised consignment mass of 70 tonnes per movement is used throughout the analysis
and the percentage of vehicles operating as oversized is assumed to be 10%
1
.

2.4.2 OVER SIZE OVER DIMENSION LOADS
This report makes reference to Over Size Over Dimension road cargoes. It should be noted that
there is no nationally accepted terminology for the movement of restricted access vehicles
(RAVs) carrying cargo that is a High Wide Load (HWL), Excess Dimension and Mass (EDM),
Over Height and Mass (OHM), Out of Gauge (OOG)follows rail and shipping terminologyor
Over Size Over Mass (OSOM).
This is because loads can possess some (but not all) of these characteristics. Some loads may
be longer than standard but not necessarily wider, higher or heavier. This report uses OSOM as
a generic term for non-standard movements or those requiring permit approvals.
2

1
The analysis undertaken for the study found that varying these assumptions does not demonstrably affect the relativity
of the scenario results.


2.5 ACKNOWLEDGEMENTS
Hyder would like to acknowledge the assistance of many stakeholders including various iron ore
producers, LNG producers, transport companies, logistics providers, shipping lines, port
authorities, the Chamber of Minerals and Energy WA, Department of State Development and
Main Roads WA.
Specific acknowledgement is given to Mr Bill Preston (Department of State Development) for his
assistance with compiling data on future iron ore mine expansion in the Pilbara and forecast
production through to 2030.
In undertaking this study, Hyder referred to prior works: Meyrick and Associates Pilbara Freight
StudyDecember 2008; SKMs Pilbara Freight Movement StudyOctober 2004.

2.6 STRUCTURE OF THIS REPORT
This structure of this report reflects the logical development of the study itself. Section 3
provides an overview of the iron and LNG sectors whose production forms the key driver for the
inbound logistics task. Section 4 separates the two sectors according to industry location and its
impact on the inbound logistics task.
Section 5 examines the inbound task according to cargo category and assesses each in terms
of market size, source, as well as suitability and contestability for coastal shipping. Sections 6
and 7 compare the road freight task and the coastal shipping task in terms of demand,
constraints and future options for shipping.
Section 8 examines the port infrastructure requirements based on the shipping options
developed in Section 7 and also using current/proposed port development plans.
Section 9 looks at the financial impact of different road, shipping and port options. Other issues
and next steps are presented in Section 10.

2
This issue is also highlighted by the Out of Gauge Co-Ordination Unit Report prepared for the FLCWA by Adam Pekol
Consulting.


3 PILBARA REGION PRODUCTION DRIVERS
Western Australias thriving resources sector is the countrys largest single export market.
Ninety-five per cent of total merchandise exports from Western Australia comes from the
minerals and petroleum sectors and in 2010-11, the resource sector employed over 92 500
people across the state.
3

The outlook for this states minerals and resources sector remains positive with continued
growth expected to drive more than $200 billion worth of major new resource projectseither
committed or under considerationin both the iron ore and LNG sectors
4
.
The majority is located in the Pilbara region, which accounts for over $150 billion of the
proposed new resource projects. Around 60 per cent of this investment is in the oil, gas and
condensate sector, with iron ore comprising the second largest spend and capital-intensive
magnetite projects also increasing the average iron ore project spend.
The Pilbara region now accounts for approximately 20 per cent of the nations exports and
encompasses various forms of oil and gas reserves off the north-west coast and iron ore from
the inland mines.

3.1 IRON ORE SECTOR
The Pilbara iron ore sector presently generates around 450 Mtpa of exports, most of which is
exported through Port Hedland and Dampier Port. Growth in production is expected to reach
more than 1.1 Btpa by 2030
5
with new ports at Anketell and Cape Preston handling a proportion
of this volume. Forecast growth is around 8 per cent annual compound to 2020 and then
slowing to around 3 per cent afterwards by 2030. Table 1 and Figure 1 depict this growth.
The next 34 years will see a wave of construction activity in the iron ore sector as it nears the
peak of its initial mine production phase. A number of existing mines will be expanded while
greenfield developments are yet to be established by incumbent players and new entrants into
the Pilbara mining sector.
Expansions are expected to include BHP Billitons Rapid Growth Project, Rio Tintos Pilbara
Expansion and Fortescue Metals Groups Chichester Hub (2013) and Solomon Hub (2013).
New mine developments are expected to include CITIC Pacific Minings Sino Iron Project
(2012), Hancock Prospectings Roy Hill Mine Project (2014) and Aquila Resources West
Pilbara Project (2014). These combined developments are projected to account for the majority
of growth in Pilbara iron ore exports over the period to 2030.
Appendix B provides a detailed overview of iron ore mine locations and production forecasts to
2030.

3
WA Department of Mines and Petroleum
4
Chamber of Minerals and Energy WA
5
This report has drawn on the valuable contribution of Bill Preston from the Department of State Development. The
present outlook of 1.1 Mtpa is marginally lower than that expressed in the Pilbara Outlook Study undertaken as part of
the WA Regional Freight Study.


Table 1 - Iron ore forecast production by port
(Mtpa)
Port 2012 2020 2030
Port Dampier/Cape Lambert 229 320 380
Anketell Port 0 25 70
Port Hedland 221 453 630
Cape Preston 0 22 70
Total 450 820 1150
Source: WA Department of State Development, Bureau of Resource and Energy Economics

Figure 1 - Iron ore production

3.2 LIQUIFIED NATURAL GAS SECTOR
Presently, LNG production is focused on the North West Shelf joint venture situated on the
Burrup Peninsula near Dampier. Expansion in LNG production over the next 58 years will see
output increase to more than 80 Mtpa by 2020near term growth is forecast around 30 per cent
per annum
6
with long run production possibly exceeding 100 Mtpa by 2030.
These projects include: the Pluto Project due to commence operations in 2012; the Gorgon
Project on Barrow Island (2014/15); Wheatstone (2016) and Browse Basin Projects at James
Price Point (2016/17).
Table 2 draws from the Pilbara and Kimberley case study report prepared by the Department of
Transport as part of the WA Regional Freight Plan.

6
Bureau of Resource and Energy Economics


Table 2 - Scope of emerging LNG projects
Project
status
Gas field Processing/stage Location
Potential
capacity
(Mtpa)
Gas production
commencement
Operating NWS NWS JV; 5 trains Burrup 16.3 Current
Under
construction
Pluto/Xena Pluto; train 1 Burrup 4.3 2011
NWS NWS life extension and expansion Burrup 4.3 2015
Gorgon Gorgon; trains 13 Barrow Island 15.0 2014
Under
consideration
TBA Pluto; train 2 Burrup 4.3 2015
Wheatstone Wheatstone; trains 12 Ashburton 8.6 2014
TBA Pluto; train 3 Burrup 4.3 2015
Prelude / Concerto Shell FLNG 3.5 2016
Browse Woodside; trains 13 James Price Point 15.0 2016
Future
prospects
Scarborough Scarborough Ashburton 6.0 2016
Gorgon Gorgon; trains 45 Barrow Island 10.0 2020
Browse Woodside or other proponents; trains 46 James Price Point 15.0 2021
Total 106.6
Source: Department of Transport WA, WA Regional Freight Plan: Case Study Pilbara and Kimberley iron ore and LNG
sectors (2011)

3.3 A CONSOLIDATED VIEW OF OUTPUT
While long forecasts are known to vary with time, a consolidated view of production provides a
basis for long-running infrastructure planning.
Combined output for the iron ore and LNG sectors is currently around 470 Mtpa and forecast to
reach over 900 Mtpa by 2020. By 2030, the combined output is forecast to exceed 1.2 Btpa.
Industry is in general agreement with these forecasts.
Table 3 summarises the forecast outbound volumes for the iron ore and LNG sectors.

Table 3 - Consolidated view of iron ore and LNG production
Sector
2011 2020 2030
Mtpa Mtpa Mtpa
Iron Ore 450 820 1150
LNG 20 80 100
Total 470 900 1250


4 THE PILBARA LOGISTICS PRECINCT
While production and outbound flows in the region are forecast to grow substantially, these are
mostly vertically integrated processes that are managed by the relevant producer companies.
Industry has substantially invested in building capacity to support efficient outbound product
flow and ultimately, exports sales. In contrast, the inbound flows are less integrated owing to the
variety and nature of goods carried, differences in cargo origins and destinations, and the
individual Terms of Trade between different suppliers and customers; all this influences who has
control over the transport process and the transport mode chosen.
Key drivers in the choice of transport mode include response time and reducing inventories.
Skills and labour shortages in the Pilbara have further seen inventories of inbound goods and
materials relocated from the Pilbara region back to the Perth area. The requirement for Just In
Time delivery and the local availability of transport also have great bearing on the choice of
transport mode.
This section examines the scale of the Pilbara inbound logistics task and the emerging issues
and impacts affecting the operation of road networks to, from, and within that region.
4.1 A SUPPLY CHAIN MODEL
The Pilbara iron ore and LNG sectors operate like many other industrial processesinbound
movement of materials is needed to support production and outbound flows of product as
exports (iron ore and LNG specifically). A supply chain approach was therefore proposed to
describe the dynamic transport processes that can be observed across the region. A
generalised model for the supply chain is shown in Figure 2.
Key points about the supply chain:
a. Production is dominated by the iron ore sector and the outbound transport flows are
mostly by rail, excepting several mines located along the Pilbara coastal region.
b. The outbound flows for the LNG sector do not generate transport movements (per se) as
after processing, product gets diverted to export shipping via pipeline. Inbound gas flows
to the processing facility similarly occur by pipeline.
c. While the iron ore and LNG sectors both use processing plants and equipment, the iron
ore sector also requires other mining inputs including explosives, fuel, grinding media,
metals and mobile handling equipment (e.g. excavators and dump trucks).
d. Inbound flows occurring in the construction phase of the mine site or processing plant
are generally much higher than during the steady state operating phase.
e. The inbound freight task relies heavily on public infrastructure (e.g. road networks,
general purpose berths, related facilities), which invariably entails Government
involvement either in an ownership or policy capacity.
In general, bulk commodities and/or manufactured materials originate from:
a. Perth or Fremantle and are transported to the Pilbara region by road or shipped by
coastal vessels through Pilbara ports;
b. Overseas (as imports) and are stored at the marine ports (such as with fuel) or at
logistics facilities.


Imported bulk commodities and/or manufactured materials are transport to iron ore mines by rail
(e.g. as with fuel) or by road as either general or over size over mass (OSOM) loads.

Figure 2 - generalised supply chain and transport model for Pilbara iron ore and LNG sectors
Suppliers
warehouse and
inventory
Fremantle port or
AMC Henderson
Port Hedland,
Dampier or other
Pilbara port
Port logistics
precinct and/or
storage
Mine site (inland)
or LNG site
(coastal)
Perth metro
PUD move
by road
Pilbara region
distribution
by road or rail
Road train
assembly area
(Wubin/Apple St.)
Shuttle movement
to Wubin
(semi or double
road train)
Regional/intrastate
movement by road
(triple road train)
Regional/intrastate
movement by road
(double road train)
Gorgon
development
(Barrow Island)
Coastal shipping
movement
Coastal shipping
movement
Overseas supplier
Plant and
equipment; bulk
fuel, etc

4.2 PRODUCTION HUBS
The forecast growth in the iron ore sector will see the doubling of mines from around 30 at
present to more than 60 mines by 2020. A number of these mines will replace depleted mines
while others are greenfield developments. An optimal method of assessing current and future
transport flows into the region is to view these mines within hubs rather than individually. The
relationship between the hub and the transport networks will therefore, influence the inbound
pathways.


a. Iron ore production hubs in the Pilbara are mostly located inland, predominantly in the
Newman and Tom Price regions. A number of mines are also located along the coastal
belt in proximity to the Pilbara ports. Many of these hubs are proximate to road and rail
networks.
b. The LNG industry is located along the coastal region at Burrup (Dampier), Ashburton
(Onslow) and James Price Point (north of Broome).
The location of each mine cluster or LNG plant, and the origin of the inbound materials, will also
influence the desired pathway. By 2020, it is anticipated the coastal region will account for
20-25 per cent of production, and therefore, will also account for a similar proportion of inbound
logistics activity.

Table 4 - Distribution of production in Pilbara precinct
Sector/region Current 2020 2030
Iron ore production (Mtpa)
Coastal 31 102 198
Tom Price 109 154 185
Newman 310 564 767
Total 450 820 1150
LNG production (Mtpa)
Coastal 20 80 100
Total production (Mtpa)
Coastal 51 182 298
Tom Price 109 154 185
Newman 310 564 767
All 470 900 1250
Total production (%)
Coastal 11% 20% 24%
Tom Price 23% 17% 15%
Newman 66% 63% 61%


Figure 3: Regional base map showing iron ore mines, LNG facilities and port locations


5 THE INBOUND FREIGHT TASK
The inbound freight task encompasses the overall demand for input goods and materials
needed to support iron ore and LNG production output. Within this general description however,
are two distinct sub-groups with different characteristics and logistics requirements. One group
covers the needs and cargo flows associated with construction/project and expansion phases,
while the other encompasses those flows supporting steady state operations.
Construction/ Project phase: refers to goods and materials used in construction of iron ore and
LNG production facilities (e.g. building materials, steel fabrication, accommodation units, plant,
gas storage and processing units, pipeline material).
Steady State operations: refers to goods and materials required to support ongoing iron ore and
LNG production. These include industrial inputs such as fuel, ammonium nitrate (as
explosives), mining equipment (including excavators, dump trucks and parts), as well as general
freight to support the workforce.

