ara - national freight strategy - towards 2050

8/6/2019 ARA - National Freight Strategy - Towards 2050

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2 Towards 2050: National Freight Strategy

General

This document was prepared with support romindustry members including the Australian Rail

Track Corporation, Asciano, Independent Rail,Queensland Rail, SCT and WestNet Rail.

ARA OceSuite 4, Level 4Plaza Oces (East)

Terminal ComplexCanberra AirportACT 2609Australia

Telephone 02 6270 4500Facsimile 02 6273 5581Website www.ara.net.au

Published byThe Australasian Railway Association (ARA) 2010 All Rights Reserved


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3Chapter Name


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CONTENTS

INTRODUCING THE NATIONAL FREIGHT STRATEGY

Forward 6

Scope & Objective o Strategy 6

Vision or Rail Freight 6

Key Recommendations o the Strategy 7

Next Steps 9

Executive Summary 10

WHY A NATIONAL FREIGHT STRATEGY AND THE ROLE OF RAIL

Why a Freight Strategy? 14

Population Growth 14

Increased Trade 15

Land Use and Transport Corridors 15

Road Congestion 15

Growth in Australian Road Task 1975-2007 (Compounded Annual Growth Rate) 15

Price o Oil (per barrel) in USD 16

Integrated Policy & Planning Frameworks 16

Microeconomic Reorm 16

Increasing Energy Prices & the Carbon Restricted Economy 16

Energy Prices 16Carbon Restricted Economy 17

A Multi-Modal Solution 17

The Contribution o Rail 18

Cost eective 18

Average Freight Costs or Australian InterCapital Road and Rail Freight 18

Superior Saety Record 19

Environmentally Friendly & Fuel Ecient 22

Solution to Congestion 22


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5Chapter Name

Current State o Rail 22

Inrastructure 23

De-Prioritisation and Under-Utilisation o Freight Rail 24

Market Failures in Land Freight Market 24

Impacts 25

A CALL TO ACTION

Freight Transport Policy Action Plan 30

Single Australian Land Transport Economic Regulator 30

Integrated Land & Transport Planner & a Single Australian Land Transport Policy Maker 30

Inormed & Cost-Eective Investment 31

Rationalise and Consolidate Regulatory Requirements 31

Internalising Externalities 31

Clearly Stated & Quantifed Social, Environmental & Economic Outcomes 32

Industry Action 32

Operational Eciency 32

Industry Cooperation 33

Improved Customer Oering 33

Outcomes o a Freight Strategy 34

Competitive Neutrality 34

Maximise Perormance 34

Value or Money 34

CONCLUSION AND APPENDIX

Conclusion 38

Appendix 1: Specifc Government Investment Projects 39

Asciano/Pacifc National, ARTC & Queensland Rail 39

Asciano 39

SCT 39

WestNet 39

RailCorp 39


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INTRODUCTION1


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1 Prime Minister Kevin Rudd (2010), Speech: Adelaide Australia Day Celebrations, 20 January 2010


ForwardAustralia aces signicant challenges in ensuring its

uture international competitiveness. The FederalGovernment has placed transport, and in particularreight transport, as a central plank to promoting theproductivity growth needed to maintain Australiaseconomic expansion1.

Despite its obvious social, environmental and economicadvantages, Australias rail reight network is in a sub-optimal state, due to historical underinvestment in railinrastructure over the past 30 years.

The Towards 2050 National Rail Freight Strategyaddresseskey challenges acing Australia in the coming decades inrelation to reight transportation and outlines solutionsto meet these challenges. The Strategy is targeted atboth internal and external stakeholders including reightindustry players, Federal and State Governments, andtransport policy makers.

The strategy has explicitly taken a long-term view o anational reight strategy, given the long-term nature oinrastructure projects and the Federal Governmentsocus on orecasting and planning to the year 2050.

The Strategy is a collaborative eort between various railreight operators in Australia. The Australasian RailwayAssociation has been tasked by the industry with the

preparation o the strategy and has received substantiveinput rom industry partners and Government agenciesincluding Inrastructure Australia in its preparation.

Scope & Objective

o StrategyThe Strategy provides a principle based approach toreight transport policy. These principles should beadhered to by all reight transport policy rameworks

and decision making processes. These principles applyequally to all modes o reight transportation and do notseek a special policy status or rail reight.

