ARA ADDRESS: Creating a stronger business environment for rail manufacturers and contractors


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Bryan Nye, CEO, Australasian Railway Association has presented at the Rail Suppliers Forum 2012. If you would like more information about the conference, please visit the website:

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ARA ADDRESS: Creating a stronger business environment for rail manufacturers and contractors

  1. 1. 64 217 302 489Bryan Nye, CEO - ARA17 July 2012RAIL SUPPLIERSCONFERENCE
  2. 2. ARA• Who we are: a member-based association thatrepresents the interests of the rail sector• Our purpose: to create an environment that willpermit the Australasian rail industry to prosper• Who we represent: all rail operators, both private andgovernment, track owners and managers,manufacturers of rollingstock and components, andother aspects of the rail industry
  3. 3. industry: size• Labour force: 44,210 people (+9.5%)(+70,000 working in industries supporting rail)• Investment Commitments in rollingstock and track $36billion• 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
  4. 4.
  5. 5. and railFreight• 1 billion tonnes ofmining producttransport on rail• The state ofintermodal freight• The uncertainty ofgrain freight• 1 new train consistneeded every weekto handle mininggrowthMoving People(intra-region)• 750 millionpassenger journeysp.a.• Over 5% growthp.a.• 60 thousand newpassenger journeysevery week• 300 new passengercars every yearMoving People(inter-region)• Rail needs to pickup it game in thisarea• Solution: HighSpeed Rail
  6. 6. operators• RailCorp NSW• Metro Train Melbourne• Yarra Trams• V/Line• Public Transport Services SA• Public Transport Authority WA• Queensland Rail• Great Southern Railway
  7. 7. means an additional60,000 people travellingon 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)
  8. 8. Value of Rail –Relieving congestionOne passenger train can take 525 cars off the road.This is 3.2 million vehicle kilometres annuallyor 1000 trips Sydney - Perth.The average freight train takes 110 trucks off the road.This reduces truck movements by around49.7 million truck kilometres / yearor 3100 times the distance Sydney - New York.
  9. 9. change*Marchetti Travel PrincipleRelative change 2004 – 2008Petrol price +31%Population +6%Private road vehicle use +1%Heavy rail +23%Light rail +10%Bus +11%Public transport +18%
  10. 10. in context
  11. 11. Value of RailSafer and healthier AustraliansOne passenger train reduces accident costs by anamount that could fund130 hospital visits,505 hospital beds per day,or 6 doctors for one year.
  12. 12. Value of RailReducing carbon emissions and protecting ourenvironmentIn one year, one passenger trainreduces carbon emissions by thesame amount as planting 320 hectares of trees.In one year, one freight train travelling Melbourne -Brisbane reduces carbon emissions by the sameamount asplanting 600 hectares of trees.
  13. 13. challenges• An increasing transport demand• Climate change• Need for integrated and sustainable planning for alltransport modes to ensure seamless connectivity• Lack of strategic and long term planning and investment• Potential to improve operations to meet customers’ needs
  14. 14. networkRail’s share of containerised freight
  15. 15. freight - Big picture2008/09 2009/10 ChangeCoal 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%
  16. 16. BulkSource: Royal Bank of Scotland Transport Equities Update (2012)Grains 3-4%Bulk Commodities931 million tonsNon-Bulk Commodities20 million tonsRail freightRail Freight moves nearly 1billion tons of goods p.a. (2011)CoalOreSugarBauxiteGrainOther Bulk
  17. 17. freight020040060080010001200140016001800Y2012 Y2020Coal and Iron OreSource: Royal Bank of Scotland Transport Equities Update (2012)818 milliontonnes1530 milliontonnes
  18. 18. Solutions for the future• Containerisation of grain/ changed ownershipstructure• A terminals strategy and/or inland rail route– Its all about reliability, the focus on transit time is wrong• Pricing that actually reflects the true value oftransport choices– We need to get smarter in how we price our transportinfrastructure
  19. 19. grain lines
  20. 20. A drag on our internationalcompetitivenessAustralia’s geography and relative isolation puts us at a disadvantage interms of international competitivenessThe cost of our freight supply chain is extremely high compared to all othertrade 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 interms of costs from the port gate to shipping50% of market pricegoes to logisticsCanada does it for ½the price despitelonger distances
  21. 21. Solutions for the future• Containerisation of grain/ changed ownershipstructure• A terminals strategy and inland rail route– Its all about reliability, the focus on transit time is justwrong• Pricing that actually reflects the true value oftransport choices– We need to get smarter in how we price our transportinfrastructure
