Cruise Passenger Terminal Steering Committee Part B Report

Identification and investigation of future infrastructure requirements and potential locations for a Cruise Passenger Terminal east of Sydney Harbour Bridge.

JANUARY 2011

PART B

REPORT TO THE MINISTER FOR PLANNING, MINISTER FOR INFRASTRUCTURE, MINISTER FOR LANDS FROM THE CRUISE PASSENGER TERMINAL STEERING COMMITTEE

Report to the Minister for Planning, Minister for Infrastructure, Minister for Lands from the Passenger Cruise Terminal Steering Committee

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Table of Contents

1 EXECUTIVE SUMMARY ............................................................................................................................... 3

1.1 RECOMMENDATIONS OF THE PASSENGER CRUISE TERMINAL STEERING COMMITTEE: ......... 5

2 BACKGROUND ............................................................................................................................................ 7

3 SYDNEY’S CAPACITY TO BE A PRE-EMINENT CRUISE INDUSTRY CITY ............................................. 9

4 GROWTH ASSUMPTIONS ......................................................................................................................... 10

4.1 WORLD CRUISE SHIPPING INDUSTRY .............................................................................. 10

4.2 CRUISE SHIPPING OPERATIONS IN SYDNEY ....................................................................... 10

4.3 PASSENGER GROWTH PROSPECTS IN SYDNEY ................................................................. 11

4.4 VESSEL GROWTH PROSPECTS IN SYDNEY ........................................................................ 12

4.5 VESSEL CALLS WITH AIR DRAFT RESTRICTIONS.............................................................. 14

4.6 GAP ANALYSIS ............................................................................................................... 16

4.7 MEASURING DEMAND ..................................................................................................... 18

5 SCENARIOS EXPLORED .......................................................................................................................... 19

5.1 DEMAND MANAGEMENT MEASURES ................................................................................ 19

5.2 OVERSEAS PASSENGER TERMINAL, CIRCULAR QUAY ...................................................... 20

6 ALTERNATIVE BERTHING & MOORING OPPORTUNITIES IN SYDNEY HARBOUR ............................ 23

6.1 GARDEN ISLAND (GI) ..................................................................................................... 23

6.2 ALTERNATIVES IDENTIFIED IN SPC REPORT .................................................................... 24

6.3 GLEBE ISLAND ............................................................................................................... 25

7 ALTERNATIVE BERTHING OPPORTUNITIES OUTSIDE SYDNEY HARBOUR ...................................... 25

7.1 PORT BOTANY ............................................................................................................... 25

7.2 NEWCASTLE .................................................................................................................. 26

7.3 PORT KEMBLA ............................................................................................................... 26

8 FUNDING SOURCES FROM THE CRUISE INDUSTRY AND OTHER OPPORTUNITIES........................ 27

8.1 CAPITAL INVESTMENT .................................................................................................... 27

9 FINANCIAL COSTING ANALYSIS PROCESS .......................................................................................... 27

9.1 COSTS, ECONOMIC AND FINANCIAL BENEFITS/REVENUES ................................................ 27

9.2 ECONOMIC AND FINANCIAL INVESTMENT ANALYSES ......................................................... 28

10 PASSENGER CRUISE SHIPS FEES AND CHARGES .............................................................................. 28

11 FINANCIAL IMPACT OF CRUISE SHIP VISITS TO SYDNEY ................................................................... 29


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ATTACHMENTS:

Attachment 1 – Passenger Cruise Terminal Steering Committee Terms of Reference

Attachment 2 – Passenger Cruise Terminal Steering Committee Membership

Attachment 3 – Steering Committee Meetings Held and Site Inspections

Attachment 4 – Future Accommodation of Cruise Ships in Sydney Working Paper 1

Attachment 5 – Study on the Operational and Physical Constraints of the OPT

Attachment 6 – Report from Navy Strategic Command of September 2010 on Cruise Ship Access to

FBE/GI Berths – Implications for Navy

Attachment 7 – SPC Alternative Berthing Opportunities

Attachment 8 – Port Botany Plan

Attachment 9 – Newcastle Cruise Shipping Industry

Attachment 10 – Costs and Economic Benefits

Attachment 11 – Study on Passenger Cruise Ship Fees and Charges

Attachment 12 – Financial impact of cruise ships to the NSW Economy


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1 EXECUTIVE SUMMARY

In May 2009 the Minister for Planning announced the formation of the Passenger Cruise Terminal

(PCT) Steering Committee. The Steering Committee, as requested by the Minister, prioritised its work

by first identifying and reporting on potential permanent infrastructure needs west of Sydney

Harbour Bridge. This Part A Report was presented and the recommendations adopted by the NSW

Government in December 2009.

In February 2010, the Committee was requested by the Minister for Planning to proceed with a Part

B Report consisting of investigations and identification of potential locations for additional passenger

cruise terminals for the outer harbour (east of Sydney Harbour Bridge).

This Part B Report commences with a background summary which sets the framework for the study.

The Report then reiterates the Steering Committee’s earlier findings with respect to Sydney’s

capacity to be a pre-eminent cruise industry city.

Growth assumptions are then reviewed in some detail covering items such as the world cruise

shipping industry, cruise shipping operations in Sydney, passenger and vessel growth prospects in

Sydney, vessel calls with air draft restrictions (which means that the vessels can not pass under the

Sydney Harbour Bridge), and finally a methodology for measuring demand projections.

The study then analyses various scenarios that warrant further consideration. This includes,

reviewing demand management measures, studying the Overseas Passenger Terminal (OPT) capacity

constraints and making key recommendations as to the future direction of this building. It is

envisaged that the only foreseeable capital expenditure required for passenger cruise operations

east of the Sydney Harbour Bridge will be for OPT renovation works and for the installation of a

mooring dolphin at the OPT.

The report reviews operations at Garden Island (GI) and considers alternative berthing opportunities

outside of Sydney Harbour covering the locations of Port Botany, Newcastle and Port Kembla.

Funding sources for capital works projects are briefly considered and the financial and economic

framework process is covered in greater detail. At this point in time it is too early to perform an

economic feasibility study as there is no defined capital works program. However, once a program is

established this report details the steps to be undertaken to prepare a business case to the Minister

utilising the NSW Government Business Gateway process.


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The report concludes that there is the possibility of improving utilisation and increasing efficiency of

the existing facilities at OPT and that dialogue should continue for the shared usage of GI for cruise

vessels.

The recommendations made in this Part B Report are listed in Section 1.1.

In conclusion, the Steering Committee is of the view, in completing its two reports on Sydney’s cruise

passenger industry, it has complied with its terms of reference, and subject to this Part B report

being approved by the Minister for Planning, recommends the Steering Committee be disbanded.


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1.1 RECOMMENDATIONS OF THE PASSENGER CRUISE TERMINAL STEERING

COMMITTEE:

Part B Report concludes that there are no new viable berthing locations available for passenger ships

east of the Sydney Harbour Bridge within Sydney Harbour. The Steering Committee recommends the

following action points be implemented or incorporated in future planning development.

Based on medium term growth projections Sydney Harbour (east of the Sydney Harbour Bridge) will

not be able to accommodate the peak season demands of the passenger shipping industry by the

year 2015 as the OPT will be operating at full capacity unless the shipping industry can reschedule

some vessels to arrive in the shoulder season and therefore reduce demand in the peak season or

allow for Round the World vessels to utilise a mooring buoy for day two of their visit.

1.1.1 Sydney Ports Corporation (SPC) to Commission a ‘Master Plan’ for the OPT. This would

involve a full study of the facility and proposing potential modifications that would make the terminal

more efficient from an operational perspective for passenger cruise ships whilst being cognisant of

the existing tenants. Part of the Plan would involve design works necessitating the engagement of

architects, engineers and cost consultants. The Plan would also involve a high level financial and

economic analysis of the budget estimate of the Works. This would include identifying potential

funding sources from the cruise industry and other commercial opportunities. The ‘Master Plan’

concept must work in harmony with overall planning for the Circular Quay precinct.

1.1.2 The Steering Committee notes that the NSW Government has agreed there should be a State

Government ‘place manager’ having over arching responsibility to coordinate and integrate planning,

management and marketing for the Circular Quay Precinct, recognising its role as a strategic and

iconic gateway to Sydney. It is of fundamental importance that the ‘place manager’ (Land and

Property Management Authority) participates in the preparation and finalisation of the Master Plan.

1.1.3 Develop a timetable for key activities from the ‘Master Plan’ that need to take place if the

OPT is to accommodate the demand requirements of the cruise industry in the future. There will be a

requirement for a new dolphin mooring installation by 2013 (due to the likely increased unavailability

of Garden Island).

In summary, a timeline of key events and activities covered in the recommendations is graphically

represented as follows:


1.1.4 Vessel and passenger growth projection numbers are reviewed every year

next five years) in order to compare the projected growth rate against the actual growth rate and

recalibrate if required the medium and long term projections for berth projections east of the Sydney

Harbour Bridge.

1.1.5 Continue dialogue between the cruise industry and the Navy in regards to

Garden Island for cruise passenger ships

existing berths during peak season, or capacity to guarantee

advanced notice sought by the cruise industry

1.1.6 Commence dialogue between

term co-sharing arrangement for a passenger terminal.

Signed:

_______________________

Mike Collins, Steering Committee Chairman

On behalf of the Passenger Cruise Terminal Steering Committee

Dated: 31 January 2011

•Mooring Dolphin Planning

•Operations and Facilities Planning

OPT Master Plan

2011-2012


Vessel and passenger growth projection numbers are reviewed every year

in order to compare the projected growth rate against the actual growth rate and

edium and long term projections for berth projections east of the Sydney

Continue dialogue between the cruise industry and the Navy in regards to

Garden Island for cruise passenger ships, noting that this offers little prospect of increased access to

existing berths during peak season, or capacity to guarantee berth availability with the degree of

advanced notice sought by the cruise industry.

dialogue between all key stakeholders of Port Botany as to any potential long

sharing arrangement for a passenger terminal.

, Steering Committee Chairman

On behalf of the Passenger Cruise Terminal Steering Committee

•Dolphin Installation 2013

•Renovations OPT 2014

OPT Master Plan

Approval

2012-2013

OPT at Capacity

2016

Report to the Minister for Planning, Minister for Infrastructure, Minister for Part B

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Vessel and passenger growth projection numbers are reviewed every year (at least for the

in order to compare the projected growth rate against the actual growth rate and

edium and long term projections for berth projections east of the Sydney

Continue dialogue between the cruise industry and the Navy in regards to occasional use of

noting that this offers little prospect of increased access to

berth availability with the degree of

all key stakeholders of Port Botany as to any potential long-

Alternative Terminal

Required East of Sydney

Harbour Bridge

OPT at Capacity

2016


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2 BACKGROUND

In May 2009 the then Minister for Planning announced the formation of the Passenger Cruise

Terminal (PCT) Steering Committee to:

� Confirm the long term growth projections for the cruise shipping industry in Sydney Harbour;

� Make recommendations to cater for that growth;

� Identify and investigate potential locations for new cruise terminals for both west and east of

Sydney Harbour Bridge; and

� Consider potential improvements to the Overseas Passenger Terminal at Circular Quay.

The Terms of Reference of the PCT Steering Committee are at Attachment 1.

The PCT Steering Committee comprises representatives from Carnival Australia, Royal Caribbean

Cruises Australia, Tourism Transport Forum, Sydney Ports Corporation, NSW Maritime, Shipping

Australia, Tourism NSW, Sydney Harbour Foreshore Authority and the Royal Australian Navy. The

membership of the PCT Steering Committee is at Attachment 2.

The Steering Committee, as requested by the Minister, prioritised its work by first identifying and

reporting on potential permanent infrastructure needs west of Sydney Harbour Bridge.

The Steering Committee’s Part A Report recommendations of November 2009 were adopted by the

NSW Government and on 20 December 2009 it was announced that the NSW Government had

decided to permanently relocate the Cruise Passenger Terminal from East Darling Harbour to White

Bay Wharf 5. A new purpose-built facility would be built at White Bay 5 with a secondary berthing at

White Bay 4.

On 19 February 2010, the Committee was requested by the Minister for Planning to proceed with

investigations and identification of potential locations for additional passenger cruise terminals for

the outer harbour (east of Sydney Harbour Bridge).

In this Part B Report the Steering Committee has undertaken an analysis of:

� the future growth of the cruise shipping industry and the implications for Sydney Harbour

� the dimensions of vessels that are likely to be accessing Sydney Harbour in the period 2010 to

2030

� possible strategies for managing future demand without additional berthing facilities

� possible berthing opportunities outside of Sydney Harbour

� the financial costing process


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The outcome of this analysis has informed the identification of:

� the need for additional cruise shipping facilities east of Sydney Harbour Bridge

� the nature of the facilities required

� the timeframe for implementation of strategies required to ensure Sydney can accommodate

the future growth requirements of the cruise shipping industry.

Attachment 3 references the meetings held this year as well as site visits undertaken by the Steering

Committee in developing this body of work.

Secretariat services to the Steering Committee were provided by Sydney Harbour Foreshore

Authority. External project services were provided by various consultants including Crown Project

Services (report content gathering and assimilation) and GHD (statistics and industry brief).

In addition several meeting were conducted with key stakeholders including Sydney Ports

Corporation, Royal Caribbean, Carnival Australia, Port Kembla Port Corporation and Newcastle Port

Corporation.


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3 SYDNEY’S CAPACITY TO BE A PRE-EMINENT CRUISE INDUSTRY CITY

Sydney is a world class tourist destination that is in great demand as a call for most cruise itinerary

planners sending ships to this region.

Sydney’s advantages as a cruise industry city include:

• Internationally, Sydney is the most recognised Australian location – it has top-of-mind

awareness among potential visitors;

• The icons of Sydney Harbour, the Sydney Opera House and Sydney Harbour Bridge provide

an outstanding and internationally lauded cruise experience that few cities around the world

can match;

• Sydney has a huge range of tourism attractions and retail outlets that provide it with the

opportunity to benefit from its pre-eminent position in Australia cruising;

• Sydney has a natural harbour in the centre of the city with deep-water frontage and the

potential to accommodate ships of almost any size;

• Sydney’s climate allows for year-round cruising. Its sunshine is particularly appealing for

passengers escaping the northern hemisphere winter; and

• Sydney has a reputation as a safe destination for both cruising and shore excursions, with

friendly people and a good hygienic standard of facilities.

The majority of international cruise passengers arrive in, and depart from, Australia via Sydney

International Airport. This gives Sydney a considerable competitive advantage over other Australian

port cities.

However, Sydney’s existing facilities will struggle with the predicted growth of passenger numbers

and vessel size. Sydney could lose out to competitive ports such as Melbourne, Brisbane and

Auckland – despite the fact that none have ideal cruise facilities. This loss would have significant

impact on NSW tourism and the State economy.

Sydney’s ability to compete with other cruise destinations within Australia and overseas is

dependent on keeping pace with changes in the cruise market and in the infrastructure needs of the

next generation of cruise ships. Sydney as a city needs to embrace the cruise shipping market as a

growth industry and supply it with the infrastructure it requires.


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4 GROWTH ASSUMPTIONS

4.1 WORLD CRUISE SHIPPING INDUSTRY

The world cruise shipping industry is experiencing strong growth which has been driven by a number

of factors including:

− Increasing range of cruise types and itineraries;

− Increased affordability of cruises in many key markets;

− The introduction of larger cruise ships with more passenger facilities;

− Continued propensity for global leisure travel;

− Capacity to quickly re-deploy ships in growing geographical regions and market segments;

− Increasing economic wealth in populous Asian economies.

In 2010 it is estimated that the total worldwide cruise market reached US$26.8 billion in revenue, a

7.4 per cent increase from 2009. Over the past decade the industry has continued to become more

concentrated with a small number of major operators. Carnival and Royal Caribbean represent 41

per cent and 17 per cent respectively of the global berth capacity for cruise ships.

4.2 CRUISE SHIPPING OPERATIONS IN SYDNEY

Australia and the South Pacific market represent less than 4 per cent of the global cruise market. The

Australian cruise industry has experienced consistent growth over the past decade and the market is

still relatively immature compared to the well established markets of Europe and North America.

Operationally, there are three broad cruise ship operating segments in the Sydney market. They are:

1) Home port vessels: these ships are based in Sydney and most of their passengers join and

leave the cruises in Sydney. These vessels carry a mix of locally-based passengers and

passengers who fly or drive to Sydney to join the cruise. The majority of Home Port vessels

are currently accommodated west of Sydney Harbour Bridge. Previously they were based at

Darling Harbour 8 and are now accommodated at a marquee at Barangaroo 5. From mid

2012 Home Port vessels will be accommodated at a new purpose built facility at White Bay 5

with secondary berthing at White Bay 4. White Bay 5 will provide more circulation space,

enhanced multiuse facilities and a more efficient turnaround than is currently achievable at

OPT at Circular Quay. However, it can only be utilised by vessels that can pass under Sydney

Harbour Bridge.


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2) Seasonal vessels: these ships are based in Sydney for between 3-6months during peak

season (nominally mid-October to mid-April). The vessels are redeployed from their

Northern Hemisphere base coinciding with the Northern Winter. They operate full

exchanges using an operating structure similar to the Home Port vessels. The key difference

between Home Port and Seasonal vessel call type is the majority of Seasonal vessels are not

able to sail under Sydney Harbour Bridge, therefore they must operate from OPT at Circular

Quay. While a full exchange and providoring is possible at OPT, it is less than optimal due to

layout restrictions, occupation of sections of the OPT by restaurant users and traffic

constraints.

3) Round-the-World cruises: these vessels operate more or less continuously on a round the

world itinerary. Passengers may join the cruise for a segment of the journey. For instance,

they may join the cruise in Los Angeles and disembark in Sydney; or they may book for a full

trip. In almost all cases the Sydney call will involve some level of passenger exchange (i.e.

some embarking, some disembarking) but the majority of passengers are in transit. This

reduces logistical demands on facilities. The OPT is the preferred berth for this sector due to

its central city location, proximity to major tourist attractions, and good access for passenger

day tours.

The Home Port calls segment is the largest cruise segment in Sydney, with calls representing 50 per

cent of total cruise calls. Round the World and Seasonal calls are equally divided, representing 25

per cent each of current cruise calls.

4.3 PASSENGER GROWTH PROSPECTS IN SYDNEY

While current global economic conditions may impact on passenger numbers in the short to medium

term, a continued increase in passenger numbers can be anticipated. This is the result of an

increasing number of vessel calls, the increasing passenger capacity of vessels calling in Sydney and

an anticipated increase in local market penetration. With an increase in passenger numbers comes

greater demand on terminal facilities during passenger exchange and transit. This is of particular

significance at OPT.


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Table 1 below provides vessel calls and passenger forecast details under three growth scenarios:

Table 1; Vessel and Passenger Forecasts Under Three Scenarios

All Operating Segments Year ended 30 June Average Yearly Growth

Growth

Scenarios

2010 to 2015 to 2020 to 2025 to 2030 to

2015

to

2020

to

2025

to

2030

Vessel

Calls

Low Growth 116 270 311 341 375 18.4% 2.9% 1.8% 1.9%

Medium Case 116 278 381 466 525 19.1% 6.5% 4.1% 2.4%

High Growth 116 287 444 626 773 19.8% 9.1% 7.1% 4.3%

Passenger

numbers

Low Growth 214,730 538,707 670,887 775,325 876,126 20.2% 4.5% 2.9% 2.4%

Medium Case 214,730 554,859 822,685 1,062,257 1,230,810 20.9% 8.2% 5.2% 3.0%

High Growth 214,730 566,711 954,098 1,426,883 1,813,580 21.4% 11.0% 8.4% 4.9%

Source: GHD, June 2010 - Amended to account for actual Sydney Port’s cruise ship bookings to June 2013.

The growth scenarios are derived from looking at historical data, reviewing the confirmed bookings

for the next two years for Sydney Harbour and canvassing the opinions of the cruise operators. The

Australian cruise market has experienced consistent growth through the last decade, with 11 per

cent yearly average growth of passengers for the period to 2010. There is scope for continued strong

growth as the Australian market is regarded as relatively immature compared to the well-established

North American and European markets.

Table 1 illustrates that under the medium case scenario that by 2025 there will be over 1 million

passengers per annum on cruise ships utilising Sydney Harbour.

4.4 VESSEL GROWTH PROSPECTS IN SYDNEY

Major cruise operators such as Carnival and Royal Caribbean are experiencing strong growth,

especially in the Sydney market. Port calls have grown consistently since 2001 with an average

yearly growth of 6.2 per cent to 2010. Higher growth is expected for the next two years taking the

overall yearly growth for the period 2001 to 2013 to about 10.1 per cent per year.


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Table 1 illustrates that cruise vessel calls are expected to more than triple to 2019/20 under the

medium case scenario compared to 2009/10 results, with most growth expected across the Home

Port and Seasonal operating segments.

Furthermore, historic patterns show larger vessels are redeployed to Australia for Home Port

operations approximately 15 to 20 years after vessels first enter service. Larger vessels enter the

busier northern hemisphere market, displacing older vessels which are then transferred to markets

similar to Australia where yields are lower and the vessels remain viable. The trend to larger vessels

indicates Home Port vessels will start experiencing air draft restrictions in Sydney Harbour within the

next 5 to 10 years.

The GT range of cruise vessels calling at Sydney has changed substantially during the period 2001-

2010 reflecting world trends. The number of cruise vessels less than 60,000 GT has decreased

substantially since 2007, with a significant increase of calls from larger vessels, particularly vessels in

the 60,000 to 80,000 GT range. These smaller vessels do not have restrictions for sailing under

Sydney Harbour Bridge.

An increasing number of vessels over 80,000 GT are also being observed and this number is expected

to grow significantly. These vessels are not able to sail under Sydney Harbour Bridge and will have

to be accommodated at the OPT or at an alternative berth or mooring east of Sydney Harbour

Bridge. Restrictions can also apply to vessels close to 80,000 GT, depending on tides, weather, air

draft, vessel design, and other conditions that the Harbour Master and Shipping Manager take into

account.

At present, Home Port calls are mostly made to berths west of Sydney Harbour Bridge. Currently

there is no air draft restriction to any Home Port vessel. However, discussions with Cruise Operators

and a review of the current Sydney Ports’ Vessel Booking system (bookings were taken through to

2013) indicates that new Home Port vessels are coming on line in 2012 that will have air draft

restrictions and will therefore need to berth east of the Bridge.

Seasonal vessels are primarily calling east of Sydney Harbour Bridge, whilst Round the World vessels

have been calling at berths both east and west of the Bridge. Since 2001 air-draft restrictions have

applied to some vessels in this segment. The increasing number of vessels over 80,000 GT that have

been recently added to the fleet means there will be an increased frequency of calls to east of the

Bridge.


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4.5 VESSEL CALLS WITH AIR DRAFT RESTRICTIONS

It is important to distinguish vessels that may not be able to sail under the Sydney Harbour Bridge in

the analysis of vessel growth projections as these vessels will need to be berthed at the OPT, or at an

alternative location east of the Sydney Harbour Bridge. Table 2 provides a summary detail for vessels

with air draft restrictions under various vessel growth scenarios.

Table 2; Vessel calls with Air Draft Restriction

2010 2015 2020 2025 2030

Seasonal

Low Growth 16 92 84 84 96

Medium Growth 16 94 101 106 123

High Growth 16 96 117 144 182

Round-the-World

Low Growth 4 8 10 9 13

Medium Growth 4 9 11 13 18

High Growth 4 12 14 17 27

Home Port

Low Growth 0 34 107 186 206

Medium Growth 0 35 134 263 300

High Growth 0 35 155 353 441

Grand Total

Low Growth 20 134 201 279 315

Medium Growth 20 138 246 382 441

High Growth 20 142 286 513 649

Source: GHD, July 2010 - Amended to account for actual Sydney Ports’ cruise ship bookings to June 2013


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Table 3 details estimated calls west and east of Sydney Harbour Bridge and total calls for the period

2010 to 2030.

