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FM AMCONSUL MELBOURNE
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INFO RHMFISS/DEPT OF HOMELAND SECURITY WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RHEHAAA/NSC WASHDC
RUEHZU/ASIAN PACIFIC ECONOMIC COOPERATION
RUEHPT/AMCONSUL PERTH 1512

UNCLAS SECTION 01 OF 02 MELBOURNE 000011 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: EIND ECON ETRD AS
SUBJECT: PM to Raise Container Security Initiative with President? 
 
MELBOURNE 00000011  001.2 OF 002 
 
Ref: 
 
Summary 
------- 
 
¶1. (SBU) According to Port Melbourne's CEO Stephen Bradford, Prime 
Minister Rudd may raise the logistics of DHS' Container Security 
Initiative with the President during their early interactions. 
Melbourne is Australia's busiest port and has seen a clear drop in 
container traffic since November.  Bradford expects a deeper decline 
in January as the lunar New Year holiday compounds slowing growth in 
China, Australia's primary export destination.  Bradford was 
optimistic, however, that container traffic would pick up again 
after the "crisis of confidence" passes.  End Summary. 
 
Container Security Initiative 
----------------------------- 
 
¶2. (SBU) Melbourne Port Corporation CEO Stephen Bradford told post 
on January 22 that he was somewhat apprehensive about U.S. 
legislation requiring selected containers to be x-rayed prior to 
entering the United States and believes that Prime Minister Rudd may 
bring concerns about this initiative to the attention of the 
President during their early interactions.  (Comment: We believe 
Bradford was referring to DHS' Container Security Initiative - CSI - 
which has not yet been fully implemented in Australia.  End 
comment.) 
 
¶3. (SBU) Bradford made reference to a 2011-2012 mandatory 
implementation date for ports around the world, including Melbourne 
and stated that he was uncertain whether screening would take place 
in Australia or in the United States.  He went on to say that any 
costs generated by the screening process would inevitably be passed 
on to downstream consumers. 
 
Traffic Slows in Melbourne's Port 
--------------------------------- 
 
¶4. (SBU) Melbourne's port, which handles approximately 36 percent of 
Australia's trade, has seen reduced container traffic since 
November.  According to Bradford, growth in the number of containers 
handled by the Port of Melbourne has hovered around 8.5 percent 
annually.  He expects this to drop off to 4.5 percent this fiscal 
year, which ends in June.  Automobile imports have fallen off by 
approximately one-third since October.  Bradford remained 
optimistic, however, and believes that growth will pick up again 
within two or three months once the "crisis in consumer confidence" 
sputters out. 
 
¶5. (SBU) Exports to the United States have remained steadily at 16 
percent of Melbourne's port traffic over the years and are comprised 
of consumables such as meat, wine and vegetables.  Bradford noted 
that he has not noticed a significant rise in the volume of exports 
to the United States since the free trade agreement was signed in 
¶2004.  (Comment: The U.S. share of Australia's overall exports has 
declined since 2004.  Given that exports to the United States have 
remained at 16 percent of Port Melbourne's total, the city's 
relative share of U.S. exports vis-a-vis other Australian ports has 
almost certainly increased since 2004.  End comment.) 
 
China 
----- 
 
¶6. (SBU) China is Port Melbourne's largest export destination. 
Butter, cheese and other consumables make up the bulk of these 
exports; ore is exported primarily from Western Australian ports. 
Bradford expects a sharp decline in January exports due to the 
traditionally slow Chinese New Year period.  He has heard from many 
sources that Chinese companies are planning on extending the New 
Year holiday for up to three weeks in order to avoid cutting back 
staff as Chinese growth slows. 
 
¶7. (SBU) Bradford, who worked for an iron ore company for several 
years, does not believe that Australian mining firms will capitulate 
to Chinese demands to re-price ore contracts quarterly.  He said 
that this would create too much uncertainty for mining companies to 
make capital investment and other long-term business decisions. 
While he believes that 2009 iron ore contract prices will be 
significantly lower than last year's prices, he stated that mining 
companies will not agree to re-price the contracts to the January 1, 
2009 effective date that Chinese firms are pushing for. 
 
Comment 
------- 
 
 
MELBOURNE 00000011  002.2 OF 002 
 
 
¶8. (SBU) While Bradford does not speak for the Australian government 
on the issue of the Container Security Initiative, he is the chief 
of Australia's busiest port and no doubt wields influence on 
Australian maritime trade policy.  He did not oppose the initiative, 
but rather expressed concern over the logistics of its 
implementation and eventual costs.  Bradford was somber in his 
assessment of the global slowdown's impact on the volume of traffic 
passing through his port, but was optimistic that container traffic 
would pick up again by April.  Post believes Bradford's expectation 
of a quick recovery in consumer confidence to be overly optimistic. 
 
THURSTON