  22. 22.• Safety: Safest form of land transport• Environment:– 9 times more energy efficient– One train, two drivers – 150 trucks & 45,000 litresof fuel• Efficient: rail is a cheaper mode of freighttransport than road on all inter capitalcorridors
  23. 23. Coast challenge• Transit time• Reliability• Availability• Price• Modal share
  24. 24. Rail
  25. 25. Rail -Why• Eastern Corridor: Highest freight volume in Australia• Tripling of containerised freight by 2050 requires newfreight infrastructure• Demand supports an inland rail route: induced demand,increased market share and larger freight market• Using rail benefits the Australian economy
  26. 26. Rail: Benefits• Direct economic benefits: $12 billion boost to GDP,2400 regional jobs created every year, a further 2400permanent jobs• Wider economic benefits: creation of freight villages inregional Australia, $2 billion invested in rollingstock,reduction in road costs• Social and environmental benefits: reduced roadfatalities, congestion and emissions
  27. 27. Rail –State of Rail today• Low market share N-S: > 20%, btw10-15% for Syd-Brisand syd-Melb• Geographical constraints: Sydney bottleneck• Operational constraints: terminal access, no doublestacking
  28. 28. 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
  29. 29. Rail: CostA $4.4 billion Melbourne - Brisbane
  30. 30. Rail: Must…be supported by a terminal strategy- a newterminal in western VIC and a new freight villagewith terminal in Bromelton
  31. 31. to date• Inland Route alignment study(IRAS)• Melbourne to Sydneyupgrades(integral)• Commitment to First Stage-landreservation
  32. 32. findings• Improved transit time• Excludes Shepparton ( Vic Govt)• Links to Toowoomba and Qld plan• Allows for 1800m double stacked trains• Supports ATMS• Provides an alternate route tocoastal(flexibilty)
  33. 33. strategy• Challenge of planning and approvals• Study recommended reassessment of timing 2015-2020• NPV assumed 7% today projects such as HSR 4%• Further investment must occur Melbourne –Cootamundra• Developments in Qld could be staged and improvethe network
  34. 34.
  35. 35.
  36. 36. Speed Rail:Creating new living circlesWhat about here inAustralia?
  37. 37. High Speed Rail?• Massive Tourism Potential• Efficient way to travel• Increased Land Values• Less reliance on fossil fuels• Safe and reliable• Reduce air/ road congestion• Solutions for 2nd Sydney Airport• Urban & Regional development• Improves labour supply
  38. 38. HSR Study – 2012• Two phases – Aug 2011 and late 2012• Short-listed corridors identified• Cost: $61-108 billion• Speed: 350 kph (or 400 kph)• Patronage: 54 million per year by 2036• Stations: City, Airport, City-Periphery, Regional• Fares: Competitive to other travels ($30-$200)
  39. 39. Rail Manufacturing IndustryStrategic Plan 2009 - 2014Clear long termdemand profileHarmonised nationalproduct specifications,policy & standardsStrong customerpartnershipsInnovative &technology savvyInternationally competitive& strong export marketSkilled, capable &renewed workforceCohesive industrywith a single voice2014 Milestones1. Funded rail supply task force in place and body established2. Convincing case articulated and key stakeholders on board3. COAG endorsed strategic development plan for the railsupply industry4. Harmonisation body established and a major exemplarstandard published5. Five new major research projects funded and underwayand demonstrated industry uptake of existing research6. Developed an effective Tier 3 supply chain developmentprogram7. Consistent national industry participation and procurementpolicy implemented8. Published first annual consolidated demand forecast andwide endorsement9. Media plan with six positive press releases on value of railindustry10. Skills enhancement plan for trades and scholarships2010 MilestonesCreate aconvincing &compellingcaseBuild a nationalrail supply planCreate acollectiveGain keystakeholderbuy-inDriveharmonisationagendaEngaged inNationalplanningUnderstand themarket andfocus oninnovationBuild onstrengths anddevelop criticalskillsPathways
  40. 40. Outcomes1. Cohesive industry with a single voice2. Clear long term demand profile3. Harmonised national product specifications, policyand standards4. Strong customer partnerships5. Innovative and technology savvy6. Internationally competitive and strong exportmarket7. Skilled, capable and renewed workforce
  41. 41. Create a convincing and compelling case2. Build a national rail supply plan3. Create a collective4. Gain key stakeholder buy-in5. Drive harmonisation agenda6. Engage in national planning7. Understand the market & focus on innovation8. Build on strengths & develop critical skills
  42. 42.…• Travelling to work• Sending freight• Getting there safely• The impact on the environment• Costing less• Rail… it’s always better