Similarly the policy principles in this strategy applyequally to all types o rail reight including bulk andnon-bulk and do not distinguish between privately orpublicly owned rail services or inrastructure. The aim oa national reight strategy is to provide an holistic view osolutions to uture reight transportation.

Vision or Rail Freight

Vision

The Australian rail industry

aims to be the preerred mode

o medium-long distance land

reight transport within an

integrated multi-modal system

that will provide Australia withthe saest, environmentally

riendly, cost eective land reight

transportation solution


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9Introduction

Key Recommendations of the StrategyThe National Freight Strategy has put orward the ollowing key recommendations

Integrated Transport & Land Use Planning

Integrated national transport and land use planning is a key requirement to achieving a truly ecientreight transport market. The need to identiy and protect uture transport corridors and multi-modal reightacilities will ensure that the uture reight network capacity is not constrained, especially by continuingurban expansion, and that transport priorities are identied to aid urban development and to meet uturegrowth in intra and interstate trade and the export market.

Competitive Neutrality in all Transport Policy Decisions

A properly unctioning transport market ree rom distortions is the key to an ecient reight transportindustry. Government economic and operational regulations must apply equally to all modes o transport toavoid an articial bias towards any mode o transport. In this respect the principals underlying the ollowingregulations should be the same across all modes o transport:

road pricing and rail track access charges;

saety requirements; and

OH&S requirements.

This strategy advocates the promotion o the right mode o transport in the circumstances or the reighttask. Competitive neutrality will ensure this.

Address Market Failure (Internalising Externalities)

In selecting the right mode o reight transport all externalities associated with the movement o reightshould be identied and internalised where possible. While the nancial cost eectiveness o reighttransport is an important consideration, any transport policy should also ensure that non-nancial costsassociated with reight transportation are captured in the decision making process including:

environmental costs such as emissions, noise and land use;

saety costs such as atalities, injuries and property damage; and

congestion and its associated costs.

I the transport decision making process cannot internalise these costs, the Federal Government must ensurethat the mode that exhibits the best saety and environmental perormance receives incentives or subsidiesto ensure that the community enjoys the benets o this superior perormance.

Clearly Stated Social, Environmental & Economic Objectives

The Federal Government needs to clearly state social, environmental and economic policy objectives.These objectives may include:

Environmental perormance (emissions, noise, land use)

Saety

Congestion

Competitive markets (ensure reight users have a viable modal transport options)

Energy security

Eciency


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The implementation o these socio-economic objectives go hand in hand with internalising negativetransport externalities and should guide investment decisions in land reight inrastructure.

A Single Land Transport Economic Regulatory Framework

A single national economic regulatory ramework should be established. This will ensure consistent,competitively neutral pricing and access arrangements or all modes o land transport across all jurisdictions.

A Single Land Transport Policy Framework

The imperative to take account o broader government social, environmental and economic policyobjectives, the need to internalise negative externalities and the recognition that reight transport extendsbeyond local council and state borders and is increasingly reliant on multi-modal supply chains necessitates

an overarching land transport policy ramework.

Inormed & Cost-Eective Investment

The correction o market ailures combined with the implementation social, environmental, economic policyobjectives, operational eciency and value or money should guide investment decisions regardless o thepublic or private nature o the ownership o the inrastructure. This requires policies that provide incentivesto the private sector or economically viable inrastructure projects to go ahead.

This will ensure the greatest economic benet or Australia rom reight transport inrastructure expenditure.

Consolidating and Rationalising Regulatory Requirements

The myriad o, oten inconsistent and duplicative, regulations governing land transport must be consolidatedand rationalised. Separate state operational and economic regulations create a signicant compliance costor national reight carriers as does modal based regulations or multi-modal reight service providers.


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11Introduction

Next Steps

A Single Land Transport

Economic Regulator

The establishment o a single land transport economicregulator that determines road and rail access chargesacross all jurisdictions, based on similar competitionand cost recovery principals, would ensure competitiveneutrality amongst all land reight modes andconsistency o economic regulations on a national level.

This regulatory unction can be administered by anexisting regulator such as the Australian Competition andConsumer Commission, or the creation o a new regulator.

Introduction o Competitively

Neutral Road Charges or

Heavy Vehicles

The Government must ensure that heavy vehiclespay the actual costs associated with their use o roadinrastructure, ending the eective cross-subsidisationo heavy vehicles by smaller vehicles and increasethe Governments cost recovery capacity or road

inrastructure investments.Mass distance road charging is one tool to ensurecompetitive neutrality in the land reight market.