5.1 MEASURING THE TASK
The inbound logistics task is highly correlated with the outbound task and as the latter grows, it
is foreseeable that the inbound task will similarly grow. This may accelerate over the next
35 years as the construction material needed for expanding new iron ore and LNG production
facilities is transported to, and across, the Pilbara region.
Industry acknowledges that inbound data is less than mature, although a number of prior
studies have estimated the inbound task to be between 0.6 and 2.0 per cent of output volumes.
Mature operations with stable production outputs tend to be at the lower bound, whereas the
upper bound is more likely during expansion.
It is worth noting that analysis of the Pilbara and Kimberley iron ore and LNG sector outlook
found a range from 1.1 to 1.3 per cent for iron ore, and up to 1.6 per cent for the LNG sector.
The present study, which leverages some of the prior findings and is informed by further
input from sector stakeholders, has confirmed a similar range. Results support a ratio
around 1.5 per cent at present, then declining to around 1.1 per cent by 2030.
The present inbound logistics task is estimated around 6-7 Mtpa and expected to rise to
10-12 Mtpa by 2030.
While further analysis should continue to refine this forecast, it is imperative to note that
the current road-dominant transport flows presents immediate challenges for
community, industry and government. The forecast 40 per cent increase in road freight
by 2020 and 75 per cent by 2030 underlines this point.
All of these factors pose great challenges for managing the inbound task, which is made more
complex by the nature of the goods and materials, multiple points of origin and destination being
involved, and diverse Terms of Sale that influence management of the transport arrangements.


Table 5 provides a high level summary of inbound logistics forecasts while the following report
sections provide further supporting information for these estimates. These include separate
analyses for construction and project cargo, as well as steady state cargo.
Table 5 - Forecast inbound logistics task to 2030
Sector Cargo volumes (Mtpa) Current 2020 2030
Iron ore Outbound 450 820 1,150
LNG Outbound 20 80 100
Total Outbound 470 900 1,250
Ratio Inbound to outbound 1.47% 1.10% 1.03%
Total Inbound 6.9 9.9 12.9

5.1.1 CONSTRUCTION OR PROJECT CARGO
Both the iron ore and LNG sectors are going through a major expansion phase. Within the LNG
sector, the North West Shelf, Pluto and Gorgon projects are ongoing while the Wheatstone and
Browse projects are commencing over the coming years. Within the iron ore sector, new and
expanded mines are planned in the West and Eastern Pilbara.
Where construction material was previously sourced and fabricated locally (stick-built), labour
and skills shortages in the Pilbara have seen fabrication moved to Perth or overseas.
Construction units are often pre-assembled as large/modular structures that require transport
from the point of fabrication to the Pilbara.
By their nature, project cargo is often indivisible due to abnormal dimensions and weights that
are not easily conveyed by standard equipment. Such cargo includes steel structures,
transformers, generators, pre-fabricated buildings, accommodation units and oversized/heavy
machinery.
Volume
Volumes for project cargo are generally more complex to determine than for other categories
7
.
With much of the construction work contracted out to construction specialists, data is often at
arms length to the mine owner. Given the state of construction activity though, the current
volumes are expected to increase over the next 35 years as construction continues. After
2017-18, this should reduce to around 1.0 Mtpa by 2020 and 0.5 Mtpa by 2030.

7
The estimation for project cargo was undertaken with industry specialists. One method for estimating volume was to
assess the weekly volume of shipping capacity assigned to this category. Presently, there are 23 weekly ship visits for
construction cargo.


Table 6 - Estimated volume of construction and project cargo
Project Cargo Current 2020 2030
Volume (Mtpa) 1.4 0.9 0.5
Ratio to gross output 0.30% 0.10% 0.04%
Source: Industry and project stakeholders
Source
Pre-fabrication of construction/project cargo is predominantly undertaken in Asia and to some
extent, locally in Perth. The Australian Marine Complex Henderson
8
(AMC Henderson) is
playing a key role as a centre for the LNG industry.
Transport method
Material sourced from Asia is transported directly to the Pilbara by ocean shipping, either on
liner vessels or specifically chartered vessels. This is particularly the case for the LNG sector
where production and distribution units tend towards large scale.
A number of specialist shipping lines cater for the international maritime transport of
modularised construction/project cargo: Spliethoff Shipping; Austral Asia Line; BBC Chartering.
Project cargo that is pre-fabricated in Perth (e.g. at AMC Henderson) is loaded directly from the
AMC onto dedicated charter vessels and shipped directly to Dampier or Barrow Island. Table 7
provides an estimate of these flows.
Table 7 - Estimate of maritime movements of construction cargo
Project cargo (Mtpa) Current 2020 2030
Ex Perth by sea 0.5 0.5 0.25
Ex Intl. by sea 1.0 0.5 0.25
Total 1.5 1.0 0.5

5.1.2 MINING EQUIPMENT AND TYRES
The iron ore sector is ending one stage of operations and entering another, so demand for
mining equipment is currently very high. This includes earthmoving equipment used in mine
construction, as well as dump trucks, dozers and tyres used in ongoing steady state mining
operations.
Volume
With demand so high, mining companies are buying both new and second-hand equipment,
particularly dump trucks. The study found that one mining company has been replacing dump
trucks at the rate of two per week due to exhaustive use.
This is exacerbated by the current trend towards larger, heavier vehicles and larger load trays
that offer greater carrying capacity.

8
AMC Henderson refers to the Australian Marine Complex located south of Fremantle.


In keeping with this, demand for tyres is also changing. Road transport operators are now
adapting their vehicles to transport tyres stacked upright whereas previously, tyres were stacked
flat that create wide loads.
The recent surge in demand for mining equipment and their parts/tyres has been a key factor
behind increased northbound road movements and southbound backload movements
delivering parts and machinery for repair or refurbishment.
Table 8 - Estimated volume of mining and mobile equipment
Mining Equipment Current 2020 2030
Source
New equipment is mostly sourced from overseas (United States and Asia) where it is
manufactured under licence and imported through Fremantle on RORO
9
vessels. All major
manufacturers of mining equipment have representation in the Perth area CAT, Komatsu,
Liebherr, Bucyrus, Terexwhere imported machinery is first brought up to Australian standard
before being transport northward.
Most second-hand equipment is similarly sourced overseas. They are imported through
Fremantle and then transferred to supplier depots within the Perth area. Prior to leaving their
port of arrival for transport northward, imported second-hand equipment must first be approved
by AQIS (Australian Quarantine and Inspection Service) as this equipment often requires a
wash-down.
Transport method
The Terms of Sale for mining equipment generally entails Deliver to Site, so transport
arrangements are the responsibility of the suppliers rather than mining companies. Suppliers
tend to sub-contract this haulage to heavy haulage specialists such as HWE.
An ever-increasing number of these loads are now classified OSOM, so northbound road
movement is restricted to the Great Northern Highway via Wubin and Newman. This report
notes one observers comment that, the Great Northern Highway will eventually become a
freight-only highway.
Current Special Permit applications are estimated to be in excess of 200 per day with 80 per
cent related to OSOM loads. An industry view supports this type of cargo being suitable for a
coastal shipping service for both new and second-hand equipment.
5.1.3 FUEL
Fuel is a key input into the iron ore sector, particularly for explosives used during ore extraction
and to fuel mine equipment and rail operations. Demand from the LNG sector is negligible.

9
Refers to Roll-on/Roll-off vessels


Volume
Current demand is in the vicinity of 700 000 tonnes per annum. As new mine sites are being
developed, demand is forecast to rise to around 2.2 Mtpa by 2020 and reach 3.1 Mtpa by 2030.
Table 9 - Estimated volume of fuel inputs
Fuel Demand Current 2020 2030
Source: Assembled from stakeholder interviews and data and analysis of prior studies
Source
Most of the fuel delivered to the Pilbara is sourced from Singapore and shipped directly by
tanker vessel to the ports of Dampier and Port Hedland. Fuel arriving by seagoing tankers is
stored at the port before on-transport to different mine site clusters.
Transport method
In 2010-11, the port of Dampier imported some 485 000 tonnes of product annually. This port
has two storage tanks dedicated to the Woodside Supply Base and two storage tanks
(100 000 litres) dedicated to Mermaid Marine Supply Base. Rio Tinto has an arrangement with
BP covering four fuel storage tanks from which product is railed to Rio Tintos mine site fuel
storage facilities at Brockman, West Angelas, Tom Price and Paraburdoo (Tom Price is being
wound back in favour of Paraburdoo). Rio Tinto currently has a single dedicated fuel train and a
second forecast for 2013 in line with mine expansion.
In 2010-11, Port Hedland imported around 100 000 tonnes of fuel. Both BHPB and FMG have
also established their own dedicated fuel trains serving their respective mines sites in the
Pilbara region.
Mine sites in the coastal hub, closer to Dampier and Port Hedland, are generally serviced by
road tanker.
5.1.4 AMMONIUM NITRATE
Ammonium nitrate is used principally as an explosive in the iron ore mining sector.
Volume
Demand for ammonium nitrate is currently in the region of 300 000 tonnes per annum. This is
forecast to rise in line with new mine production to reach some 750 000 tonnes per annum by
2020 and 1.3 Mtpa by 2030.

Table 10 - Estimated volume of ammonium nitrate inputs
Ammonium Nitrate - Mtpa Current 2020 2030


Source
Current demand is being met almost entirely from the CSBP plant at Kwinana, WA. From time
to time and as an exception rather than the rule, some product has been shipped from CSBPs
Queensland plant or from overseas through the North West ports (including Wyndham).
Current capacity at the Kwinana plant is around 520 000 tonnes per annum, which is sufficient
for current demand. CSBP has announced plans to increase production to 780 000 tonnes per
annum with construction due to commence later in 2012 with first additional production in 2014.
Norways Yara Group has announced a planned joint venture with Burrup Holdings to build an
ammonium nitrate plant on the Burrup Peninsula offering a production capability of
330 000 tonnes per annum. Whilst not yet approved, construction is anticipated to commence
mid-2012 and first production in 2014.
Once all proposed developments are complete, production capability will exceed 1.1 mtpa and
will meet the level forecast demand at the ratio of Kwinana 70 per cent to Pilbara 30 per cent.
Distribution from Perth remains a substantial task and will increase.
Transport method
With Kwinana being virtually the sole source of ammonium nitrate, all inbound requirements are
moved north to mine sites by road. Current road movements are in the vicinity of 14 road trains
per day. Trucking has been the preferred transport method given that volume limits were
imposed on ports and shipping companies in relation to its Class 5.2 hazardous classification.
Ammonium nitrate volumes present an opportunity for transfer to coastal shipment, particularly
now that volume restrictions at WA ports have been eased.
5.1.5 INDUSTRIAL CONSUMABLES
Industrial goods and materials used in productionmainly in the iron ore sectorinclude
grinding media, grinding rods, chemicals, wire rope, rail wheels and axles, bar stock (for
grinding media feed) and rebar and machinery parts.
Volume
The current inbound volume to the Pilbara region is around 400 000 tonnes per annum and as
with other industry inputs, volumes are forecast to rise in line with increased production to
reach 850 000 tonnes per annum by 2020 and 1.5 Mtpa by 2030.

Table 11 - Estimated volume of mine site consumables
Industrial Consumables Current 2020 2030


Source
Perth is the primary source for much of the industrial consumables entering the Pilbara region.
This is growing as mining companies move their inventory holdings back to Perth and close
Pilbara workshops and stores due to lack of labour and skills in the non-mining industries. This
is in contrast with higher availability of both in Perth.
Transport method
Mine site industrial consumables are carried on general road trains along with other general
freight. Current demand is around 25 road trains per day, which is expected to increase to over
100 road trains per day.
The requirement to move parts and equipment back to Perth for repair and refurbishment has
resulted in increased back-load movements heading from the Pilbara to Perth. This opportunity
to divert more northbound and southbound freight to a costal shipping service should be
considered.
5.1.6 GENERAL FREIGHT
General freight encompasses those goods and materials required for general business function,
the community and for workforce amenity. They include foodstuffs, clothing, stores and other
provisions.
Volume
Currently, the annual volume of inbound general freight is around 400 000 tonnes per annum,
similar to the volume of industrial consumables. Both have similar forecast growth in line with
increase production.
Over the longer term, the ratio of general freight is expected to rise as the Pilbara cities take
shape and as the current fly-in, fly-out workforce is increasingly replaced by a local workforce.
Table 12 - Estimated volume of general freight
General Freight Current 2020 2030
Source: Assembled from stakeholder data as well as analysis of prior studies
Source
The majority of general freight for both the iron ore and LNG sectors is sourced from Perth. The
Terms of Sale tend to be ex warehouse, so loads are consolidated either at depots run by
logistics operator or directly from Distribution Centres where volumes are sufficient.
Transport method
Transport of general freight from Perth to the Pilbara occurs by road, wherein major logistics
operators work with major mining companies and oil & gas producers on a contractual basis.
These operators will often manage the inventory process on behalf of their clients.
The general approach is for transport and logistics companies to operate from depots in Perths
eastern industrial areas (e.g. Hazlemere, Canning Vale, Welshpool) in conjunction with their
depots at key destinations points and en-route (e.g. Carnarvon, Karratha Dampier, Port
Hedland, Kununurra, Tom Price, Newman, Broome).


The preferred northbound transport route is the North West Coastal Highway, along which
numerous en-route cargo drops may be made.
General freight does not ideally lend itself to a coastal shipping service where sailing is
infrequent and costs are higher compared to the cost and flexibility of daily road transport
options.
5.2 PATHWAY ANALYSIS FOR INBOUND FREIGHT
Unlike the outbound flow of iron orewhich follows specific pathways from mine to port and
onto shipthe pathways for inbound logistics are subject to a variety of demands and
commercial drivers.
Table 13 and analysis of the pathway flows associated with inbound logistics is based on
several assumptions:
a. Project cargo is imported directly into the Pilbara Ports except for cargo moved from AMC
Henderson to Dampier/Barrow Island by coastal shipping.
b. Mining equipment is mostly sourced from Perth as the main inventory point for new
equipment or imported second-hand equipment.
c. Fuel is imported into the Pilbara ports and distributed mainly to mining hubs by rail.
d. Ammonium nitrate, industrial consumables and general freight are mostly sourced from
Perth as the location of key inventories. With future nitrate production expected in the
Pilbara, products will be sourced locally. Future supply from Perth will also be higher than
at present. It is assumed that with increasing demand, there is an opportunity to establish
a local stockholding of industrial and general goods imported directly.
The following observations emerged during the study:
a. Road freight movements from Perth are expected to increase from around 4.6 Mtpa to
more than 7.0 Mtpa even after allowing for increased local inventories (of general and
industrial goods) and local production of nitrate.
b. Of this volume, the opportunity for additional coastal shipping services lies in attracting
market share for the carriage of nitrate from Perth and through an increased share of the
mining equipment and industrial consumables.
c. General freight tends to travel along the coastal highway in line with the network of
transport depots servicing the local markets and line-haul operations.
d. Current coastal shipping of project cargo ostensibly relates to equipment inbound to the
Gorgon project, yet this is a model for future coastal shipping services to coastal ports.
e. The distribution of fuel (within the Pilbara) used to serve the mining sector can leverage
the rail capacity that is available.