Table 3; Estimated Vessel Calls Distributed According to Air Draft Restrictions


This is translated into percentage terms (west and east of Sydney Harbour Bridge) in the following

table:

96 96 96 136 141 145 110 135 15861 84 113

60 84 12420 20 20

134 138 142 201246

286

279

382

513

315

441

649

116 116 116

270 278 287311

381

444

341

466

626

375

525

773

0

100

200

300

400

500

600

700

800

900

2010 2010 2010 2015 2015 2015 2020 2020 2020 2025 2025 2025 2030 2030 2030

L M H L M H L M H L M H L M H

Vessel

Calls

L - Low Growth M - Medium Growth H - High Growth

No Restriction East of the Bridge Only Total


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Table 4; Percentage of Vessel Calls Distributed According to Air Draft Restrictions


These tables show that while the new Cruise Terminal Facility proposed for White Bay 5 and the OPT

can cope with current demand for berthing facilities (albeit with need for management controls in

peak season) there are clear capacity issues east of the Sydney Harbour Bridge in the future with this

capacity being heavily influenced by seasonality. If the schedules for passenger ships could be

modified to allow for more vessels to arrive in the shoulder seasons and not the peak season then

the demand conditions would shift accordingly.

4.6 GAP ANALYSIS

The two gap analysis scenarios presented are based on the following criteria;

Scenario 1 assumes that in the Round the World sector that the vessel berths for two days (48 hours)

at the OPT.

Scenario 2 assumes that all vessels berth for only one day (24 hours) at the OPT. Should there be a

requirement for two days then the vessel would need to use an alternative berth such as a mooring

buoy for the second day.

83%

51%

36%

18% 16%

17%

49%

64%

82% 84%

0%

25%

50%

75%

100%

2010 2015 2020 2025 2030

% D

istr

ibu

tio

n

Able to Sail Under the Bridge East of the Bridge Only


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Table 5; GAP ANALYSIS - MEDIUM GROWTH 2010-2030 AT OPT

Vessel visits to OPT with air-draft restrictions

Medium

Growth

Scenario

July Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Total

2010 0 0 0 1 3 3 4 5 2 1 1 0 20

2015 3 2 4 11 18 19 23 28 14 11 4 1 138

2020 11 9 10 19 30 33 33 38 25 19 11 8 246

2025 19 18 17 31 46 49 46 52 38 32 20 14 382

2030 22 20 19 36 52 57 53 60 44 36 23 19 441

GAP ANALYSIS SCENARIO 1- MEDIUM GROWTH 2010-2030 OPT

Vessels unable to be serviced based on two day berth for round the world segment

Medium

Growth

Scenario


2010 0 0 0 0 0 0 0 0 0 0 0 0 0

2015 0 0 0 0 0 0 0 4 0 0 0 0 4

2020 0 0 0 0 0 3 5 15 0 0 0 0 23

2025 0 0 0 0 16 19 18 30 10 2 0 0 95

2030 0 0 0 5 23 28 26 40 16 6 0 0 144

GAP ANALYSIS SCENARIO 2- MEDIUM GROWTH 2010-2030 OPT

Vessels unable to be serviced based on one day berth per vessel per day

Medium

Growth

Scenario


2010 0 0 0 0 0 0 0 0 0 0 0 0 0

2015 0 0 0 0 0 0 0 0 0 0 0 0 0

2020 0 0 0 0 0 2 2 10 0 0 0 0 14

2025 0 0 0 0 16 18 15 24 7 2 0 0 82

2030 0 0 0 5 22 26 22 32 13 6 0 0 126

Number of vessels unable to be serviced at OPT per month


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The gap analysis shows that the number of vessel visits to Sydney with air draft restrictions is

expected to exceed OPT capacity by 2015, on the basis that Round the World visits are berthed for

more than 1 day.

Scenario 2 demonstrates that if alternative berthing arrangements can be made for the Round the

World sector then capacity constraints for the OPT shift out beyond 2015. The effect is likely to be

negligible however and capacity is likely to be exceeded in 2016.

It must also be noted that the growth projections are based on the medium case growth Scenario.

Should the analysis be conducted on the low case numbers (noted in table 3) then demand would

shift outwards, meaning the OPT could service demand for a longer period of time. Conversely,

should the high case numbers be used then demand would shift inwards.

4.7 MEASURING DEMAND

It is proposed that current vessel and passenger growth projection numbers be reviewed annually in

order to compare the projected growth rates against the actual growth rates. Once this relationship

has been determined the overall growth projection rates should then be recalibrated whilst always

maintaining a twenty year forecast on vessel and passenger growth predictions.


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5 SCENARIOS EXPLORED

5.1 DEMAND MANAGEMENT MEASURES

Having identified future demand, demand management measures were then explored to identify

measures that could be introduced to:

� relieve pressures on the OPT;

� delay the need for new infrastructure east of Sydney Harbour Bridge

Maximisation strategies examined are detailed in Attachment 4.

Pricing measures explored were:

� the application of premium charges for vessels staying in excess of a defined period at the OPT

� the application of seasonal pricing in order to spread demand across the year in order to

reduce the summer peak period.

Regulatory measures aimed at increasing effective berth capacity by reducing average turnaround

time during peak periods were also explored including:

� the establishment of a maximum site time a vessel may remain alongside the OPT during peak

periods

� enforcing the use of buoys for passenger vessel operations extending over the maximum

allowable time at berth.

Capacity improvement measures explored were:

� use of Point Piper Buoy and Athol Buoy as alternative mooring facilities

� infrastructure improvements to OPT

� secure agreement with Royal Australian Navy for more frequent use of Garden Island.

It is understood SPC has already introduced new operational procedures to ensure when vessels

capable of accessing facilities west of Sydney Harbour Bridge are booked at OPT they will be

relocated west of Sydney Harbour Bridge if there is a requirement for use of OPT for a vessel which

has air draft restrictions.


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5.2 OVERSEAS PASSENGER TERMINAL, CIRCULAR QUAY

OPT through its strategic positioning with respect to the international icons of the Sydney Opera

House and Sydney Harbour Bridge, helps make Sydney one of the great cruise cities of the world. It

is essential the OPT be retained and enhanced.

There are numerous agencies controlling the land around the OPT. The agencies include Sydney City

Council, SHFA, Sydney Ports Corporation, NSW Maritime, and the Parks & Wildlife Services.

Furthermore the area has significant Heritage importance.

The Government has recently appointed a single government agency the Land and Property

Management Authority (LPMA) as ‘place manager’ to coordinate integrated planning, management

and marketing of the Circular Quay precinct. The LPMA is the lead integrated property management

authority and place manager for Sydney foreshore land and property assets.

In order to cater for the increased number of larger vessels that will be visiting the OPT it is

imperative that there is short, medium and most importantly long term vision for how this area will

be developed and function.

The OPT building is controlled by SPC and carries historical significance; there are various elements

within the building itself to which attention must be paid, such as the mural wall which is of local

heritage significance and the gangways which are of State heritage significance.

In August 2010, the NSW Government released a discussion paper on the need for a new State

Environmental Planning Policy (SEPP) to provide for the conservation of the universal values for

world heritage sites in NSW. The proposed SEPP is to ensure that the identified qualities of the world

heritage properties will be maintained.

Under the new SEPP, consideration is to be given to the world heritage values of the Sydney Opera

House (SOH) when preparing an environmental planning instrument, determining a development

application or carrying out an activity that may affect those values of the world heritage site.

Attention would need to be paid to this issue for any OPT planning issues to ensure compliance as

this facility lies within the SOH precinct.

From a berthing perspective the Sydney Harbour Master has confirmed that there is no requirement

to increase the quay length to allow larger vessels such as the Queen Mary 2 to berth. It is possible to

install mooring ‘dolphins’ for restraint purposes. There is sufficient depth (over 10.5m) at the OPT for

all vessels. It is proposed a cost estimate is undertaken as an early works activity within the ‘Master


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Planning’ for the OPT. Should the OPT be able to berth larger vessels such as the QM2 then the

immediate operational importance of Garden Island is somewhat diminished.

The functionality of the building has changed over time. The increasing number of restaurants and

bars adds both ambiance to an otherwise quiet area (on non-ship days) and an income for Sydney

Ports Corporation. Given that the average passenger ship is increasing in both physical size and

passenger numbers, meaning that many vessels will no longer fit under the Sydney Harbour Bridge

within the next 5-10 years and that ship visits will become more frequent to the OPT it is important

to re-establish the primary purpose of the building. A home based passenger terminal requires

approximately 4000sqm-5000sqm dedicated to passengers and back of house operations issues. The

OPT now has about half that dedicated space. Furthermore there is high traffic congestion around

The Rocks area when a large passenger ship is berthed.

A comprehensive study of the OPT is detailed in Attachment 5

5.2.1 Recommendations for the OPT

� It is recommended that SPC commissions a ‘Master Plan’ for the OPT. This would involve a full

study of the facility and what modifications may be required to make the terminal more

efficient from an operational perspective for cruise ships. Part of the Master Plan would

involve design works and architects, engineers and cost consultants would need to be

engaged. It is further recommended that the ‘Place Manager’ for the Circular Quay Precinct

participates in the preparation and finalisation of the Master Plan.

� Consider the implementation of a ‘service level agreement’ with the Cruise Operators to

manage the embarkation, disembarkation, and traffic management processes.

� Develop a timetable for key activities from the ‘Master Plan’ that need to take place if the OPT

is to accommodate the demand requirements of the industry in the future. There will be a

requirement for dolphin mooring installation by 2013 and the terminal will be at capacity by

2015 unless the Cruise Operators can reschedule their vessel arrival dates.

� Undertake a high level financial costing analysis of the OPT from the ‘Master Plan’ and identify

potential funding sources from the cruise industry and other commercial opportunities.

� Review lease expiry dates and locations of the lease premises with a view to ensuring that

there are sufficient tenant opportunities provided for in the ‘Master Plan’.


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� It is understood that SPC are currently undertaking an operational study of the OPT. This study

will be a valuable document for the ‘Master Plan’ phase.

� The OPT ‘Master Plan’ must work in harmony within the overall ‘Master Plan’ for the Circular

Quay precinct including integration with traffic management and transport. Close coordination

is required between SPC and the ‘Place Manager’.


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6 ALTERNATIVE BERTHING & MOORING OPPORTUNITIES IN SYDNEY HARBOUR

6.1 GARDEN ISLAND (GI)

The primary function of the Fleet Base East (FBE)/GI complex is to provide support and maintenance

berths for the 11 major Royal Australian Navy (RAN) ships currently home-ported in Sydney, plus

berths for other visiting RAN and foreign warships deployed to the area. A site inspection was

carried out by members of the Steering Committee as detailed in Attachment 3.

Attachment 6 is the ‘Report from Navy Strategic Command of September 2010 on Cruise Ship Access

to FBE/GI Berths – Implications for Navy’ highlighting the significance of GI for the Navy and the

impact this will have on the Cruise Passenger shipping industry.

Of particular note is point 32 which states;

‘On 1 March 2010 the Minister for Defence endorsed the following key points to be conveyed to the

Passenger Cruise Terminal Steering Committee:

a. FBE/GI is a strategically vital Defence asset necessary for the operational, training,

maintenance and logistical support to east coast RAN Fleet units, and to other visiting RAN

and allied warships. Its present location is assured.

b. Priority for berth allocation must remain with naval units. As a general principle RAN ships

will not be moved from FBE/GI to commercial berths elsewhere in the port, which lack

alongside power and other support services, in order to temporarily accommodate visiting

cruise ships.

c. Berths at FBE for larger cruise ships unable to berth elsewhere in Sydney may only be made

available when not required by the Navy.

d. These occasions will be very infrequent, and while every effort will be made to commit to

accepting a cruise ship once Navy agreement in principle has been given and necessary

Defence licence arrangement put in place, industry must accept that operational

contingencies which arise at short notice may drive the need to withdraw approval at short

notice.

e. This would only occur in case of true operational need and once Navy had done all that is

reasonably within its power to make the berth available. However this will not override the

need for Navy to be able to respond to short notice contingencies directed by government.’


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At present Garden Island is occasionally used (about one visit per year) to berth large passenger

vessels such as Pacific Princess in November 2006, Queen Elizabeth II in February 2008, and Queen

Mary 2 visits in February 2007, February 2009 and March 2010. Future visits for these passenger

vessels are planned. However, the availability of berth space at GI will be further constrained by

2014 when the Navy takes receipt of new ships due to enter the service, such as the Landing

Helicopter Dock (LHD) and Air Warfare Destroyers (AWD) that will be home-ported in Sydney. The

planned arrival in Sydney of the first LHD in December 2013, combined with other naval berth space

demands at the time, may result in lack of space to accommodate Queen Mary 2 at Fleet Base East in

February 2014. Based on this knowledge the possibility of installing mooring ‘dolphins’ at OPT prior

to 2014 needs to be investigated.

The cruise industry has expressed interest in co-sharing the GI facilities in the future for passenger

ships and a continued dialogue needs to take place between the respective parties in order to

determine what may or may not be feasible.

However Navy Strategic Command advises the fundamental challenge remains that Navy's demand

for maximum berth space at Garden Island, dictated by annual leave, harbour training and fleet

workup cycles, coincides with the peak cruise season in Sydney. Additionally, given the need to

retain flexibility to respond to frequent changes in Fleet operational tasking and maintenance

activities requiring ships to be alongside berths at GI, Navy capacity to guarantee existing GI berth

space availability with the degree of advanced notice (>12 months) sought by the cruise industry will

remain very limited. As a result, Defence approval of increased cruise industry visit requests for

access to GI berths is likely to be infrequent.

6.2 ALTERNATIVES IDENTIFIED IN SPC REPORT

In May 2009 Sydney Ports Corporation held an internal workshop to examine alternative berthing

facilities east of Sydney Harbour Bridge (refer to Attachment 7 for report details)

Of the fifteen potential locations mentioned, other than GI and OPT which have been previously

covered in this report, the following two locations offer the best potential for mooring opportunities.

a) Athol Buoy

b) Point Piper Buoy

Neither location should be considered as a land berthing location. However, both locations have

previously been used as a passenger turn-around port and could continue to operate in this fashion.


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Whilst internationally, pontoons have been used for berthing purposes the Harbour Master has

confirmed that the use of pontoons or mooring dolphins would not be required at either location in

Sydney Harbour as the existing buoys are sufficient to secure the vessels. These buoys would

primarily be used by the round the world sector for the second day of berthing in Sydney Harbour.

The OPT would be utilised for the first 24 hours where passenger exchanges and providoring would

take place.

6.3 GLEBE ISLAND

Glebe Island could be used on an ad-hoc basis as it has available quay line for berthing a vessel.

Should White Bay not be available due to capacity constraints, or any other reason, Glebe Island due

to its proximity could be considered as an alternative option. However, as Glebe Island is west of the

Harbour Bridge it is not a viable option for passenger ships over 80,000GT.

7 ALTERNATIVE BERTHING OPPORTUNITIES OUTSIDE SYDNEY HARBOUR

7.1 PORT BOTANY

Port Botany from an infrastructure perspective is currently undergoing major expansion with the

development of T3 which is adding 1850 metres of quay line- due to be built and operating for trade

by 2012. Port Botany is Australia’s second largest container terminal handling a third of all container

traffic. The long term growth rates since the 1970’s have consistently been around 7%.

At the present time there are no viable berthing opportunities for a passenger terminal to be located

in Port Botany. However, dialogue should continue between key stakeholders in order to determine

if there will be any future opportunities at T3, at an area adjacent to bulk liquids or any other

alternative location. Port Botany offers proximity to Sydney airport which could potentially provide

access to existing customs operations. Port Botany also provides 24 hour pilotage as it is adjacent to

the boarding station, as well as bunkering and other victualling facilities. These advantages make

Port Botany a superior facility to Newcastle and Port Kembla. Interface issues with a working port

and passenger transport to the CBD are issues that require further consideration. Attachment 8 is a

plan view of Port Botany and shows part construction of the new T3.


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7.2 NEWCASTLE

Newcastle has attracted several cruise ships annually between 2002 and 2010. Several berths have

been utilised over this period however all previous locations had constraints ranging from the size of

the ship that could berth to impact on regular port trade.

More recently the Newcastle Port Corporation and the NSW Government improved infrastructure by

recommissioning the Channel Berth at Dyke Point which is now functional and operating as a vessel

home port.

The success of this first home port season is likely to determine the feasibility of a permanent

terminal in Newcastle either in the present location of Dyke Point , at Queens Wharf or at the Old

Tugs Berths. Attachment 9 illustrates the proposed locations and provides further background

information relating to the Cruise Shipping Industry in Newcastle.

Newcastle could be used on an ad-hoc basis should Sydney Harbour have no spare capacity.

However, it should be noted Newcastle at present has no bunkering facilities.

7.3 PORT KEMBLA

Port Kembla is located on the east coast of NSW approximately 80km south of Sydney City Centre

and is one of three major ports in the state. The diverse commodity base of the port today reflects

the growth of the region and its capability to service the growing South West Sydney market. The

port is managed by the Port Kembla Port Corporation (PKPC) which is a state owned corporation. The

port has recently undergone a major expansion which included the construction of 3 new berths and

the development of 53 hectares of land. The port consists of an Inner and Outer Harbour and there is

an approved ‘Master Plan’ for a major development of the Outer Harbour. The plan is about

increasing land and berthing capacity at the port as demand for its facilities increase.

From a cruise passenger perspective the port in the short term could be used on an ad-hoc basis to

berth vessels if required and indeed in the recent past has been seriously considered as a viable ‘fall-

back’ location by some members of the cruise shipping industry. The Inner Harbour has sufficient

water depth, wharf length and bunkering facilities to accommodate any passenger vessel. From a

long term perspective the port could also be considered as a viable option (subject to a more

detailed study being undertaken and PKPC approving the business case). However, the cruise

operators have advised at this point in time that this would not be a preferential location for a

passenger terminal.


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8 FUNDING SOURCES FROM THE CRUISE INDUSTRY AND OTHER OPPORTUNITIES

8.1 CAPITAL INVESTMENT

Capital investment for any works, including any modifications to the OPT will require discussions and

negotiations between all stakeholders. In section 4.4.1 it is recommended that a ‘Master Plan’ be

undertaken for the OPT. Part of this plan would involve creating a budget for the planned works.

Further discussions need to take place as to how the project could be funded.

There are different ways in which the cruise operators could contribute such as reviewing the charge

out rate of port fees or the introduction of a head tax for passengers.

9 FINANCIAL COSTING ANALYSIS PROCESS

The development of an Economic Feasibility Study (or Business Case) using cost-benefit techniques

for the local/State economy, the community and the environment will involve a Triple Bottom Line

(TBL) approach. The shipping industry will be included as a generator of expenditures, employment

and local government revenues, within the TBL framework.

Should additional investment be required for capacity expansion at the OPT or for a new facility, the

NSW Government Business Gateway procedures will require a financial feasibility study, at the pre-

feasibility level. Only direct revenues from the cruise ship visits will be involved as benefits, i.e. only

those benefits which the facility can capture.

On this basis it will be necessary to undertake two (2) separate cost-benefit analyses. For both, a

time period of 20 years should be assumed; all costs and benefits will be estimated in 2010 constant

prices, i.e. no inflationary forecasts. For the economic analysis, all GST and other taxes will be

deleted (reflecting social or resource costs and benefits). For the financial analysis, all costs and

revenues will be in market prices.

9.1 COSTS, ECONOMIC AND FINANCIAL BENEFITS/REVENUES

For both analyses, the start point will be the identification of the first year, at which existing capacity

will be constrained, or for which additional infrastructure upgrading is required. All costs will need to

be estimated. Annual maintenance costs to support the facilities will need to be estimated at the

year for which additional investment is required. Any additional investment/

expansions/replacement costs over the remainder of the 20 years will also need to be estimated and


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incorporated in the study. Attachment 10 provides more detailed breakdown of the TBL analysis,

the economic and financial benefits and revenues.

9.2 ECONOMIC AND FINANCIAL INVESTMENT ANALYSES

For both the economic and financial investment analyses to be undertaken, it is proposed that the

passenger and ship call forecasts for the Medium growth Case be initially used. Subsequently, as

part of the sensitivity testing, it is proposed to revise the individual benefit/revenue estimates to

reflect ‘low’ ship call and ‘low’ passenger forecast estimates. This will serve to identify the levels of

economic and financial risk to be associated with adopting the ‘Medium Growth Case’ forecasts as

compared to more conservative ship call and ship passenger forecasts.

Variations upwards in the number of passengers (and crew) arriving per assumed visitor/crew

average expenditure level and passenger/crew fees can also be tested, in both sets of models.

Alternative passenger/crew charging policies can also be tested, to be compared to additional ship

berthing fees.

Therefore, the statistical analysis review tasks can be independently and separately evaluated in

terms of their risk implications, from the proposed Business Case development.

10 PASSENGER CRUISE SHIPS FEES AND CHARGES

Across Australian ports, a broad range of cruise ship fees and charges are levied by the respective

port authorities or port corporations. Attachment 11 provides a full breakdown of Australian and

International Ports. The concept of ‘common users’ facilities for berths to be available on demand

for all forms of shipping including the round-the-world, seasonal and home ported cruise ships

applies to all ports. However, in Cairns, Brisbane, Sydney and Melbourne, there are specific berthing

facilities owned by the various ports for which individual port tariffs apply.

Across Australia’s cruise shipping terminals only the Port of Cairns levies a passenger head charge.

None of the mainland ports, which receive cruise ships, charge a passenger tax for the use of

terminal facilities, either for embarking or disembarking.

Internationally, by comparison, there is a general philosophy of a ‘user pay’ system in regards to

cruise passenger terminals. As such, head taxes often are applied by international ports in addition to

the range of wharfage, berthage, pilotage and other port tariffs which are levied on arriving or

departing cruise ships.


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11 FINANCIAL IMPACT OF CRUISE SHIP VISITS TO SYDNEY

An independent analysis commissioned by Crown Project Services has been undertaken to determine

the financial impact that cruise ships have to the NSW economy. The study is included in Attachment

12 and is an analysis of the average level of expenditures incurred per passenger per day (<24 hours)

in Sydney. The study reports the total direct, indirect and induced financial revenues and economic

impacts generated by each ship call.

The average daily expenditures by cruise ship passengers, related to both direct and indirect

(multiplier) expenditures effects for Sydney is $299. This number represents a direct and indirect

expenditure flow, which would be lost to the NSW economy if a cruise ship could not be berthed

because of capacity constraints. If a vessel with gross tonnage over 80,000 GT could not be berthed

the total loss of financial revenue / economic benefit would be at least $309,000.

A report undertaken by Access Economics on behalf of Carnival Australia in December 2009 also

reported on the direct and indirect contribution made by passengers to the New South Wales

economy. The estimated daily spend determined in this report is $304 per passenger.

The Crown Project and Carnival commissioned report expenditure figures variance is 2%.

The table below utilises the daily spend of $299 (with a total loss of revenue per vessel of $309,000)

and calculates the potential loss of revenue to the NSW economy based on the gap analysis statistics

presented on page 17.

Medium Growth Scenario 1- Vessels unable to be serviced based on two day berth for round the

world segment

Oct Nov Dec Jan Feb Mar Apr Total

2010 0 0 0 0 0 0 0 0

2015 0 0 0 0

1,236,000 0 0 $ 1,236,000

2020 0 0

927,000

1,545,000

4,635,000 0 0 $ 7,107,000

2025 0

4,944,000

5,871,000

5,562,000

9,270,000

3,090,000

618,000 $29,355,000

2030

1,545,000

7,107,000

8,652,000

8,034,000

12,360,000

4,944,000

1,854,000 $44,496,000


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ATTACHMENT 1 – PASSENGER CRUISE TERMINAL STEERING COMMITTEE TERMS OF

REFERENCE

TERMS OF REFERENCE

Objective:

The Objective of the Steering Committee is to:

� confirm the long term growth projections for the cruise shipping industry in Sydney Harbour,

and

� make recommendations to cater for that growth.

