Victorian state Premier Ted Baillieu announced the AU$1.2bn (£766m) redevelopment of the port, which will create more than 2,500 jobs directly and indirectly.
Ports Minister Denis Napthine described the plans as “absolutely essential to ensure we have the capacity to deal with the trade coming through our port”.
Victoria handles 2.5m teu a year, which is expected to grow to 5.5m by 2025, and 8m by 2035.
However, critics claim that the plans would slow traffic flows on the West Gate Freeway.
Surveying work for the new port has already started and construction is expected to begin within 12 months, to be completed by 2016.
Any new operator will compete with Swanson Dock’s current two operators: DP World and Patrick Terminals.