Sydney’s bid for a third cruise terminal moved a tentative step closer today with a NSW government announcement of a “market engagement process” starting on two sites at Port Botany.

The announcement maintained the process “will consider and assess” options for an additional terminal at Yarra Bay or Molineux Point near Port Botany, with the cruise industry asked to assemble a case along with the port authority for what will be a major investment in Sydney’s future tourism growth.

The process is expected to take around three months.

Any signs of a solution in the long-running saga of Sydney’s struggling capacity to handle the expansion of cruise will be a huge relief for industry chiefs, who have been complaining for years about the lack of space for larger ships which won’t go under the bridge.

Sydney’s second terminal, White Bay, is on the west side of the bridge.

The industry, which creates $2.75 billion for the state’s economy each year, maintains growth is slowing because Sydney, the city overseas visitors want to sail into, can’t cope.

Cruise passenger numbers this year grew just 0.9 per cent at 1.34 million.  Brisbane plans to open a new cruise terminal next year and lines like Royal Caribbean have dispersed ships to Melbourne because of capacity constraints.

But the news provoked an immediate reaction from councils around Botany, who are keen to try and thwart the new terminal before building begins.

The Commonwealth Government ruled out Garden Island as an option under Malcolm Turnbull’s Prime Ministership, leaving Port Botany as the only viable location for another terminal.

Cruise Lines International Association Australasia, the body which represents the industry, welcomed the announcement.

“Cruise Lines International Association (CLIA) welcomes progress towards achieving a solution to Sydney’s current berthing capacity constraints, which are limiting growth in Australia’s cruise industry,” said a statement.

“The NSW Government’s announcement that it is beginning the market planning phase for the development of a third Sydney cruise ship terminal is a positive development that recognises the vital need for new infrastructure to support the cruise industry and the approximately 17,000 jobs it sustains across Australia.

“Additional berthing capacity is urgently needed in Sydney to ensure Australia’s cruise industry can continue to prosper into the future. Limits on available berthing space in Australia’s gateway port threaten cruise tourism growth not only in Sydney, but in destinations around Australia, New Zealand and the South Pacific.”

NSW Minister for Transport Andrew Constance and Minister for Tourism Stuart Ayres said the market engagement process will inform the next stage of delivering more capacity for Sydney’s growing cruise industry.

“The cruise industry creates $2.75 billion for the state’s economy each year. We’re expecting almost 1.6 million passengers this cruise season alone,” Mr Constance said. “This potential terminal at Port Botany would address the capacity constraints we’re seeing at the Overseas Passenger Terminal.”

Around 350 cruise ships will visit NSW this season, with the Majestic Princess and her 3,560 passengers the first to arrive in Sydney Harbour this morning.

“The cruise industry supports around 10,000 jobs and creates around $800 million in wages,” Mr Ayres said.

“This season we are welcoming 317 cruise ships to the Overseas Passenger Terminal and White Bay terminals, it would be great to have the option to welcome even more.”

A market engagement process is part of the first phase of the Detailed Business Case, which will be developed by Port Authority of NSW in collaboration with NSW Treasury

Detailed technical studies will consider the social and economic benefits, traffic and transport impacts, costs, heritage and environmental impacts, including recreational fishing, at both potential sites.

According to the statement, there will also be a strong emphasis on consulting with local stakeholders and the community – both of whom have been vocal in opposing expansion of shipping in Port Botany for fear or road congestion.