Process:

To achieve the Objective, the Steering Committee will undertake the following work:

� Review existing information on the cruise industry’s existing and projected capacity

requirements for both the seasonal and year round cruise markets.

� If necessary, undertake additional research to confirm/validate cruise passenger dynamics and

projected future capacity requirements for both seasonal and year round cruise markets.

� Collate the findings of all information and identify shortfalls, if any, in the provision of existing

infrastructure to cater for future demand.

� Recommend the nature, extent and potential location of new infrastructure and

enhancements to existing facilities which will be required to meet the future demands of the

cruise industry, cruise shipping passengers and the broader tourism industry including

identification of potential improvements to OPT. Regard will be had to shoreside

infrastructure requirements (passenger, tourist, servicing access/transport) and harbourside

infrastructure requirements (refuelling).

� Identify and investigate potential locations for additional passenger cruise terminals for the

inner harbour (west of Sydney Harbour Bridge) and outer harbour (east of Sydney Harbour

Bridge).

In respect of each potential location:

� Conduct a cost benefit analysis for the environment, local community, the economy and

shipping industry;


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� Conduct an assessment of land transport requirements and connections necessary for each

site which includes access, parking and provisioning (with input from the Department of

Transport and Infrastructure);

� Conduct an assessment of potential tourism and passenger amenity requirements and

opportunities in relation to each site;

� Conduct an assessment of the impact of any potential cruise terminal location on other

harbour users, including an assessment of the navigation safety requirements for each

location;

� Conduct an assessment of the security, border agencies and/or Defence requirements of any

new facility both shoreside and harbourside from a Commonwealth and State perspective;

� Conduct an assessment of the potential impact of proposed infrastructure on existing land

ownership/occupants;

� Undertake a high level financial costing analysis of each potential site and identify potential

funding sources from the cruise industry and other commercial opportunities.

� Engage where appropriate with relevant stakeholders.

� Provide a report to the Minister for Planning which incorporates responses to the Terms of

Reference and makes recommendations for the consideration of the Minister and Cabinet.

� In doing so the Steering Committee will, as requested by the Minister, prioritise its work in

relation to potential permanent infrastructure west of Sydney Harbour Bridge and provide a

Part A report to the Minister within three months in relation to inner harbour facilities;

� The Part A report will be followed within a further three months by a Part B report to the

Minister in relation to outer harbour facilities.


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ATTACHMENT 2 – PASSENGER CRUISE TERMINAL STEERING COMMITTEE MEMBERSHIP

Sydney Harbour Foreshore Authority Mike Collins (Chair)

Carnival Australia Ann Sherry AO, Chief Executive Office,

John Nell, Director Shore Operations (alternate)

Tourism and Transport Forum (TTF) John Lee, Chief Executive Officer

Chris Brown, Managing Director (retired December 2010)

Royal Australian Navy Andrew Mackinnon, Director Navy Infrastructure Plans

Gerry Savvakis, Port Services Manager

NSW Maritime Tony Middleton, Deputy Chief Executive

Daniel Rath, Principle Policy Officer (alternate)

Sydney Ports Corporation Grant Gilfillan, Chief Executive Officer

Annette Woods, Executive General Manager (alternate)

Tourism NSW Lyndel Gray, Executive Director and General Manager

Alan McGuigan (alternate)

Royal Caribbean Cruises Australia Gavin Smith, Managing Director

John Richardson (alternate)

Shipping Australia Limited Llew Russell AM, Chief Executive Officer

Technical and Administrative Support to the Steering Committee was provided by:

Sydney Harbour Foreshore Authority Diana Talty – Director Strategic Developments

Nick Fterniatis – Senior Place Planner

Nicole Hudson – Administration Officer


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ATTACHMENT 3 – STEERING COMMITTEE MEETINGS HELD AND SITE INSPECTIONS

Meeting Date Location:

Meeting 7, 14 January 2010 Foreshore House, 66 Harrington St, The Rocks

Meeting 8, 15 February 2010 Foreshore House, 66 Harrington St, The Rocks

Meeting 9, 26 March 2010 Foreshore House, 66 Harrington St, The Rocks

Meeting 10, 4 May 2010 Foreshore House, 66 Harrington St, The Rocks

Meeting 11, 30 June 2010 Foreshore House, 66 Harrington St, The Rocks

Meeting 12, 30 July 2010 Foreshore House, 66 Harrington St, The Rocks

Meeting 13, 16 December 2010

Meeting 14, 31 January 2011

Foreshore House, 66 Harrington St, The Rocks

Foreshore House, 66 Harrington St, The Rocks

SITE INSPECTIONS

On 30 September 2009 the Steering Committee carried out an inspection by water & land at GI

The following Steering Committee members (or delegate) attended the site inspection:

Mike Collins Sydney Harbour Foreshore Authority

Chris Brown

Grant Gilfillan

Andrew Mackinnon

Tony Middleton

Tourism & Transport Forum

Sydney Ports Corporation

Royal Australian Navy

NSW Maritime

Sandy Olsen Carnival Cruises


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John Richardson Royal Caribbean Cruises

Gerry Savvakis

Gavin Smith


Royal Caribbean Cruises

Alan McGuigan NSW Tourism

Also in attendance were:

Di Talty Sydney Harbour Foreshore Authority

Nick Fterniatis Sydney Harbour Foreshore Authority

Nicole Hudson Sydney Harbour Foreshore Authority

Annette Woods Sydney Ports Corporation

On 15 February 2010 the Steering Committee carried out a site inspection of the Overseas

Passenger Terminal at Circular Quay.

The following Steering Committee members (or delegate) attended the site inspection:

Mike Collins Sydney Harbour Foreshore Authority

Chris Brown

Andrew Mackinnon

Tony Middleton

Tourism & Transport Forum


NSW Maritime

John Nell Carnival Cruises

Llew Russsell Shipping Australia Pty Ltd

Gavin Smith Royal Caribbean Cruises

Dominica Nelson Delegate for NSW Tourism


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Also in attendance were:

Di Talty Sydney Harbour Foreshore Authority

Nick Fterniatis Sydney Harbour Foreshore Authority

Nicole Hudson Sydney Harbour Foreshore Authority

Annette Woods Sydney Ports Corporation

Heather Mattes Sydney Ports Corporation


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ATTACHMENT 4 – FUTURE ACCOMODATION OF CRUISE SHIPS IN SYDNEY WORKING PAPER 1

This working paper was completed in June 2010. The growth projections for both vessels and

passengers noted in the body of the report have subsequently been updated to reflect the confirmed

Sydney Ports bookings for passenger vessels from 2011 to 2013.

Cruise Terminal Steering Committee

Future Accommodation of Cruise Ships in SydneyWorking Paper 1

June 2010

Future Accomodation of Cruise Ships in SydneyCruise Passenger Industry

Contents

1. Executive Summary 4

2. Introduction 8

3. Growth Prospects of World Cruise Shipping 9

3.1 Industry trends 9

3.2 Cruise Passenger Growth 9

4. The World Cruise Ship Fleet 11

4.1 Cruise Ship Fleet Characteristics 11

5. Cruise Shipping Operations in Sydney 12

6. Cruise Shipping Growth Prospects in Sydney 16

6.1 Data Sources 16

6.2 Methodology 16

6.3 Assumptions and Parameter Values 17

6.4 Vessel and Passenger Projections 21

6.5 Recommendations to the Committee on Demand Assumptions 28

Cruise Ships Fleet Prospects 33

Table IndexTable 1 Assumed Market Penetration 5Table 2 Summary Forecast 6Table 3 Calls by vessels with Air Draft Restriction 7Table 4 Projected World wide Growth of Cruise Passengers

in the Short Term 10Table 5 Market Penetration 18Table 6 Seasonal Segment – Growth Parameters 19Table 7 Round the world Segment – Growth Parameters 20Table 8 Home Port Segment – Growth Parameters 21Table 9 Summary Forecast 21Table 10 Summary by Operating Segments and Growth

Scenarios 23Table 11 Site Occupation Time by Business Segments 24Table 12 Vessels with Air Draft Restriction 26


Table 13 Vessel order book 33

AppendicesA Estimated passenger growth in the medium termB Top Cruise BrandsC World Cruise Fleet CharacteristicsD References

4Future Accomodation of Cruise Ships in SydneyCruise Passenger Industry

1. Executive Summary

The passenger cruise industry is very positive regarding the prospects of future growth in the Australianmarket but is concerned about the capacity of facilities in Sydney to accommodate this growth. Aparticular concern is that the size of cruise ships visiting Sydney will increase, and a greater proportion ofvessels will be unable to pass under the Sydney Harbour Bridge, placing additional stress on facilities tothe east of the bridge.

The current study will assist the Cruise Terminal Steering Committee in analysing the likely futuredemand including:

future growth of cruise shipping in Sydney

the dimensions of the vessels that are likely to be deployed;

strategies for managing future demand;

the need for additional cruise shipping facilities; and

the nature of the additional facilities that will need to be provided.

The study is not intended to develop a business case for particular facilities, but rather to present anexploratory analysis that will help define the scale and type of facilities most appropriate to the futureneeds of the cruise industry in Sydney.

The forecasts presented in the working paper are based on our current understanding of the structureand drivers of demand, taking into account stakeholders’ views and the growth trends in the industry.They are provided in order to ascertain what demand assumptions should underlie future planning forcruise shipping in Sydney.

Key Factors Supporting Vessel and Passenger Growth Prospects at Sydney

The Australian cruise market has experienced consistent growth through the last decade, with 11 percent yearly average growth of passengers for the period to 2009. There is scope for continued stronggrowth as the market is regarded as relatively immature compared to the well-established NorthAmerican and European markets.

Major cruise operators such as Carnival and Royal Caribbean have experienced strong growth,especially in the Sydney market. Port calls have consistently grown since 2001 with an averageyearly growth of 6.2 per cent to 2009. Higher growth is expected for the next two years taking theoverall yearly growth for the period 2001-2012 to about 7.6 per cent per year.

The size of cruise vessels calling at Sydney has changed substantially, reflecting world trends, with asignificant increase in visits from larger vessels, particularly in the 50,000 to 70,000 GT range.However, the number of vessels over 80,000 GT is expected to grow significantly. Most of thesevessels will not be able to sail under the Sydney Harbour Bridge and would have to beaccommodated at the OPT or somewhere else on the east of the Sydney Harbour Bridge.

Internationally, cruise passenger volumes are also expected to grow across the key traditional worldmarket segments of America and Europe, but the strongest growth in the short term is anticipated inthe emerging markets grouped by Cruise Market Watch as 'Rest of the World', which includes


Australia. Short term growth (2010 to 2013) in this region from is expected to be 7.9 per cent perannum, a rate significantly higher than the anticipated global industry growth of 4.9 per cent duringthat period.

The long-term industry growth to 2020 presented by Ocean Shipping Consultants is also verypositive, with Europe and Asia leading the expected growth by cruise region, especially from EastAsia where high yearly growth is expected in China, Taiwan and South Korea. The Asia Pacificregion, which includes Australia, has been identified as an area of growth potential.

Market Penetration

Market penetration has been calculated for Australian passengers exchanged in Sydney, against the totalof Australian population including its projection to 2026. Sydney is estimated to be 60 per cent of theAustralian market, with this share of the market assumed to remain steady throughout the life of thestudy.

Industry estimates provided during stakeholder discussions suggest that a market penetration of up to 5per cent is achievable. The market penetration in Sydney for Australian passengers only for the BaseCase is calculated at 1.4 per cent in 2015, increasing to 2.4 per cent in 2020. This provides an equivalentmarket penetration in Australia of about 2.3 per cent in 2015 and 3.2 per cent in 2020, corresponding to ayearly average growth in Australian passengers of 10.0 percent to 2015 and 9.0 per cent to 2020. Afurther increase to 4.4 per cent is assumed by 2030. Details of market penetration assumption forAustralian passengers in each growth scenario are shown in the following table.

Table 1 Assumed Market PenetrationAustralian Passengers ONLY 2010 2015 2020 2025 2030

Low GrowthMarket penetration in Sydney – Australian passengers only 0.7% 1.2% 1.4% 1.5% 1.6%

Equivalent Market Penetration in Australia 1.2% 2.0% 2.4% 2.6% 2.7%Base Case

Market penetration in Sydney – Australian passengers only 0.7% 1.4% 1.9% 2.4% 2.6%Equivalent Market Penetration in Australia 1.2% 2.3% 3.2% 4.0% 4.4%

High GrowthMarket penetration in Sydney – Australian passengers only 0.7% 1.5% 2.4% 3.5% 4.1%

Equivalent Market Penetration in Australia 1.2% 2.4% 4.0% 5.8% 6.9%

Vessel and Passenger Forecasts

Cruise shipping activity in Sydney consists of three operating segments with different seasonal callingpatterns. Vessels within the Home Port segment are based in Sydney, and their calling pattern is smoothand spread across the year. Vessels within the Seasonal segment are based in Sydney for regionalcruises typically between October and April, peaking during Australia’s summer season, with morefrequent calls in the months of January and February. In the Round the World cruise segment seasonalityis more pronounced, with a strong preference for calls in the peak summer months.


In the Base Case scenario, it is anticipated there will be a yearly growth of over 15 per cent on vesselcalls and 17 per cent in passenger numbers to 2015, reflecting primarily the strong growth anticipated for2010/11 and 2011/12. Sustained growth is anticipated through the 2106-2020 period, with yearly averageexpansion rates of 6.5 per cent for vessel calls and 8.2 per cent for passengers. By 2020, marketpenetration in Australia is expected to reach 3.2% (equivalent to over 485,000 Australian passengers).Growth for vessel calls and passenger numbers is anticipated to continue at a rate of 4.1 per cent and 5.2per cent respectively per year to 2025, as there are still opportunities for increasing the marketpenetration beyond the 3.2 per cent reached in 2020. Growth is then expected to decrease reflectinggeneral world growth.

The following table provides vessel calls and passenger forecast detail under various growth scenarios.

Table 2 Summary Forecast

All Operating Segments Year ended 30 June Average Yearly GrowthGrowthScenarios

2010 to 2015 to 2020 to 2025 to 2030 to 2015

to2020

to2025

to2030

Low Growth 116 210 242 265 291 12.6% 2.9% 1.8% 1.9%

Base Case 116 236 323 395 445 15.3% 6.5% 4.1% 2.4%VesselCalls

High Growth 116 259 401 565 698 17.4% 9.1% 7.1% 4.3%

Low Growth 214,730 419,267 521,714 602,953 680,175 14.3% 4.5% 2.9% 2.4%

Base Case 214,730 470,272 696,748 899,581 1,042,860 17.0% 8.2% 5.2% 3.0%Passengernumbers

High Growth 214,730 511,937 861,984 1,288,189 1,637,827 19.0% 11.0% 8.4% 4.9%

Cruise vessel calls are expected to triple by 2019/20 under the Base Case scenario compared to 2009/10results, with most growth expected across Home Port and Seasonal operating segments. Vessel calls areanticipated to remain largely dominated by Home Port calls with about 56 per cent of the total callsexpected in 2019/20, whilst Seasonal and Round-the-World segments are expected to generate 30 percent and 14 per cent of total calls respectively. The share of total calls is expected to remain fairly steadyalthough with a slight share gained by Home Port calls at the expense of the other operating segments.

Air Draft Restricted Port Calls

It is important to distinguish vessels that may have air draft restrictions and are therefore unable to sailunder the Sydney Harbour Bridge. The study assumes, as a general rule, that vessels over 80,000 GTwill have to be accommodated somewhere east of Sydney Harbour Bridge. These vessels are expectedto increase in number following the growth in vessel calls as well as the general trend of increases invessel size.

The air draft restriction issue also has the potential to affect, for the first time, vessel operations in theHome Port operating segment, when older vessels are replaced by newer, larger vessels. The followingtable provides expected vessels with air draft restrictions under various vessel growth scenarios.


Table 3 Calls by vessels with Air Draft Restriction2010 2015 2020 2025 2030

Low Growth 20 70 137 219 246

Base Case 20 78 180 324 372

High Growth 20 86 225 464 585

Recommendation to the Committee on Demand Assumptions

It is recommended that the estimates developed for each of the operating segments form the basis fordetermining what demand assumptions should underlie future planning for cruise shipping in Sydney.

Next Project Steps

Once agreed by the Steering Committee, the future demand scenarios will form the basis for theremainder of the analysis, which will be structured under three growth scenarios (low, base case, andhigh growth scenario).

The future demand for cruise ship services will be translated into a demand for port infrastructure whichwill be expected to be mediated in the first place by demand management strategies to be adopted by theport. This will include the development of a range of measures that are or could be used to manage thedemand for port infrastructure; exploring how they might be applied in the Sydney context; and making apreliminary assessment of the likely effect of each measure on demand patterns.

Once a range of possible demand management measures has been identified, further discussions will beheld with industry stakeholders to obtain their views on the expected effectiveness of each managementmeasure in moderating the impact of demand growth on port infrastructure, and the likely commercialconsequences for cruise operators.

Taking into account industry feedback, we will prepare and submit to the Steering Committee a shortworking paper (Working Paper 2) outlining the available demand management alternatives, their likelyimpact on demand for port infrastructure and the likely level of industry support.

Steering Committee agreement on the demand management assumptions will underlie future analysisand the estimation of vessel calls to port facilities taking into account the proposed demand measures,including seasonality, under each demand scenario. This will lead us to the development of draftspecifications for port facilities that will be required to service the needs previously identified. This will beachieved through consultation with industry representatives in order to solicit ideas for improvement in theaccommodation concept. A draft report outlining the preliminary facility specifications will be prepared andsubmitted to the Steering Committee.


2. Introd uction

The Australian cruise industry does not exist in an isolated market place but impacted by global factorsaffecting the industry. With this in mind, the international context is examined in Sections 2 and 3 of thisreport in order to ascertain cruise industry trends, fleet characteristics, and growth prospects that mayimpact on our local market. Industry trends in vessel design and characteristics are discussed. It shouldbe noted that this is to provide an indication of world trends, which are not necessarily applicable toSydney and/or or Australia.

In Section 4, the paper discusses in detail current cruise shipping operations in Sydney, covering keyaspects such as business segments, key players, fleet characteristics, berth locations, industryseasonality and air draft restrictions.

The analysis leads to a discussion (in Section 5) of the cruise shipping growth prospects in Sydney,starting with a brief explanation on data sources, methodology and forecast model structure, modelassumptions, and parameter values used in preparing vessel and passenger forecast.

The forecasts presented are based on our current understanding of the structure and drivers of demand,taking into account stakeholders’ views, and the growth trends in the industry. They are provided inorder to ascertain what demand assumptions should underlie future planning for cruise shipping inSydney. The vessel calls forecast represents unconstrained demand for cruise shipping at the port; boththe number of calls and vessels characteristics may be modified by the physical constraints of the portfacilities and the berthing options that may be available.

Although some of the discussion is framed in terms of gross tonnage, the report acknowledges that thekey issues that may impact on port facilities are the vessels’ capacity, Length Over All (its capability to fitalong the quay line) and air draft (its capability to sail under the Sydney Harbour Bridge). However, thegross tonnage of the vessels and its trend is correlated (although not perfectly) to vessel capacity anddimensions. Changes in vessel gross tonnage will therefore, on average, be reflected in increases incarrying capacity, vessel length and air draft.


3. Growth Prospects of World Cruise Shipping

The world cruise shipping industry is experiencing strong growth. This is being driven by a number offactors including:

Increasing range of cruise types and itineraries;

Increased affordability of cruises in many key markets;

The introduction of larger cruise ships with more passenger facilities;

Continued propensity for global leisure travel;

Increasing economic wealth in populous Asian economies;

Capacity to quickly re-deploy ships in growing geographical regions and market segments.

Cruise Market Watch1 has recently released the 2010 cruise line market share and revenue projections,together with highlights for 2010 as follows:

Total worldwide cruise passenger capacity will increase to 417,000 berths, 7.0 per cent growth over2009.

Annualized total passengers carried worldwide in 2010 are estimated at 18.4 million.

The total worldwide cruise market to reach $26.8 billion in revenue, a 7.4 per cent increase from2009.

3.1 Industry trendsThe industry has continued to become more concentrated in a small number of major operators, withthe top 13 cruise lines accounting for 75 per cent in terms of passenger capacity.

New fleet additions are set to lead to increased market concentration for some of the top brands, withthe top 13 lines accounting for almost all new cruise ship capacity on order throughout the world.

The dominance of the large vessel market by the top individual lines is highlighted with the 3 majorgroups (Carnival Group, Royal Caribbean Line, Star Group) accounting for a combined 93 per cent ofall vessels with a capacity of over 1500 berths

The world’s leading cruise ports include both home ports from which individual cruise ships or linesoperate, and ports of call included in vessel’s cruise itineraries. Some ports are included in bothcategories, but in terms of passenger volumes, home-ports dominate the rankings.

3.2 Cruise Passenger GrowthCruise passenger volumes are expected to grow across the key traditional world markets segments ofAmerica and Europe, but the strongest growth in the short term is anticipated in the emerging marketsgrouped by Cruise Market Watch as 'Rest of the World'. Growth in this region through to 2013 isexpected to be almost double the growth of the North American market, as shown in the following table.

1 the official newsletter of Cruise Shipping Miami


Table 4 Projected World wide Growth of Cruise Passengers in the Short TermYearly Growth Growth 2007 to

2010Growth 2013 Vs

2010Growth 2007 to

20132008 2009 2010 Yearly Total Yearly Average Yearly

GrowthNorth America 5.6% 0.2% 7.9% 4.5% 13.5% 4.3% 4.4%

Europe 10.5% 5.3% 2.5% 6.1% 16.0% 5.1% 5.6%

Rest of the World 11.3% 11.8% 11.6% 11.5% 25.7% 7.9% 9.7%

Total 7.4% 2.7% 7.0% 5.7% 15.6% 4.9% 5.3%

Source: Cruise Market watch, Cruise Shipping Miami

The combination of an attractive vacation value and new ship designs is anticipated to provide theopportunity to introduce new cruises, and provide stimulus for industry growth with passenger volumesprojected to reach 21.3 million passengers by 2013, a 15.6 per cent increase from 2010.

A key industry success factor is the flexibility to move the ships to match demand, repositioning vessels towhere the best yields can be achieved. Projected passenger growth in the short term is depicted in thefollowing graph.

The global recession has had a greater effect on the American market which grew only 0.2 per cent in2009, but there are expectations of a strong recovery in 2010, providing growth for the period 2007-2013of about 4.4 per cent per year. This will be driven by shorter cruises, more local ports and moredestinations matching consumer demand. However, the Rest of the World market is anticipated to growth9.7 per cent per year over the same period, with larger growth expected from Asian markets.

The Medium Term passenger growth outlook has been articulated in some detail by Ocean ShippingConsultants (OSC) in its report “The World Cruise Shipping Industry to 2020”. Europe and Asia areleading the expected growth by cruise areas, especially from East Asia where high yearly growth isexpected mainly in China, Taiwan and South Korea. Total world cruise passenger is expected to grow 4.5per cent per year to 2015, and about 3.75 per cent per year to 2020. Details of the growth for mostregional markets, as estimated by OSC, are presented in Appendix A.


4. The World Cruise Ship Fleet

The world cruise ship fleet has previously been run by a large number of individual cruise lines. However,the industry has become increasingly concentrated in a small number of major operators over the pastdecade. This market consolidation has accelerated in recent years through mergers and take-overs, andthe cessation of operations of several smaller lines. Currently, the world cruise market is largelydominated by Carnival and to a lesser extent by Royal Caribbean, each of which operates a number ofbrands across different world markets.

