Melbourne’s next container port should be built near Geelong but Infrastructure Victoria says the $6 billion facility won’t be needed until 2055.
The independent body picked Bay West as the best site for the city's next port, instead of the longstanding alternative site in Hastings, southeast of Melbourne.
"Why Bay West? Because this is the shortest distance to where the market is," Infrastructure Victoria chief executive Michel Masson told reporters on Tuesday.
"The cost of Bay West will be around $6 billion dollars and the detailed planning for this will need to start 15 years before the Port of Melbourne reaches capacity."
Mr Masson said the Melbourne port is expected to reach its capacity in 2055, and the distance between ports and their final customers made a competitive difference between Bay West and Hastings.
"Our analysis shows that every container that lands in Hastings would have to travel an additional 20 minutes on the road in order to get to the customers," he said.
The previous coalition government had planned for a new container port in Hastings, because ships would not have to manoeuvre through the Port Phillip Bay heads.
But Mr Masson says there would be no need to blast the heads to accommodate larger ships coming through.
"Blasting is an old fashioned technique and it should not be necessary to accommodate the container ships of the future," he said.
Special Minister of State Gavin Jennings says the government will consider the advice as part of the ongoing work on the state's freight strategy.
The Port of Melbourne was leased for 50 years for $9.7 billion in 2016, and the lease includes compensation payable to the winning consortium if a competing port is built within the first 15 years of the lease.
A consortium led by the Future Fund and QIC won the bid for the port.