Table 13 - Pathway analysis of forecast inbound flows

Demand forecasts Volume ex Perth Volume ex Pilbara ports Comments
Current 2020 2030 Current 2020 2030 Current 2020 2030
Project Cargo Volume (Mtpa) 1.4 0.9 0.5 Volume (Mtpa) 0.47 0.45 0.25 0.94 0.45 0.25 Coastal shipping, ex Perth
Ratio to gross output 0.30% 0.10% 0.04% % share by pathway 33% 50% 50% 67% 50% 50%
Mining Equipment Volume (Mtpa) 3.8 4.5 5.0 Volume (Mtpa) 3.57 4.05 4.00 0.19 0.45 1.00 80% as Special Permit or OSOM loads
Fuel Demand Volume (Mtpa) 0.7 2.2 3.1 Volume (Mtpa) 0.00 0.00 0.00 0.71 2.16 3.13 Rail distribution from Ports
Ammonium Nitrate Volume (Mtpa) 0.3 0.7 1.3 Volume (Mtpa) 0.28 0.58 0.75 0.00 0.14 0.50 Road train movements
Industrial
Consumables
Volume (Mtpa) 0.4 0.8 1.5 Volume (Mtpa) 0.38 0.73 1.20 0.00 0.08 0.30 Road train movements
General Freight Volume (Mtpa) 0.4 0.8 1.5 Volume (Mtpa) 0.38 0.73 1.20 0.00 0.08 0.30 Road train movements
Totals Volume (Mtpa) 6.9 9.9 12.9 Volume (Mtpa) 5.1 6.5 7.4 1.84 3.37 5.48

Volume by mode

- Road 4.61 6.08 7.15 1.13 1.21 2.35 Includes road movement of project cargo
from Pilbara Ports
- Rail 0.00 0.00 0.00 0.71 2.16 3.13 Assumes full movement of fuel by rail
- Coastal ship 0.47 0.45 0.25 0.00 0.00 0.00
Totals 5.07 6.53 7.40 1.84 3.37 5.48


5.3 THE CONTESTABLE FREIGHT MARKET
The opportunity to create a sustainable and viable coastal shipping service requires that firstly,
a sufficient proportion of the contestable inbound freight originating from Perth and destined for
the Pilbara be won.
The previous section of this report examined the key commodity groups that constitute the bulk
of the inbound freight task, including their volumes, source and transport method. Table 13
shows the total inbound freight task at nearly 7.0 Mtpa and forecast to increase to around
13.0 Mtpa by 2030.
Not every commodity group however, is equally contestable and assessment of different groups
needs to account for many factors (e.g. point of origin, Terms of Sale, product value, inventory
costs, transport price, service regularity, delivery frequency, transit time).
To help identify which commodity groups are suited for a coastal shipping service, the SWOT
analysis in Table 14 looks at each key commodity group in terms of contestability between road
transport and coastal shipping mode.

Table 14 - SWOT analysis of inbound freight task
Category Strengths Weaknesses Opportunities Threats
Fuel * Demand is ongoing
and increasing
* Essentially non-
contestable
* Shipped directly to
Pilbara ports from
Singapore
* Limited - only if supply
from Singapore is
interrupted
* Port congestion leading
to delays in supply
Ammonium Nitrate * Key component in
steady state mining
operations
* Readily convertible to
shipping
* Reduced south-north
shipping opportunities
* PUD component
makes competition
against road extremely
difficult
* Demand is ongoing
and increasing
* Possible future road
pricing may assist
shipping task
* Class 5 hazardous
cargo - volume
limitations may be
imposed on carriage by
ship
* New production
capacity planned for the
Pilbara
Industrial Consumables * Key component in
steady state mining
operations
shipping
* PUD component
makes competition
difficult
* Requires more than
weekly departures
* Demand is ongoing
and increasing
* Potential for return
cargo repairs and
refurbishment
* Highly competitive
nature of road transport
General Freight * Key component in
steady state mining
operations.
shipping
* PUD component
makes competition
difficult
* Requires more than
weekly departures
* Demand is ongoing
and increasing
* Highly competitive
nature of road transport


Category Strengths Weaknesses Opportunities Threats
Mining Equipment * Key component in
steady state mining
operations
* Main port of import
Fremantle makes
transhipment to coastal
a good option
* Requirement for
onward delivery by road
from ports to mine sites
* May require differential
road-pricing to assist
shipping task
* Demand is ongoing
and increasing at a
higher rate than other
categories
* Volume and
dimensions of
northbound loads
present opportunities for
conversion to shipping
* Should attract higher
seafreight rates
*Possible future road
pricing may assist
shipping task
* PUD costs associated
with onward delivery by
road from ports to mine
sites
Project Cargo * High inbound volumes
during construction
phase
* Fabrication activity in
the Perth area
* Role of AMC
Henderson
* Short term requirement
during construction
phase
* Large modular nature
makes road transport
difficult
* Good opportunities for
coastal service
* Should attract higher
seafreight rates
* Increased direct
shipment from Asia

Those commodity groups that are sourced from overseassuch as fuel and most
construction/project cargocan be immediately discounted as contestable.
General freight is highly contested by the road transport sector and is largely driven by price,
frequency and availability of road transport. As a consequence, general freight has not been
greatly contested by coastal shipping. Were coastal shipping to be supported by a regular, two-
ship weekly service, general freight (especially those of non-perishable nature) may be
considered contestable; more so if the service was supported by three vessels.
The market sectors currently moved by road between Perth and Pilbara and deemed most
contestable for a coastal shipping service are:
a. Mobile mining equipment
b. Ammonium nitrate
c. Industrial consumables
While a SWOT is only one means of analysis, the potential the potential target market for a
coastal shipping service has already reduced to three key groups for further analysis.
Table 15 examines these three contestable cargo groups in more detail using three scenarios
predicting the potential volumes for high, medium and low market shares. The purpose is to
identify the required thresholds to yield sufficient volume to sustain two ships operating on a
14-day rotation, thereby providing a weekly service from Perth to the Pilbara.
A target volume of 0.5 Mtpa is required in order to achieve utilisation of 10 000 tonnes per
voyage. From the table data, it can be seen that a cumulative market share around
1215 per cent achieves this outcome.


This is deemed to be relatively conservative because an ideal market share of around
20 per cent (i.e. the high growth scenario) would support a third ship operating and thereby,
improve voyage frequency and service.
The cost analysis to follow also indicated that the coastal shipping service (encompassing road
transport Pick Up and Delivery or PUD
10
services at either end) is competitive for cargo that is
destined for the coastal zone but less competitive for the Newman or Tom Price zone.
In time, there is likely to be an opportunity to attract back-loading cargo onto the coastal
shipping service however, this has not been factored into the analysis here. It is understood that
the resource companies are already factoring in a four-year regular maintenance schedule for
all equipment, with the work to be done in Perth. This would represent a significant and regular
southbound trade that would positively impact on a shipping services bottom line, potentially
lowering the shipping line-haul selling rates by around 15 per cent, which in turn would stimulate
an increase in market share.

10
PUD relates to road transport charges for collection from point of origin to port of loading, and from port of discharge to
point of delivery.


Table 15 - Target market shares of contestable freight
Target markets (ex Perth)
High growth (20%) Medium growth (15%) Low growth (10%)
Current 2020 2030 Current 2020 2030 Current 2020 2030
Mining Equipment Total contestable demand Mtpa 3.57 4.05 4.00 3.57 4.05 4.00 3.57 4.05 4.00
Target % share % 15% 15% 15% 10% 10% 10% 5% 5% 5%
Secured demand Mtpa 0.54 0.61 0.60 0.36 0.41 0.40 0.18 0.20 0.20
Ammonium Nitrate Total contestable demand Mtpa 0.28 0.58 0.75 0.28 0.58 0.75 0.28 0.58 0.75
Target % share % 20% 20% 20% 15% 15% 15% 10% 10% 10%
Industrial Consumables Total contestable demand Mtpa 0.38 0.73 1.20 0.38 0.73 1.20 0.38 0.73 1.20
Target % share % 20% 20% 20% 15% 15% 15% 10% 10% 10%
Totals from above Total contestable demand Mtpa 4.23 5.36 5.95 4.23 5.36 5.95 4.23 5.36 5.95
Target % share % 16% 16% 17% 11% 11% 12% 6% 6% 7%


5.3.1 FREIGHT TYPES AND REQUIRED VOLUMES
In the previous section, the three main contestable cargoes were identified for coastal shipping:
mobile mining equipment; ammonium nitrate; industrial consumables. It was further established
that a conservative target volume of 0.5 Mtpa is required to achieve a vessel utilisation of
10 000 tonnes per voyage and that this outcome relies on a cumulative market share of around
1215 per cent. Estimated market share by cargo category is provided as follows.
Mobile mining equipment
As noted in Section 5.1.2, demand for mining equipmentboth new and second-handis
currently high. Southnorth road movements are approximately 3.8 Mtpa and forecast to reach
5.0 Mtpa by 2030.
Perth is the main origin point and southnorth road transport occurs via the Great Northern
Highway. However, it has been observed that much of the present tonnage comprises OSOM
loads with associated restrictions (e.g. travel times, speeds and routes).
This category is considered contestable owing to the size of the market and the origin points
being accessible to either Fremantle or Henderson. It is even more contestable where
equipment is destined for mine sites in the coastal hub and reduces the added PUD costs
associated with road transport to either Tom Price or Newman.
To ensure sustainability for coastal shipping, the target market share of mobile mining
machinery needs to be a minimum 10 per cent of annual southnorth volumes.
Ammonium nitrate
As noted in Section 5.1.4, demand for ammonium nitrate is currently in the vicinity of
300 000 tonnes per annu`m and forecast to reach 1.3 Mtpa by 2030.
Kwinana is presently the principal point of origin and southnorth transport occurs by road.
While additional ammonium nitrate production capacity is planned for the Pilbara region, it will
not fully meet demand and so, Kwinana sourcing will remain.
Trucking has been the preferred transport method as volume limitations had been imposed on
ports and shipping companies due the hazardous classification of the product. Since restrictions
on storing this product at WA ports has now been eased, ammonium nitrate is now considered
highly contestable for transport by coastal shipping.
To ensure sustainability for coastal shipping, the target market share for ammonium nitrate
needs to be a minimum 15 per cent of annual southnorth volumes.
Industrial consumables
As noted in Section 5.1.5 demand for industrial consumables is currently 0.4 Mtpa, forecast to
reach 1.5 Mtpa by 2030.
Perth is the epicentre for much of the industrial consumables moving into the Pilbara region and
transported southnorth by road.
There is an emerging trend which sees mining companies moving inventory holdings back to
Perth and closing Pilbara workshops and stores. This is expected to increase southbound flows
to Perth for maintenance.


Mine site industrial consumables are carried on general road trains along with other general
freight. Current demand is around 25 road trains per day; this is expected to increase to more
than 100 road trains per day.
Industrial consumables are also considered highly contestable for transport by coastal shipping.
To ensure sustainability for coastal shipping, the target market share needs to be a minimum
15 per cent of annual southnorth volumes.
Cumulative
Cumulative market share based on low growth (10 per cent) does not deliver the necessary
0.5 mtpa required for a sustainable coastal service. However, at medium (15 per cent) and high
growth rates (20 per cent), the cumulative volume translated as coastal shipping tonnage meets
the required hurdle volume.


6 THE ROAD FREIGHT TASK
Except for fuel distribution from the Pilbara ports, road transport remains the dominant transport
mode servicing the inbound task to the Pilbara region. This includes:
a. inbound movement of mining equipment, industrial consumables, nitrate and general
freight from Perth;
b. distribution of similar products originating from smaller inventories held in the Pilbara ports
and townships;
c. movement of construction/project cargo from the Pilbara ports to mining and LNG projects.
The cumulative road freight task to, and within, the Pilbara region is forecast to increase from
5.7 Mtpa to 9.5 Mtpa for flows from Perth and the Pilbara Ports.

6.1 KEY ROAD PATHWAYS
The road networks servicing the iron ore and LNG sectors in the Pilbara are characterised by
three key elements:
a. the inland corridor of the Great Northern Highway from Perth to Wubin, Newman and Port
Hedland and Broome;
b. the coastal corridor of the North West Coastal Highway from Perth to Geraldton,
Carnarvon, Karratha and Port Hedland;
c. various other local roads extending from the coast to Tom Price, Marble Bar and Newman.
The Great Northern Highway is the shortest route to the Pilbara and a considwerable volume of
RAVs and OSOM loads are directed to use this pathway. There is a substantial weight of
evidence to suggest this corridor is approaching maximum capacity in its current form and at its
current numbers of OSOM loads.
Despite the longer transit, lighter general freight movements generally use the North West
Coastal Highway via Perth/Onslow, even when accessing areas in the eastern Pilbara. This
highway however, runs through residential and tourist areas. This situation creates safety and
amenity concerns for towns such as Geraldton, where there is a width restriction of 8.0 metres
applied to heavy vehicles.
The Pilbara inbound task is equivalent to some 260 road train equivalents per day, of which
around 80 per cent is associated with mining equipment being OSOM
11
. Accounting for forecast
growth of the inbound task, pressure will only further increase on both the Great Northern
Highway and the North West Coastal Highway.

