achieving a truly efficient multimodal freight transport market
DESCRIPTION
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/18MD4XMTRANSCRIPT
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ABN 64 217 302 489
AusIntermodal 2012
Bryan Nye, ARA CEO
30 Oct 2012
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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
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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
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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)
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Congestion in context
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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.
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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
CoalOreSugarBauxiteGrainOther Bulk
Source: Royal Bank of Scotland Transport Equities Update (2012)
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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
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Freight network
Rail’s share of containerised freight
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Optimise grain lines
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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
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Woolworths
14
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Woolworths
15
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– 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
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– 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
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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
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40.0 42.1 41.1 42.1 41.1
48.353.3
38.335.0
25.0
Syd-Bris Melb-Syd Melb-Bris Melb-Perth Syd-Perth
Road
Rail
42.244.4 43.3 44.4 43.3
38.742.7
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 49.250.355.3
40.337.0
27.0
Syd-Bris Melb-Syd Melb-Bris Melb-Perth Syd-Perth
Road
Rail
52.4 54.6 53.5 54.6 53.5
40.744.7
32.730.0 22.0
Syd-Bris Melb-Syd Melb-Bris Melb-Perth Syd-Perth
Road
Rail
?
??
Pro
pe
rly F
un
cti
on
ing
Ma
rke
t
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!
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Freight: Solutions for the future
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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
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Inland Rail
Inland Rail
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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)
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Inland Rail –State of Rail today
• Low market share on N-S (> 20%, btw10-15% for Syd-Brisand syd-Melb)
• Geographical constraints (Sydney bottleneck)
• Operational constraints (terminal access, no double stacking)
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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
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Inland Rail: Cost
A $4.4 billion Melbourne - Brisbane
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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
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Inland Rail: Complications
The $2 billion cost of construction through the
Toowoomba and Little Liverpool ranges (for
environmental, cultural and engineering reasons)
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