Achieving a truly efficient multimodal freight transport market

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Bryan Nye, CEO, Australasian Railway Association delivered this presentation at the 2012 Ausintermodal conference. For more information on the annual event, please visit the website http://bit.ly/18MD4XM

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Achieving a truly efficient multimodal freight transport market

  1. 1. www.ara.net.au ABN 64 217 302 489 AusIntermodal 2012 Bryan Nye, ARA CEO 30 Oct 2012
  2. 2. www.ara.net.au Rail Industry: Size • Labour force: 44,210 people (+9.5%) (+70,000 working in industries supporting rail) • Investment Commitments in rollingstock and track $36 billion • Track: 44,262 km in Australia • 725 million annual customer journeys • 853.5 million tonnes of freight moved across the country • Over 1,800 locomotives and 32,000 wagons and carriages
  3. 3. www.ara.net.au
  4. 4. www.ara.net.au Transport and rail Freight • 1 billion tonnes of mining product transport on rail • The state of intermodal freight • The uncertainty of grain freight • 1 new train consist needed every week to handle mining growth Moving People (intra-region) • 770 million passenger journeys p.a. • Over 5% growth p.a. • 60 thousand new passenger journeys every week • 300 new passenger cars every year Moving People (inter-region) • Rail needs to pick up it game in this area • Solution: High Speed Rail
  5. 5. www.ara.net.au Passengers That means an additional 60,000 people on our trains every week! Urban Passenger Rail 769.9 million journeys in 2010 (6.1% increase since 2008) Non-Urban Passenger Rail 13.38 million journeys in 2010 (12% increase since 2008)
  6. 6. www.ara.net.au Congestion in context
  7. 7. www.ara.net.au Rail freight - Big picture 2008/09 2009/10 Change Coal 282.73 318.62 12.7% Ore 350.7 412.02 17.8% Sugar 25.88 27.57 7.7% Bauxite 18.03 17.91 -0.67% Other Bulk 56.74 56.79 - Non-Bulk 18.84 17.94 - 4.8% Total 755.29 853.46 13.39% * Numbers in million tones.
  8. 8. www.ara.net.au Grains 3-4% Bulk Commodities 931 million tons Non-Bulk Commodities 20 million tons Rail freight Rail Freight moves nearly 1billion tons of goods p.a. (2011) Coal Ore Sugar Bauxite Grain Other Bulk Coal Ore Sugar Bauxite Grain Other Bulk Source: Royal Bank of Scotland Transport Equities Update (2012)
  9. 9. www.ara.net.au Rail freight 0 200 400 600 800 1000 1200 1400 1600 1800 Y2012 Y2020 Coal and Iron Ore Source: Royal Bank of Scotland Transport Equities Update (2012) 818 million tonnes 1530 million tonnes
  10. 10. www.ara.net.au Freight network Rail’s share of containerised freight
  11. 11. www.ara.net.au Optimise grain lines
  12. 12. www.ara.net.au Freight: A drag on our international competitiveness Australia’s geography and relative isolation puts us at a disadvantage in terms of international competitiveness The cost of our freight supply chain is extremely high compared to all other trade oriented economies: • Some costs can be attributed to long shipping distances on land and sea, but equally the cost is due to inefficiencies • We have some of the highest costs in terms of land transport to port and in terms of costs from the port gate to shipping 50% of market price goes to logistics Canada does it for ½ the price despite longer distances
  13. 13. www.ara.net.au
  14. 14. www.ara.net.au Woolworths 14
  15. 15. www.ara.net.au Woolworths 15
  16. 16. www.ara.net.au – Price & reliability are key drivers of choice – Reliability for freight owners means trains meeting advertised freight availability times – East coast needs the same reliability level as West coast – Stock levels have been reduced in supply chains therefore companies demand a reliable transport mode to cover this cost saving – Some freight owners would pay a premium for reliability – Rail needs to improve its position Melbourne – Sydney, Sydney – Brisbane in terms of transit times and costs – Terminal ownership and their locations can be barriers to entry 16 Freight owners perspective