11
Nominal estimates correlate broadly with stakeholder advice regarding permit applications


6.2 FORECASTING ROAD FREIGHT DEMAND
Demand forecasts for road freight movement from Perth to the Pilbara ports were provided in
the previous chapter of this report. Actual roadside CULWAY counts for relevant corridors were
last published for 2008/09, so do not reflect more recent growth in mining and LNG demand.
Industry advice suggests that the Great Northern Highway accounts for some 80 per cent of
total northbound road movements with the balance assigned to North West Coastal Highway.
Table 16 extends to year 2030 the demand forecasts that were previously developed to
estimate daily movements in the inbound road freight task.

Table 16 - Nominal road freight forecasts for inbound Pilbara freight (generalised)
Nominal road freight forecast
estimates for inbound Pilbara freight
Volume ex Perth Volume ex Pilbara ports
Current 2020 2030 Current 2020 2030
Forecast road demand (Mtpa) 4.61 6.08 7.15 1.13 1.21 2.35
Nominal load (tonnes) capacity per trip 60 60 60 60 60 60
Average number of loads per day 260 340 400 60 70 130
(Assumes 300 days per annum)
Mining equipment

- OSOM @ 80% 160 180 180 10 20 40
- Other 40 50 40 0 10 10
Other general and bulk freight 60 110 180 50 40 80
Total 260 340 400 60 70 130
Nominal corridor share

- GNH 80% 80% 80% 80% 80% 80%
- NWCH 20% 20% 20% 20% 20% 20%
Movements

- GNH 208 272 320 48 56 104
- NWCH 52 68 80 12 14 26

Implications
The following points stem from observations made during analysis:
The generalised results broadly align with what is presently observed as northbound flows
to the Pilbara i.e. the Great Northern Highway is carrying around 200 northbound loads
per day, of which around 160 loads are deemed OSOM, requiring Special Permits and
police escort.
Despite OSOM movements being trialled for night-time operations, the overwhelming
volume of OSOM loads travel in daylight hours. This optimistically equates to around
10 loads per hour across a 16 hour day. Even if travelling in convoy, this is equivalent to
34 movements per hour or one every 15 minutes.
General freight road trains would also equate to 45 per hour in addition to the OSOM
convoys.


Forecast to 2020 and beyond, this will increase a further 20% in reference to OSOM
loads and considerably more for general freight loads.

6.3 OPERATIONAL ISSUES
The bulk of the northbound road task is undertaken by double and triple road trains. Triple road
trains are assembled at the road train assembly area in Wubin. South of Wubin, only double
road trains can operate to/from Perth. Around 7080 per cent of the northbound loads are
currently undertaken by RAVs under special permit.
Freight vehicles that are 2.55.5 metres wide need a permit but no escort. Loads over
5.5 metres wide require a police escort while those over 8.08.5 metres wide require two police
escorts; the latter now averages up to four loads per week.
Many OSOM movements travel north on the Great Northern Highway irrespective of final
destination. Typically, these are dump trucks used for the iron ore sector and involve either new
equipment or second-hand replacements. Anecdotal evidence suggests that some mining
companies are replacing dump trucks at the rate of two per week.
The volume of current and forecast traffic, in addition to challenging operating characteristics
(i.e. size, reduced transit speeds, convoy length, reduced pavement widths and limited
overtaking opportunities), means that the Great Northern Highway is experiencing adverse
congestion that impacts on the freight operator and the community generally. As one industry
player observed, the Great North Highway is becoming a freight only road.
An opportunity exists to operate OSOM loads at night. This is presently being trialled as a
means of partially mitigating congestion however, it presents other operating challenges.
Other issues impacting road freight operations into the Pilbara include:
managing compliance with driver fatigue management laws
frequency and adequacy of rest areas and amenities
convoy parking area and overtaking zones
flooding impacts
power lines
last mile constraints in town areas.
A number of these issues are considered in the following section.

6.3.1 NETWORK CONGESTION POINTS
There are a number of potential congestion points on the road network that influence
movements to, and within, the Pilbara. Table 17 identifies the key points.


Table 17 - Network congestion issues
From To Issue Impacts
Fremantle Port Eastern Industrial areas Port access
OSOM loads on Roe Highway
Slow moving/wide loads first mile
constraints
Metro Perth AMC Henderson OSOM loads restricted from using
Kwinana Highway
Slow moving/wide loads first mile
constraints
Metro Perth Apple St RTAA Volume of single trailers moving to
RTAA
General volume of freight vehicles and
road congestion
Roe Hwy GNH interchange Vehicle volumes Mostly OSOM impacts
Double road train impacts
Great Northern Highway
interchange
Apple St/Muchea Swan Valley Conflict with local tourism traffic
Muchea Wubin Double Road Train only Shared traffic impacts
Wubin Newman Triple Road Train allowed Inadequate passing opportunities
especially for OSOM loads
Perth Newman OSOM loadsslow moving, convoys,
lack of overtaking opportunities
Virtually forcing all other road
movements onto the longer NWCH
impacting on other transit and tourist
traffic
Pilbara local

Pilbara local Flooding between Nov/May Potential for delays to road
trains/convoys
Driver hours/fatigueincreased costs
North West Coastal
Highway

Geraldton Width restrictions Local impactspotential to slow traffic
North West Coastal
Highway

Carnarvon Other traffic / tourism
Overtaking areas etc.
Local impactspotential to slow traffic


7 SHIPPING
In principle, coastal shipping presents a viable alternative to land transport especially when
large cargo volumes and long distances are involved. On a net tonne per kilometre basis, sea
freight rates are lower than both road and rail-line haul freight rates; it also realises additional
social and environmental benefits associated with reduced congestion, emissions (calculated
per tonne kilometre) and energy use (calculated per tonne kilometre).
Governments have long recognised the benefits afforded by coastal shipping as witnessed in
European Union and United States government-led initiatives to establish coastal shipping as a
viable, efficient alternative to ever-increasing road usage.
With the southnorth road network between Perth and Pilbara falling under increasing
pressureespecially from OSOM loadscoastal shipping is potentially well-positioned to offer
a cost-effective and environmentally friendly alternative to all-road transport and to alleviate
some of the road network pressure.
In its current configuration however, the WA coastal shipping service is limited in its ability to
compete on a cost or service footing to the Pilbara region; this is in contrast to highly cost-
competitive and well-established road transport services that are available daily. It should be
noted however, that the present shipping service receives Government support in respect of
providing a competitive freight alternative to the Kimberley Region. Any activity it has in the
Pilbara Region is incidental and could in fact, be limited if there was evidence of the Kimberley
being neglected.
In order to provide an effective and viable alternative, a coastal shipping service will need to
satisfy a number of Key Success Factors. These are examined in more detail in Section 7.2.

7.1 ROLE OF SHIPPING SERVICING THE PILBARA
The inbound logistics task into the Pilbara is modestly served by shipping activity when
compared to road activity. Most inbound activity is associated with the current wave of
construction activity and more specifically, where goods and materials are sourced from
overseas and where consumption occurs closer to the Pilbara ports.
To a lesser extent, the region is served by a coastal shipping service from Fremantle that serves
the Pilbara with calls in the Kimberley. A second service between Perth and the Pilbara involves
a fixed term, dedicated service associated with construction of the LNG Gorgon LNG Project.

7.1.1 INTERNATIONAL SHIPPING
The Pilbara ports are served by a number of international shipping companies transporting
mostly project and general cargoes associated with LNG and iron ore construction projects.
Much of this material is in large, modular form that is pre-fabricated in Asia and requires
transport using shipping lines that specialise in carrying such materials.
Port calls are largely centred on construction schedules so once the construction phase is
complete, it would be doubtful whether these international shipping services would continue to
service the Pilbara ports other than on specific cargo inducement.


Key shipping companies that operate between Asian and Pilbara ports are Spliethoff Shipping,
Austral Asia Line (AAL) and Oceania Pacific Asia Line (OPAL). In many cases, other Australian
ports are called as part of a round-voyage.
Some of the project cargo vessels are voyage specific and chartered for individual construction
project loads. These lines include Hartmann Reederei, BBC Chartering and Mammoet Shipping.

7.1.2 COASTAL SHIPPING
Currently, there are three distinctly different shipping services participating in the Pilbara
inbound task:
1. Liner coastal shipping between Perth/Fremantle and the Pilbara/Kimberley region is
presently served by a single, dedicated Western Australian Coastal service that is
operated by Norwegian ship owner/operator, Jebsens International. The service has been
under Jebsens management since March 2010 and was previously operated by the Perth-
based SeaCorp.
The service utilises a single self-geared, container/general cargo vesselthe 3850 gross
tonne Kimberley Queen. It has a cargo carrying capacity of 4766 Dead-Weight Tonnes or
345 teus (multiplied by 14 tonne loaded containers).
With a sailing frequency of 17 days, this service currently includes port calls at Fremantle,
Dampier, Port Hedland, Broome, Wyndham and Darwin.The Kimberley port calls are
obligatory while the Pilbara ones are by inducement. Cargo types carried are mostly
containerised commodities and break-bulk, as well as general cargo.
2. The Gorgon LNG Project serving Barrow Island is utilising a dedicated shipping service
between AMC Henderson/Fremantle and Dampier/Barrow Island. The service operates on
a cargo-ready basis and uses two highly versatile, multi-purpose combination vessels
chartered specifically for the project to carry materials and equipment that have been pre-
fabricated or pre-assembled at the AMC facility.
Cargo destined for Barrow Island is discharged at Dampier Supply Base (DSB) and
transferred to Barrow using towed Landing Craft Tugs (barges) at a frequency of up to
three per day.
3 Some international shipping lines provide regular coastal services between Fremantle and
the Pilbara as part of their broader overseas schedule. Examples include Spliethoff
Shipping and AAL.

7.1.3 INTEGRATED COASTAL AND INTERNATIONAL
SERVICE
A future coastal shipping service is likely to be one of two options:
1 One option is a dedicated coastal shipping service operating between southern ports
(Fremantle/Henderson) and ports in the Pilbara (Dampier/Port Hedland).
Its target market would be the contestable cargo identified in Section 5.3.1, namely mobile
mining equipment, ammonium nitrate and industrial consumables.


The minimum annual cargo volumes needed to ensure service viability is 0.5 Mtpa.
2 Another option is an integrated coastalinternational service operating between Fremantle,
Singapore/Port Klang and Pilbara ports (for example). It would combine international cargo
moving between Fremantle and Singapore/Port Klang with cargo moving between
Singapore/Port Klang and the Pilbara, as well as coastal cargo moving between Fremantle
and the Pilbara.
Its target market will be three-fold: one market is international cargo travelling from
Fremantle to South East Asia (largely containers and break-bulk); the second consists of
contestable cargo moving from Fremantle to the Pilbara (this report previously identified
this as mobile mining equipment, ammonium nitrate and industrial consumables); the third
is already active market which consists of cargo moving directly from South East Asia to
Pilbara ports (e.g. modular construction/project cargo).
An overseas operator will have significantly lower operating costs than the operator of a
dedicated coastal service and could even price at marginal cost rates just as overseas
operators moving containers eastwest tend to do.
Target market volumes for the coastal leg may be lower than for a dedicated coastal
service in that the shipping line has the ability to carry other cargo from Fremantle to South
East Asia and from South East Asia to the Pilbara, thereby offsetting operating costs.

7.2 KEY SUCCESS FACTORS
For coastal shipping to be an effective alternative to road-only transport, any potential service
offering will need to fulfil a number of key success factors; these are essentially the customers
(and potential customers) drivers for modal choice.
Service frequency and reliability
Market price
Vessel configuration
Port infrastructure

7.2.1 SERVICE FREQUENCY AND RELIABILITY
To achieve minimum competitiveness with road transport, a coastal shipping service needs to
provide weekly sailings between Perth/Fremantle and the Pilbara. These must have fixed
arrival/departure days for each port of call and would entail two vessels being employed
(specific type is described later), based on a forecast market share of 0.5 Mtpa.
To maintain service integrity, ports must be able to offer the coastal service fixed berthing
windows or priority berthing so that the vessel can be berthed and worked on upon arrival.
Berthing delays will be detrimental to service integrity and may ultimately force a return to road.
Service reliability is considered as high a priority as service frequency. When offering fixed
arrival/departure days, maintaining the service schedule is paramount, so vessels employed in


a coastal shipping service must have sufficient service speed to make up time if needed
(e.g. delays by inclement weather, delays in port).
This is extremely important where high value cargo has been ordered for construction and
scheduled production is reliant on port arrival of vessels as timetabled. Reliable vessel arrival is
similarly critical where delivery connections for pick-up and on-transport by road are in place
and specialised transport vehicles are involved.
The current coastal service receives priority berthing with the exception of AMC Henderson,
where Berth 4 of the common-user facility is understood to be prioritised around LNG project
ship arrivals for 21 months.

7.2.2 MARKET PRICE
Market prices for coastal shipping will need to compete with road transport pricing on a door-to-
door basis. This includes costs for PUD at the origin and destination (e.g. greater Perth and
Pilbara port-to-mine site respectively), in addition to quay-to-quay sea freight rates.
The WA trucking sector is highly patronised and road freight pricing to the Pilbara region is
extremely competitive, particularly given there is not a regular coastal shipping alternative.
Anecdotal evidence suggests that door-to-door northbound road pricing is some 40 per cent
lower than the equivalent by sea when PUD costs are added.
Rates at this level will make it hard for any coastal service to compete in the general freight
door-to-door market. Concentrating instead on the target markets previously identified presents
better opportunities for coastal shipping services to differentiate its product offering.
Prices for non-general freight should attract a higher rate level, particularly those inputs where
the opportunity costs of non-supply are of much greater value than the monetary value of the
inventory.
It should be noted that where the Government-supported Kimberley shipping service is required
to be competitive with road-based transport, any dedicated Pilbara shipping service would not
be subsidised by the Government.