Access arrangements similar to those or rail could alsobe considered.

A Single Land Transport Planner

Integrated national land use and transport planningis essential to the ecient running o the land reighttransport sector. The planner would promote the

creation o a seamless national reight supply chain andensure inrastructure investment and land availability toachieve this.

A Single Land Transport

Policy Agency

A single land transport policy agency would ensurethe implementation o a truly national multi-modalpolicy ramework or land reight transportation, takeinto account the Governments wider policy objectives,

assist with the consolidation o regulatory rameworksand ensure the required expertise and knowledgeto make inormed and cost efective transportinrastructure investments.

Review o Regulatory Framework

Governing Freight Transport

A joint state and Federal review, possibly throughCOAG or a Ministerial Council, is required to identiyopportunities to consolidate, harmonise and rationaliseregulations governing the land reight transport sector.

Government Review o the Cost o

Transport Externalities

A review is required to quantiy the cost o transportexternalities and make recommendations on ways tointernalise these externalities. While much research

has been conducted on discrete externalities, such asenvironmental degradation, air pollution, congestion andsaety, no review has consolidated the research and putorward policy rameworks or mechanisms to internalisethese externalities.

Government Initiatives to

Promote Cost Eective, Sae &

Environmentally Friendly Freight

Transportation

The correction o market distortions, externalitiesand other market ailures in the land transport sectoris a long-term process. In the interim the FederalGovernment must ensure that cost eective, sae andenvironmentally riendly reight transport options arepromoted and utilised.

The Government should provide nancial incentives oreconomically viable, yet commercially unviable, projectsundertaken by the private sector. This will ensuremaximum economic benet or Australia with minimalGovernment spending.

To ensure environmental and saety perormance isimproved, Government subsidies and incentives should beinitiated to encourage the greater utilisation o the saestand most environmentally riendly transport options


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2 Prime Minister Kevin Rudd (2010), Speech: Adelaide Australia Day Celebrations, 20 January 2010

3 Bureau o Inrastructure Transport and Regional Economics (2006) Freight Measurement and Modelling in Australia. Report 112, BITRE, Canberra ACT


Executive Summary

The Challenge

Australia aces many challenges in ensuring itsinternational competitiveness, requiring signicantimprovements in its productivity perormance. TheFederal Government has placed transport, and inparticular reight transport, as a central plank to promotethe productivity growth needed to maintain Australiaseconomic position2.

Freight transport aces many external challengesincluding population growth and the resultant increaseddemand or transport, increased trade volumesdomestically and internationally, congestion, increasingenergy prices and increasing scarcity o urban land.

Obstacles have been created that inhibit the ecientoperation o the reight transport market includingmarket distortions as a result o government pricing,subsidies and investment decisions, ragmented andincremental transport planning and a regulatoryenvironment that acts as a barrier to the ecientprovision o reight inrastructure and services.

Given the projected doubling o the reight task by 2020rom 2000 levels3,and the challenges highlighted above,business as usual practices in reight transport planning

cannot continue. The signicant ineciencies createdby the incremental, piece-meal approach to reighttransport planning is no longer sustainable.

The National Freight Strategy

The implementation o the National Freight Strategy willresult in three key objectives:

competitive neutrality in the reight transport market;

maximising perormance and eciency in theprovision o reight services; and

value or money or governments and customers.

I these objectives are achieved, it will ensure signicantimprovements in reight transports productivityand ensure that the vision o an integrated multi-modal system that will provide Australia with thesaest, environmentally riendly, cost eective reighttransportation solution is met.

The National Freight Strategy advocates a multi-modalsolution to the challenges acing reight transportation.All modes o reight transport must be utilised in

the most ecient manner possible to ensure theproductivity gains required to maintain Australiasinternational competitiveness.

The Federal Government must actively remove anyhurdles to creating a collaborative ully integrated supplychain or reight. Each mode o reight transportationhas a comparative advantage in certain circumstancesand must be utilised appropriately to achieve maximumeciency gains. The strategy advocates the use o theright mode or the circumstance.