  17. 17. www.ara.net.au – The safety and compliance offered by rail is considered an advantage by freight owners – Some major retailers use safety, service, price as their key drivers – Rail is very good at communicating to the freight industry during major disruptions – Past experience influences choice – Environmental considerations are not key drivers unless price is comparable – Freight owners want more information about rail – Coastal shipping is seen as a viable alternative to rail – Regional freight opportunities exist Freight owners perspective 17
  18. 18. www.ara.net.au Freight: Solutions for the future • Containerisation of grain/ changed ownership structure • A terminals strategy and inland rail route – Its all about reliability, the focus on transit time is just wrong • Pricing that actually reflects the true value of transport choices – We need to get smarter in how we price our transport infrastructure
  19. 19. www.ara.net.au 40.0 42.1 41.1 42.1 41.1 48.3 53.3 38.3 35.0 25.0 Syd-Bris Melb-Syd Melb-Bris Melb-Perth Syd-Perth Road Rail 42.2 44.4 43.3 44.4 43.3 38.7 42.7 30.7 28.0 20.0 Syd-Bris Melb-Syd Melb-Bris Melb-Perth Syd-Perth Road Rail 48.2 50.2 49.2 50.2 49.250.3 55.3 40.3 37.0 27.0 Syd-Bris Melb-Syd Melb-Bris Melb-Perth Syd-Perth Road Rail 52.4 54.6 53.5 54.6 53.5 40.7 44.7 32.7 30.0 22.0 Syd-Bris Melb-Syd Melb-Bris Melb-Perth Syd-Perth Roa d Rail ? ?? ProperlyFunctioningMarket Road / Rail Operating Cost Comparison ($ per 000 ntk) High Scenario Road / Rail Operating Cost Comparison ($ per 000 ntk) Equitable Road & Rail Charges Road / Rail Operating Cost Comparison ($ per 000 ntk) Externalities Internalised Road / Rail Operating Cost Comparison ($ per 000 ntk) Equitable Road/Rail Charges & Externalities Internalised The true value of rail!
  20. 20. www.ara.net.au Freight: Solutions for the future
  21. 21. www.ara.net.au Benefits • Safety: Safest form of land transport • Environment: – 9 times more energy efficient – One train, two drivers – 150 trucks & 45,000 litres of fuel • Efficient: rail is a cheaper mode of freight transport than road on all inter capital corridors
  22. 22. www.ara.net.au Inland Rail Inland Rail
  23. 23. www.ara.net.au Inland Rail -Why • Eastern Corridor: Highest freight volume in Australia • Tripling of containerised freight by 2050 requires new freight infrastructure • Demand supports an inland rail route (induced demand, increased market share and larger freight market) • Use of rail benefits the Australian economy (see next slide)
  24. 24. www.ara.net.au Inland Rail –State of Rail today • Low market share on N-S (> 20%, btw10-15% for Syd-Bris and syd-Melb) • Geographical constraints (Sydney bottleneck) • Operational constraints (terminal access, no double stacking)
  25. 25. www.ara.net.au Inland Rail: Changing the transport sector • Increase rail’s reliability and efficiency – double stacking, longer trains, – avoids Sydney bottlenecks – reduce travel times by 15hrs, train speeds of 110kmph • Increase rail’s market share – 80% on Bris-Melb – up to 25% for shorter legs
  26. 26. www.ara.net.au Inland Rail: Cost A $4.4 billion Melbourne - Brisbane
  27. 27. www.ara.net.au Inland Rail: Must haves Must be supported by a terminal strategy- a new terminal in western VIC and a new freight village with terminal in Bromelton
  28. 28. www.ara.net.au Inland Rail: Complications The $2 billion cost of construction through the Toowoomba and Little Liverpool ranges (for environmental, cultural and engineering reasons)
  29. 29. www.ara.net.au

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