7.2.3 VESSEL CONFIGURATION
To successfully market to those cargo types identified, future vessels operating in a coastal
shipping service will need be very different and more versatile than vessels currently in use.
Future vessels will be required to accommodate the needs of different cargo types: from
unitised to break-bulk; from divisible to non-divisible; from wheeled to heavy-lift cargo.
Accordingly, it is envisaged that future vessels should:
be larger than current with load capacity in the region of 10001200 teus;
provide Roll-on/Roll-off (RORO) capability incorporating heavy-load ramp capacity
provide Lift-on/Lift-Off (LOLO) capability with heavy-lift ship crane capability
(120160 metric ton)
offer increased deck weight capability and tween decks


offer sufficient service speed to allow for a weekly service (minimum 14 knots).
Vessel types with the capacity to meet these requirements can be divided into the following
categories:
Container/general cargo
Roll-on/Roll-off (RORO)
Container/Roll-on/Roll-off (ConRo)
LASH Barge
Heavy Lift/Combi
Sea Barge
A fuller description of each vessel type and their relative advantages for a coastal service are
detailed in Appendix 3. Table 18 summarises the typical characteristics for a vessel highly
suited to a Pilbara coastal service.
Table 18 - Typical dimensions for future coastal vessel
Alternative vessel type From To
Length Over All (LOA) 100 m 200 m
Beam (Width) 20 m 25 m
Draft (depth) 6 m 10.5 m
Load capacity 10 000 tonnes 12 000 tonnes
Container capacity 1000 teus 1500 teus
RORO ramp Up to 750 tonnes
Ships cranes (heavy lift) X2 X2

As an example, the Gorgon project has a contract to charter two semi-submersible/heavy-lift
ships from Combi Lift of Denmark. The two vessels (Combi Dock I and Combi Dock III) offer
extremely high-loading and discharging flexibility with simultaneous RORO and LOLO capability
i.e. wheeled cargo can be done simultaneously (RORO) as other cargo is discharged (LOLO),
such as from the ships deck container, break-bulk and general cargo. The charter is for a two-
year term that will see the two vessels operate in a dedicated shuttle service between AMC
Henderson and Dampier/Barrow Island.
It should be noted that anlaysis of possible vessel types is purely for this costing exercise.
Ultimately, it will be the shipping companies who decide which vessel types best suit this trade.

7.2.4 PORT INFRASTRUCTURE
Earlier in this section, this report established that providing a competitive and viable alternative
to road transport requires a restructure of coastal shipping from its current configuration,
including across service frequency, schedule reliability and vessel type.


Port infrastructure including berths, laydown areas and road access serving coastal shipping
must also be capable of supporting forecast levels of inbound activity and accommodating the
type and number of vessels scheduled. This applies to all inward shipping activity including
coastal services, project ships serving iron ore and LNG construction, as well as vessels
supporting the off-shore oil and gas sector and local port tugs.
Whilst much is being done to cater for port infrastructure associated with outbound export
cargo, the same cannot be said for the inbound task.
Berth utilisation at existing common-user facilities is already high and delays for vessels
awaiting berths are not uncommon. Increased vessel activity due to ongoing fuel movements
and forecast iron ore and LNG construction will only exacerbate this situation.
In order for shipping to play a greater role in moving inbound material to the Pilbara, ports need
additional capacity in terms of wharves and sufficient terminal area to accommodate associated
land-side activity i.e. logistics areas, cargo lay-down and assembly areas. Access to, and
egress from, ports must also be sufficient to ensure through movements to the Pilbara without
hindrance from first mile issues.
Having identified a range of vessel types that could serve in a coastal shipping service, any port
of call will still require (as a minimum) a number of additional infrastructure items.
Table 19 - Typical port infrastructure requirements for future coastal vessel
Port characteristics From To
Wharf frontage 400 m 500 m (min)
Wharf apron 50 m 100 m
Lay-down area 10 ha 20 ha
Load capability 40 kPa 50 kPa
Draft (depth) 8 m 12.05 m
RORO ramp yes yes
Mobile cranes yes yes

7.2.5 WHARVES
Additional wharf capacity will need to be able to accommodate a minimum of two 175 metre
handymax sized vessels simultaneously. It should therefore be considered that a minimum of
two 200 metre berths are required. Allowing for a wharf length of 500 metres would also cater
for port tugs and off-shore supply vessels.
Given the different types of vessels and cargo to be accommodated, wharf construction will
need to be of sufficient strength to accommodate large/modular loads, heavy RORO loads, as
well as containers, general cargo and break-bulk loads.
Wharves should be of a linear nature. Pier/jetty type structures are not suited for the types of
vessel and cargoes being targeted.
Given the flexibility in loading and unloading of the preferred vessel types, port equipment (in
terms of shore cranes) will be minimal however, the provision of shore-based mobile cranes
should be considered.
Cost estimates for delivering 400 metres of new wharf is estimated to be between $160 million
($400 000 per metre) and $200 million ($500 000 per metre), which covers dredging,


reclamation and provision of some 5075 deep terminal area (23 hectares). When adding
sufficient terminal area to cater for logistics centres and lay-down (e.g. between 5 and
20 hectares), development costs of up to $500 million can be expected.
It should be noted that construction costs are estimates only and will vary depending on a
number of factors including: geotechnical and environmental issues that affect the type of
construction and amount of dredging required; channel depths and distance to open sea; wharf
construction.

7.2.6 TERMINAL AREA
The most common concern among current port users is the lack of terminal area for cargo lay-
down. Lay-down areas are required for cargo assembly, storage awaiting transport or convoy
assembly in the case of split consignments.
Both Dampier and Port Hedland are constrained by lack of sufficient lay-down areas. Future
port developments should consider allowing for a minimal lay-down area of 510 hectares in
any proposed terminal construction and should be contiguous with the wharf area. A 500 metre
wharf with a 100 metre depth will provide for 5 hectares of terminal.
Terminal design and construction should consider heavy duty paving to allow for extreme cargo
weights and masses.

7.2.7 PORT ACCESS
In addition to providing suitable and adequate wharves and terminal areas, adequate access
and egress both to, and from, the wharf and terminal area is critical in future port development.
Access roads into, and out, of the port must therefore be sufficient to provide road corridors
suitable for the types of cargo being moved, especially in respect of oversize project cargos and
OSOM road movements associated with the Pilbara mining areas.
This is particularly relevant for any WA coastal shipping service that aspires to successfully
converting current southnorth movements from road to sea.


8 SYNOPSIS OF EXISTING PORTS
The preceding sections of this report examined the types of vessel best suited to operate in a
dedicated coastal shipping service and the infrastructure required by those ports within its
scheduled itinerary.
In this section, existing port facilities are examined. This encompasses their suitability (or
otherwise) to accommodate the proposed coastal shipping vessels and taking into consideration
current facilities, constraints and proposed development plans.
Potential alternative ports are also identified.

8.1 FREMANTLE
As well as being one the nations top container and fuel import ports, Fremantle is a key transfer
point for cargo associated with both the iron ore and LNG industry sectors. As well as being an
international port, Fremantle is also the initial point of entry into Australia for a range of goods
and materials comprising the inbound logistics task for the Pilbara.
Principal among these are the mining fleet and parts, which constitute a large proportion of the
overall inbound volume. Mining fleet and parts (mainly tyres) are manufactured principally in the
United States, Europe or (under licence) in Asia. These are then shipped into Fremantle on
board ocean-going RORO vessels. Once cleared by Customs and AQIS, they are transported
by road to dealer premises where they are upgraded to Australian standards before being
transported to the Pilbara region. Certain construction/project cargo also arrives into Fremantle
from overseas by the same means.
The increase in demand for mining equipmentparticularly in the dump-truck sectormeans
new equipment is being supplemented by second-hand sources that require additional work by
AQIS (including wash-down) before being cleared for onward transport.
Facilities
North Quay in Fremantles Inner Harbour provides 811 metres of common-user wharf,
specifically Berths 1 & 2 and Berths 11 & 12. The latter are heavy duty wharves that provide the
principal unloading point for international Ro/Ro vessels carrying mobile mining equipment and
certain project cargo.
Victoria Quay has six common-user berths of which fourBerths E to Hare used
predominantly by car carrier vessels, as well as by some project vessels.


Table 20 - Current port facilities suitable for coastal task
Fremantle Berths Length (m) Depth (m) Max vessel draft
North Quay 1 Common User 207.0 11.0 10.5
2 Common User 175.0 11.0 10.5
11 Common User 196.0 11.0 10.5
12 Common User 233.0 11.0 10.5
Victoria Quay D Common User 176.0 11.0 10.5
E Common User 230.0 11.0 10.5
F Common User 204.0 11.0 10.5
G Common User 206.0 11.0 10.5
H Common User 275.00 11.0 10.5

Constraints
Observed constraints:
Recent increased importing of large mining machinery is putting pressure on existing port
land. The terminal area serving Berths 11 & 12 is experiencing pressure not only from
increased volumes but from increasing cargo dwell times.
Berth occupancy rates are currently very high.
Increased dwell times stem from additional time being needed for AQIS to inspect and
wash second-hand equipment and for processing Special Permit requests for Restricted
Access Vehicle movements.
Victoria Quay wharves are constrained by their lack of heavy duty capability. The
Fremantle Passenger Terminal occupies wharf frontage at Berths F and G, while a large
proportion of the terminal area is consumed by storage and processing of imported cars.
Internal transfer between North Quay and Victoria Quay wharves is also constrained,
especially for OSOM loads.
The handling of large, OOG freight is greatly constrained as Fremantle is not on the states
HWL corridor.
Requirements to support coastal shipping
Based on the requirements identified in Section 6 of this report, Fremantle is well-served to
accommodate the type of vessels in question. As the principal point of import, Fremantle is
obviously well-positioned to manage direct cargo transfers between international and coastal
vessels.
Current wharf facilities at North Quay are suitably equipped in terms of quay length, quay
strength and terminal area. Both RORO and LOLO operations can be accommodated, in
addition to heavy lift. Equally relevant is the ability of these berths to offer priority to a potential
Pilbara service.
Road access to the port is generally adequate, although OSOM egress is potentially
constrained as loads continue to increase in dimension.


To accommodate the requirements of the prescribed coastal shipping service, North Quay
Berths 11 & 12 provide the best option. Berth E at Victoria Quay is a potential alternative but is
constrained by its lack of heavy-duty capability.
In the longer term and should container trade be transfered to the proposed Outer Harbour
development at Kwinana, there is an ideal opportunity for the current container berths at North
Quayspecifically Berths 4 through 10to provide dedicated facilities for coastal shipping
services and project vessels contiguous with the existing RORO Berths 11 & 12.

8.2 AUSTRALIAN MARINE COMPLEX - HENDERSON
The AMC at Henderson (23 kilometres south of Perth) was established as a centre for
manufacturing, fabrication, assembly, maintenance and technology development in addition to
serving the marine, defence, oil & gas and resources industries. The AMC is operated under the
auspices of the Department of Commerce and is home to the largest marine industry in
Australia.
Currently, it has also become a key centre for fabricating, assembling and shipping large
infrastructure modules needed for the offshore oil and gas industry. AMC is the key centre for
the Gorgon LNG Projectlocal fabrication takes place within the precinct and is loaded directly
to chartered project vessels operating between the AMC and Dampier/Barrow Island.
Facilities
The AMC has four wharves including one equipped with a 300 tonne capacity crane for load-out
and stowing on-board project cargo vessels. These wharves are supported by:
a 40 hectare common-user facility that includes a 99 metre x 53 metre floating dock and a
self-propelled modular transporter (SPMT) to transfer vessels and heavy modules
between land and water;
a common user facility with some 40 hectares of laydown area catering for modular
assembly and testing, and a Main Fabrication Hall with 168 000 cubic metres of space;
a 38 hectare Support Industry Precinct in close proximity to Perths heavy industrial zones
and provides ease of access to OSOM loads;
an 80 hectare Fabrication Precinct featuring direct access to the common user facility (the
precinct hosts a dedicated 20 hectare Subsea Cluster that can manage fabrication and
load-out of pre-assembled units up to 15 000 tonnes in weight).
Constraints
Current high patronage from the LNG sector has raised concerns over berth availability,
particularly where fixed-day guaranteed berthing windows are required for a liner coastal
shipping service.
Shipping of project cargo operates differently to liner shipping in that ship loads are specifically
built and moved only when ready; not necessarily to a fixed schedule. Any dedicated coastal
shipping service will require guaranteed berthing arrangements.
A key constraint of AMC as the Perth base for a coastal shipping service would be any
dislocation from Fremantle. Since Fremantle is the principal import location for certain materials
and equipment, dislocation would rely on road transport to Henderson if the latter were to be the
main load point for northbound coastal cargo.