The Role o Rail

Rail is central to any multimodal reight transportsolution. Rail is the most cost eective mode o land

reight transportation or journeys over 1500km andwith increasing liquid uel prices, will enjoy absoluteprice advantage or all non-urban journeys. Rail reightis up to 9 times saer than road reight. Rail reight is10 times more uel ecient and causes up to 10 timesless emissions than road reight. Given the severe roadcongestion in an around Australias ports and majorarterial roadways, modes, such as rail, must be utilised toalleviate road congestion.

A Call to Action /

RecommendationsThe ultimate goal o the National Freight Strategy is tocreate a competitive, ecient and cost-eective reighttransport system. To achieve this, the reight industry andgovernments must work collaboratively and ensure:

Competitively neutral economic regulations

or transport: Economic regulatory rameworksgoverning transport should be competitivelyneutral, allowing or the right mode to be used inthe appropriate circumstances. O major concern arethe inconsistent principles used in determining road

pricing and rail access charges.

Externalities are internalised/clearly articulated

Government objective: The true cost o externalities(social, environmental, saety etc.) must beincorporated into transport policy rameworksand investment decisions. This goes hand in handwith the articulation and incorporation o theGovernments socio-economic objectives.

Integrated transport and land use planning: wherelocal, state, national transport and land use planningare addressed in a holistic manner.


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13Introduction

A single land transport policy ramework: to ensuretransport policy is developed and implemented inan integrated manner and takes into account theGovernments broader policy objectives.

Rationalising and consolidating regulatory

requirements: The myriad o multi-jurisdictionaleconomic, saety, OH&S, access and competitionregulations are a signicant impediment tooperational eciency and must be consolidated andrationalised.

Operational efciency: The reight industry mustwork together to ensure operational eciency,through greater collaboration such as ensuringinteroperability and collaborative supply chainarrangements.

Cost Eective Investment:

The Strategy recommendsthat the most economically viable transportinvestments be prioritised regardless o public orprivate ownership, ensuring value or money.

Customer oering: The rail reight industry mustensure its product oerings meet the dynamic needso its customer based on service quality and price.

Long-Term Goal: A Truly Integrated,

Competitive Multi-Modal Freight

Supply ChainIn the long-term, the strategy seeks to achieve acompetitive, cost eective, integrated multi-modalreight supply chain ree rom market distortions andailures, where Government decisions are made based onholistic and integrated policy and planning rameworks.

This will ensure a reight transport network capable omeeting the challenges posed by uture developmentsin demographics and trade.


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2THE CASE FOR A NATIONALFREIGHT STRATEGY AND

THE ROLE OF RAIL


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4 Prime Minister Kevin Rudd (2010), Speech:Adelaide Australia Day Celebrations, 20 January 20105 Prime Minister Kevin Rudd (2010)

6 Bureau o Inrastructure Transport and Regional Economics (2006) Freight Measurement and Modelling in Australia. Report 112, BITRE, Canberra ACT.

7 Inrastructure Partnerships Australia (2008),

8 The Australian Government Treasury (2010), Australia to 2050:Future Challenges, see URL:http://treasury.gov.au/igr/igr2010/Overview/pd/IGR_2010_Overview.pd

9 Australian Bureau o Statistics (2005), Population Projections Australia, Issue 3222.0, 29 November

10 Australian Bureau o Statistics (2005)


Why a Freight Strategy?

HIGHLIGHTSThe reight task is expected to double by 2020,and triple by 2050 rom 2006 levels , as a resulto population growth (set to reach 35 millionby 2050) and increased intra state, interstateand international trade

Increasing urban population and limitedurban land availability will create confictsbetween land use planning and transportplanning, necessitating an integratedapproach to planning.

Government policies have led to marketdistortions through inadequate andinconsistently applied operational andeconomic regulations. A reight strategy isrequired to address these inadequacies.

Environmental and saety concerns haveincreased in recent years, yet there hasbeen a ailure to adequately capture theenvironmental and saety externalitiesassociated with road transportation. Theseexternalities need to be internalised in the

transport policy rameworkI ncreasing liquid uel costs will change thedynamics o the land transport market,making road transportation signicantlymore expensive and rail transport moreviable. However under-investment in railinrastructure will inhibit any modal switchbetween road and rail.

Australia aces many challenges in ensuring its utureeconomic growth. The Federal Government has placed

transport, and in particular reight transport, as a centralplank to promoting the productivity growth neededto maintain Australias economic expansion4. Freighttransport has been identied as the transport priority orCOAG in 20105.

