A union leader says it is unlikely Bluescope will be able to move an estimated 650,000 tonnes of steel annually between Port Kembla and Western Port.
Maritime Union of Australia New South Wales branch president Garry Keane was speaking after the steel giant announced plans to sell the steel coil carrying ro-ro ship, the Iron Monarch at the end of the year.
Instead, Bluescope has stated it plans to move the steel coils by rail.
But Mr Keane said he doubted the rail network could handle this volume of steel and the company would end up using foreign ships on single-voyage-permits.
"You're talking about needing 148 carriages a week on a rail route that regularly has delays," Mr Keane told Lloyd's List Australia.
"The steel has to be railed from Port Kembla to Sydney down to Melbourne and then out to Western Port.
"We think they are going to run short of capacity and will have to use Single-Voyage-Permit vessels with foreign crews."
Mr Keane said he doubted the Iron Monarch would find a new owner/operator in Australia, as it was a specialised ship.
He said there had been "some success" in organising redeployments for stevedores and seamen who currently crew or stevedore the Iron Monarch.