Carnival is the largest cruise operator with 6 top cruise brands, comprising 25 per cent of the total cruisefleet, but with a larger share of berth capacity, estimated at 41 per cent respectively. Royal Caribbean isthe second largest group operating two brands and holding 17 per cent of berth capacity. A detail of topcruise brands is presented in Appendix B.

4.1 Cruise Ship Fleet CharacteristicsMost of the key fleet analysis presented in this Working Paper is related to vessel’s gross tonnage (GT).Although our area of interest is more aligned with other characteristics such as vessel length over all(LOA) or air draft, information on gross tonnage is more comprehensively and consistently available.Gross tonnage has therefore been used as the initial indicator of trends in vessel size. However, despitesignificant variation between vessels, vessels with a higher gross tonnage will, on average, have greaterberth capacity. They will also tend to be longer and to have a greater air draft. For instance, most vesselsover 80,000 GT would have an air draft close to or exceeding 50 metres (a limiting factor for sailing underSydney’s Harbour Bridge).

The world cruise fleet presents the following key characteristics:

Most vessels added to the current fleet in the last four years, are over 60,000 gross tonnage, withmany vessels over 100,000 GT.

Passenger capacity is strongly correlated to vessel size and, because vessel size has beenincreasing steadily, with vessel age. Thus, most of older vessels within the fleet (that is, those over 20years old) have a capacity of less than 999 passengers (83% of vessels in this age bracket).Consistent with increase in size and new vessel design, passenger capacity has increasedsubstantially especially in the last decade with most fleet additions above the 60,000 GT mark, havingover 2000 berths per vessel

The trend for larger vessels with increasing passenger capacity has strengthened in the last fewyears, and is expected to continue, at least in the short term. There is no clear evidence, at this stage,of vessels reaching maximum or ideal capacity with respect to economies of scale. However, vesseldesign may be constrained by the availability of adequate port facilities at key world ports. Thus,larger vessels may be designed primarily to serve specific market niches.

Details of world cruise fleet including information on vessels by year of built; number of vessels by sizegroup and age; fleet by passenger capacity; and cruise ship fleet prospects are provided in Appendix C.


5. Cruise Shipping Operations in Sydney

Australia and the South Pacific market represent less than 4 per cent of the global cruise market.However, the Australian cruise industry market has experienced consistent growth through the lastdecade. There is scope for continued strong growth, as the market is regarded as relatively immaturecompared to well established North American and European markets.

The cruise industry has experienced strong growth in the Sydney market in the period 2000/01 to2008/09, with an average yearly growth of 11 per cent in passenger numbers and 6.2 per cent growth invessel visits. During the same period, vessels deployed to serve this market have been increasing in size,consistent with world trends, with 14 per cent average yearly growth of GT deployed.

Graph 1 Historical Passenger numbers, Gross Tonnage and Vessel Visits

0

50,000

100,000

150,000

200,000

250,000

2001 2002 2003 2004 2005 2006 2007 2008 2009

To 30 June

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

8,000,000

9,000,000

Passengers (Left Axis) Gross Tonnage (Right Axis)

0

20

40

60

80

100

120

140

2001 2002 2003 2004 2005 2006 2007 2008 2009

To 30 June

Vess

el C

alls

Operationally, there are three broad cruise ship operating segments2:

Home port vessels: these ships are based in Sydney and most of their passengers join and leave thecruises in Sydney. These vessels carry a mix of locally-based passengers and passengers who fly ordrive to Sydney to join the cruise.

Seasonal vessels: these ships are based in Sydney for between 3-6 months during peak season.During this time they operate full exchanges using an operating structure similar to the Home Portvessels. Operationally, the key difference between Home Port and Seasonal vessel call type is themajority of Seasonal vessels are not able to sail under the Sydney Harbour Bridge, therefore theymust operate from OPT at Circular Quay.

Round-the-World cruises: these vessels operate more or less continuously on a round the worlditinerary. Passengers may join the cruise for a segment of the journey. For instance, they may join thecruise in Los Angeles and disembark in Sydney; or they may book for a full trip. In almost all cases

2 Operators disaggregate the market in different ways for the purposes of market analysis and product development. We havetherefore used the term operating segments, rather than market segments, to distinguish the different operational patterns thathave commonly been used in discussion of the cruise industry in Sydney.


the Sydney call will involve some level of passenger exchange (i.e. some embarking, somedisembarking).

The Home Port calls segment is the largest cruise segment in Sydney, with calls representing 50 per centof total cruise calls. Round the World and Seasonal calls are equally divided, representing 25 per centeach of current cruise calls.

The following graph depicts historical cruise shipping calls in Sydney by operational segment.

Graph 2 Cruise Shipping Calls in Sydney

0

10

20

30

40

50

60

To 30 June

Vess

el Cal

ls

Home Port 40 37 38 38 30 42 43 56 59

Round-The-World 28 17 37 32 32 43 40 30 30

Seasonal 5 5 15 10 5 5 5 12 29

2001 2002 2003 2004 2005 2006 2007 2008 2009

Typically, Home Port calls are mostly made to berths west of the Sydney Harbour Bridge. Currently thereis no air draft restriction to any Home Port vessel and there is also no restriction applied to any Home Portvessel scheduled for calling into Sydney under the current Sydney Ports’ Vessel Booking system.

Graph 3 Vessel Calls by Berthing location

0

20

40

60

80

100

120

to 30 June

Vess

el Calls

S - West of Bridge 4 4 9 4 0 0 0 0 4

S - East of Bridge 1 1 6 6 5 5 5 12 25

R - West of Bridge 13 8 20 21 19 22 16 11 5

R - East of Bridge 15 9 17 11 13 21 24 19 25

H - West of Bridge 37 34 34 38 28 40 40 51 54

H - East of Bridge 3 3 4 0 2 2 3 5 5

2001 2002 2003 2004 2005 2006 2007 2008 2009

Seasonal vessels are primarily calling at east of Sydney Harbour Bridge, whilst Round–the-World vesselshave been calling at berths both east and west of the Bridge. Since 2001 air-draft restrictions haveapplied to some vessels in this segment. The increasing number of vessels over 80,000 Gross Tons thathave been recently added to the fleet makes it likely that there will be an increased frequency of calls to


Sydney by larger vessels. These vessels will be restricted to use the OPT or another facility east of theSydney Harbour Bridge. The following graph depicts historical vessel calls to Sydney with air draftrestriction.

Graph 4 Ship Calls with Air Draft Restrictions

3 3 3 42

3 4 4

9

3 45 5

12

22

3 3 3

76

89

16

31

0

5

10

15

20

25

30

35

2001 2002 2003 2004 2005 2006 2007 2008 2009

To 30 June

Ves

sel C

alls

Round-the-World Seasonal Total

The GT range of cruise vessels calling at Sydney has changed substantially during the period 2001-2009,as shown in the graph below. The number of cruise vessels less than 50,000 Gross Tons has decreasedsubstantially since 2007, with a significant increase of calls from larger vessels, particularly vessels in the50,000 to 70,000 GT range. These vessels do not have restrictions for sailing under the Sydney HarbourBridge. Restrictions can apply to vessels close to or in excess of 80,000 Gross Tons, but this depends ontides, weather, air draft, vessel design, and other conditions that the Harbour Master and ShippingManager take into account.

The 80,000 plus vessel GT ranges are expected to have significant growth in the future. In general anyvessel on the 80k GT range and over would have to be accommodated at the OPT or somewhere on theeast of the Sydney Harbour Bridge.

Graph 5 Ship calls by GT range

0

20

40

60

80

100

120

2001 2002 2003 2004 2005 2006 2007 2008 2009

To 30 June

Vess

el C

alls

< 30k >30 < 60k >60k < 80k > 80k < 100k >100k < 120 k > 120 k


The three operating segments have different seasonal calling patterns. Vessels within the Home Portsegment call at Sydney all year round, so their calling pattern is smooth and spread across the year.Vessels within the Seasonal segment are based in Sydney for regional cruises typically between Octoberand April, peaking during Australia’s summer season, with more frequent calls in the months of Januaryand February. Seasonality is more pronounced for vessels operating in the Round the World cruisesegment, with a strong preference for callings in the peak summer months. The following graph depictsthe average historical seasonality of cruise passenger calls by operating segment.

Graph 6 Call Frequency Pattern by Cruise Passenger Segments

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

July Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Home Port Round The World Seasonal

Changes in the fleet composition through the period 2001 to 2009 have followed world trends, withvessels calling at Sydney increasing in size and berth capacity. As previously mentioned, passengernumbers grew at a yearly average of 11 per cent, while vessel calls grew by a yearly average of 6.2 percent. The increase in passengers has therefore been managed by a combination of larger vesselsservicing the market, and by an increase in vessel visits. The average number of passengers per cruisevessel depicted in the following graph shows a steady increase since 2005, which has been intensified bychanges in the Home Port fleet.

Graph 7 Average Number of Passengers per Cruise Vessel

1,300

1,400

1,500

1,600

1,700

1,800

1,900

2001

2002

2003

2004

2005

2006

2007

2008

2009

Year to 30 June

Pass

enge

rs


6. Cruise Shipping Growth Prospects in Sydney

This section deals with the growth prospects for the cruise shipping industry in Sydney. It is divided intothree major parts. The first part explains the data sources used for the preparation of demandprojections; in the second part, the methodology underlying the projections is explained, followed by adiscussion on the assumptions and parameter values used for the forecasts; and in the third part, theresulting projections are presented.

The demand projections presented in this paper are based on our current understanding of the structureand drivers of demand, taking into account growth trends in the industry. The projections are provided inorder to ascertain what demand assumptions should underlie future planning for cruise shipping inSydney. The vessel calls projection represent the unconstrained demand for cruise shipping at the portof Sydney; both the number of calls and vessels characteristics may be modified by the physicalconstraints of the port facilities and the berthing options provided to the industry.

As with the discussion of trends in the world fleet, because data is more comprehensive and reliable,some of the discussion is framed in terms of the growth in vessels’ gross tonnage. The key issues thatmay impact on port facilities are the vessel's passenger capacity, Length Over All (its capability to fitalong the quay line) and air draft (its capability to sail under the Sydney Harbour Bridge). However, thegross tonnage of the vessels and its trend is correlated (although not perfectly) to vessel dimension andcarrying capacity. For the purpose of the analysis, a proxy of 80,000 GT has been used to indicate themaximum air draft limit for vessels able to sail under the Sydney Harbour Bridge.

6.1 Data SourcesThe primary source of data comprises an excel-based data from Sydney Ports Corporation, of passengervessels visiting Sydney for the periods 2000/01 to 2009/10 together with current and expected calls forthe FY 2009/10 and firm bookings for 2010/11 and 2011/12. The data set contains details of each vesselcall including, among other things, vessel name, GT, berth, arrival/departure dates and (in some cases)passenger exchanges.

Carnival has provided an industry forecast under various growth scenarios. The data was especiallyvaluable for completing and improving the data field related to passenger exchanges per vessel call, andestimation of future fleet replacement.

Passenger growth prospects have been selectively sourced from “Cruise Market Watch” for the short-term outlook, whilst the long-term outlook has been partially based on passenger growth prospectssourced from Ocean Shipping Consultants. Also, following consultation with the Steering Committee,further upwards adjustment has been made to the high growth scenario, addressing stakeholder’sexpectation of potential strong growth. These growth rates will be presented in detail in the followingsections.

Current and projected Australian population is based on ABS data.

6.2 MethodologyThe key driver of the demand projections is passenger growth, which has been split into two growth rates,one for Australian passengers, and one for non-Australian passengers. This split applies to each of the


three key operating segments (Home Port, Seasonal, and Round-the-World). The growth rates arestructured as ‘average growth rate” for a 5 year period until 2030.

The passenger vessel data has been structured in the three operating segments and split by variousgross tonnage ranges. For each gross tonnage under each operating segment, three data fields havebeen calculated: number of vessel visits, total passenger exchange, and the average passengerexchange per vessel.

Input tables are used for growth rates for passengers mix (Australians and Non-Australians) and forassigning percentage growth rates for the scenarios of low growth, base case, and high growth acrossthe three operating segments.

Within each operating segment and GT range, the passenger growth rate interacts with the totalpassenger exchange and the calculated average number of passengers per vessel for each GT range.The result of this interaction is the number of vessel calls.

The composition of current and future fleet deployment has been built into the model, taking intoconsideration expected changes in vessel size serving the Sydney market following world trends as wellas expected fleet replacements.

The demand projections are unconstrained: they do not reflect possible impacts on the choice of vesselsfrom operating constraints within the port. In practice, vessel deployment will be strongly influenced bythe physical constraints of the port facilities at the time.

6.3 Assumptions and Parameter ValuesAlthough it is understood that, for market analysis purposes, the cruise passenger industry uses adifferent segmentation, for practical reasons the assumptions and parameter values have been structuredunder the operating segment concept. The key trend drivers are applied in a similar way to the threeoperating segments, as explained in the following sub-sections.

6.3.1 Market Penetration

Market penetration has been calculated against the total of Australian Population including its projectionto 2026, which has been sourced from Australian Bureau of statistics. The ABS data assumes 1.4 percent yearly growth in population.

Industry estimates provided during stakeholder discussions suggest that an Australian market penetrationof up to 5 per cent is achievable. The market penetration in Sydney for Australian passengers only for theBase Case is calculated at 1.4 per cent in 2015, increasing to 2.4 per cent in 2020This provides anequivalent market penetration in Australia of about 2.3 per cent in 2015 and 3.2 per cent in 2020,corresponding to a yearly average growth in Australian passengers of 10.0 percent to 2015 and 9.0 percent to 2020. A further increase to 4.4 per cent is assumed by 2030. Details of market penetrationassumption for Australian passengers in each growth scenario are shown in the following table.


A detail of market penetration for Australian passengers3 is shown in the following table.

Table 5 Market PenetrationAustralian Passengers ONLY 2010 2015 2020 2025 2030

Australian Population (million) 22.475 23.420 25.083 26.865 28.774

Low GrowthAustralian Passengers only 155,570 281,798 359,145 416,069 470,442

Average Yearly Growth 6.0% 5.0% 3.0% 2.5%Market penetration in Sydney – Australian passengers only 0.7% 1.2% 1.4% 1.5% 1.6%


Base CaseAustralian Passengers only 155,570 316,351 485,863 649,115 752,503



High GrowthAustralian Passengers only 155,570 343,901 604,580 928,761 1,185,004



6.3.2 Seasonal Operating Segment

This operating segment is represented by both Carnival and Royal Caribbean. Carnival passengers inthis segment are typically Australians, whilst Royal Caribbean’s are mostly international passengers, withmany flying to Sydney to join the cruises.

The historical passenger data numbers in this segment shows significant positive and negative passengervariations, with substantial increases expected for 2010/11 and 2011/12 resulting from large callincreases in Royal Caribbean cruises. Passenger growth is expected to be significant for both Australiansand Non-Australian passengers.

Thus, the Base Case growth scenario for Australian passengers for the period to 2015 is set at 10 percent growth, which is consistent with the 8 year historical growth trend to FY 2008/09. This assumption isalso consistent with the perceived immaturity of the local market and the increased preference for leisuretravel. Passenger growth is maintained at 9 per cent yearly average growth until 2020, which is higherthan the expansion rate suggested by Ocean Shipping Consultants (OSC) for most regions, but isconsistent with growth expectations of the local industry.

3 Australia’s market penetration is calculated based on the assumption that Australian passengers exchanged in Sydney represent60% of the total market.


Beyond 2020, the expansion rate for the Base Case for Australian passengers is anticipated to decreaseto 6 per cent per year as the maturation of the market slows down the yearly expansion rate. The BaseCase is to a great extent equidistant to the upper and lower growth scenarios, with the low growthreflecting a potential detrimental impact due to unforseen world events, while the high growth scenarioreflects a larger and prolonged expansionary effect due to a combination of favourable economic andother variables coming into play.

The Base Case Growth scenario for Non-Australian passengers for the short term to 2015 has been setat 7.9 per cent which is consistent with the expected growth for the “Rest of the World” in the passengergrowth prospect released by “Cruise Industry Watch”. The demand projection suggest a 6.5 per centincrease to 2020, which is above most OSC forecast for all regions, except China, reflecting theattractiveness of Australia as tourist destination and the Asia Pacific region. The longer term demandprojection anticipates a slowdown in growth as the market matures and competing destinationsproliferate. The upper and lower growth scenarios reflect similar variables as explained for Australians.

Table 6 Seasonal Segment – Growth ParametersPassenger Mix - Carnival

Australians 90%Non- Australians 10%Total 100%

Passenger Mix - Royal CaribbeanAustralians 15%

Non- Australians 85%Total 100%

2013 to 2015 to 2020 To 2025 to 2030

AustraliansLow Growth 6.0% 5.0% 3.0% 2.5%Base Case 10.0% 9.0% 6.0% 3.0%High Growth 13.0% 12.0% 9.0% 5.0%

Non-AustraliansLow Growth 4.5% 3.5% 3.0% 2.5%Base Case 7.9% 6.5% 3.5% 3.0%High Growth 11.0% 9.0% 7.0% 5.0%

6.3.3 Round-The-World Operating Segment

The Round-the-World segment is comprised of about 14 cruise lines averaging 30 cruises per year, withabout 30 per cent of the cruises attributed to Carnival. The majority of passengers are Non-Australian.

Although the number of cruises has been static for a few years, passenger numbers increased at a rate of7.7 per cent per annum between 2000/01 and 2008/09. Vessel data for the current financial year and thevessel bookings for the next two years do not show any increase in the number of cruises, but it isreasonable to expect additional vessel bookings for 2011/12. The base case growth for Australians andNon-Australians has been set at 7.9 per cent to 2015, which is the growth rate for “Rest of the World” asper the cruise growth forecast from “Cruise Market Watch”. The growth maintains momentum to 2020,


with an expected average growth of 6.5 per cent, and then slows down within the long-term outlook,consistent with OSC long-term forecasts for the global market growth. The upper and lower growthscenarios reflect both favourable and less favourable outlooks.

Table 7 Round the world Segment – Growth ParametersPassenger Mix

Australians 15%

Non- Australians 85%Total 100%

2013 to 2015 to 2020 to 2025 to 2030

AustraliansLow Growth 4.0% 3.0% 2.0% 1.0%Base Case 7.9% 6.5% 3.5% 3.0%

High Growth 10.0% 8.5% 6.5% 4.5%

Non-AustraliansLow Growth 4.0% 3.0% 2.0% 1.0%Base Case 7.9% 6.5% 3.5% 3.0%High Growth 10.0 8.5% 6.5% 4.5%

6.3.4 Home Port Operating Segment

Home Port calls are at present made only by Carnival and serve mostly Australian passengers. Theperformance of this sector has been strong over the last 10 years, with vessel calls growing at 5 per centper annum and passengers growing at 8 per cent per annum over the period 2001/02 to 2008/09. Thegrowth rates are even more significant for the period 2009/10 to 2011/12, supporting the view of afavourable economic environment, increasing preference for leisure travelling, and the current relative lowpenetration in the local cruise passenger market.

The Base Case for Australian passengers has been set within the expectation of continuing high growthper annum based at historical trend growth which is expected to be maintained almost at the same leveluntil 2020. From then on, it is anticipated there will be a slowing down in the market penetration, althoughstill with a growth of 6 per cent per annum to 2025, easing towards a more conservative 3 per cent growthuntil 2030. The upper and lower scenarios reflect the potential favourable and unfavourable events thatmay impact the industry, similar to those previously described for other operating segments.

Non-Australian passengers represent only 15 per cent of this segment, and this is expected to remainsteady during the analysis period. Although it is a relative small share of the business segment, it isimportant to measure its impact and degree of significance at various growth scenarios. Growth for theBase Case is set at 7.9 per cent, which is the growth expected for “Rest of the World” as per CruiseMarket Watch short term forecast. Growth for the period 2016-2020 remains high at 6.5 per cent aboveOSC’s growth rates expected for most regions, but slightly below the 7 per cent expected for East Asia(mostly China), and well above the OSC’s 3.8 per cent growth for the total world cruise passenger.


Table 8 Home Port Segment – Growth ParametersPassenger Mix

Australians 90%Non- Australians 10%Total 100%

2013 to 2015 to 2020 to 2025 to 2030

AustraliansLow Growth 6.0% 5.0% 3.0% 2.5%

Base Case 10.0% 9.0% 6.0% 3.0%High Growth 13.0% 12.0% 9.0% 5.0%

Non-AustraliansLow Growth 4.5% 3.5% 3.0% 2.5%Base Case 7.9% 6.5% 3.5% 3.0%High Growth 11.0% 9.0% 7.0% 4.0%

6.4 Vessel and Passenger ProjectionsThere is a consistent growth expected across the three operating segments under the three growthscenarios. For instance, in the Base Case scenario, it is anticipated there will be a yearly growth of over15 per cent on vessel calls and 17 per cent in passenger numbers to 2015, reflecting the strong growthanticipated for 2010/11 and 2011/12, which is also reflected in Sydney Ports’ Vessel Booking system.Growth for 2012/13 and 2014/15 are projected as per growth parameters described in previous section.Growth is expected to keep momentum until 2020, when some market maturity is reached, calculated atabout 3.2 per cent of market penetration in Australia (over 485,000 Australian passengers). Growth forvessel calls and passenger numbers is anticipated to continue at a rate of over 4.1 per cent and 5.2 percent per year respectively to 2025, as there are still opportunities for increasing the market penetrationbeyond the 3.2 per cent reached in 2020. Growth is then expected to decrease reflecting general worldtrends.

The following table provides vessel calls and passenger numbers under various growth scenarios.

Table 9 Summary Forecast

All Operating Segments Year ended 30 June Average Yearly GrowthGrowthScenarios

2010 to 2015 to 2020 to 2025 to 2030 to 2015

to2020

to2025

to2030

Low Growth 116 210 242 265 291 12.6% 2.9% 1.8% 1.9%


High Growth 116 259 401 565 698 17.4% 9.1% 7.1% 4.3%

Low Growth 214,730 419,267 521,714 602,953 680,175 14.3% 4.5% 2.9% 2.4%

Base Case 214,730 470,272 696,748 899,581 1,042,860 17.0% 8.2% 5.2% 3.0%PassengerNumbers

High Growth 214,730 511,937 861,984 1,288,189 1,637,827 19.0% 11.0% 8.4% 4.9%


Cruise vessel calls are expected to triple by 2019/20 under the Base Case scenario compared to 2009/10results, with most growth expected across Home Port and Seasonal operating segments. Vessel calls areanticipated to remain largely dominated by Home Port calls with about 56 per cent of the total callsexpected in 2019/20, whilst Seasonal and Round-the-World segments are expected to generate 30 percent and 14 per cent of total calls respectively. The share of total calls is expected to remain fairly steadyalthough with a slight share gained by Home Port calls at the expense of the other operating segments.

Projected vessel calls under the three growth scenarios are presented in the following graph.

Graph 8 Passenger Vessel Calls

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20052006

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To 30 June

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el C

alls

HISTORICAL LOW GROWTH BASE CASE HIGH GROWTH

In the financial year 2019-20, 68 per cent of passenger exchanges will be generated by the Home Portsegment, whilst the Seasonal segment is expected to generate 29 per cent, and Round-the-Worldgenerating 7 per cent, with fairly similar share maintained across the analysis period. Overall, cruisepassengers are expected to triple by 2020, compared to 2009/10 results. The following graph depictspassenger numbers under various growth scenarios to 2030.