Inrastructure Australias proposed National FreightNetworks Plan is a step in the right direction. However,the network and inrastructure ocus o the strategyshould be expanded to ensure an holistic approach

which addresses key policy issues such as economicand operational regulations, modally neutral transportpolicies and integrated transport and land use planning.

Freight movements overall are projected by the Bureauo Transport and Regional Economics6 to doublebetween 2000 and 2020 as a result o:

population growth ; and

Increased international, inter-state andintra-state trade.

Inrastructure Partnerships Australia7 has provided

research suggesting a tripling o the reight task by 2050.However there are many market and structuralimpediments restricting the supply o reighttransport services including:

The scarcity o urban land, jeopardising utureplanning or transport corridors;

Increasing road congestion restricting capacity;

Complexity o regulatory regime governing reight

transport

Government investment decisions, taxes andsubsidies distorting the land reight market; and

Increasing energy prices and the

increasingly carbon

restricted economy.

Population Growth

Recent projections prepared by Treasury show thatAustralias population will grow by 63% over the next 40years to 35 million people by 20498. By 2030 Australiaspopulation will have reached 26 million. The increasewill be driven by a greater number o women o child-bearing age than projected, and increased net migration.

Growth and concentration o population in Australiasmajor cities are set to increase. While in 2004, 62% othe population lived in capital cities, it is projected thatby 2051 this number will rise to more than 66%9. Over50% o Australias population will be living in easternState capitals10.


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11 The Australian Federal Treasury (2007), Intergenerational Report 2007, 2 April12 Australasian Railway Association (2010), Rail Freight Industry Workshop on Inrastructure Australias National Freight Networks Strategy,

Melbourne 19 January

13 Bureau o Transport and Regional Economics (2007), Estimating urban trafc and congestion cost trends i or Australian cities ,Working Paper no. 79, Canberra.

14 American Association o Rail (2010), see URL: http://reightrailworks.org/open-highways-one-train-at-a-time.php

17The Case for a National Freight Strategy and the Role of Rail

Australias increasing population, particularly on theeast coast, will drastically increase the demand or bothreight and passenger transport. Given the current stateo transport corridors, there is likely to be major policy

conficts between the provision o reight and passengertransportation, congestion problems and a lack oavailable land or the expansion o transport networks.

Increased Trade

Treasury projections indicate that Australias GDP willcontinue to grow by 2.4% per annum in real terms overthe next orty years11, uelled by international trade. Thistranslates to a 258% increase in Australias GDP between2010 and 2050.

Continuing improvements in global trade linkages andsustained growth by Australias major trading partners,such as China, will ensure that international trade willcontinue to be a prominent actor in Australias utureeconomic growth.

This will inevitably increase the demand or reighttransport. Demand or land reight transportation willincrease as a result o inter-state and intra-state tradeand the need to distribute international goods to and

rom port acilities.

Land Use and Transport CorridorsWhile the demand or passenger and reight transportationis growing, the supply o such transportation is becomingmore restricted. To accommodate Australias acceleratingpopulation growth, it has become necessary to increaseurban density and utilise surplus lands in and around ourmajor cities.

However, the growth in demand or residential landhas put in jeopardy the ability to expand transportinrastructure in urban areas. Sydney, or example, suersrom signicant bottle-necks in both its passenger and

reight rail networks, yet aces land restrictions whentrying to address these bottle-necks through networkexpansion. As a result, rail reight is increasingly cominginto confict with passenger rail services12.

Road Congestion

The Bureau o Transport and Regional Economics has

estimated that:road congestion costs Australia up to $15 billionper annum, or about one per cent o GDP; and

road congestion cost will double by 2020. 13

Growth in Australian Road Task 1975-2007

(Compounded Annual Growth Rate)

0

1

2

3

4

5

6

GDPPassengerRoad Freight

5.2%

3.2%

2.4%

Source: Bureau o Inrastructure, Transport and Regional Economics(2009), Australian Transport Statistics Yearbook 2009, Departmento Inrastructure, Transport, Regional Development and LocalGovernment, Canberra; Australian Bureau o Statistics (2008), AustralianSystem o National Accounts, Cat. no. 5204.0, ABS, Canberra

As the above graph indicates the growth in roadtransportation, particularly road reight, in the last 30 yearshas grown much aster than GDP. This growth has createda serious congestion problem in Australias road network.

