Interview - Stewart Lammin - Chief Executive Officer, Flinders Ports.
Flinders Ports is South Australia's leading port operator with seven ports located at Port Adelaide, Port Lincoln, Port Pirie, Thevenard, Port Giles, Wallaroo and Klein Point.
Last year Flinders Ports joined other port corporations as an affiliate member and sponsor of the Australian Peak Shippers Association (APSA) and Freight and Trade Alliance (FTA).
Travis Brooks-Garrett, Director FTA and APSA Secretariat, speaks to Stewart Lammin, the recently appointed Chief Executive Officer, Flinders Ports.
1. TRAVIS BROOKS-GARRETT- Congratulations on your appointment to the role of Chief Executive Officer Flinders Ports. What is your vision for the company?
The Flinders Port Holdings Group has constantly developed since privatisation in 2001 where today we have approximately 750 employees across the three business units, Flinders Ports, Flinders Adelaide Container Terminal and Flinders Logistics. The success of the business has been built around a clear strategy, the quality and dedication of its employees and a culture that values working with and respecting all our stakeholders including the communities within which we operate and responsible management of the marine environment.
My vision for the organisation is to continue to grow the business, both geographically and the range of services that we provide our customers. To build on the legacy which I have inherited and to continue to foster the culture that I spoke about earlier. I want this to be a business that our employees are proud to be a part of and most importantly an organisation that places safety and well-being of its employees on top of the list of priorities.
We are continuing to see evolution in our industry, whether it be work practices and behaviours or technological advances. Successful businesses will be those that are flexible and dynamic and able to embrace and see opportunities that the changes in our sector will provide. I would like Flinders Ports to be a business that continues to encourage and fosters innovation amongst its employees.
2. TRAVIS BROOKS-GARRETT- Flinders Ports has seen steady growth in cargo volumes, what do you attribute that to?
This has been a combination of natural State growth (particularly relevant to the container trades), a growing resource sector and favourable weather conditions for agricultural exports. The growth in trade also needs port capacity to handle the increased demand so considerable planning has gone into improving efficiencies at the Flinders Adelaide Container Terminal and the bulk berths. The Berth 29 facility in Port Adelaide is a prime example of planning to meet demand, a single, handy size berth that was underutilised some years ago now facilitates over a million tons of trade across a number of customers.
3. TRAVIS BROOKS-GARRETT- Flinders Ports is often seen as a case study for good privatisation. What do you think are the benefits and risks of port privatisation?
Firstly a couple of caveats, I have never worked for a Government run organisation and the Flinders Ports model is the only privatised port operation I've worked within and I'll avoid the productivity and efficiency arguments. The major benefit of the Flinders Ports privatisation is that the South Australian ports are owned and operated by infrastructure owners who are able to take a long term view of the assets. Ports are long life assets that have constant maintenance requirements and high and lumpy capital requirements. Governments, understandably often think in terms of the next election cycle with a potential for capital restraint on assets that by and large don't garner great voter appeal or support. It would take a brave Government to spend $100m on a wharf asset at the expense of upgrading its roads or trains or trams.
Pricing and access are often raised as the major risks to the industry however these risks can be easily managed by having an appropriate regulatory regime. An appropriate regime provides comfort to all parties, ensuring port services can be competitively priced and access available but also give gives infrastructure investors certainty that investment can be underpinned by achieving appropriate returns on the investment. The regime also needs to be light handed and facilitates healthy negotiation between the counter parties.
4. TRAVIS BROOKS-GARRETT- NSW Ports and the Port of Melbourne have seen increased competition for contestable trade since privatisation, are we seeing similar competition between the Port of Melbourne and Flinders Ports?
In most instances cargo located in the Adelaide/Melbourne corridor has a natural port gateway but there will always be a catchment area where trades, both containerised and bulk trades will have port options. There has always been South Australian containerised cargo that has moved via Melbourne dictated more by the ship than the origin or destination of the cargo but this has certainly diminished over the years. The infrastructure available in Adelaide and the ability to access all markets should ensure that the loss of trade continues to shrink. Flinders Ports is also conscious of maintaining a pricing regime that will ensure Adelaide stays competitive.
5. TRAVIS BROOKS-GARRETT- There has been significant controversy regarding the Infrastructure Fees and the lack of Government regulation in landside terminal charges. Do you think we will see similar increases in landside charges in South Australia?
Ports and Terminals are constantly under pressure to improve efficiencies and increase capacity on land side. The reality is that there are costs involved in achieving the requirements of industry and capital projects tend to be expensive particularly in respect to civil infrastructure and you then have to combine this with increasing operating costs including constantly rising land values. Flinders Ports has, and will continue to invest in improving the efficiency and safety of its landside infrastructure and up to now has been able to minimise any additional costs to users, however there will need to be appropriate increases in charges in the future to recover costs.
6. TRAVIS BROOKS-GARRETT- What do you see as the biggest risks and opportunities for 2018?
The key risk for 2018 for South Australia is the channel widening project that is currently in the hands of the State Government Planning Minister to approve. The project involves widening the channel to 170 metres, enabling us to handle, unrestricted the larger liner, cruise and liquid fuels vessels that will be arriving on the Australian coast. Hopefully this project will get the sign off shortly and be concluded towards the latter half of 2018. Other key risks for 2018 are no different to risks that ports and stevedores have face in any other year, managing safety, the environment and the community. Safety will always be viewed as the key risk to be managed, we have employees in challenging works environments and we aim to ensure those employees get home safely after every shift. We have a record that we are proud of across the Group but we will continue to looks at ways to improve our safety processes and practices, it is a work in process.
Opportunities across the Flinders Ports Holdings Group include leveraging off the increased buoyancy in the South Australian economy, particularly the resource sector. Flinders Logistics is a business that is constantly growing in South Australia and now has a presence outside of the State with the recent acquisition of Townsville Bulk Storage and Handling (TBSH). This will improve both its reach of clients on a local and national level but also increase the range of services in can provide. It is an operation that has continued to develop over the years, concentrating on safety, environmental best practice and innovation and we are extremely optimistic in the growth potential of the business.
7. TRAVIS BROOKS-GARRETT- the Victoria International Container Terminal (VICT) has entered the Australian market and is one of the world's most automated container terminals, is Flinders Ports looking to increase investment in automation and technology?
It is no secret that with constantly rising labour costs at container terminals and in real terms, reductions in revenue per TEU, operating margins are under pressure. Automation is one of the few levers operators have to control costs & Flinders Adelaide Container Terminal is certainly looking at the automation option. It is a lengthy process to identify what is the most appropriate form of automation, timing and how to minimise impacts on the labour where possible. Clearly there are risks involved in having an automated terminal and getting the right balance between costs and productivity is essential.
8. TRAVIS BROOKS-GARRETT - On behalf of APSA, FTA and our members, thank you for taking the time to participate in this interview. We look forward to working closely with you and your executive team in the years ahead.