Graph 9 Total Passenger Numbers

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2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

To 30 June

Pass

enge

rs

Historical Low Growth Base Case High Gowth

The consolidated projection by operating segment is presented in the following table, which provides asummary of vessel calls and passenger numbers under the Low Growth, Base Case and High Growth


scenarios. The projection is the product of the interaction of the data base with a set of parameter valuesdiscussed in detail in the previous section.

Table 10 Summary by Operating Segments and Growth ScenariosYear ended 30 June Average Yearly Growth

GrowthScenarios 2010 to 2015 to 2020 to 2025 to 2030 to

2015To

2020To

2025to

2030

Seasonal Segment

Low Growth 24 63 75 86 96 21.3% 3.5% 2.8% 2.2%


High Growth 24 77 123 175 219 26.3% 9.8% 7.3% 4.6%

Low Growth 48,230 128,493 156,230 181,114 204,914 21.7% 4.0% 3.0% 2.5%

Base Case 48,230 143,289 204,196 253,348 293,699 24.3% 7.3% 4.4% 3.0%PassengerExchange

High Growth 48,230 156,740 252,694 366,776 468,109 26.6% 10.0% 7.7% 5.0%

Round-the-World Segment

Low Growth 24 28 32 33 34 3.1% 2.7% 0.6% 0.6%


High Growth 24 39 54 71 82 10.2% 6.7% 5.6% 2.9%

Low Growth 23,850 29,017 33,639 37,140 40,010 4.0% 3.0% 2.0% 1.5%


High Growth 23,850 38,411 57,756 79,131 98,612 10.0% 8.5% 6.5% 4.5%

Home port Segment

Low Growth 68 119 135 146 161 11.8% 2.6% 1.6% 2.0%


High Growth 68 143 224 319 397 16.0% 9.4% 7.3% 4.5%

Low Growth 142,650 261,757 331,844 384,699 435,251 12.9% 4.9% 3.0% 2.5%


High Growth 142,650 316,786 551,533 842,283 1,071,106 17.3% 11.7% 8.8% 4.9%

Note – larger growth expected in the Seasonal segment for the period 2010-15 is mostly the result of strong vessel bookings from

Royal Caribbean Line

Site Occupation Time and Seasonality

Site time has been calculated on the basis of historical average vessel site occupation time for eachbusiness segment, and it is assumed that the average site time per vessel in each segment will remainconstant during the analysis period (10 hours for Home Port vessels, 20 hours for Seasonal vessels and29 hours for Round-the-World vessels). Site time will interact with the vessels’ frequency call pattern(seasonality) and designated berth in order to determine berth occupancy. This may in turn be influencedby demand management measures: an assessment of the potential use of these measures will be


undertaken in the next stage of the project, once agreement has been reached on the deamndassumptions to be used.

Table 11 Site Occupation Time by Business SegmentsSite Time (Hrs.) 2010 2015 2020 2025 2030SeasonalLow Growth 480 1,260 1,500 1,720 1,920

Base Case 480 1,400 1,960 2,420 2,760

High Growth 480 1,540 2,460 3,500 4,380

Round-the-World

Low Growth 696 812 928 957 986

Base Case 696 986 1,276 1,479 1,566

High Growth 696 1131 1,566 2,059 2,378

Home PortLow Growth 680 1,190 1,350 1,460 1,610

Base Case 680 1,320 1,810 2,230 2,530

High Growth 680 1,430 2,240 3,190 3,970

Grand TotalLow Growth 1,856 3,262 3,778 4,137 4,516

Base Case 1,856 3,706 5,046 6,129 6,856

High Growth 1,856 4,101 6,266 8,749 10,728

Vessels’ Call Frequency Pattern

The current seasonal call pattern for each operating segment has been applied to the projections of futureship calls in order to show low and high periods where cruise calls would require port facilities. Peakperiods are between the months of October to April, peaking in our summer season. The following threegraphs depicts expected vessels’ call frequency pattern under the three growth scenarios.

Graph 10 Vessels’ Calls Frequency Pattern – Low Growth Scenario

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Vess

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2010 2015 2020 2025 2030


Graph 11 Vessels’ Call Frequency Pattern - Base Case Growth Scenario

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2010 2015 2020 2025 2030

Graph 12 Vessels’ Call Frequency Pattern - High Growth Scenario

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2010 2015 2020 2025 2030

Vessel Calls with Air Draft Restriction

It is important to distinguish vessels that may have air draft restrictions and are therefore unable to sailunder the Sydney Harbour Bridge. The study assumes, as a general rule, that vessels over 80,000 GTwill have to be accommodated somewhere east of Sydney Harbour Bridge. These vessels are expectedto increase in number following the growth in vessel calls as well as the general trend of increases invessel size.

Other vessels just under 80K Gross tons have also been identified as unable to sail under the SydneyHarbour Bridge (e.g. Rhapsody of the Seas, Celebrity Century). The projection assumes that this will be aconsistent pattern that may increase in correlation with the expected yearly vessel calls growth.

Air draft restriction also has the potential to affect other vessels such as those within the Home Portoperating segment. For instance, Carnival plans to introduce to the Home Port fleet two vessels over100,000 gross tons (Sapphire Princess and Grand Princess), as well as the Golden Princess (althoughfor one year only). These vessels have air draft restrictions and would only be able to operate east ofSydney Harbour Bridge.

The following table provides a summary detail for vessels with air draft restrictions under various vesselgrowth scenarios.


Table 12 Vessels with Air Draft Restriction2010 2015 2020 2025 2030

Seasonal

Low Growth 16 48 57 66 75

Base Case 16 53 74 90 104

High Growth 16 58 92 130 164

Round-the-WorldLow Growth 4 4 7 7 10

Base Case 4 5 8 11 15

High Growth 4 7 11 15 24

Home PortLow Growth 0 18 73 146 161Base Case 0 20 98 223 253

High Growth 0 21 122 319 397

Grand Total

Low Growth 20 70 137 219 246

Base Case 20 78 180 324 372

High Growth 20 86 225 464 585

The following graph provides a yearly detail of vessels that would have to be accommodated east of theHarbour Bridge.

Graph 13 Vessel Calls with Air Draft Restriction

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To 30 June

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HISTORICAL LOW GROWTH BASE CASE HIGH GROWTH

There is possibly a slight conservative bias in these numbers, as they may underestimate the number oflarger vessels (over 100K GT) that may opportunistically call to Sydney in the future — mostly within theRound-the-World segment. Also, some vessels may be replaced (due to age or strategic issues) byvessels with larger tonnages, which may result in more vessel replacements than those assumed withinthe operating segments. However, it is worth noting that shipping lines will make these future strategicdecisions taking into account the physical constraints at Sydney at a particular point in time , as well as


any other limitations that may exists at other ports within the intended port rotations. The following threegrafts depict vessels with air draft restriction under the three growth scenarios according to their callfrequency pattern. These vessels would need to be serviced somewhere east of the Sydney HarbourBridge.

Graph 14 Vessels with Air Draft Restriction in the Low Growth Scenario

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2010 2015 2020 2025 2030

Graph 15 Vessels with Air Draft Restriction in the Base Case Scenario

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2010 2015 2020 2025 2030

Graph 16 Vessels with Air Draft Restriction in the High Growth Scenario

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Vess

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lls

2010 2015 2020 2025 2030


Highlights of growth projections

Short term growth is driven primarily by increased vessel deployment across the Home Port andSeasonal operating segments.

Long term growth driven by favourable economic environment, increased consumer preference forleisure travelling, relative immaturity of the Australian cruising market, and shipping lines’development of the local market.

Cruise sector activity for both vessel calls and passengers are anticipated to growth strongly to 2015under the Base Case scenario, followed by expected yearly growth of 6.5 per cent in vessels callsand 8.2 per cent in passengers for the period 2016-2020.

Vessel calls and passenger exchanges are expected to triple by 2019-20 compared to 2009-10.

Home Port business segment will continue to lead the expansion, representing 56 per cent and 68per cent of total vessel calls and total passenger exchanges respectively in 2019-20.

Increased frequency of larger vessels calling Sydney which will be affected by air draft restrictions,unable to sail under the Bridge.

Greater market penetration, increasing from the current 1.2 per cent to 3.2 per cent in 2019-20 for theBase Case.

6.5 Recommendations to the Committee on Demand AssumptionsIt is recommended that the estimates developed for each of the operating segments form the basis fordetermining what demand assumptions should underlie future planning for cruise shipping in Sydney.


Appendix A

Estimated passenger growth in the medium term

America – the demand moving to the mass market (away from the 60+ years age bracket) 4.4 mpassengers in mid 1990, to 7m passengers in 2000, 8.2m in 2003, 11-12.2m in 2010, 12.8-15.7m by2015, and 14-20 m by 2020 (most likely 12m by 2010, 14.5m by 2015, 17.2m by 2020).This isequivalent to an annual average expansion rate of 4.25% per year. It is worth noting that this expectedgrowth is consistent with the short term outlook presented by Market Watch.

Germany – passenger growth 10% growth to 2010, 7% to 2015, 4.25% to 2020.

France – passenger growth of about 4% per year to 2020.

Spain – passenger growth of about 5% per year to 2020.

Europe – about 5.25% passenger growth per year to 2020. However, a low and high forecast band of4.0% and 7.25% respectively is also estimated for this period.

Japan – passenger growth of about 3.25% per year to 2020.

East Asia - passenger growth of about 7% per year to 2020 (mainly for China, Taiwan and SouthKorea)

SE Asia - passenger growth of about 5% per year to 2020

Asia Pacific region (including Australia) – perceived growth potential for Australia and India

Total World Cruise Passenger – after expanding from 5.0m in 1995 to 10m in 2000, and about 13.6 min 2005, is expected to reach 18m by 2010, 22.6m by 2015 and 27m by 2020. This represents anexpansion of about 5.75% per year to 2010, about 4.5% per year between 2010 to 2015, and about3.75% per year between 2015 to 2020.

Source: Ocean Shipping Consultants, “The World Cruise Shipping Industry to 2020”


Appendix B

Top Cruise Brands

Brand Group Ships GT ('000) BerthsCarnival Cruise Lines Carnival 22 7% 1,922 13% 52,366 14%Royal Caribbean Royal

Caribbean20 6% 2,111 14% 51,162 13%

Princess Cruises Carnival 19 6% 1,637 11% 40,506 11%Costa Crociere Carnival 14 4% 1,100 8% 24,134 6%Norwegian Cruise Line NCL 12 4% 961 7% 23,518 6%Holland America Line Carnival 14 4% 907 6% 20,830 5%MSC Cruises MSC Cruises 10 3% 808 6% 18,516 5%Celebrity Cruises Royal

Caribbean9 3% 750 5% 14,723 4%

P&O Cruises Carnival 6 2% 463 3% 11,906 3%Aida Cruises Carnival 6 2% 331 2% 7,798 2%Other Other 196 60% 3,651 25% 116,605 31%

Total 328 100% 14,641 100% 382,064 100%

Group SummaryGroup Ships GT ('000) BerthsCarnival 81 25% 6,360 43% 157,540 41%RoyalCaribbean

29 9% 2,861 20% 65,885 17%

NCL 12 4% 961 7% 23,518 6%MSC Cruises 10 3% 808 6% 18,516 5%Other 196 60% 3,651 25% 116,605 31%

Total 328 100% 14,641 100% 382,064 100%

Note - smaller brands that may belong to groups such Carnival are included in “other” category


Appendix C

World Cruise Fleet Characteristics

World Cruise Fleet by Year of Built

As at September 2009 there were 67 vessels in the world cruise fleet that were made before 1980,representing 20 per cent of the total fleet but only 0.3 per cent of the total fleet’s gross tonnage. Mostvessels added to the current fleet in the last four years are over 60,000 gross tonnage, with many vesselsover 100,000 gross tonnage.

Graph 17 Current Fleet by Year of Built and GT Composition

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bers

<10,000 10,000 - 59,999 60,000 - 99,999 > 100,000

Key Characteristics of the passenger cruise fleet as at September 2009 are:

A steady segment representing vessels less than 10,000 gross tonnage, comprising about 3 per centof the total fleet.

Aggregate gross tonnage of vessels over 10,000 gross tonnage and less than 60,000 gross tonnagehas remained steady at around 6 million gross tonnes in 2009. However, the share of total fleettonnage accounted for by vessels in this range has declined from 55 per cent in 1998 to 27 per centin 2009.


Tonnage in the 60,000 to 99,999 gross tonnage range has been increasing every year, but the rate ofincrease has declined from a 24 per cent increase in 1999, to only a 3 per cent increase in 2009.Vessels in this size range represent 42 per cent of the total fleet tonnage.

Total tonnage of vessels of over 100,000 GT has been growing strongly across most years, with 16per cent growth in 2007, 17 per cent growth in 2008 and 22 per cent growth in 2009. The share of thetotal fleet tonnage comprised of vessels in this size range has also increased consistently, rising from20 per cent in 2005, to an estimated 29 per cent in 2009.

The following graph shows the fleet development by year of built by GT range.

Graph 18 Cruise Fleet by Year of Built

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1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

'000

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<10,000 10,000-59,999 60,000-99,999 >100,000

Fleet by Passenger Capacity

Passenger capacity is strongly correlated to vessel size and, because vessel size has been increasingsteadily, with vessel age. Thus, most of older vessels within the fleet (that is, those over 20 years old)have a capacity of less than 999 passengers (83% of vessels in this age bracket). Consistent withincrease in size and new vessel design, passenger capacity has increased substantially especially in thelast decade with most fleet additions above the 60,000 gross tonnage mark, having over 2000 berths pervessel. The following graph depicts the passenger capacity by vessel age.


Graph 19 Fleet by Vessel Age and Passenger Capacity

124

51 53

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20 yrs & over 15 - 19 yrs 10 - 14 yrs 5 - 9 yrs 0 - 4 yrs

50- 200 200 - 999 1,000 - 1,999 2,000 - 2,999 3,000 & Above

Cruise Ships Fleet ProspectsApproximately 91 per cent of all vessels on order in 2005 were above 1,500 berth capacity.

The trend for larger vessels with increasing passenger capacity has strengthened in the last few years,and is expected to continue, at least in the short term. There is no clear evidence, at this stage, of vesselsreaching maximum or ideal capacity with respect to economies of scale. However, vessel design may beconstrained by the availability of adequate port facilities at key world ports. Thus, larger vessels may bedesigned primarily to serve specific market niches.

The latest vessel order book confirms this trend Royal Caribbean Line has recently received the “Oasis ofthe Seas”, a 225,282 GT vessel with 5,400 passenger capacity, and has another with similar size andvessel capacity (“Allure of the Seas”) to be delivered in 2010. Most vessels on order for 2010 and the nexttwo years have passenger capacity exceeding 2000 berths, which may equate to vessels exceeding80,000 GTs. The following table shows the current vessel order book until 2012.

Table 13 Vessel order book2010 2011 2012

Cruise Line Vessel Name PassengerCapacity

Vessel Name PassengerCapacity


AIDA Cruises AIDAblu 2,174 unnamed 2,174 unnamed 2,174

Carnival Cruise Lines CarnivalMagic 3,652

Celebrity Cruises Celebrity Eclipse 2,850 unnamed 2,850 unnamed 2,850

Costa Cruises Costa Deliziosa 2,260 CostaFavolosa 3,012 Costa

Fascinosa 3,012

Cunard Line Queen Elizabeth 2,092 Disney Dream 2,500

Disney Cruise Line DisneyFantasy 2,500

Holland America Line NieuwAmsterdam 2,100

MSC Cruises MSC Magnifica 2,550 MSCMeraviglia 2,550


2010 2011 2012

Cruise Line Vessel Name PassengerCapacity



NCL Norwegian Epic 4,200

Oceania Cruises Marina 1,260 unnamed 1,260

P&O Cruises Azura 3,076

Pearl Seas Cruises Pearl Mist 210

Ponant Cruises Le Boreal 264 L’Austral 264

RCL Allure of theSeas 5,400

Seabourn Cruise Line SeabournSojourn 450 unnamed 450

Total 13 28,886 9 18,712 4 10,536

Avg. Number ofberths 2,222 2,079 2,634


Appendix D

References

World cruise shipping trends was researched through international publications including ClarksonResearch Services, Cruise shipping Miami, and Ocean Shipping Consultants (“The World Cruise shippingIndustry to 2020”). The latter report has been widely used to understand world industry trends and longterm growth, while Clarkson Research Services has been primarily used obtain the industry’s lateststatistical information (as at September 2009) on vessel numbers and key characteristics of the cruiseship fleet. This data has also completed by the most recent information released by Market Watch, apublication arm of Cruise Shipping Miami.

Other sources of Information:

Access Economics, The Australian Cruise Sector, Report for Carnival Australia, December 2009

AECgroup, Economic Assessment of the

Australian Bureau of Statistics, Australian population projections, catalogue 3222.0

Australian Government, Department of Resources, Energy and Tourism

Carnival – Passenger vessel data for Sydney

Crown Project Services, Cruise Passenger Terminal – Location Options Report for West of SydneyHarbour Bridge, Commissioned by Sydney Harbour Foreshore Authority, November 2009

Cruise Line International Association (CLIA)

International Cruise Council Australasia (ICCA)

Thompson Clarke Shipping Pty Ltd, NSW Cruise Industry Growth Trends Study, April 2008, TourismNSW

Sydney Ports Corporation – Passenger vessels data for the period 2000-01 to 2011-12

World Tourism Organisation


GHD

133 Castlereagh St Sydney NSW 2000-T: 2 9239 7100 F: 2 9239 7199 E: [email protected]

© GHD 2010

The document may only be used for the purpose for which it was commissioned and in accordance withthe Terms of Engagement for the commission. Unauthorised use of this document in any formwhatsoever is prohibited.

Document Status

Reviewer Approved for IssueRevNo. Author

Name Signature Name Signature Date

1 G Gomez S Meyrick S Meyrick 15/4/2010




Part B

37 | P a g e

ATTACHMENT 5 – STUDY ON THE OPERATIONAL AND PHYSICAL CONSTRAINTS OF THE OPT

Part B Report‐ Study on the operational and physical constraints of the OPT

1

REFERENCE DOCUMENT FOR PART B REPORT IDENTIFICATION AND INVESTIGATION OF FUTURE INFRASTRUCTURE REQUIREMENTS AND POTENTIAL LOCATIONS FOR A CRUISE PASSENGER TERMINAL EAST OF THE SYDNEY HARBOUR BRIDGE

STUDY ON THE OPERATIONAL AND PHYSICAL CONSTRAINTS OF THE OPT


2

Table of Contents

1.0) Executive Summary ........................................................................................................................... 3

2.0) Background ....................................................................................................................................... 4

2.1) Building Refurbishments ............................................................................................................... 4

2.2) Floor Space Allocation ................................................................................................................... 5

3.0) Demarcation Zones ........................................................................................................................... 7

4.0) Activities .......................................................................................................................................... 10

4.1) Disembarkation ........................................................................................................................... 10

4.2) Embarkation ................................................................................................................................ 11

4.3) Security ....................................................................................................................................... 11

4.4) Curfew ......................................................................................................................................... 13

4.5) Access and traffic flow ................................................................................................................ 13

4.6) Leasing ........................................................................................................................................ 15

4.7) Quay length and Water Depth .................................................................................................... 16

4.8) Vessel turn‐around‐time ............................................................................................................. 17

4.9) OPT Structure and functionality ................................................................................................. 17

4.10) Timetable .................................................................................................................................... 18

5.0) Recommendations .......................................................................................................................... 19

6.0) References ...................................................................................................................................... 20


3

1.0) Executive Summary

This report reviews the operational and physical constraints of the Overseas Passenger Terminal (OPT)

and is a reference document for the Part B report to the Minister for Planning, Minister for

Infrastructure, and Minister for Lands from the Cruise Passenger Terminal Steering Committee.

The report commences with a background review of OPT from a historical perspective and tracks the

life‐changes to the building since the 1960’s. The modifications in the 1980’s for the bicentenary are

noted as well as the more recent modifications in the year 2000.

The demarcation zones for the OPT and surrounding area are then reviewed highlighting the significance

of the Rocks area and the Sydney Opera House. The area is of significant heritage importance and there

are numerous parties controlling specific zones. There would appear to be a necessity for one party to

have an overall view of the operation of the OPT and the surrounding area. It is one key

recommendation in this report that Sydney Ports Corporation performs this role.

Activities within the OPT are then reviewed from an operational and functionality perspective. The

activities include the disembarkation process, the embarkation process, security operations, the curfew

pertaining to the operating hours of Circular Quay, access to and from the OPT and traffic flow, the

leasing of the OPT for various bars and restaurants, the quay length and water depth of the berthing

zone for passenger ships, the vessel turn‐around‐time for vessels and the OPT physical building structure

and current functionality. As the building has been structurally and operationally modified over the last

fifty years it is of fundamental importance that there is a clear and consolidation viewpoint on what this

building should be servicing over the short, medium and long term.

Lastly key recommendations are made for further consideration. One key recommendation is that a

‘Master Plan’ for the OPT is commissioned that will review the operations, planning and key issues that

need to be understood if the demand requirements of the passenger shipping industry are to be met.


4

2.0) Background

2.1) Building Refurbishments

The OPT has undergone two major modifications since it was first built in 1960’s on reclaimed land in

front of the historic Rocks warehouses. The building was designed to accommodate the surge in the

passenger cruise ship industry world‐wide and was solely utilized as a passenger terminal.

The first modification was in 1988 for the Bicentenary of Australia where extensions were made to

external balconies, new steel and concrete staircases were constructed, the curtain wall was modified,

new escalators were installed and roadways were modified.i

The second modification was undertaken in 2001. The total cost of the upgrade was $22 million and the

key elements included three new restaurants, and modifications to cruise ship access. Many of the

changes to the OPT meant that the building became more of a mixed use facility and were not directly

aimed at making the passenger terminal more efficient from an operational perspective;

Some of the modifications in the refurbishment includedii;

Increased foreshore access and more sunlight and new terraced eating areas;

Upgrades to staff facilities;

Improved links between Circular Quay and the Rocks and public access to all levels of OPT;

More seating in Customs Hall for passengers and renovated public facilities/toilets;

New public‐viewing decks on two upper levels;

A new ground‐level entrance for cruise passenger arrivals and baggage handling.

In early 2000 the cruise industry demand for the OPT facility was somewhat limited. Over the last

decade the number of vessel calls has grown substantially making the OPT facility a more important

facility from a demand perspective. A section view of the OPT (shown below) illustrates the mixed

usage of the building as a passenger terminal and a restaurant and entertainment destination.

Drawing 1‐ Section view of OPT tenants and allocated areasiii


5

2.2) Floor Space Allocation

The OPT building comprises of four floors and a basement. It has an elevated road access to the third

floor and has an external staircase leading from the first floor roadway to the third floor roadway and

balcony access.

The arrivals hall is split between the first two floors and is joined by three lifts and two internal

escalators. The hall is 230sqm on each level. Therefore the total arrival hall space is 460sqm. There are

four separate tenancies (restaurants‐bars) located between the first two floors as well as a providoring

hall. Two of the restaurants and the hall have voids at the second floor making them double height.

Marked in hashed blue below in drawing 2 are the external retail areas. In hashed red are the tenanted

zones and the areas with no markings are the providoring hall and arrivals hall.

Drawing 2‐ Levels 1 and 2 tenancy plan view


6

Levels three and four consist of three tenancies, a customs hall, car parking/road access and external

balconies. The customs hall is 1480sqm‐ and on passenger ship days is used as a baggage area and a

customs check point. If no vessels are berthed the area can be used as a functions hall (photo below).

Drawing 3‐ Levels 3 and 4 tenancy plan view & photo of customs function hall


7

3.0) Demarcation Zones

There are numerous agencies controlling the land around the OPT. The agencies include Sydney City

Council, SHFA, Sydney Ports Corporation Lands, SPC private, Waterways authority and the Parks &

Wildlife Services. Furthermore the area has significant Heritage importance.