A reight strategy is required to address such issues andto ensure that all modes, in particular rail, play their partin alleviating the impending road congestion crisis.

Rail is a high density mode o transportation that cancreate signicant new capacity or both passenger andreight journeys with limited land availability. One reighttrain has the potential to remove the equivalent o up to

150 trucks o the road14.


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15 Victorian Department o Transport (2008), Freight Futures: Victorian Freight Network Strategy, see URL: http://www.doi.vic.gov.au/doi/doielect.ns/2a6bd98dee287482ca256915001c0c/612a49cebbee70a1ca257521002095a/$FILE/reightutures.pd

16 Freight & Logistics Council o NSW (2009),Actions not Words: A Freight Agenda or NSW, November 2009


Lack o Integrated Planning &

Microeconomic Reorm

Given Australias growing and aging population and theneed or high productivity gains to ensure international

competitiveness, realising the eciency gains rom

integrated planning and microeconomic reorm is essential.

Integrated Policy & Planning Frameworks

The need or national transport planning is paramountto ensure the provision o the most ecient reightnetwork. Freight networks go beyond local council andstate boundaries and require a national approach. Thecurrent state based approach to transport planning has

created signicant ineciencies. The Victorian15

and NSW16

governments have both outlined strategies or their reightnetworks, yet these strategies have major compatibilityissues. For example the NSW and Victorian rail reightnetworks use dierent track gauges, and have dieringtrack quality, requiring the use o multiple locomotivesor journeys between NSW and Victoria. Individual Statereight plans are not sucient. A national plan is needed ithe greatest productivity gains are to be achieved.

Microeconomic Reorm

Economic and operational regulations governingreight transport has been piece-meal and has inhibitedoperational eciency in the reight transport market.

Saety, OH&S, competition, access and pricing regimesdier across jurisdictions and are unnecessarilyburdensome. For example track access pricing isdetermined by individual state regulatory bodies,

who oten determine dierent pricing structuresusing dierent recovery models, despite the act thatmost operators run services across interstate borders,subjecting them to dierent regimes.

Increasing Energy Prices & the

Carbon Restricted Economy

Increasing liquid uel prices and the impending carbonrestricted economy will necessitate a complete overviewo our use and perception o transport.

Energy Prices

Increasing energy prices over the coming decade willnecessitate the shit towards uel ecient transportation.

The recent wild fuctuations in world oil prices hasthrown doubt on any long-term projections or oil prices,however the combination o declining reserves andincreasing demand would indicate a continued increasein oil and other energy prices. As the graph belowdemonstrates, the historical trend in oil prices is upwards.

Price o Oil (per barrel) in USD

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

1989USD (Real)

NominalUSD

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Source: International Energy Agency


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17 Department o Climate Change & Energy Eciency (2008), Carbon Pollution Reduction Scheme: Australias Low Pollution Future, December 1818 Department o Climate Change (2007), National greenhouse gas inventory,

19 Garnaut Climate Change Review (2007), Transport, Planning and the Built Environment, Issues Paper - Forum 520 Department o Climate Change (2007),

21 BITRE Australian Transport Statistics Yearbook 2007

22 Bureau o Inrastructure, Transport and Regional Economics (2009), Australian Transport Statistics Yearbook, Canberra


Carbon Restricted Economy

The Australian Government has set a target o a 60%reduction in GHG emissions per annum in 2050 rom2000 levels17.

The Federal Department o Climate Change and EnergyEciency18 estimated that the transportation industryaccounted or 13.2% o Australias domestic emissions in2007. Emissions rom cars account or approximately 54%o Australias total domestic transport emissions, and areprojected to increase by 40% between 1990 and 202019.

Trucks and light commercial vehicles account or 31% oAustralias transport emissions, and emissions rom thesemodes are projected to increase by 112% between 1990and 2020.

Passenger and reight rail services are only responsibleor 2.4% o total transport emissions20. This is despite theact that passenger rail accounts or 5-10%21 o passenger

journeys and reight rail accounts or approximately 50%o the land reight task22.

GHG emissions perormance and uture energy inputcosts need to be incorporated into inrastructureinvestment and policy decisions.

A Multi-Modal SolutionGiven the projections o the doubling o the reight task

by 2020 rom 2006 levels, increasingly congested road,capacity constraints or rail and ports, and increasingscarcity o urban land, all modes o reight transport mustbe used in the most ecient manner. This will ensurethe productivity gains required to maintain Australiasinternational competitiveness.