AMC Henderson is well-positioned to play an active role in a coastal shipping service. The
facility is well-served against the requirements previously identified i.e. sufficient quay length,
RORO and LOLO capability, heavy lift and sufficient terminal area.
Given its current role as the Perth base for the fabrication, pre-assembly and shipment of LNG
project cargo, the AMC offers exceptional opportunities for the iron ore sector also. As with the
LNG sector, construction material required for the iron ore sector can be pre-fabricated onsite
and loaded directly to coastal shipping vessels, most likely in addition to calls at Fremantle.
AMC is strategically located on the HWL corridor, thus enabling local transport of OSOM loads
and direct loading onto vessels from within the AMC. AMCs proximity to the proposed
Fremantle Outer Harbour provides long term opportunities for closer operational synergies with
the Port of Fremantle, particulalrly as the the current Gorgon arrangements conclude by
mid-2014. Current Government policy is that AMC should not perform as a commercial port but
this could change given its potential in terms of a coastal shipping role.
8.3 PORT HEDLAND
Since handling its first iron ore export in 1965, Port Hedland has become the highest tonnage
port in Australia. In line with increased iron ore production, the Port Hedland Port Authority
(PHPA) has overseen ongoing capacity development to manage the growing task of iron ore
exports that now exceed 200 Mtpa.
In recent years, Port Hedland has also seen an increase in vessel calls associated with the
inbound logistics of the mining sector. These include fuel imports from Singapore,
construction/project cargo from Asia, as well as the current coastal shipping service.
Facilities
Existing facilities at Port Hedland for non-iron ore cargo are PHPA Berths 1 through 3 which
have a combined length of 527 metres. Associated terminal area for inbound logistics and cargo
lay-down/assembly is limited.
Table 21 - Current port facilities for non-iron ore cargo
Berths Length (m) Depth (m) Max vessel draft Comment
Berth 1 213.0 13.2 13.0 General/containers
Berth 2 131.0 13.2 13.0 General/containers
Berth 3 183.0 13.2 13.0 General cargo

Constraints
Capacity at Berths 1 through 3 is already constrained and berth utilisation exceeds acceptable
limits. As a consequence, inbound vessels of all types are often delayedsometimes waiting up
to six days for a berthwhich creates delays for critical cargo and incurs costs in terms of
vessel demurrage.


The projected new mine developments are driving forecast inbound ship arrivals to reach some
500 over the next five yearsthis equates to an average of two per week. General cargo
Berths 1 through 3 however, are likely to reach capacity within the next three years.
This berth capacity issue is further exacerbated by Port Hedlands lack of terminal back-up land,
so inbound cargo has to be transported directly from ship to satellite locations away from the
immediate wharf area. Where consignments are split over more than one vessel, cargo that is
off-loaded from one vessel may be forced to wait days before the consignment balance arrives
with obvious consequences for consignments moving in convoy.
While the Lumsden Point proposal addresses much of the inbound task requirements, the
development proposal itself is constrained by lack of planning approval and funding sources.
Port Hedland is limited in its ability to accommodate the type of vessel advocated for a future
coastal shipping service. Indeed, existing port facilities struggle to manage the current inbound
task and port users are faced with unacceptable and costly delays.
Current wharf facilities are modest and limited to the type of vessel currently employed in the
coastal service i.e. small capacity container/general cargo. These facilities however, will not
support a future coastal shipping service employing multi-purpose vessels as prescribed.
The port will also struggle to accommodate the numbers of vessels and volumes of cargo
planned in association with the new iron ore mine construction.
In order to accommodate the requirements of increased vessel callsincluding a coastal
shipping servicePort Hedland will need, as a minimum, two additional berths
(400500 metres) and associated terminal area to cater for logistics and lay-down needs
(1020 hectares).
The Lumsden Point development may resolve this issue and could potentially include RORO
capability; this review was given to understand that major international RORO shipping lines
that carry project cargo and equipment for new mine construction have expressed their interest.
The development will also support LNG rig tender vessels, off-shore supply and support craft,
imports of cement, fuel, and pre-assembled modules, as well as earth moving, mining and
processing equipment.
However, unless there is progress in terms of planning and funding such a strategy, mining
companies may seek alternative transport means to meet their inbound cargo requirements.
8.4 DAMPIER
Dampier Port is both the nations second highest port for iron ore exports and a major marine
hub for the LNG industry, owing to its proximity to the North West Shelf area of oil & gas
extraction and production.
In 2009/10, Dampier Port facilitated the inbound modular movement of the $12 billion Pluto LNG
Project. This entailed some 264 fabricated modulesthe largest around 2000 tonnesbeing
shipped on heavy-lift, wide-deck, RORO vessels and assembled on the Burrup Peninsula.
Dampier is well-versed in managing such project cargo/modular shipping vessels and has
become the marine hub for the North West Shelf, Pluto and Gorgon LNG projects. Its port
facilities for non-LNG activity however, are limited.


Facilities
Current port facilities catering for inbound, non-iron ore shipments are shown in Table 22.

Table 22 - Current port facilities for non-iron ore cargoes
Berths Length (m) Depth (m) Max vessel draft Comment
Cargo Wharf West 209.6 10.0 9.0 General/containers
Cargo Wharf East 142.0 6.5 5.5 General/containers
Bulk Liquids Berth 215.0 13.0 12.0 Bulk Liquids only

In addition to these berths, other infrastructure associated with inbound movements includes a
Heavy Load-Out Facility (HLOF) that was constructed to support the North West Shelf Venture.
The HLOF is a 50 metre facility used to offload pre-assembled modules. An Alternative Load-
Out Facility (ALOF) is located adjacent to the HLOF and has a 20 metre berth face.
Located next to the Dampier Cargo Wharf is the Dampier Barge Ramp; 59.5 metres long,
15 metres wide, with a ramp deck area of 773.5 square metres.
Constraints
The Dampier Cargo Wharf is the Dampier Port Authoritys (DPA) only common-user facility and
is constrained by a number of factorsit is of a pier construction and not contiguous with any
terminal, berth depth (Dampier Cargo Wharf East), berth capacity and current utilisation levels.
As with other ports, Dampier suffers from a lack of suitable and sizeable terminal land
contiguous with its wharves. While there are significant land parcels outside the designated port
area which represent potential to expand port activities, these are not vested in the DPA and not
contiguous with any wharf.
The forecast increase in inbound vessel calls associated with iron ore and LNG construction
activity will place further constraints on what is already, limited port infrastructure. Accordingly,
Dampiers existing infrastructure will not be able to accommodate increased vessel activity
including a restructured coastal service.
As with Port Hedland, the planning for additional wharf and terminal infrastructure is recognised
although approvals and funding remain outstanding.
Dampier is similar to Port Hedland in its limited ability to accommodate the type of vessel
advocated for future coastal shipping services. Current facilities at Dampier are also extremely
modest and primarily servicing the LNG sector or vessel-to-vessel transfers. Dampier Cargo
Wharf with its two berths will not be able to manage increased vessel calls and like Port
Hedland, vessel operators will face berth congestion and vessel delays.
The DPA recognises the need for additional berth and land capacity in order to manage the
inbound logistic task. In its Development Plan 20102020, the DPA proposes the development
of a Dampier Marine Services Facility (DMSF) adjacent to the current Dampier Cargo Wharf.
This involves two stagesconstructing a 300 metre jetty and reclaiming 22 hectares of land.
The development costs are estimated around $500 million.


While it may be that the proposed DMS, in conjunction with the existing Dampier Cargo Wharf,
could manage the short term requirements of the inbound logistics task (encompassing a
coastal shipping service), it might not be sufficient in the longer term. Other locations have been
identified as potential targets for reclamation and development to create marine wharves/jetties
and provide for land-side uses. These include the vicinity of King Bay Supply Facility and the
Mermaid Marine Supply Base.
Given the lead time needed to effect planning and funding approvals, the DPA is also
considering interim solutions such as the use of a barge (30004000 cubic metres of deck-
space) moored to the existing Dampier Cargo Wharf. This would effectively increase wharf
capacity by some 7080 per cent.
As with the proposed Port Hedland development, continued delays in approval and funding may
force importers and shipping companies towards alternative transportation for inbound cargo
requirements.

8.5 ANKETELL
Anketell Port has been identified as the next major deep water bulk export port for the Pilbara.
The greenfield site 35 kilometres east of Dampier will be developed as a multi-user,
multi-commodity port with some 1400 hectares of associated strategic industrial area.
Anketell is expected to open up new growth opportunities for the export of bulk commodities
(principally iron ore) while reducing pressure on neighbouring bulk ports. Its design is based on
a potential export capacity of around 350 Mtpa of iron ore.
The DPA will manage the port and infrastructure corridors while the industrial precinct will be
developed by LandCorp.
Facilities
Whilst the development plans exclude specific facilities for general cargo, container, break-bulk
or project cargo vessels, it is understood there are two temporary jetties to be used during
construction that could be retained post-construction to cater for uses relating to the inbound
task. Construction is expected to begin late 2012 and first export shipment forecast for 2015.
With the development still in its infancy, consideration should be given as to whether Anketell
can accommodate the 400-500 metres of wharf and associated terminal area needed to support
the inbound logistics task and as a means to supplement planned capacity for Dampier Port.
Port infrastructure in Dampier is severely constrained and development proposals lack planning
and funding approval. The potential therefore, exists to develop Anketell Port to complement
Dampier in terms of managing the inbound logistics task.

8.6 ASHBURTON NORTH
The new port of Ashburton North is being developed primarily to serve the LNG sector and
exports of up to 50 Mtpa of LNG and other hydrocarbon-based products. It will incorporate the
proposed Ashburton North Strategic Industrial Area (ANSIA), developed as a site for LNG and
domestic gas processing primarily for the Wheatstone Project.


The DPA has been appointed the Port Authority managing the development of the proposed
ANSIA, located 11 kilometres southwest of Onslow.
Facilities
Ashburton North is expected to include a port precinct, multi-user facilities and a multi-user
corridor. As with the proposed Port of Anketell development, plans exclude any specific facilities
to handle the inbound logistics for general cargo, container or break-bulk cargo. There is
however, space being provided for two marine base operators to establish facilities and
lay-down areas.
Whilst these facilities have been designed with the LNG marine supply in mind, the
development is still in its early stages and so, could consider if it can accommodate the
400-500 metres of wharf and terminal area needed to service the inbound logistics task and
also provide a complement to planned capacity at Dampier. As with Anketell, the lead times
involved will require prompt planning decisions.

8.7 BROOME
Whilst the Port of Broome is not a Pilbara port, it is the principal deep water port for the West
Kimberley region and plays a key role in serving current and future offshore oil and gas
exploration supply vessels. If a future coastal shipping service focuses on the Pilbara ports only,
then consideration may be required as to how the Kimberley region is best served by south
north shipping.
Given its importance to the LNG sector, Broome has been included in this study for comparison
only. Whether or not it is incuded in any future service (combined with the Pilbara ports), will be
for a coastal shipping operator to determine.
The Port of Broome supports the Browse Basin offshore oil & gas exploration industry and is the
preferred inbound point-of-entry for the proposed LNG precinct at James Price Point, some
60 kilometres north of the town.
The port also supports livestock exports and is also the main fuel and container receival point
for the region. Trade volume is dominated by petroleum product imports destined for the
Kimberley region.
The port is expected to accommodate LNG processing facilities and associated works needed
to handle a total 50 Mtpa of LNG output. The Broome Port Authority is planning to provide
project-ready land, additional logistic handling equipment and infrastructure modificationsfor a
Broome Freight Precinctand is progressing with development plans for some 17 hectares of
land intended for this purpose.
Facilities
Current shipping activity is accommodated by three berths that are connected to the main port
area by a 640 metre road-enabled pier. The berths include an Outer Berth (331 metres long)
and two Inner Berths (170 metres and 96 metres long).


Table 23 - Current port facilities suitable for coastal/inbound task
Berths Length (m) Depth (m) Max vessel
draft
Comment
Outer Common User 331.0 10.0 9.6 General cargo/containers
Inner 1 Common User 170.0 8.0 7.6 General cargo/containers
Inner 2 Common User 96.0 7.0 6.6 General cargo/containers

Constraints
Port operations in Broome are constrained in that wharf operations are non-contiguous with
landside activities, separated by a 640m jetty structure.
In essence, only the Outer Berth can accommodate those vessels engaged in supporting the
inbound task however, the Outer Berth is not suited for either project or RORO vessels. It also
cannot accommodate any out-of-dimension or heavy cargo.
Broome is also constrained by its high tidal range, which determines the maximum size of
vessels using the port. Strong tides are evident across the entrance channel and at the berth.
Road access to, and from, the Port of Broome is also constrained with all port traffic having to
pass through residential and tourist precincts of the growing Broome township.

Current berth configuration, limited depth alongside and isolation of wharf/land-side facilities
means this port does not lend itself to the type of vessel or cargo envisaged for a restructured
coastal shipping service.
Whilst development plans are in place to make this port a focal point of inbound activity for the
LNG sector, its role in a restructured coastal shipping service is limited.
The question therefore remains as to how coastal cargo originating from the Perth area can be
transported by sea to the Kimberley region in order to avoid the all-road alternative. It may be
anticipated (and subject to further study) that in future, coastal cargo leaving Perth may be
trans-shipped from Pilbara ports by smaller vessels serving the Kimberley region expressly.


9 SCENARIO ANALYSIS
9.1 SCENARIOS
The following scenarios were modelled to provide an assessment of the conditions under which
a coastal shipping service would be competitive, and further to assess the economic viability of
the proposed service.

Table 24 - Proposed market share under each scenario
Scenario Coastal shipping market share
1 Base case (all road) 0%
2 Low market share Flat 12%
3 Medium market share 1620%
4 High market share 2030%

A simple Net Present Value (NPV) model was developed to test current road dominated flows
against an alternative model where a coastal shipping service is established targeting between
12 and 30 per cent market share (ostensibly focused on inbound flows to the Pilbara coastal
zone) with a modest volume also being delivered to the Newman and Tom Price inland zones.
Net Present Value represents the present value of current and future cash flows with a cost of
capital applied allowing different scenarios to be brought back to a comparative base.

9.2 INPUTS
9.2.1 ROAD OPERATING COSTS
Table 25 provides unit cost per tonne assumptions for five road movements relevant to the
analysis. These unit costs are used in a comparative analysis of pathway costs, whether (a) by
road door-to-door, or (b) by coastal shipping, terminal and PUD pathway.
An arbitrary premium of 30 per cent loading has been added to general freight rates for OSOM
out of gauge loads.