The Government has appointed the Land and Property Management Authority (LPMA) as a ‘Place

Manager’ to coordinate integrated planning, management and marketing of the Circular Quay precinct.

As such, any modifications to the OPT would ultimately require the involvement of the ‘Place Manager’.

In order to cater for the increased number of larger vessels that will be visiting the OPT it is imperative

that there is short, medium and most importantly long term vision for how this area will be developed

and function.

Drawing 4‐ Plan view of the OPT and surrounding area


8

The OPT building itself carries historical significance and there are various elements within the building

itself where particular attention must be paid. Such as the mural wall which carries local significance and

the gangways carry state significance.

Directly west of the OPT is Cadman’s Cottage (owned by National Parks and Wildlife Services). Their

draft Heritage Conservation Management Plan identifies the significance of the view corridor at the

southern end of the OPT towards the water at Circular Quay and that the corridor should be

maintained.iv

Of greater significance is the Sydney Regional Environmental Plan (Sydney Harbour Catchment) 2005

which established a buffer zone around the Sydney Opera House. The objectives of this plan in relation

to the Sydney Opera House were:

(a) To establish a buffer zone around the Sydney Opera House so as to give added protection to the its world heritage value, and

(b) To recognise that views and vistas between Sydney Opera House and other public places within that zone contribute to its world heritage value.

Drawing 6‐ Plan view of the buffer zone around the Sydney Opera House


9

In August 2010, the NSW Government released a discussion paper on the need for a new State

Environmental Policy (SEPP) that will provide for the conservation of the universal values for world

heritage sites in NSW. The proposed SEPP is to ensure that the identified qualities of the world heritage

properties will be maintained.

Under the new SEPP, consideration is to be given to the world heritage values of the Sydney Opera

House when preparing an environmental planning instrument, determining a development application

or carrying out an activity that may affect those values of the world heritage site.

In addition to the existing provisions of Sydney Regional Environmental Plan (Sydney Harbour

Catchment) 2005, the Sydney Opera House buffer zone will be incorporated into the proposed SEPP.

The matters outlined below, which incorporate and build upon the considerations under the Sydney

Harbour Catchment REP, are to be taken into consideration by a consent authority before granting

consent to a development application under Part 4 of the EP&A Act, or by a public authority or others

before carrying out activities to which Part 5 of the EP&A Act applies;

Whether the proposed development:

∙ Conserves the environmental heritage of the Sydney Opera House and its buffer zone;

∙ Conserves the heritage significance of existing fabric, relics, setting and views associated

with the heritage significant of heritage items;

∙ Impacts on archaeological sites and places of Aboriginal heritage significance;

∙ Diminishes the visual prominence of the Sydney Opera House;

∙ Enhances views and vistas to and from the Sydney Opera House in connection to public

places and landmarks within the buffer zone;

∙ Protects architectural forms, elements and features of the Sydney Opera House including its

forecourt, podium and roof structure;

∙ Impedes the ability of the Sydney Opera House to be able to function as a performing arts

centre; and

∙ Is consistent with any management plans that have been prepared and are in force for the

Sydney Opera House and its buffer zone.

The development of new CPT infrastructure east of Sydney Harbour Bridge within the buffer zone,

including any upgrade works to the existing OPT is required to address the above measures.v


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4.0) Activities

4.1) Disembarkation

Due to the physical size of the Hall disembarkation is currently managed in four or five tranches for the

larger vessels. If the baggage hall (situated on the third floor) were increased in size this could be

reduced to two tranches in‐line with industry practice worldwide.

Passenger disembarkation occurs at the third floor and baggage is off loaded at the first floor where it is

loaded into vans and driven up to the third floor where it is unloaded and placed in the baggage area

where it is then picked up by passengers. Passengers then either exit the building directly and catch a

taxi or they move down to the second and first floor arrivals halls and exit the building. Due to the high

number of passengers and staff leaving simultaneously this area becomes highly congested.vi

The plan below illustrates the space allocated to the different activities involved in the process. As

previously noted the whole customs hall is 1480sqm‐ so the baggage area is approximately 500sqm in

total. Each passenger on average has at least one piece of luggage in addition to their hand luggage.vii If

the baggage hall were increased in size this would mean that the passenger disembarkation process

could be managed in fewer steps.

Drawing 5‐ Level 3 inward function process

In addition there is insufficient storage space for tables/chairs/security equipment. For example security

equipment is ‘ferried’ between sites depending where a vessel is berthed. If there were more space

available security equipment would be kept at OPT full time. This appears to be an operational

constraint.


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4.2) Embarkation

This is a function of the number of check‐in counters available. Presently there are 10 check‐in counters

used and generally cruise customers arrive at the terminal more or less the same time. It is not industry

practice to stagger arrivals. However, it is possible to add more check‐in counters (currently this process

is managed by the Cruise Operators) which could alleviate some of the queuing congestion.

One current limitation is that the arrivals lounges on the first and second floors cannot accommodate

the number of people (approximately 2500) who arrive for a cruise, which is particularly necessary if the

ship is delayed. There is only all weather capacity for approximately 500 people at present and the

remaining passengers leave the terminal and move throughout the Circular Quay area. If there is

inclement weather then this poses problems for the passengers, cruise operators and for the timely

embarkation onto the vessel. On days where larger vessels are berthed it is not uncommon to see the

arrivals halls full of people with substantial queues outside the building for people waiting to embark.

Drawing 6‐ Level 3 outward functions

4.3) Security

The security for the OPT is contracted out for a two year contract basis and is intended to meet Federal

Government security requirements (MTOFSA).

The primary functions for the security team are; screening baggage, managing vehicle access to the area

(inside the customs precinct), managing traffic flow‐ including trucks, coaches, taxis and other vehicles

and waterside patrolling. The area is controlled by CCTV. On days where ships are berthed restaurants

do not have wharf‐side access for their patrons as the external area is a controlled secure zone.


12

Some of the challenges at present areviii;

On berthing days of large vessels the whole rocks area is congested with traffic, which make it

difficult for emergency services to access the area quickly if required.

There is no place to sit externally for guards in inclement weather.

There is insufficient storage area within the building to store all the equipment required.

Surrounding area presents additional security issues‐ For example the Museum of

Contemporary Art (MCA) is currently under renovation and contractors involved on this project

require access inside the customs precinct to access their project. Once the renovation is

completed there will be a permanent requirement for access to the MCA through the Customs

precinct. This will add to the overall congestion of the area when ships are berthed.

Drawing 7‐ Plan view of Level 1 customs precinct and controlled areas

Drawings 7 and 8 illustrate the zones controlled by customs and the zone of the customs precinct when

a vessel is berthed. When a vessel berths the gates between the OPT and waterside are closed which

means the general public can no longer enter this area. Restaurants are also not permitted to use the

water‐side external areas.


13

Drawing 8‐ Plan view of Level 3 customs precinct and controlled areas

4.4) Curfew

Currently there is a curfew in place for large vessel movements, which is a written procedure and is

administered at the discretion of the Sydney Harbour Master. There is a curfew in place between 0700‐

930 and 16.00‐18.30 to avoid peak hour commuter services utilizing the harbour. The requirement for a

curfew has changed in recent times as the cruise vessels can self operate without the need for tug‐

boats. The curfew can be relaxed at the determination of the Harbor Master.ix

4.5) Access and traffic flow

This remains a major issue. Due to the number of coaches and taxis required when a vessel berths there

is high traffic congestion in the streets. Providoring could be organized to follow a schedule (staggered)

which would reduce traffic congestion to a point. However, this will only assist to a point due to the

large number of vehicles required.

At present it is the Cruise Operator’s responsibility to manage police and marshals outside the customs

precinct zone when vessels arrive in port.

Within the precinct there are a limited number of car spaces available. Given that car spaces come at a

‘premium’ when a vessel is berthed it is recommended that car spaces are allocated as efficiently as


14

possible.x Drawing 9 illustrates the location and number of car spaces available. There are 36 spaces

available on Level 3 and 62 available spaces on level 1.

Drawing 9‐ Level 3 car parking zone (above) and level 1 (below)


15

Providoring for the vessels is a major activity when the terminal is used as a home port. For a large

passenger ship there may be 3500 personnel (passengers and crew) aboard. To provide supplies 15

semi‐trailers are required and they must arrive reasonably early in the morning so as to not cause

additional traffic congestion in the city.xi Therefore staggering of vehicles can only work to a point.

Passenger exchanges at the terminal mean that there are a large number of taxis and coaches accessing

the Terminal zone. Many passengers may not be permanently disembarking but could be taking a tour in

and around Sydney. For the QM2 which currently berths at GI there are as many as 50‐60 coaches pre‐

positioned on the wharf awaiting the ships arrival. This causes a bottleneck when the coaches depart as

well as when they return one hour prior to departure.

4.6) Leasing

The leases in the OPT generate an income and raise revenue for Sydney Ports Corporation. A table of the

present leases and expiry dates are listed below.xii

Tenant Location Start Expiry Review

Doyle's Sea Foods P/L Tenancy 5 Gd & 1st First flrs Nthn Areas 1/10/2000 30/09/2015 1/10/2010

Nippon Aust. Seafood P/L Tenancy ‐ 8 ‐ L 4 1/06/2001 31/05/2016 1/06/2011

Ocean Room Tenancy 4 Gnd Flr (inc extn Licn'd areas 1/04/2006 31/03/2011 1/04/2011

Wildfire Restaurants Syd P/L Tenancies 2 & 3 (Grd Flr ) OPT 1/08/2001 31/07/2021 1/08/2011

C.Q.Properties P/L Tenancies 1& 7 1/07/2001 30/06/2016 1/07/2011

Q.R.A. P/L Tenancy 6 ; Levels 3&4 & 2 car bays 1/09/2000 31/08/2015 1/09/2010

It is recommended a review of the lease conditions be undertaken to determine the various options

available for Sydney Ports Corporation. If it is decided that there is a requirement to expand or modify

the terminal prior to lease expiry dates the financial impact to Sydney Ports could be calculated in

advance. Upcoming reviews should consider possible future works to the OPT.


16

4.7) Quay length and Water Depth

There is no requirement to increase the quay length to allow for larger vessels such as the Queen Mary 2

to berth. It is possible to install mooring ‘dolphins’ for restraint purposes.xiii There is sufficient depth at

the OPT for all vessels. It is recommended a cost estimate is undertaken for this exercise. Should the

OPT be able to berth larger vessels such as the QM2 then the operational importance of Garden Island is

somewhat diminished.

Drawing 10‐ Superimposed image of the QM2 at OPT


17

4.8) Vessel turnaroundtime

In peak times (October to March) there is increased demand for berths both West and East of the

Harbour Bridge. Vessel turnaround time for yearly, seasonal, and round the world vessels can be

managed in 24 hours. Should the vessel require a berth for a longer period of time then Athol Buoy or

Point Piper Buoy could be utilized.xiv Vessels that require more than one days berthing tend to be in the

Round‐the‐World segment. Therefore for example in the month a February (peak demand) a maximum

of 28 vessels could berth. Based on current projections there will be 28 February vessel visits in 2020.xv

Therefore by 2021 the OPT will no longer be able to service the demand requirements of the industry

unless the scheduling for vessel arrivals changes.

4.9) OPT Structure and functionality

The building is a steel portal frame design with columns that are tapered and narrow at the bottom of

the structure. The columns curve up and over to join the beams at the top with web stiffeners with

suspended concrete slabs. Some structural foundation work was undertaken in the 2000 refurbishment.

It is recommended that a structural engineer reviews the current facility and is involved early on in the

planning process to determine what if any alterations may be feasible.

Facilities management is reviewing and upgrading plant and equipment as and when required. The

plant‐life cycle has now reached a point where some upgrading is required for the chillers, escalators

and the fire alarm panel.xviThere is a significant cost associated with the replacement of this type of

plant and equipment and If the middle to longer term plan was understood for the OPT then some of

the capital commitment that is currently envisaged could potentially be deferred until the revised

concept is approved. There has also recently been an upgrade of flooring in external balcony areas.

The functionality of the building has changed over its life‐cycle. The increasing number of restaurants

and bars adds both ambiance to an otherwise quiet area (on non‐ship days) and an income for Sydney

Ports Corporation. Given that the average vessel size is increasing in size and passenger numbersxvii,

meaning that many vessels will no longer fit under the Sydney Harbour Bridge within the next 5‐10 years

and that ship visits will become more and more frequent to the OPT the question needs to be asked as

to what the building is ultimately trying to serve. A home based passenger terminal has about 4000sqm‐

5000sqm dedicated to passengers and back of house operational issues.xviii The OPT now has about half

that dedicated space.

It should also be noted that if the OPT is to be used as a home port for passenger ships that there is no

fueling capability (bunkering) from the Quay.xix


18

There are various operational elements currently managed by the Cruise Operators covered in this

report. Such as in section 4.2‐ Embarkation the Operator manages the number of check‐in counters. In

section 4.5‐ Access and traffic flow it is noted the Operators manage the hiring of police and marshals

outside the customs precinct zone as well as the scheduling of the providoring. It is recommended that a

‘service‐level agreement’ be considered that would formalize the organizational operation of these

functions. It could mean a third party is engaged by Sydney Ports and the Cruise Operator to manage

these operations.

4.10) Timetable

As noted in section 4.8‐ Vessel turn‐around‐time based on current projections of vessel growth the OPT

will not be able to service the demand requirements of the industry by 2021. This is working on the

assumption that Athol Buoy and Point Paper Buoy can be used for the round‐the‐world sector to berth

the vessels on the second days of their visits.

At present Garden Island (GI) is occasionally used (about one visit per year) to berth the larger passenger

vessels such as the Pacific Princess in November 2006, the Queen Elizabeth II in February 2008, and the

Queen Mary 2 visits in February 2007, February 2009 and March 2010. Berth access is not guaranteed

even once booked in as Navy operational contingencies may arise which may drive the need to

withdraw approval at short notice. In addition to this, availability of berth space at GI will be further

constrained by 2014 when the Navy takes receipt of the new ships due to enter the service, such as the

Landing Helicopter Dock (LHD) and Air Warfare Destroyers (AWD) that will be home‐ported in Sydney.xx

Based on this knowledge it is therefore recommended to install the dolphins at the OPT prior to 2014.

The cruise industry has expressed interest in co‐sharing the GI facilities in the future for passenger ships

and a continued dialogue needs to take place between the respective parties in order to determine

what may or may not be feasible.xxi


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5.0) Recommendations

5.1) Sydney Ports Corporation to commission a ‘Master Plan’ for the OPT. Conduct a full

study of the facility and what modifications may be required to make the terminal more

efficient from an operational perspective for cruise ships. Part of the Plan will involve

design works and architects, engineers and cost consultants would need to be engaged.

The ‘Place Manager’ will be required to approve the Plan.

5.2) Develop a timetable for key activities from the ‘Master Plan’ that need to take place if

the OPT is to accommodate the demand requirements of the industry in the future.

There will be a requirement for dolphin mooring installation by 2014 and the terminal

will be at capacity by 2021 unless the Cruise Operators can reschedule their vessel

arrival dates.

5.3) Undertake a high level financial costing analysis of the OPT from the ‘Master Plan’ and

identify potential funding sources from the cruise industry and other commercial

opportunities.

5.4) Consider the implementation of a ‘service level agreement’ with the Cruise Operators to

manage the embarkation, disembarkation, and traffic management processes.

5.5) Review lease expiry dates and locations of the lease premises. Consider not extending

any leases until the ‘Master Plan’ is signed‐off.

5.6) It is understood that Sydney Ports Corporation are currently undertaking an operational

study of the OPT. This study will be valuable document for the ‘Master Plan’ phase.


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6.0) References i Working drawings from the 1960’s, 1980’s and 2000 supplied by Sydney Ports Corporation

ii Media Release, Sydney Cove Passenger Terminal, THE HON CARL SCULLY MP Minister for Transport,

Minister for Roads, Wednesday 19 December 2001

iii Floor plans provided by Sydney Ports Corporations

iv Briefing sessions with Sydney Ports Corporations held on 31.08.10 and 7.9.10

v SHFA background information for Opera House buffer zone

vi Briefing sessions with Sydney Ports Corporations held on 31.08.10 and 7.9.10

vii Briefing session held with Royal Caribbean on 16.09.10

viii Briefing sessions with Sydney Ports Corporations held on 31.08.10 and 7.9.10

ix Briefing sessions with Sydney Ports Corporations held on 31.08.10 and 7.9.10 x Briefing sessions with Sydney Ports Corporations held on 31.08.10 and 7.9.10 xi Cruise Ship Access to FBE/GI Berths‐ implications for Navy, September 2010

xii Briefing sessions with Sydney Ports Corporations held on 31.08.10 and 7.9.10 xiii Briefing sessions with Sydney Ports Corporations held on 31.08.10 and 7.9.10

xiv Briefing sessions with Sydney Ports Corporations held on 31.08.10 and 7.9.10

xv GHD Future Accommodation of Cruise Ships in Sydney working papers 1&2, June 2010

xvi Briefing sessions with Sydney Ports Corporations held on 31.08.10 and 7.9.10

xvii GHD Future Accommodation of Cruise Ships in Sydney working papers 1&2, June 2010


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xviii Briefing session held with Carnival on 15.09.10

xix Briefing session held with Royal Caribbean on 16.09.10 xx Cruise Ship Access to FBE/GI Berths‐ implications for Navy, September 2010

xxi Briefing session held with Carnival on 15.09.10


Part B

38 | P a g e

ATTACHMENT 6 – REPORT FROM NAVY STRATEGIC COMMAND OF SEPTEMBER 2010 ON CRUISE

SHIP ACCESS TO FBE/GI BERTHS - IMPLICATIONS FOR NAVY

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CRUISE SHIP ACCESS TO FBE/GI BERTHS - IMPLICATIONS FOR NAVY

Introduction

1. This paper has been developed by Navy Strategic Command to articulate the present and future challenges associated with providing berth space for cruise ships at the Fleet Base East /Garden Island (FBE/GI) complex in Sydney. In part this aims to inform consideration of this issue by the NSW Government‟s “Passenger Cruise Terminal Steering Committee,” which has been established to review future options to meet the anticipated demand for increased cruise ship berthing in the port of Sydney. It also aims to provide key Defence and other agencies with a broad appreciation of the issues involved.

2. Defence understanding of the issues associated with cruise ship visits to Sydney has been informed by involvement in this Committee and preceding dialogue. Additionally, knowledge of the impacts on Navy when cruise ships are berthed alongside FBE/GI has most recently been informed by five visits - Pacific Princess in November 2006; Queen Elizabeth II in February 2008; and Queen Mary 2 in February 2007, February 2009 and March 2010.

Cruise Ship Berthing in Sydney 3. The cruise ship season in Australia currently runs from October to April, peaking around January-March. Sydney is a most attractive location for cruise ship operators plying the Australia/Southwest Pacific market. Overall passenger numbers are rising as a product of both an increasing number of cruise ship calls and the increasing passenger capacity of these vessels. There was 18% annual growth from 2002-2008, culminating in an estimated 250,000 passenger arrivals in 2008/091. The cruise ship industry growth is expected to continue despite the global economic crisis, with some asserting this as the fastest growing tourism sector. The extent of the annual cruise ship season and peak visits to Sydney is therefore expected to expand, albeit limited by the capacity of the port to handle multiple ship visits.

4. Intrinsic to predicted future growth of the industry is the increase in the size and passenger capacity of cruise ships. Ships in excess of 80,000 Gross Tonnes are increasingly common; this is the approximate size which determines that their air draft is such that they are unable to pass under the Harbour Bridge to berth at cruise ship facilities west of the Harbour bridge.

5. The Overseas Passenger Terminal (OPT) located at Circular Quay is the only commercial berth on the seaward side (east) of the Harbour Bridge. Apart from Queen Mary 2, the OPT berth pocket is able to support the large cruise ships now operating around Australia. While the single OPT berth is currently not operating to capacity, industry predictions suggest this will be reached around 2016, with demand for two or more large cruise ships concurrently seeking berths east of the Harbour Bridge gradually increasing during the peak cruise season. The number of days on which this might occur remains subject to further analysis.

6. If unable to secure an OPT berth, the alternative for large cruise ships is to anchor in the Harbour. This is not preferred, due to various safety and weather risks and costs associated with moving up to 2500 passengers and their baggage to/from the ship, plus the need to embark larger quantities of stores and victuals (and occasionally fuel). FBE/GI is therefore seen by cruise ship operators as an attractive berthing alternative, due to its size, location and facilities.

FBE/GI Overview & Considerations

7. The primary function of the FBE/GI complex is to provide support and maintenance berths for the 11 major Royal Australian Navy (RAN) ships currently home-ported in Sydney,

1 Report to NSW Government from the Sydney Passenger Cruise Terminal Steering Committee, November 2009 – page 9.

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plus berths for other visiting RAN and foreign warships deployed to the area. This requires ships to berth alongside for extended periods, either associated with a range of contracted maintenance/repair activities, crew training alongside, or replenishment prior to return to sea.

8. The annual Fleet Reduced Activity Period (RAP), which generally runs throughout December and January each year, is particularly significant. This allows for some contracted maintenance to be combined with an extended crew leave break over the Christmas/New Year period, before ships commence their workup during the Fleet Concentration Period (FCP) in February/March each year. Various elements dictate the importance of the RAP, not least the personnel factors associated with acquitting outstanding leave after extended periods at sea, and when they are best able to spend time with their families; the personnel turnaround associated with routine postings; and the reduced duty watch arrangements which determine that ships are connected to dedicated shore power and services when alongside2.

9. The ensuing FCP normally runs through February and early March. During this phase, most Sydney-based warships, plus some from the west coast and New Zealand, are involved in a work up to full operational readiness. This begins with a harbour training phase, followed by graduated multi-threat exercises at sea over a three week period in exercise areas between Newcastle and Jervis Bay. This seagoing phase is interspersed with a weekend break in Sydney for replenishment and any necessary maintenance. The FCP is a vital element in maintaining the operational readiness of the Fleet and preparedness for future operations and deployments in coming months, and its timing each year is not negotiable.

Berth Access

10. Most berths in the FBE/GI complex are under Navy control while certain berths used for industrial ship repair and maintenance activities are currently managed under lease arrangements between Defence and Thales Australia3. This lease includes Thales use of the Captain Cook Dock4, plus Cruiser Wharf (and the associated Floating Dock) and East Dock Wharf. Navy has priority use of these wharves when required, subject to reasonable compensation to Thales. The remaining wharves (Oil Wharf, West Dock Wharf and FBE Berths 1-5) are controlled by Navy.

11. Attachment A and the following table provide an overview of FBE and GI berth dimensions. Current depths alongside remain subject to a periodic dredging programme. FBE Berths Oil

Wharf Cruiser Wharf

East Wall

West Wall 1 Nth 1 Sth 2 3 4 5

Length 120 m 150 m 150 m 140 m 160 m 150 m 157 m 270 m 190 m 185 m

Depth 12.0 m 11.5 m 11.0 m 10.5 m 10.0 m 9.5 m 9.0 m 8.5 m 8.8 m 8.9 m

Of particular note is the following:

a. FBE is 870 metres long (including use of the northern mooring dolphin), with a 10 degree „kink‟ at the 310 metre mark, which realistically provides two berth pockets. The northern FBE 1-3 berth pocket is 560 metres long, and the southern FBE 4-5 pocket is 310 metres.

b. The presence of the disused Hammerhead Crane at FBE 1N creates constraints on berthing larger ships on the FBE wharf continuum, particularly for ships with wharf overhangs or requiring vehicle and mobile crane use in this area. For example, this determines that Queen Mary 2 must berth south of the Crane, occupying all of FBE 1S-3.