The Federal Government must actively ensure theremoval o any hurdles in creating a collaborative ullyintegrated supply chain or reight. Each mode o reighttransportation has a comparative advantage in certaincircumstances (see table below as an example) andmust be utilised appropriately to achieve maximum

eciency gains.

The relevance o the table below is to show that eachtransport mode has a role to play in the movement oreight. It highlights the comparative advantage o eachmode, including cost o inrastructure, reliability, speedand fexibility.

Comparisons o Benefts o Various Modes o Freight

Attribute Ocean Tanker Rail Truck

Scale 1 ML+ 100 kL 5-60 kL

Unit costs Very low High Very high

Capital costs Very High Low Very low

Access Very limited Limited High

Responsiveness 1-4 weeks 2-4 days 4-12 hours

Flexibility Limited Good High

Usage Long haul Medium haul Short haul

Source: adapted rom Ken Dymock (2007) General Manager, Distribution, Petro Canada,Chartered Institute o Logistics and Transport, Transportation Situation & Outlook Conerence.


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At the heart o a multi-modal approach to reightsupply chains is the ability to use the right mode otransport or the job. Nearly all sea reight journeys willrequire a transer to other modes o transport including

rail and road. Similarly a large portion o rail reightjourneys will require a transer to road transportation. Indetermining the right mode the Federal Governmentmust ensure that the reight market is set up in such away to incorporate saety, environmental and economicconsiderations.

The industry must work closely with Government toensure investment in inrastructure and reorms totransport policies lead to the greatest eciency gains.

The Contribution o Rail

HIGHLIGHTS

Rail is the most cost eective mode oland reight transportation or journeysover 1500km and with increasing liquiduel prices; rail will enjoy absolute priceadvantage or all non-urban journeys.

Rail reight is 7-9 times saer thanroad reight.

Rail reight is 10 times more uel ecientand causes up to 10 times less emissionsthan road reight.

Rail reight network reorms hold the key tothe alleviation o road congestion(one reight train removes up to 150 tuckso the road).

Cost eective

Rail has the potential to be the most cost-eectiveland based mode o transportation despite structuralimpediments caused by lack o investment in track andacilities inrastructure and the eective Governmentsubsidisation o road reight.

Average Freight Costs or Australian

Inter-Capital Road and Rail Freight

500

Rail

Road

Rail (excl. PUD)

1500 4000

Cost

Source: BITRE (2008)

When the cost o multi-modal transportation is actoredin, rail becomes the cost eective mode or reight

journeys above 1500 km. When excluding the high costo multi-modal transport, rail becomes the cost eectivemode or reight journeys over 500 km. With adequateand integrated multi-modal acilities and changes tocompetition regulations, rail will enjoy a price advantageover road transport or all reight journeys over 500km.

The above analysis assumes oil prices o between $US30-50 per barrel. At oil prices above $US 100 per barrel,

rail enjoys an absolute price advantage over road in mostinter-capital corridors. Given the general upward trend inoil prices, the Federal Government should ensure that railinrastructure is adequate to allow the Australian economyto take advantage o rails superior cost eectiveness.


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Superior Saety Record

FACTSAround 1500 people die on the roads everyyear in Australia

Road accidents accounts or 94% o all atalaccidents relating to transport,

Rail is responsible or only 2-3% o all landtransport accidents

Heavy vehicle accidents account or around170 atalities p.a.

Rail reight accounts or around 30 atalities

p.a.

Rail Transport (including reight) is up to 7-9times saer than road transportation

The cost to the Australian economy o roadaccidents is up to $31 billion p.a.

The cost to the Australian economy o heavyvehicle accidents is up to $3 billion p.a.

Over 80% o heavy vehicle accidents occuron highways

Switching long distance land reight

transportation to rail will save up to 110 livesand $2.1 billion p.a.

Over 1500 people die on our roads every year, manymore are seriously injured or permanently disabled.

These road accidents cost the Australian economy upto $31 billion per annum. Not all accidents or atalitiesare preventable, however where they are, governmentsmust act to prevent such deaths.

A modal shit towards rail transport is the solution tothis needless waste o lives and money. Rail transport is7-9 times saer than road transport in relation to bothpassenger and reight.