Table 25 - Derivation of road operating costs for relevant sections
Road operating costs A B C D E
Origin Perth Perth Pilbara port Pilbara port Perth Metro
Destination Port Hedland Newman Newman Pilbara coast (semi-trailer)
Distance (km) 1650 1200 450 150 50
Tonnes/trip (Triple Road Train) 70 70 70 70 70
12

Tonne km 115 500 84 000 31 500 10 500 3500
Cents/tkm $0.085 $0.085 $0.085 $0.120 $0.200
Cost/trip $9 818 $7 140 $2 678 $1 260 $700
Road operating cost per tonne $140 $102 $38 $18 $10

9.2.2 COASTAL SHIPPING OPERATING COSTS
The following table provides unit cost per tonne assumptions for a coastal shipping service.
Costs were sourced from a standard sea voyage calculator with additional input provided by
industry stakeholders.
Table 26 - Derivation of coastal shipping operating costs
Shipping operating costs Per voyage
Per tonne
(General)
Per tonne
(OSOM)
Tonnes 10 000 7 000
Chartering $280 000 $28 $40
Fuel $200 000 $20 $29
Port costs $50 000 $5 $7
Stevedoring (origin and destination) $200 000 $20 $29
Other costs $20 000 $2 $3
Margin $50 000 $5 $7
Total $800 000 $80 $114

12
This movement is undertaken as two or three discrete semi-trailer loads within the metro area and later assembled into
road train configuration for the linehaul journey


9.2.3 PATHWAY COSTS
The following table brings together road and coastal shipping costs to provide unit cost per tonne assumptions for LNG and mine pathways to the
Pilbara coast and the Newman area.
Table 27 - Derivation of pathway operating costs
Mode
Road Road Shipping Shipping Road Road Shipping Shipping
Origin
Perth Perth Perth Perth Perth Perth Perth Perth
Destination (region)
Newman area Newman area Newman area Newman area
Pilbara
(coastal)
Pilbara
(coastal)
Pilbara
(coastal)
Pilbara
(coastal)
Freight type
General OSOM General OSOM General OSOM General OSOM
Distances (km; one-way):
Warehouse to mine 1200 1200
Warehouse to LNG plant 1650 1650
Warehouse to Fremantle or Henderson 50 50 50 50
Fremantle/Henderson to Pilbara port 1700 1700 1700 1700
Pilbara port to mine site (Newman) 450 450
Pilbara port to LNG plant (Coastal) 150 150
Cost per tonne (one-way)
Perth metro PUD Road $10 $13 $10 $13
Coastal shipping Shipping $80 $114 $80 $114
Pilbara region distribution Road $38 $50 $18 $23
Direct line-haul (door to door) Road $102 $133 $140 $182
Pathway cost per tonne $102 $133 $128 $177 $140 $182 $108 $151


The coastal shipping service appears more competitive for the Pilbara coastal zone due mainly
to the PUD haulage costs from the Pilbara ports back to the Newman and Tom Price regions,
which represent more than 35 per cent of the direct road costs from Perth to Newman.
9.2.4 INFRASTRUCTURE UPGRADE COSTS
In addition to assessing transport operating costs, consideration has been given to the capital
cost of upgrading roads and ports infrastructure required under each scenario.
Required upgrades to the Great Northern Highway include pavement widening and increasing
the number of passing lanes. Main Roads Western Australia (MRWA) has recommended
2 kilometre passing lanes every 20 kilometres. Under the coastal shipping scenario, fewer
passing lanes are required given the reduction in road freight volume.
Table 28 - Derivation of road infrastructure costs
Road infrastructure costs No coastal shipping service With coastal shipping service
Origin Perth Perth Pilbara port Perth Perth
Destination Newman Port Hedland Newman Newman Port Hedland
Trip distance 1200 1650 450 1200 1650
Passing lanes per 100 km 5 5 3 3 3
Number of passing lanes 60 82.5 13.5 36 49.5
Passing lane length (km) 2 2 2 2 2
Cumulative distance 120 165 27 72 99
Passing lane cost/km ($) $1 000 000 $1 000 000 $1 000 000 $1 000 000 $1 000 000
Passing lane CAPEX $120 000 000 $165 000 000 $27 000 000 $72 000 000 $99 000 000
Pavement width distance 200 200 50 200 200
Pavement width cost/km ($) $250 000 $250 000 $250 000 $250 000 $250 000
Pavement width CAPEX $50 000 000 $50 000 000 $12 500 000 $50 000 000 $50 000 000
Total CAPEX cost $170 000 000 $215 000 000 $39 500 000 $122 000 000 $149 000 000
Tonnes (Mtpa) 4 4 1 3 3
Road infrastructure
cost per tonne $40 $50 $40 $40 $50

In order to support a coastal shipping service, additional berth capacity for general cargo and
adequate lay-down areas are required at Pilbara ports.
Given that berth upgrades will service a variety of cargoes, 25 per cent of the capital cost has
been attributed to the coastal shipping service.


Table 29 - Derivation of port infrastructure costs
Port infrastructure costs
Required berth length 400m
Berth cost per metre $400 000
Total CAPEX cost $160 000 000
Potential berth capacity (Mtpa) 3
Port infrastructure cost per tonne $53
Usage % attributed 25%
Total attributed CAPEX cost $40 000 000
9.3 ASSUMPTIONS
The following assumptions form inputs to the model:
The coastal shipping scenario is based on contestable markets including mobile mining
equipment (Roll On Roll Off cargo), ammonium nitrate and industrial consumables.
A ratio of 10:90 has been used for the volume of OSOM freight to general freight.
Externality road freight costs have been assigned $10.70 per net tonne kilometre
13
.
An arbitrary discount rate of 10 per cent has been prescribed. Lower discount rates return
similar relativities.
The model assumes the coastal shipping service becomes operational in 2015.
The distribution of demand is presently dominated by the Newman area but increases
proportionally along the coast. By 2020, it is estimated that the coastal region will account
for 25 per cent of demand.
Road operating costs per tonne kilometre have been based on industry knowledge and
comparison with market pricing sourced through stakeholder engagement.
The model assumes no back-haul freight (backloading) as part of the coastal shipping
service.

13
Externality costs are the exogenous costs and benefits of transport, outside the purely internalised commercial costs.
Specifically, they include negative impacts such as pollution, climate change, congestion, degraded respiratory health,
crashes, noise and severance - or the cost to mitigate these impacts as a result of a development in transport
operations or infrastructure. The most widely used Australian externality cost estimates are originally sourced from
European data (Infras/IWW). The interpreted results however, vary widely, based on the selection of European countries
with which to compare Australia and other conversion factors. The two major data sources in this regard are the
National Guidelines for Transport System Management (ATC 2006) and AustRoads report Valuing emissions and other
externalities, which was authored in 2000 and updated in 2005. Estimation of the value of externalities is a complex task
and is the subject of ongoing research. Broadly speaking, theaccepted value of externalities for road freight is up to
$43.80 per thousand ntk (net tonne kilometres) in urban environments and up to $10.70 per ntk for rural. For rail freight,
the costs are $6.90 and $0.80 respectively, derived from the working documents used to support the AusLink (2006)
transport funding programs.


9.4 OUTPUTS
The comparative results of the financial modelling exercise are presented below in terms of the
relative NPVs returned.
Table 10 - Net Present Value modelling results
Scenario Coastal shipping market share Net Present Value (billion)
1 Base case (all road) 0% $5.48
2 Low market share Flat 12% $5.35
3 Medium market share 1620% $5.28
4 High market share 2030% $5.21

The NPV returned under all coastal shipping scenarios is marginally lower than that returned for
the base case, or the road only option. These results demonstrate that the introduction of a
coastal shipping service is feasible under these scenarios.
The inbound logistics task is expected to see accelerated growth over the next 35 years as
construction material is brought into the region to meet expansion of new iron ore and LNG
production facilities. Coastal shipping would be able to service this task and in doing so, mitigate
OSOM and related loads on the northern highways.
Whilst these figures have been prepared at a high level (and more detailed financial analysis will
be required going forward), the analysis shows that a coastal shipping service warrants
consideration especially in terms of targeting movements inbound to the Pilbara coastal regions.
The base case scenario of road-only freight exhibits a higher NPV with none of the wider
opportunities associated with introducing a modal alternative.
9.5 SENSITIVITY TESTING
Key parameters in the NPV modelling were adjusted to test the sensitivity of outcomes including
freight composition, infrastructure costs (CAPEX) and shipping prices.
Test A assumes no oversized loads and no road infrastructure expenditure as a result.
Test B assumes 50% reduced road infrastructure expenditure.
Test C assumes 50% reduced road infrastructure expenditure and 25% increased shipping
costs.


Table 11 - Sensitivity testing results
Inputs Original
Scenario
Sensitivity test
Coastal market share
A B C
Base case (all road) 0% 0% 0% 0%
Low (from) 12% 12% 12% 12%
(to) 12% 12% 12% 12%
Medium (from) 16% 16% 16% 16%
(to) 20% 20% 20% 20%
High (from) 20% 20% 20% 20%
(to) 30% 30% 30% 30%
Freight composition

General freight 90% 100% 90% 90%
Oversized loads 10% 0% 10% 10%
CAPEX

Road (base) $m 215 0 108 108
Road (alternative) $m 161 0 81 81
Port $m 40 40 40 40
NPV outcome

Base case (all road)( $m) 5483 5159 5390 5390
Low ($m) 5345 5066 5368 5445
Medium ($m) 5278 4998 5301 5419
High ($m) 5205 4924 5228 5391
Shipping costs Unchanged Unchanged Unchanged Increased by 25%

Results show in relative terms that coastal shipping could provide a partial solution under Test A
and Test B.
For Test C, shipping rates were increased by 25%. In this case, under the low and medium
scenarios, coastal shipping returns a higher NPV however parity emerges between the base
case and the high scenario.


10 SUMMARY KEY ISSUES AND NEXT STEPS
This study finds there is a prima facie case for supporting a coastal shipping service to the
Pilbara. Such a service is most cost effective for movements into the coastal region of the
Pilbara, whereas higher PUD costs from port to mines in the Tom Price and Newman areas
continue to favour direct road supply from Perth.
The minimum service level is weekly and entails two ships operating on a 14-day rotation.
These need to carry 0.5 Mtpa cargoequivalent to around 15 per cent of the contestable
marketin order to ensure a sustainable service.
Using a NPV approach, the coastal shipping pathway is shown to provide marginally lower NPV
cost than road. Further analysis and market testing will be required, along with analysis to test
the sensitivities of assumptions herein.
This study has raised a number of high level issues that need to be addressed in order to
support a future coastal shipping service. These included ensuring the right
transactional/commercial arrangements are in place among supply chain participants, as well as
ensuring government has targeted its road and infrastructure access pricing effectively.

10.1 ROADS
The inbound logistics task is forecast to grow from 6.96 Mpta to 12.13 Mtpa by 2030. While road
transport currently supports the majority of the inbound task, forecast growth is expected to
place undue pressure on the road network.
To measure road capacity or the costs for addressing road infrastructure or funding
improvements falls outside the scope of this study, however, it is worth noting that the do
nothing scenario presents associated external costs including issues of congestion, air quality
and public amenity.
Next steps
Commendation is forthcoming to Main Roads WA, the Police and the Western Power in relation
to initiatives such as trialling night-time OSOM movements and the proposed one-stop shop for
Special Permit loads. These measures however, do not serve to reduce overall volume and size
of vehicle loads that are moving northbound.
In future, consideration might be given to road pricing policies (and price signals) as one means
of attracting a range of freight movements (including OSOM freight) away from road and onto
coastal shipping. This could conceivably take the form of a price based on physical dimensions
of the load or a per kilometre unit cost.

10.2 CO-ORDINATING/COMMUNICATING
Matters such as local first mile traffic issues, Special Permit application requests, industry
communication and possible underground placement of power lines are being addressed by a
joint taskforce that includes the WA Police, Main Roads WA and Western Power (assisted by
Adam Pekol Consulting Pty Ltd).


Certain stakeholders have suggested that greater government engagement with the mining and
LNG companies is vital to ensuring appropriate input and contribution into the inbound logistics
task.
Next steps
A forum could be established to provide a channel through which major iron ore mining and
LNG producing companies could understand and contribute to the overall management of the
Pilbara inbound logistics task that potentially features a partial coastal shipping service.
The responsibility for co-ordinating this forum may lie with the Freight and Logistics Council in
the first instance.

10.3 SHIPPING
This study looked at the level of restructure that a coastal shipping service would need in order
to provide a viable, cost-effective coastal shipping alternative to road transport. It should be
anticipated however, that even a revised coastal shipping service will require a transition period
to build up trade.
Governments in the European Union and the United States recognise that increased road traffic
volumes present with the high social cost, so alternative transport (in particular short-sea
shipping) are considered a priority.
Marco Polo in the European Union is a funding program that helps to shift freight
transport from the road to sea, rail and inland waterways. Fewer trucks on the road can
contribute to less congestion, less pollution, and the more reliable and efficient transport of
goods.
The Short Sea Shipping Co-operative Program is a similar scheme based in the United
States. It is a partnership of public and private interests that involves ports, road operators
and shipping employing RORO vessels and ferries used to alleviate highway congestion
on the Eastern Seaboard.
Next steps
These schemes on their own will not succeed when faced with strong competition from road
transport modes. Within these schemes, governments help to create favourable conditions for
the shipping alternatives to succeed, including providing administrative, pricing and regulatory
frameworks. In this respect, developing a greater understanding of the potential role for
government and its implications for a coastal shipping service may also lie within the remit of the
Freight and Logistics Council in the first instance.
The analysis in this study has not reflected any long term re-application of the current coastal
shipping subsidy presently applied to the existing Kimberley service. It is however envisaged
that the volume and market share opportunities of a Pilbara service would negate the need for
any subsidy.
A key task for Government, perhaps through the WA Freight and Logistics Council is to
undertake a market sounding phase with potential and interested shipping operators to review
and refine tha analysis conducted to date.