2 Notwithstanding this, there have been a number of precedents where ships have been activated at short notice during such

periods to respond to various crises in the region. 3 Future dockyard management arrangements beyond the June 2013 expiry of this lease are yet to be determined. 4 This is the largest dry dock in the southern hemisphere, and a vital strategic asset for the refit and repair of RAN ships on the

east coast. It also provides an important facility for commercial ships in need of docking on the east coast, particularly those that are too large to access the floating dock in Newcastle or the Cairncross dry dock in Brisbane.

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c. Berthing of larger ships is constrained at the FBE 4-5 pocket due to limited water depth and manoeuvring space.

d. Proximity of FBE 4-5 berths to Finger Wharf apartments also places major limitations on the nature of maintenance and other work that can be undertaken at these berths.

e. Use of the Cruiser Wharf is limited by the semi-permanent Floating Dock (not certified for RAN use) located at the southern end, which takes up a proportion of available berth space. This wharf is a key commercial maintenance and ship refit/repair berth, which is largely unaffected by noise constraints which apply to berths closer to residential areas.

f. Although limited in length, the Oil Wharf is a vital berth for contracted maintenance activity that is not constrained by proximity to residential accommodation.

g. East Dock Wharf (Thales lease) provides a valuable maintenance berth for smaller ships.

h. West Dock Wharf (185 metres with the mooring dolphin) is also a valuable maintenance berth, and is the allocated submarine berth in Sydney, with dedicated fendering and other support systems.

12. Vehicle access to berths on Garden Island is variously constrained by the nature of the island‟s geography, with the dry dock central to the area. A relatively narrow road borders the island and is the only vehicular access and egress for activities conducted at Oil, Cruiser, and East Dock Wharves. Access to the FBE berths and to West Dock Wharf is less constrained, though as for all berths, is achieved during normal operations through the main entrance/security gate of Garden Island.

13. Availability of berth space in FBE/GI is already limited at peak periods and will be further constrained when new larger RAN ships enter service from 2014. The two Canberra class Landing Helicopter Dock (LHD) amphibious ships (231 metres) and three Hobart class Air Warfare Destroyers (AWD) (147 metres) will be home-ported in Sydney. These ships will require a range of new training and support facilities to be developed within the FBE/GI complex. Currently being defined in more detail, this is a major redevelopment project also incorporating upgrade to various services within the FBE/GI complex, for progressive delivery in the 2013-16 timeframe.

14. The total future requirement for berth space for RAN ships home-ported in Sydney, assuming all ships alongside simultaneously, and assuming the new strategic sealift ship and the new replenishment ship to replace HMAS Success are also based in Sydney, will stabilise around 1840 metres after 2018. The length and draft of the LHDs dictates they will usually berth at FBE 1-3, limiting overall berthing management flexibility at FBE/GI and compounding constraints at this important maintenance berth.

15. The total berth space available to Navy at FBE/GI is only 1670 metres (including the Thales leased wharves, totalling 460 metres). This requires that some smaller ships are berthed outboard of other ships („nested‟ or „rafted‟) during peak demand periods. This practice is sub-optimal, particularly for some maintenance periods when an alongside berth may be essential. It is not viable for the LHDs, due to the combined loading effect of these vessels on the wharf and bollards, and because their port and starboard access points do not align. Subject to maintenance or crane access requirements, present and future frigates and the AWDs will be able to berth outboard of other ships, which will alleviate some berthing pressures.

16. Of note is that total FBE/GI berth space can not be apportioned directly to ship berthage requirements. The need to maintain a manoeuvring/safety distance between ships will depend on the ship type/role, and in the case of the LHD may require added space for watercraft entry/egress.

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17. Berth space requirements would be further impacted by the presence of decommissioned ships at FBE/GI in the months prior to disposal. This factor could add up to 500 metres of additional berth space requirements and highlights the imperative for the rapid disposal or relocation of decommissioned ships.

Accommodating Cruise Ship Visits at FBE

18. When larger cruise ships call at Sydney they aim to re-provision (and occasionally refuel), conduct a passenger exchange and operate tours in and around the city and nearby regions. Cruise ship operators aim to conduct these “turnarounds” in a limited timeframe, usually around 12 hours. Generally only larger international (around the world) cruise ships expect to berth overnight.

a. Victualling. A cruise ship the size of Queen Mary 2 may have nearly 4000 personnel (total passengers and crew) aboard. To supply the vast quantities of victuals and other stores required, 15 or more semi-trailers must be brought onto FBE/GI. As turnaround time is critical, these vehicles need to arrive early so that storing continues unabated once started. Therefore all semi-trailers are prepositioned on the wharf at FBE 1-2 and the side roads around the Fleet Gymnasium. Truck parking and movement severely limits traffic flow in this vicinity.

b. Passenger exchange. This covers passengers and crew permanently leaving or joining the ship (but not those on tours or sightseeing). All passengers and crew joining or leaving a cruise ship must pass through customs and quarantine inspection facilities in similar fashion to an international airport. Most dedicated cruise ship berths have permanent facilities to enable this process, such as search areas, baggage scanners, etc. FBE has no such facilities, and these must be hired in by cruise ship‟s agents. To meet Australian Customs and AQIS requirements, large marquees are set up on the wharf to house scanners, X-ray machines and search areas, as well as to provide a controlled zone through which all passengers and crew must be screened. The controlled zone must be set up adjacent to the ship‟s gangway to ensure positive passenger control at all times. At FBE, this zone is set up between the ship and the main gate on Flinders Road (adjacent to the main gate). The zone needs to cater for at least 1000 passengers and therefore consumes a significant amount of space, effectively cutting off all access to FBE via Flinders Road. Once processed at the wharf, departing passengers are transferred from FBE via coach to Darling Harbour Wharf 8 facilities, whence they depart for their next destination. The reverse applies for joining passengers. This necessitates a large number of coaches waiting for departing passengers or arriving on the wharf at FBE. For the visit of Queen Mary 2 in March 2010, this passenger exchange involved use of charter vessels to transport passengers to/from their shore terminal to large pontoons on the outboard side of the ship berthed at FBE. This considerably alleviated the number of coaches needing to access the wharf.

c. Tours. Many passengers not permanently disembarking will take a tour in and around Sydney. Due to the tight windows imposed by rapid turnarounds, the tour operators pre-position passenger coaches on the wharf at FBE 3-5 prior to the ship‟s arrival. Combined with those required for departing passengers, there may be 50-60 coaches pre-positioned on the wharf awaiting the ship‟s arrival. After berthing, tour passengers are escorted from the cruise ship to their coaches, which depart from the FBE southern gate. Coach arrival and departure times vary according to destinations; this results in coaches occupying the wharf for the majority of the visit. All tours return one hour prior to departure.

19. The above activities all happen concurrently, resulting in the entire wharf and associated hardstand of FBE 1-5 being occupied in direct support of the cruise ship. Due to the large

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number of trucks, coaches, taxis and cars involved, road congestion makes access to Garden Island highly problematic, and movement about the western side of FBE/GI becomes impossible. FBE essentially grinds to a halt, clogged by the immense logistic tail of the cruise ship operation. The activities of any ships berthed at FBE 4-5 are significantly constrained by vehicles on the wharf. Operations on the eastern side of the island are affected to a lesser extent, but such that Thales and other contractor activities across Garden Island are impacted adversely. While the cruise company provides commercial security personnel on and around FBE1-3 from shortly before ship arrival until just after its departure, this does not address the added security issues associated with erection and removal of marquees and associated vehicle and people movements on (part of) a military facility. Management of this risk falls to Defence and contracted security staff at GI.

Managing Cruise Ship Berth Requests

20. Previous single cruise ship visits during the peak season have mostly been accommodated during the February seagoing phase of the annual Fleet Concentration Period. During this phase, most warships are conducting annual workup exercises at sea, affording some spare berth capacity at FBE/GI. Notably, Queen Mary 2 has become a factor in Navy‟s annual planning, due to the ship‟s size and inability to berth elsewhere in Sydney.

21. Requests from cruise ship operators for ship access to berthing at FBE/GI will continue to be considered by Navy on a case by case basis. Consideration is invariably focused on access to FBE 1-3 berths, which has the least impact on activities at Garden Island. Use of the Cruiser Wharf is not contemplated due to the major disruption this would cause for all activities on the eastern side of the island, with increased security challenges and vehicular movement problems.

22. An appropriate proforma5 has been developed to facilitate and formalise the berthing request process. This access request proforma is considered initially by the Navy Port Services Organisation in Sydney, which manages the berthing and movements of all home-ported and visiting warships in Sydney. If forecast activities indicate a potential cruise ship berthing window exists, the Defence Support Group will liaise with NSW Maritime and the Commonwealth Department of Finance and Deregulation for issue of a licence to access Defence facilities, and begin negotiation with the cruise company over related charges as a necessary precursor before access can be agreed.

23. More recently Navy has affirmed that once a cruise ship access request has been formally approved, Navy will commit to provision of a FBE berth (unless emergency circumstances mandate otherwise) Once given, this will become a fixed commitment in the FBE/GI berthing programme. However the ability to predict - and thus approve – FBE/GI berth availability a year or more in advance to meet cruise industry planning imperatives remains highly problematic, and inevitably will limit such approvals.

24. The occasions when this might be possible will diminish beyond 2014, due to the berthing demands of the new LHDs. The presence of just one LHD at FBE 1-2 in future would effectively deny access to a cruise ship. A cruise ship could not safely berth south of an LHD alongside FBE 1-2 (taking into consideration the 300+ metre length of the cruise ships that seek access to FBE). Equally if there was a ship alongside FBE undergoing maintenance requiring crane support, waste removal or large equipment on the wharf, for example, this would be adversely impacted by a visiting cruise ship.

5 This was introduced in June 2009 and so far has been used by Carnival Australia for visits by Queen Mary 2 for 7-8 March 2010, 22-23 February 2011, and 2012 visits planned for 13-14 February and 7-8 March.

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Passenger Cruise Terminal Steering Committee

25. This Steering Committee first met on 15 June 2009, chaired by Mr Mike Collins of the Sydney Harbour Foreshore Authority. Navy is represented, as is Sydney Ports Corporation and key shipping, tourism and cruise industry representatives. The Committee will meet regularly through to late 2010, reviewing Sydney‟s cruise ship infrastructure issues in two parts. The Part A report assessing potential cruise ship infrastructure west of the Harbour Bridge was submitted to the NSW Minister for Planning in November 2009. The NSW Premier subsequently announced her Government‟s decision to construct a new terminal at White Bay to replace the present Wharf 8 terminal at Darling Harbour by 2012. Commenced in early 2010, Part B is examining options east of the Harbour Bridge, including further development of the OPT at Circular Quay and prospects for alternative cruise ship berths or moorings (including access to naval berthing and other facilities at FBE/GI).

26. Of note, this Committee has produced a generic functional brief for any cruise passenger facility west of Sydney Harbour Bridge. This articulates a complex range of requirements for berthing of passenger vessels and the loading and unloading of passengers and goods from or to those vessels. Related activities include occupational health and safety and security, the provision of public and private transport to and from the passenger terminal and the provision of parking at the terminal, plus its potential use for events, exhibitions, conventions and functions. Importantly the brief argues that any proposed new facility must not be less useful, less operationally convenient or less efficient than the existing OPT.

Some Realities

27. With the increased number of cruise ships anticipated to visit Sydney in future, coupled with the lack of commercial port infrastructure to support modern large cruise ships, it is inevitable that Navy will be approached more frequently for cruise ship access to berths at FBE/GI. Accommodating this access has far-reaching implications for Navy. The provision of significant berth space for cruise ships, combined with the logistic tail and temporary infrastructure required, places a heavy impost on the entire FBE/GI precinct. The significant adverse impact of potentially multiple cruise ship visits on Navy‟s maintenance activities and operational readiness should not be underestimated.

28. Navy‟s ability to respond positively to occasional requests for cruise ship use of spare berths will always remain subject to contracted and opportunity Fleet maintenance planning and operational readiness priorities or contingencies, such as the requirement for large Navy ships to load out in Sydney at short notice to meet Government-directed humanitarian and disaster relief operations in our region. These can and do change on a regular basis, and certainly inside the planning window needed for cruise ships to obtain a guaranteed berth space. The future notion of guaranteeing access for multiple cruise ship visits to FBE over an extended period either coinciding with Navy‟s peak berthing demand, or at other times, is anathema and is totally impractical.

29. In an era when personnel retention remains a high priority, Navy senior leadership is committed to the well-being of all personnel, both afloat and ashore. Any external imposition that would potentially detract from the working conditions and respite for seagoing personnel when their ship is alongside in Sydney would not be treated favourably.

30. Maintenance of physical security within the FBE/GI perimeter is a major issue for Navy and other Defence occupants. Following a Defence Base Security Review conducted in 2009, various security enhancements at Garden Island are presently being developed commensurate with the recommendations of the Review. Management of one cruise ship visit per annum is challenging but feasible and proven. A more frequent demand would not only impact on work activity in the FBE/GI complex, but would regularly compromise the security aspects of this

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strategically vital naval facility. The stream of passenger transport, baggage handling, re-provisioning and other vehicles requiring access to the FBE/GI complex adds a range of new security risks, regardless of how well controlled the cruise ship passengers and crew might be.

31. There is no known naval base in the world that is willing to establish permanent cruise ship facilities within its perimeter. Use of Defence facilities and berths at FBE/GI is markedly different and generally not comparable with the 1-2 day high intensity turnaround activity associated with cruise ship visits to commercial passenger terminals, where there are no maintenance/repair, crew training or other demands reliant on specific shore facilities. Cruise ship schedules are fixed long in advance. This does not apply to warships whose programmes can change at relatively short notice to meet unpredicted maintenance and repair requirements or contingencies determined by Government.

32. On 1 March 2010 the Minister for Defence endorsed the following key points to be conveyed to the Passenger Cruise Terminal Steering Committee:

a. FBE/GI is a strategically vital Defence asset necessary for operational, training, maintenance and logistic support to east coast based RAN Fleet units, and to other visiting RAN and allied warships. Its present location is assured.

b. Priority for berth allocation must remain with naval units. As a general principle RAN ships will not be moved from FBE/GI to commercial berths elsewhere in the port, which lack alongside power and other support services, in order to temporarily accommodate visiting cruise ships.

c. Berths at FBE for larger cruise ships unable to berth elsewhere in Sydney may only be made available when not required by Navy. d. These occasions will be very infrequent, and while every effort will be made to commit to accepting a cruise ship once Navy agreement in principle has been given and necessary Defence licence arrangement put in place, industry must accept that operational contingencies which arise at short notice may drive the need to withdraw approval at short notice.

e. This would only occur in case of true operational need and once Navy had done all that is reasonably within its power to make the berth available. However this will not override the need for Navy to be able to respond to short notice contingencies directed by government.

Conclusion

33. Navy‟s challenges in meeting the berthing demands of Sydney–based and visiting RAN and foreign warships are already significant, and will be complicated if/when berths are taken out of service temporarily during the Garden Island upgrade. They will be magnified further when new, larger ships with specific berth requirements and overall increased wharf space demands enter service over the next decade, and particularly if the Hammerhead Crane is not removed. This will further reduce the already limited scope and predictability needed to provide occasional berths for large cruise ships visiting Sydney. Establishing a permanent cruise ship facility at FBE/GI is not a viable option, and the ability to provide occasional berth access for large cruise ships unable to pass west of the Harbour Bridge will remain very limited.

Navy Strategic Command 14 September 2010 (Edition 5)

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ATTACHMENT A


Part B

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ATTACHMENT 7 – SPC ALTERNATIVE BERTHING OPPORTUNITIES


Part B

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ATTACHMENT 8 – PORT BOTANY PLAN


Part B

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ATTACHMENT 9 – NEWCASTLE CRUISE SHIPPING INDUSTRY


Part B

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ATTACHMENT 10 – COSTS AND ECONOMIC BENEFITS


Part B

1 Author: Crown Project Services

ATTACHMENT 10 – TBL ANALYSIS FRAMEWORK

As part of the TBL Analysis the following economic, social and environmental benefits will need to be

identified and quantified on an annual basis, over the 20-year period:

additional in-port visitor expenditures (per visitor, per day)

additional ship crew in-port expenditures (per arrival)

additional ship provisioning expenditures (per call)

additional technical services required (per call)

additional ship berthage/wharfage/pilotage charges

additional employment generation (after taxes) from new induced jobs

additional private sector investment (tourism, entertainment, food, transport)

additional State government revenues (GST, other tax benefits)

additional local government revenues (rates, service charges)

savings in greenhouse/CO2 emissions with introduction of new/more modern cruise ships

In addition there may also be some secondary benefits to be taken into account from an economic

perspective. These benefits include employment during the construction of the facilities, additional local

council gains, additional State Government benefits and Federal Government benefits.

As part of the Business Gateway Review submission the following key financial benefits will need to be

estimated:

additional revenues from cruise ship calls (berthage, wharfage, pilotage, passenger-fees, other

technical services)

additional revenues from water and power services

additional revenues from waste discharges

potential revenues from additional passenger fees (as additional changes to current fees)

Using conventional discounted cash flow techniques involving spreadsheet modelling, a range of

economic and financial investment criteria will be estimated separately. These will include:

Economic/financial internal rates of return (EIRR/FIRR)


Part B

2 Author: Crown Project Services

Net Present Value (NPV)

Benefit-Cost Ratios (BCR)

The NSW Treasury discount rate for Economic/Social Project Appraisal will be used for the economic

appraisal (currently 6.5%). The appropriate rate will be determined from Treasury. For the financial

appraisal, advice will be sought also for the most appropriate weighted cost of capital or other discount

rates.

Based on the results, a series of separate economic and financial sensitivity tests will be undertaken.

This will identify the degree of risk, by considering a range of ‘what-ifs’ associated with the cruise ships

terminal’s forecast costs, benefits and related cruise ship calls/passenger volumes. By changing key

underlying assumptions, the robustness of the proposed economic and financial investment cases can

be identified.


Part B

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ATTACHMENT 11 – STUDY ON PASSENGER CRUISE SHIP FEES & CHARGES


Part B

1 Author : Crown Project Services

ATTACHMENT 11 – Study on Passenger Cruise Ship Fees and Charges Economic Perspectives

Australian Ports

Across Australian ports, a broad range of cruise ship fees and charges are levied by the respective

port authorities/port corporations. Table 1 provides a summary on a port-by-port basis. With the

exception of Flinders Port in South Australia, all Australian ports listed are publicly-owned. The

concept of ‘common users’ facilities for berths to be available on demand by all forms of shipping

including international and home-ported cruise ships applies to all ports. However, in Cairns,

Brisbane, Sydney and Melbourne, there are specific berthing facilities owned by the various ports for

which individual port tariffs apply.

Throughout Australian and international ports, there is no ‘right’ set of port tariffs for commercial or

cruise shipping. However, there are some ports for which individual pricing strategies have been

developed covering all forms of shipping, to achieve specific objectives. These objectives include:

(i) recovery of operating costs associated with berthage and wharfage labour costs;

(ii) payment for utilities and services used after berthing (water, sewage, power,

security);

(iii) part recovery of capital investment for specific port upgrading or expansion; and

(iv) collection of minor passenger head taxes in port to contribute to tourism marketing

and promotion expenditures.

Across Australia’s cruise shipping terminals, only the Port of Cairns levies passenger head charges.

These are by international standards’ quite low ($1.34 per head, covering transit dues and port

dues). None of the other mainland ports, which receive cruise ships, charge a passenger tax for the

use of terminal facilities, either for embarking or disembarking. Table 1 provides a port-by-port

summary of all cruise ship tariffs and charges.


Part B


The Port of Melbourne levies a concessional rate on cruise ship arrivals to assist in the funding of the

recently completed dredging/deepening of the entrance to Port Philip and for the 45 kms of channels

leading to Station Pier (the dedicated cruise/passenger terminal). The Victorian Government has a

specific policy of ‘not charging’ for passenger movements through the terminal.

In summary, the prevailing policy across Australian ports is not to recover capital or operating costs

directly from user charges or tariffs levied on cruise ship passengers.

International Cruise Ship Ports

By comparison, internationally, there is a general philosophy that ‘users pay,’ in relation to cruise

ship terminal facilities. Table 2 provides a summary of the passenger head taxes which apply. These

taxes are in addition to a range of wharfage, berthage, pilotage and other port tariffs which are

levied on arriving/departing cruise ships (which apply also to all other forms of commercial shipping).

Key issues which emerge from the review of international cruise ship passenger tax policies are:

(i) there is a general recognition that cruise passengers should contribute to both the

capital investment repayment for terminal facilities and in their operating costs;

(ii) international cruise ships which berth for periods of more than 12 hours accept that

there are port time costs incurred at busy cruise ship destinations (with respect to

other visiting ships) and that taxes are levied on passengers whether they disembark

or not (hence, a passenger cabin tax);

(iii) international cruise ships operators recognise that all passenger head taxes are a

small percentage of the total passenger cruise fare (a general industry approach of <

6% of the total fare should be for taxes and ‘incidental’ charges);

(iv) given the strong relationships between airlines and cruise ship operations (fly/cruise

passengers packages), there is general acceptance that as airlines collect taxes in the

total ticket price, a corresponding practice with cruise shipping is also an acceptable

practice;


Part B


(v) the imposition of various State taxes on a passenger head basis (such as in Alaska

and Florida), in addition to specifically-defined passenger

embarkation/disembarkation fees. Additional charges on a passenger head basis for

the recovery of State government costs outside infrastructure cost recovery or for

purposes of general revenue collection have been the subject of legal disputation.

The collection of gambling taxes on a per capita cruise ship basis remains as a major

ongoing issue for Alaskan cruises.

In summary, the Australian (and NSW) position as to the role of passenger head taxes as a form of

‘user pays’ for dedicated infrastructure for cruise shipping remains in sharp contrast with

international cruise ship industry experience.


Part B


Table 1: Summary of Cruise Ship Taxes and Tariffs/Charges at Australian Ports

Cruise Ship Port

Type of Tax/Charge

(Description)

Amount (GRT = Gross Registered Tonne)

1. Port of Sydney, NSW (Passenger Cruise Terminal)

Navigation Service Charge (< 24 hrs)

35%reduction applies to passenger vessels

$0.5203/GRT- Standard vessels

$0.34/GRT – Passenger vessels

Refer to Schedule of Port Charges for Sydney Harbour & Botany Bay – Effective date 1 July 2010 for detailed breakdown and definitions

Site Occupation Charge $275/hour

Utilities/Services (water, sewerage, power [as requested] Cost per usage

No passenger head tax

2. Port of Melbourne, VIC (Station Pier) Channel Deepening Fees (to cover recent channel dredging of $720 million) $0.18/GRT

Anchorage Fee/Wharfage Fee $67/hour

Security Fee $50/hour

Additional Fees/Charges (negotiated)

- gangway hire

- trolley hire

- wasted removal

- wharf inspection

- water supply

Cost per usage


3. Flinders Port, Adelaide, SA (Outer Harbour) Mooring Fees $3,639 (plus $0.0059 per GRT)

Pilotage $1,402


Part B


Cruise Ship Port

Type of Tax/Charge

(Description)


Navigation Service Charge $1,162 (plus $0.12 per GRT)

Gangway hire $70

Utilities/Services [as required] Cost per usage


4. Port of Fremantle, WA (Inner Harbour) Mooring Fees $0.18/GRT

Berthage Fees (for discharge of passengers) Nil up to 24 hours

$117/hr after 24 hours

Pilotage Fees (negotiable)

Utilities/Services [as required]


5. Port of Darwin, NT (East Arm) Berthage Fees $0.24/GRT

Anchorage Fees (if not berthed) $0.08/GRT

Pilotage (in and out) ( > 4,500GRT) $0.15/GRT

Security $113/hr


6. Port of Cairns, QLD Berthage Fees ( > 50 m length of vessel) $0.77/metre/hr

Port Dues $0.12/passenger

Transit Dues $1.22/passenger

Use of Cruise Liner Terminal (if required) $50/hr


Part B


Cruise Ship Port

Type of Tax/Charge

(Description)


Utilities/Services (as required) Cost per usage

Line Launch (at mooring) $410 per service

Security (per vessel) $3,122 per visit

7. Port of Townsville, QLD Berthage Fees (> 1,000 GRT) $7,500 ( < 12 hours stay)

$8,250 per hour (if > 12 hours)

Security

- waterside (max. of 4 hours)

- landside (max. of 4 hours)

$1,528

$412

Gangway Hire $133


Marine Pollution Levy (AMSA/Commonwealth) $0.09/GRT

Conservancy Dues (QLD. Government Dept. of Transport) Negotiable (on number of visits)


8. Port of Brisbane (Hamilton/River Terminal) Multi-user Terminal Fee ( < 24 hours) $38,500 per visit

$38,500 pro-rated per hour

( > 24 hours)


No passenger head tax (several tax proposals have been deferred)

9. Port of Newcastle Navigation Service Charge

< 50,000 GRT

$0.43/GRT


Part B


Cruise Ship Port

Type of Tax/Charge

(Description)


If > 50,000 GRT

or

maximum charge per visit

$0.43/GRT plus $0.07/GRT

$45,850/visit

Site Occupancy Charge (only for cruise ships) $220/hr

Port Security (per vessel) $497

Utility Charges (water, sewerage, power) $192.50

Pilotage

< 40,000 GRT

> 40,000 GRT

$650 plus $0.06/GRT

$3,050 plus $0.005/GRT



Part B


Table 2: Summary of Passenger Taxes Applying to Cruise Ship Passengers at Major International Cruise Ship Terminals

Cruise Ship Port Nature of Tax Amount

1. Auckland, New Zealand Passenger tax disembarking at terminal facility NZ$23.30/head (was $8.30 in 2008/09)

2. Port of Miami, Florida, USA (largest cruise ship facility worldwide)

Combination of disembarking taxes, passenger in cabin taxes and state capital cost recovery taxes

US$50 - $200/head (depending on length of stay, size of vessel)

3. Alaskan Ports (USA) (Ketchikan, Juneau, Wasilla [Anchorage], Kodiak)

Combination of state passenger head taxes, on board Ocean Ranger staff tax, gambling tax per ship on all Alaskan cruises

US$23.50 to $38.50 per head (taxes are redistributed on a per head basis back to Juneau and Ketchikan and other ports for capital works financing)

4. Bermuda Passenger cabin tax (while in port) US$10 - $14/head per night at berth

5. Bahamas (USA) Passenger tax disembarking at terminal (discount applies if cruise ship arrivals meet specific annual targets)

US$15/head

6. Hawaii (USA)

State policy of no passenger taxes on arrival at terminal (taxes apply to ship berthage/wharfage) [defined as non-commissionable fees (NCFs)]

nil

7. Port of New York and New Jersey, USA Passenger disembarking tax US$8.50/head

8. Port of Southampton (UK) (largest of cruise ship bases in the UK)

Passenger embarking tax (prior to sailing) [negotiated by type of cruise ship/length of stay prior to departure]

(US$ equivalent)

$30 to $70/head

9. Port of Hamburg (Germany) Passenger disembarking tax (for capital recovery of new cruise terminal at Altona)

(Euro)

€21/head

10. European Cruises (based in Hamburg) - up to 7 countries

Passenger terminal taxes levied for all port visits (7 days) [A similar formulae applies to French and Scandinavian cruise vessels]

US$200/head

Schedule of Port Charges – Ef fective 1 July 2010

Page 1

Schedule of Port Charges

Effective 1 July 2010

Navigation service charge All commercial vessels, including cargo and passenger vessels, piloted fishing vessels, research vessels and piloted t ugs entering either Sydney Harbour or Botany Bay are required to pay a Navigat ion Service Charge.

The charge is payable by t he vessel ow ner/agent and is based on vessel Gross Tonnage (GT) per port entry.

RATE PER GROSS T ONNAGE PER PORT EN TRY Rate

excluding GST

GST Rate

including GST

Standard charge (excluding passenger, bulk liquid and gas) $0.423 $0.0423 $0.4653

Standard charge for passenger, bulk liquid and gas carrier $0.473 $0.0473 $0.5203

Environmental services charge. Addit ional charge applicable to vessels t ransport ing noxious bulk liquid, gas and oil cargos only $0.163 $0.0163 $0.1793

One port approach Vessels t ransit ing between and w ithin Sydney Harbour and Botany Bay w ill not be charged an addit ional Navigat ion Service Charge.

Passenger vessels A 35 percent reduction in t he standard Navigat ion Service Charge applies to passenger vessels.

Promotional visits A 50 percent reduction in t he standard Navigat ion Service Charge (but not the Environmental Services Charge) applies to vessels calling at Sydney f or promot ional purposes only (such as photographic w ork).

Non-cargo vessel operations A 50 percent reduction in t he standard charge applies to all vessels entering Sydney’s ports exclusively f or non-cargo operat ions such as maintenance and repair w ork.

Bunkering A 75 percent reduction in t he standard Navigat ion Service Charge (but not the Environmental Services Charge) applies to all vessels w hich call f or bunkering purposes only.

For the latest version, please visit w w w .sydneyports.com.au

Page 2

Site occupation charge The Site Occupat ion Charge is a t ime-based charge for use of the Sydney Ports’ common user or non-leased berths. Certain berths are leased t o private operators, w ho set and raise their own charges.

A Site Occupat ion Charge is payable f or t he t ime a vessel is alongside a berth or its cargo is on the berth, and for t he embarkat ion or disembarkat ion of passengers. It is payable by the stevedore or occupier of the site. A minimum charge of one hour w ill apply f or vessels occupying a site for less than an hour.

RATE PER V ESSEL PER H OUR

Standard Rate

excluding GST

GST Rate

including GST

Lay Up Rate

excluding GST

GST Rate

including GST

Nos. 1, 2, 7 and 8 Glebe Island $100.00 $10.00 $110.00 $30.00 $3.00 $33.00

Nos. 2 to 6 White Bay $100.00 $10.00 $110.00 $30.00 $3.00 $33.00

Bulk liquids berth $306.54 $30.65 $337.19 $63.86 $6.39 $70.25

Passenger t erminals- Passenger vessels $250.00 $25.00 $275.00 $100.00 $10.00 $110.00

Passenger t erminals- Non-passenger vessels $100.00 $10.00 $110.00 $30.00 $3.00 $33.00

Other berths-Passenger vessels $200.00 $20.00 $220.00 $30.00 $3.00 $33.00

Fishing vessels $13.75 $1.375 $15.125 $13.75 $1.375 $15.125

Small non-commercial vessels $30.00 $3.00 $33.00 - - -

Lay up rate The Lay Up Rate applies to those vessels which are undergoing repairs, emergency maintenance, or which cannot otherw ise carry out normal cargo t ransfer operat ions. Written not ificat ion must be provided to the Shipping Manager of the intent ion t o use a berth for lay up purposes.


Page 3

Wharfage charge A combined Wharfage Charge and PCAC* is payable by t he cargo ow ner, usually via the Shipping Agent. Containerised cargo is charged per Twenty Foot Equivalent Unit (TEU); non-containerised cargo is charged per Revenue Tonne. A Revenue Tonne is the greater of mass or volume of the cargo measured in units of tonnes, cubic metres, or kilolitres.

CONTAINERISED CARGO AND CARGO ON PLATFORMS Rate per Twenty Foot Equivalent Unit (TEUs)

Rate excluding

GST GST

Rate including

GST

Overseas import $98.23 $9.82 $108.05

Overseas export $60.24 $6.02 $66.26

Local (coastal inwards or outwards) $32.56 $3.26 $35.82

Transhipment (inwards or outwards) $16.28 $1.63 $17.91

Empty container overseas $10.84 $1.08 $11.92

Empty platform overseas $2.71 $0.27 $2.98

NON-CONTAINERISED CARGO Rate per Revenue Tonne

Dry bulk cargo $1.02 $0.102 $1.122

Overseas general cargo – import $2.05 $0.205 $2.255

Overseas general cargo – export $1.75 $0.175 $1.925

Transhipment and local general cargo (inwards or outwards) $1.00 $0.10 $1.10

Timber $1.45 $0.145 $1.595

Paper and t imber products $1.75 $0.175 $1.925

Bulk liquids (Bulk Liquids Berth) $2.14 $0.21 $2.35

* Wharfage Charges apply to imports and exports. Wharfage Charges include Port Cargo Access Charge (PCAC), w hich represents a c harge applied by, and remitted to, NSW Government to recoup government costs relating to the ports. Wharfage Charges also include a security component for cost recovery of marit ime security imposed under the Commonw ealth Marit ime Transport and Offshore Facilit ies Security Act 2003.

Transhipment Transhipped cargo is cargo unloaded f rom one vessel and re-loaded onto another vessel in Sydney Ports w ithin 14 days f rom date of unloading. Transhipment charges for all cargoes are applicable t o both the inward and outward t rip.

For the latest version, please visit w w w .sydneyports.com.au

Page 4

Mooring fee The Mooring f ee is a t ime-based charge applied t o vessels secured t o a buoy.

RATE PER V ESSEL PER H OUR Rate

excluding GST

GST Rate

including GST

Buoy $30.00 $3.00 $33.00

Where a navigat ion light is removed and re-attached f or vessels secured to a buoy, a Navigat ion Light Handling Fee w ill be applied.

RATE PER V ESSEL PER U SE Rate

excluding GST

GST Rate

including GST

Navigat ion Light Handling Fee $500.00 $50.00 $550.00

Pilotage services Sydney Ports Corporat ion offers a Pilot Service, t he Sydney Pilots can be contacted on + 61 2 9296 4888, and for further details please v isit www .sydneyports.com.au

For Pilotage charges, p lease refer t o “ Schedule of Pilotage Charges for Sydney Harbour & Port Botany” .

Other port services Contact details f or other port services providers are available f rom Sydney Ports’ w ebsite www.sydneyports.com.au

Vessel bookings Not ificat ion of vessel arrivals and bookings are to be made electronically t hrough Sydney Ports’ ShIPS system. Port service providers including pilots, t owage operators, line handlers, and Sydney Ports accept and confirm the provision of services electronically t hrough ShIPS. A ll booking enquiries and berth allocat ions should be directed t o the Shipping Manager.

Terms of trade Sydney Ports’ invoices for charges referred to in t his sc hedule are payable as below :

· Navigat ion service charge 28 days f rom the date of vessel ar rival.

· Site occupat ion charge 28 days from the earliest of either the date of vessel’s first line ashore or cargo ar rival at berth.

· Wharfage charge i) Inward cargo – 28 days f rom the date of vessel arrival.

ii) Outward cargo – 28 days f rom t he date of vessel departure.

http://www.sydneyports.com.au/�

http://www.sydneyports.com.au/__data/assets/pdf_file/0013/13225/Pilotage_Charges_-_From_1_July_2010.pdf�

http://www.sydneyports.com.au/__data/assets/pdf_file/0013/13225/Pilotage_Charges_-_From_1_July_2010.pdf�


Page 5

An incent ive rebate for w harfage is payable t o shipping agents who t ransmit manifests electronically t o the Corporat ion and sat isfy the above Terms of Trade.

Enquiries

SYDNEY PORTS’ CONTACT DETAILS Email Telephone

Price enquiries

Trade and Commercial Analyst [email protected] + 61 2 9296 4791

Invoice enquiries Revenue Controller [email protected] + 61 2 9296 4616

New business enquiries

Senior M anager Market ing [email protected] + 61 2 9296 4769

Vessel bookings (Mon – Fri: 8.30am to 4.30pm)

ShIPS Harbour Control Visit : www.sydneyports.com.au + 61 2 9296 4800

+ 61 2 9296 4000

Shipping enquiries (24 hours)

Shipping Manager [email protected] + 61 2 9296 4800

About this schedule This schedule is a summary of port charges applicable t o the commercial use of Sydney’s ports ef fect ive 1 July 2010. It does not contain all t he regulat ions and procedures applicable t o Sydney Ports’ charges.

If you are unfamiliar w ith the regulat ions and procedures relat ing t o t he Schedule of Port Charges please contact the Trade and Commercial Analyst , Shipping Manager or Revenue Controller.

mailto:[email protected]�


Part B

44 | P a g e

ATTACHMENT 12 - FINANCIAL IMPACT OF CRUISE SHIPS TO THE NSW ECONOMY

Report to the Minister for Planning, Minister for Infrastructure, Minster for Lands from the Passenger Cruise Terminal Steering Committee

Part B

1 Author : Dr Robert Noakes - Crown Project Services

FINANCIAL/ECONOMIC IMPACT OF CRUISE SHIP VISITS TO SYDNEY 1. Scope

This analysis focuses on an assessment of the financial and economic impact on the Sydney/NSW

economy created by cruise ship calls to Sydney’s Passenger Cruise Terminal. Excluded from the

analysis are round-the-world cruises and cruises which include overnight hotel stays and

international airfares for arriving and departing cruise passengers. The primary purpose of the

estimation has been to identify the size of the economic penalty or loss to the NSW economy, should

future cruise ships not be able to be ‘accommodated’ at Sydney’s Passenger Cruise Terminal.

The time frame is for the year 2009/10. It is an analysis of the average level of expenditures incurred

per passenger per day (< 24 hours) in Sydney. It also reports the total direct, indirect and induced

financial revenues and economic impacts generated by each ship call.

Distinction is made between cruise ship vessels which are unconstrained and constrained by size and

which cannot sail under the Sydney Harbour Bridge. The differentiation is: (a) ships with an average

gross registered tonnage (GRT) of 55,000 (in the range of 50,000 GRT to 70,000 GRT); and (b) ships

with 80,000 GRT or more. The major financial/economic impact variation relates to the scale of

berthing fees (navigation service charges), navigation charges (related to number of trips, line boats,

gangways, etc.) and the size of the provisioning expenditures.

2. Key Concepts

The financial/economic impact can be disaggregated as follows:

(i) Direct financial expenditures by cruise ship passengers (per day).

(ii) Direct financial expenditures by cruise ship crew members (per day).

(iii) Direct financial costs to cruise ships for all services/time incurred at the terminal

(including berthing and departure).


Part B


(iv) Indirect financial impacts associated with the use of other cruise ship industry services.

To be consistent with Access Economics and other industry studies, a multiplier impact

from expenditures on locally/regionally-produced food, wine, beer, jewellery and

souvenirs has been included.1

(v) Induced economic impacts associated with additional employment in providing

additional support.

3. Data Sources

Estimates for each of the four (4) financial and economic impacts have been derived from a range of

sources. These include:

(i) 2010 expenditure survey results form Melbourne’s Station Pier cruise ship terminal (with

industry trend extrapolation to Sydney). A ‘premium’ or additional expenditure level of

20% has been assumed for Sydney visits. This is a minimum industry estimate.

(ii) 2010 cruise passenger expenditure survey data for Darwin (Commonwealth Government

survey).

(iii) 2010 Tourism Tasmania cruise ship survey data (Hobart).

(iv) Sydney Port cruise ship tariffs and charges.

(v) Other cruise ship services expenditures (based on Access Economics/Carnival Australia

data, Dec. 2009).

(vi) Navigation and tug/mooring costs (based on industry survey estimates).

1 Access Economics, Dec. 2009, The Cruise Ship Industry in Australia Report; and the AEC Group, 2007/08, The Economic Impact of Cruise Shipping in Australia. Both studies utilised input-output tables and multipliers, developed by the Australian Bureau of Statistics. For NSW, the indirect tourism expenditure multiplier was estimated at 0.91, i.e. for every 1 dollar of direct expenditure, a further 91 cents was likely to be generated. [This assumed that all items of direct expenditure were capable of generating additional expenditure flows, i.e. it required that all items were initially produced within the NSW economy].


Part B


(vii) Induced direct employment estimates based on Melbourne industry estimates [2006/07

Victorian Government data].

4. Financial/Economic Estimates

Table 1 provides a detailed breakdown of direct daily cruise passenger expenditures, by major

category. For Sydney, the average daily expenditure was $256. [This represents a direct expenditure

flow, which would be lost to the Sydney/regional economy, if cruise ship calls were cancelled].

Comparative expenditure estimates for Melbourne, Brisbane, Hobart and Darwin are reported.

Table 2 provides a similar expenditure breakdown for cruise ship crew members. [The importance of

cruise ship personnel is best illustrated by the industry estimate that at least 50% of all crew

disembark, and that average expenditures can be at least 80% of cruise passengers]. The average

daily crew expenditure in Sydney was estimated at $215.

Table 3 summarised the average daily expenditures by cruise ship passengers and crew members,

related to both direct and indirect (multiplier) expenditures effects. The total estimates were $299

for cruise ship passengers and $249 for crew members.

Tables 4a and 4b set out the range of revenues generated/costs incurred by the actual ship visit by

ship size. A range of services and impacts have been estimated. The average total ship call impact by

the shipping line is estimated at $146,400 for unconstrained ships and $162,300 for ships unable to

pass under the Sydney Harbour Bridge. This includes direct and induced financial and economic

impacts. *Should a ship call be cancelled or ‘lost’ due to lack of infrastructure capacity to address the

height restriction in particular, the total loss of financial revenue/economic benefit would be at least

$162,300]. With the inclusion of indirect or multiplier effects, the ranges of per day cruise ship

impacts can be expected to vary from $146,400 to $279,000 for a vessel of 55,000 DWT and from

$162,000 to $309,000 per call per day for larger vessels of 80,000 GRT or greater, unable to pass

under the Sydney Harbour Bridge.


Part B


Table 1: Direct Expenditures by Cruise Ship Passengers Per day: Australian Ports 2009/10: A $

Type of Expenditure

Melbourne 1/ %

Sydney 2/

Hobart 3/

Brisbane 4/

Darwin 5/

Meals/Drinks 25 (12%) 42 15 35 32

(at restaurants/bars)

Food/Beverages (at stores) 3 (1.5%) 10 2 12 10

Shopping 107 (51%) 110 57 47 24

Entertainment 2 (1%) 6 1 4 4

Local Transport 17 (8%) 21 8 22 12

Organised Tours 46 (22%) 52 43 56 58

Other, e.g. books/medicines 9 (4.5%) 15 6 10 4

Total 209 (100%) 256 132 186 144

1/ Based on Port of Melbourne survey data for sampled cruise ship passengers in April 2010. Used as a basis for the Victorian Cruise Ship Strategy revision.

2/ Expenditure figures estimated to be 20% higher for Sydney than Melbourne, representing a 'premium' or

additional expenditure allowance for Sydney environs and attractions.

3/ Derived from 2009/10 Tourism Tasmania Cruise Ship Survey (annual survey).

4/ Based on 2006/07 Department of State Development Survey, extrapolated to 2009/2010; Queensland Ports data on estimated daily passenger expenditures.

5/ Derived from Commonwealth Department of Resources, Energy and Tourism/Tourism Research Australia, Darwin Cruise Ship Research, November 2010.


Part B


Table 2: Direct Expenditures by Cruise Ship Crew Members Per Day: Australian Ports

A $

Type of Expenditure Melbourne

1/ Sydney

2/ Hobart

3/

Meals/Drinks (at restaurants/bars) 20 36 16

Food/Beverages (at stores) 2 8 13

Shopping 86 89 54

Entertainment 2 4 1

Local Transport 14 18 2

Organised Tours 37 49 5

Other, e.g. books/medicines 7 11 14

Total 168 215 105

1/ Average crew expenditures were estimated to be 80% of total daily passenger expenditures (based on international experience). Based on Victorian Department of Transport estimates.

2/ Estimated to be 85% of total daily passenger expenditures (based on early NSW Tourism data).

3/ Derived from 2009/10 Tourism Tasmania Cruise Ship Survey.


Part B


Table 3: Direct and Indirect Expenditures By Cruise Ship Passengers

and Crew Members Per Day: Port of Sydney

2009/10: A$

Cruise Ship Passenger

Crew Member

Direct 256

215

Indirect 1/ 43

34

Total Per Day 299

249

1/ Covers expenditures or locally-produced food and beverage items (meat, fish, vegetables, fruit, dairy products, wine, beer, etc.). These expenditures provide flow-on effects to other sectors of the NSW economy. Indirect or multiplier impacts exclude expenditure effects on imported items such as liquor, clothing, jewellery, handbags, leather goods, electronic items, etc.


Part B


Table 4a: Direct Expenditure/Revenue Generated by Cruise Ship Arrivals

(Per 24-Hour Visit)

[Unconstrained by the Sydney Harbour Bridge]

Port of Sydney

(Passenger

Cruise

Terminal)

Type of Expenditure/Revenue Generation (A $)

1. Cruise Berthing

navigation service charge 1/ 9,900

site occupation charge 2/ 2,800

utilities (water, waste) 3/ 2,500

2. Passenger Services 4/ 18,300

(Security, baggage handling, cleaning)

3. Navigation Charges 5/ 37,000

(Pilotage, line boats, fire prevention, mooring, gangways)

4. Other Cruise Ship Services 6/ 52,000

(Travel agents, ship agents, medical, crew handling, telephones,

couriers, Australian customs, AQIS, AMSA)

5. Provisioning 7/ 12,200

(Bunker fuel, food, fruit, beer, wines, dairy products)

6. Induced employment 8/ 11,700

(Transport, food suppliers, packaging/delivery)

Total 146,400

1/ Assumes an average ship size of 55,000 GRT ($0.18 per GRT). 2/ $110 per hour. 3/ Minimum average fees. No tug services. 4/ 24-hour security (land side) and associated travel services. 5/ As required for safe navigation, berthing and sailing.

6/ Commonwealth Government services are mandatory requirements.

7/ Based on a gross estimate of $40,500. Only 30% is assumed to be sourced from Australia

(bunker fuel, imported food, liquor are 'leakages' or transfer payments out of the NSW economy).

8/ Based on additional or induced employment (part-time for cruise ship visits). Assumes 30 jobs

for 2 days @ $195 per day (excludes PAYE/Company taxes).


Part B


Table 4b: Direct Expenditure/Revenue Generated by Cruise Ship Arrivals

(Per 24-Hour Visit)

[Constrained by the Sydney Harbour Bridge]

Port of Sydney

(Passenger

Cruise

Terminal)

Type of Expenditure/Revenue Generation (A $)

1. Cruise Berthing

navigation service charge 1/ 14,400

site occupation charge 2/ 2,800

utilities (water, waste) 3/ 3,000

2. Passenger Services 4/ 21,000

(Security, baggage handling, cleaning)

3. Navigation Charges 5/ 42,800

(Pilotage, line boats, fire prevention, mooring, gangways)

4. Other Cruise Ship Services 6/ 52,000

(Travel agents, ship agents, medical, crew handling, telephones,

couriers, Australian customs, AQIS, AMSA)

5. Provisioning 7/ 14,600

(Bunker fuel, food, fruit, beer, wines, liquor)

6. Induced employment 8/ 11,700

(Transport, food suppliers, packaging/delivery)

Total 162,300

1/ Assumes a minimum ship size of 80,000 GRT ($0.18 per GRT). 2/ $110 per hour. 3/ Minimum average fees.

4/ 24-hour security (land side) and associated travel services. 5/ As required for safe navigation, berthing and sailing.

6/ Commonwealth Government services are mandatory requirements.

7/ Based on a gross estimate of $48,600. Only 30% is assumed to be sourced from Australia

(bunker fuel, imported food, liquor are 'leakages' or transfer payments out of the NSW economy).

8/ Based on additional or induced employment (part-time for cruise ship visits). Assumes 30 jobs

for 2 days @ $195 per day (excludes PAYE/Company taxes).

Cruise Passenger Terminal Steering Committee Part B Report

Documents

Transcript of Cruise Passenger Terminal Steering Committee Part B Report