10.4 PORTS
The port capacity available to support the Pilbara inbound taskinclusive of any restructured
coastal shipping serviceis highly constrained in terms of wharf capacity, terminal/lay-down
capacity and port road access.
Additional port infrastructure is therefore required yet the process of planning and development
requires a long lead time. This is in stark contrast with industry demands which are far more
short term focused as with the mining and LNG construction plans, which are due to commence
in the very near future.
Next steps
Given the proposed amalgamation of the Pilbara ports into one authority, it is assumed that a
more holistic approach to future port development will emerge and any current port
development plans fast-tracked.
The amalgamation also presents opportunities to examine the potential role of Anketell and
Ashburton North in the Pilbara inbound task.
As part of supporting a coastal shipping service, Pilbara ports should also consider amending
their pricing structure. Currently, all vessels and their cargo at Pilbara ports are incur standard
port tariffs. This is in contrast with Capital City ports where coastal and trans-shipment vessels
are differentiated and receive reduced rates; this can often be as much as 50 per cent off
standard tariffs.

10.5 FUNDING
Port infrastructure provisions in the Pilbara have largely been export-driven and funded by
producers and exporters. This is different to East Coast (capital city) ports where such
development is generally funded by port authorities.
Whether Pilbara should follow the practices of capital city ports with regards to inbound logistics
provision is open to debate. The question for government is likely to revolve around whether
public or private funding represents the best option.
Next steps
East Coast ports typically build a business for new infrastructure based on forecast trade
volumes and resultant income streams i.e. land rent, ships dues, wharfage fees, and pilotage.
As part of that process, interest is sought from industry participants (including potential
stevedoring companies) who will need to consider their business model based on income
streams associated with handling ships and their cargo. Neither will be considered in a short
term context.
Governments will fund port development through their port authorities but on the basis funding
is covered over the term of any lease at a hurdle rate of return, possibly 7 to 10 per cent per
annum. With a lease agreed, the stevedoring company will carry the cost of finding its market.
Other funding options include Public Private Partnerships featuring open discussions with the
mining and oil and gas producers who are ultimately, the chief beneficiaries of future
infrastructure investment.


10.6 GOVERNANCE/LEGISLATION
The size of the identified future inbound Pilbara freight task suggests a strong case for a regular
coastal shipping service into the Region. The State Governments position will have a major
influence on the outcome.
In that context, it is relevant to note the present Government funding commitment to a regular
coastal shipping service into the Kimberley Region. This subsidy has the objective of ensuring
that remote industries and communities in the Region have access to a competitive freight
alternative. The Pilbara Region is closer to Perth than the Kimberley and also represents a
significantly greater freight market. Under these circumstances, the Government does not
consider that a shipping service into the Pilbara Region requires a subsidy and does not see the
present Kimberley service as relevant to the issue.
While the Government will not be providing funding support for a new coastal shipping service
into the Pilbara Region, there are other steps it can take to encourage that outcome. The main
one of these is ensure that ports at either end of the service have capacity to support it. At the
Pilbara end of the service, and to a lesser extent the Fremantle end, this is an issue. However,
the current examination, together with an already growing interest by shipping companies in
providing a service, will assist the development of business cases and funding proposals for the
provision of related port infrastructure. The Government is well placed to facilitate that process.
The Government also has relevant legislative powers available to it, particularly in respect of
licensing intra-state shipping operations. These powers could certainly be used to encourage a
new coastal shipping service.
Next steps
It would be appropriate that the Freight and Logistics Council in its review of this Report, gives
consideration to steps that the Government may take to create an environment where industry
sees sound commercial reason to introduce a coastal shipping service into the Pilbara Region.
In other studies and with a rail context, this sort of positioning by Government has been called
rail husbandry. In this context, what is required is shipping husbandry.


11 APPENDIX
Appendix A - Summary of iron ore mines (hubs) and forecast production to 2030
Port Company Hub Existing Mine Site Location 2012 2020 2030
(Mtpa) (Mtpa) (Mtpa)
Panawonica
Mesa J 200 kmsouthwest of Karratha
Warramboo (replaces Misa J)
Mesa A 60 kmwest of Pannawonica; 165 kmsouth of Karatha
Brockman 4 60 kmnorthwest of TomPrice
Brockman 2 60 kmnorthwest of TomPrice
Nammuldi 60 kmnorthwest of TomPrice
Silvergrass
TomPrice 370 kmsouth east of Karratha
Western Turner Syncline 20 kmnorthwest of TomPrice
Paraburdoo 80 kmsouth of TomPrice
Channar 20 kmfromparaburdoo mine
Eastern Range 10 kmfromparaburdoo mine
Western range
6 Marandoo 45 kmeast of TomPrice 10 15 15
West Angelas 110 kmfromNewman
Bakers South
8
Hope Downs (includes Hope 1/2/3 and Hope 4/5/6 to
replace in 2013 - 15Mtpa)
100 kmnorthwest of Newman 25 32 40
Yandicooqina 95 kmnorthwest of Newman
10 Koodaideri / Koodaideri South 35 36 40
229 320 380
API (JV with Aquila
and AMCI)
West Pilbara; starts construction before end 2012; needs
to carry Mt Anketell port development
MCC (Chinese
Engineering Firm)
new prospect right at Cape Lambert; needs to commit to
building new track or expanded track
20% ownership of Cape Preston
FMG Solomon (subject to expansion of Anketell)
0 25 70
Newman Hub
- Mt Whaleback 6 kmwest of Newman 55 65 70
- Orebodies 23-25 8 kmeast of Newman
- Orebody 18 8 kmeast of Newman
- Orebodies 29, 30, 34 and 17
2 Jimblebar Mine 41 kmfromNewman 35 53 60
Southern Flank
- Mining Area C 92 kmwest-northwest of Newman 45 45 50
- Southern
Yandi 90 kmnorth-west of Newman
Western 4
5 Jinadi (Greenfields) 70
Sub Total BHP 185 250 350
Chinchester Hub 30 80 110
- Cloudbreak 260 kmfromPort Hedland
- Christmas Creek 50 kmeast of Cloudbreak
- Nullagine CID / Bonnie Creek/BC iron JV 130 kmnortheast of Newman
- Iron Valley (Nyindinghu)
(note: extension of Nit new deposit of FMG, can come into
portfolio of FMG)
2 Solomon East (to commence end 2012) due north of Brockman 40 60
30 120 170
Pardoo 56 kmeast-northeast of Port Hedland
Wodgina Mine 90 kmsouth of Port Hedland
Abydos 130 kmsouth of Port Hedland
Mt Webber 150 kmsouth-southeast of Port Hedland
Dalton (note: has option of independent railway or trucking)
McPhee's Creek
Newman south and all around 15 15
Hancock Prospecting
Roy Hill (2015-2016 operations) - will have stand alone
railway
277 kmsouth of Port Hedland 30 55
Brockman Resources Marillana (dependent on transport options) 100 kmnorthwest of Newman 15 17
Moly Mines Limited Spinifex Ridge 50 kmnortheast of Marble Bar 1 1 1
221 453 630
CITIC Pacific Mining Sino Iron
Magnetite (approval granted for 27.6; will take 2.5-3
years to grow to 22 mtpa)
22 70
0 22 70
450 820 1150
Rio Tinto
Port Hedland
Anketell Port
Atlas Iron Limited
BHP
FMG
4
1
Northern
Central
1
2
3
4
5
7
9
87 100
70 80
10 10
12 12
25 70
25
32 35
35
Port Dampier/
Cape Lambert
10 25 35
20 30 35
23 25
25 32 40
Cape Preston
Sub Total Port Dampier/Cape Lambert
GRAND TOTAL
Sub Total Port Hedland
25
17
5
17
Sub Total FMG
50
Sub Total Cape Preston
Sub Total Anketell Port
45
1
3


Appendix B Potential vessel types for coastal service
Type Description
Role in inbound logistics task
Advantages Disadvantages
General Cargo/Container

General cargo/container vessels are the workhorse of
international shipping. Capable of carrying both containers
and break-bulk cargo, a certain amount of project cargo may
also be shipped on these types of vessels.
However, these vessels are limited to generally unitised
cargo, so are much less flexible in their cargo carrying
capabilities compared with other vessels describe.
Unitised cargos in containers makes for easy
transport from port to site.
Majority of ports are able to accommodate
vessels of this size and type.
Vessels of this type generally readily available.
Many vessels have own onboard cranes or can
be worked with mobile cranes.
Today, approximately 90% of non-bulk cargo
worldwide is transported by container and
modern container ships.
Has limited capacity for non-
containerised/over dimension cargo
Sub-optimal for large modular and heavy
cargoes
Less versatile and flexible than other vessel
types
Does not have RORO capability and so
offers limited ability to carry volumes of
wheeled cargo


Type Description
Roll-on/Roll-off (RORO)

RORO vessels, as the name suggests, are designed for the
shipment of wheeled equipment. With stern-loading ramps,
wheeled cargo is loaded on a number of internal cargo decks
and on the upper open deck. Internal ramps connect the
decks and along with adjustable deck heights, these vessels
can carry a wide range of cargofrom road vehicles to heavy-
lift equipment and project cargo.
Vehicles can be driven directly on/off the vessels making then
extremely versatile in terms of port time.
RORO vessels are ideal for the carriage of mining equipment
north. However, they tend not to be self-geared, so any non-
wheeled on deck cargo will require some form of shore-side
equipment.
Large stern ramps enable wheeled cargo to
simply drive on and off.
It is more versatile than container vessels in
terms of the different cargo types it can carry.
Internal configuration allows for carriage of
trucks, heavy machineries, tracked units, Mafi
trailers break-bulk cargoes. Containers can be
loaded on mafi-trailers and wheeled on/off.
There are liftable decks to cater for increased
vertical clearance) as well as heavier decks for
high and heavy cargo.
RORO vessels can perform at eco-speeds of 16
knots while at full speed, more than 19 knots can
be achievedkey for maintaining service
integrity.
Flexible loading/unloading results in quicker
turnaround times in port and making for higher
schedule integrity.
This is a good option for coastal shipping:
Melbourne/Tasmania; NZ South Island/North
Island; N. Europe (North Sea, Baltic,
Mediterranean).
There is a requirement for ports to be
equipped with RORO landing capability (not
suited to ports with jetty type structures).
The use of static mafi systems requires
port or stevedores to be equipped with
prime movers to load/unload vessel.


Type Description
CON/RO (ConRo)

The ConRo vessel is a hybrid between a RORO and a
container ship. This type of vessel has a below-deck area
used for vehicle storage while containerised freight is stacked
on the top decks. ConRo vessels can also load up to 1000 teu
of containerised cargo on deck and has capability to load
on/off with ships own gear.
Separate internal ramp systems within the vessel segregate
the different cargo types (vehicles, high and heavy loads,
break-bulk, project and oversized cargo) on a number of
decks inside the vessel.
The advantage of ConRo vessels is their self-sustainability,
which requires only minimal port infrastructure. For obvious
reasons, this vessel type has proved popular with the military
given their ability to operate in non-designated ports.
Large cargo carrying capability
Flexible in terms of cargo types carried
Self-sustaining and requires minimal port
infrastructure
Vessels tend to be larger than other types
under review owing to their high cargo
capacity
These vessel types are not commonly
available


Type Description
LASH BARGE

The Lighter Aboard Ship (LASH) system involves the practice
of loading unpowered barges (lighters) aboard a larger mother
vessel for port-to-port sea transport. Once at the port of
destination, the lighters are lowered into port area and
typically towed or pushed to a berth or offshore facility, usually
by the vessels own gantry crane.
LASH ships can carry a varying number of lighters which,
depending on their cargo, can be stored and secured under
removable decks (hatch covers). Whilst not as flexible or
versatile as the RORO, ConRo or Combi-Lift, the LASH
system is capable of carrying much greater capacities than
the other types.
LASH barges are ideal for shallow ports and ports with limited
quay moorings or lack of port equipment for
loading/unloading. Its greatest down-side however, is the
need for harbour tugs to move the lighters between mother
vessel and berth.
Large cargo carrying capability
The LASH vessel does need to berth alongside
wharf
(it can stay within main harbour)
Capable of handling a range of cargo types
loaded in individual barges/lighters
Requires shore-side means of unloading
barges/lighters
Slow speed of mother vessel
Barges are unpowered and require tugs to
provide propulsion to/from wharf
Good for use in port but slow in transit
between ports
Less than ideal where quick port
turnaround times are required
Globally becoming less popular


Type Description
HEAVY LIFT/COMBI

These extremely versatile vessels are capable of managing
each aspect of the cargo task described. In essence, they are
a combination of RORO, container, general cargo and project
cargo vessel. The ideal Combi vessel has twin heavy-lift
cranes (suitable for large, heavy and indivisible project loads),
strengthened decks for break-bulk and heavy loads, heavy
capacity RORO capability for self-drive cargoes such as
mining equipment.
The Combi-Lift vessels currently being chartered for the
Gorgon project are classic examples of this vessel type.
Highly flexible in terms of cargo carrying
capability (containers, break-bulk, RORO cargo,
heavy lift, modular cargo)
Vessels are self-sufficient in loading/unloading
with minimal port requirement for cranes and
equipment
High flexibility reduces time in port
Per diem cost is higher than other vessel
types


Type Description
SEA BARGE

The use of unpowered/unmanned heavy lift barges is
common in other parts of the world for project shipments,
module transportation, and particularly in offshore energy
exploration and development. Sea-going barges offer large
carrying capacity.
In being un-manned sea barges however, ocean-going tugs
need to tow them from loading port to their port of destination.
The use of Dumb Barges has been considered; these could
be directly discharged at port and towed to say Anderson
Point.
Use of sea barges from Fremantle/AMC Henderson to the
Pilbara ports however, would require ocean-going tugs. This
makes them slower than other vessels outlined and prone to
extremes of weather.
Large cargo-carrying capability
Well-suited for large, out-of-dimension/modular
cargo that is common in LNG construction
Cost effective compared to other vessel types
Unpowered so would require ocean-going
tug to assist in port-to-port sea movement
Slow moving and also sub-optimal in
maintaining schedule integrity
Suitable for project movements but less
suited for a fixed day weekly coastal
shipping service

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