However historical underinvestment in rail inrastructureand avourable road pricing and road subsidies hasencouraged Australias over-reliance on the use o roadtransportation. This over-reliance on roads has costAustralia 14 thousand lives and close to 500 billiondollars in the last decade.

Fatalities

Rail transport is the saest orm o land transportationin Australia in terms o the incidence o atalities. In2008, 1442 atalities occurred on our road networkswhile only 33 atalities occurred on our rail network(excluding suicides). Rail accounts or only 2-3% o landtransportation atalities.

Total Land Transport Related Fatalities

YearRail Fatalities as % o Total Land

Transport Fatalities

2001 3.05%

2002 3.27%

2003 2.59%

2004 2.65%

2005 2.77%

2006 2.43%

2007 2.63%

2008 2.29%

0

200

400

600

800

1000

1200

1400

1600

1800

2001 2002 2003 2004 2005 2006 2007 2008

Road Rail

Source: Extracted rom ATSB Transport Saety Report, Rail Statistics

(2009) & the Australian Roads Death Database

Similarly, reight rail is by ar the saest orm o landreight transportation, maintaining a superior saetyrecord as compared to road based reight transportation.


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23 Rail reight atalities were estimated by using total rail atalities per annum, subtracting passenger related deaths rom the total and apportioning60-70% o level crossings atalities to rail reight.

24 Adena & Montesin (1988), Day to Day Travel in Australia 1985-86; CR 69; Instat and FORS25 ATSB (2005), Discussion Paper: Cross Modal Saety Comparisons, at URL:

http://www.atsb.gov.au/publications/2005/cross_modal_saety_comparisons.aspx

26 Based on dividing number o atalities as reported by ATSB and dividing it by the total tonne-kms


Total Land Freight Related Fatalities

YearRail Freight Fatalities as a % o Total

Land Freight Fatalities2001 14.89%

2002 14.00%

2003 12.28%

2004 14.00%

2005 14.52%

2006 11.47%

2007 11.86%

2008 11.07%

0

50

100

150

200

250

2001 2002 2003 2004 2005 2006 2007 2008

Road Rai l (Estimate)

Source: Extracted rom ATSB Transport Saety Report, Rail Statistics(2009) & the Australian Roads Death Database23

There is little recent Australian data on the incidenceo transport atalities and cross-modal comparisons(especially or reight transportation). The most otencited independent research on the cross-modal incidenceo transport atalities was conducted in 198824. Figures

rom this research have been cited by the AustralianTransport Saety Bureau (ATSB) as recently as 200525.

Cross Modal Fatality Rate Comparisons 1985/86

ModeFatalities per 100 million

passenger kilometres

Passenger Rail 0.24

Road 1.54

Pedestrians 16.12

Cyclists 4.24

Source: Adena & Montesin (1988)

The above table suggests that passenger rail is seventimes saer per passenger km as compared to road travel.

This does not actor in the incidence o pedestrian andcyclist atalities that are caused as a result o accidentswith motor vehicles.

Independent research or the incidence o atalitiesor reight transportation is scarce. The AustralasianRailway Association (ARA) has estimated the incidenceo rail reight atalities per billion tonne kilometres to beapproximately be approximately 0.126 (excluding suicide)while heavy vehicles had a rate o 0.94.

Freight Fatalities per Billion Tonne Kilometres

Source Road Rail

ARA 2006 Estimate .94 .1

Freight Corp 1998 Estimate 3.8 .55

The Freight Corp estimates show the incidence o atalities in 1998 orboth rail and road to be much higher than in 2006. This conclusionwould seem to be consistent with the improved saety o reighttransportation and the signicant increase in reight tonne kilometres.The above table indicates that rail reight is 7-9 times saer thanroad reight. This result is consistent with gures or passengertransportation.


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27 LECG Consulting (2010), The cost o road crashes, published by the Australasian Railway Association

28 Heavy Vehicles account or 10% o atalities and we have assumed 10% o injuries. Does not take into account the greaterproperty damage heavy

vehicle accidents cause and thus would suggest that our estimate is conservative.29 LECG Consulting (2010), The cost o road crashes, published by the Australasian Railway Association

30 Hassall K. (2000), Urban Truck Accidents in Australia, Fatalities and Serious Injuries: 1990 to 1999.Department o Civil and Environmental Engineering, Melbourne University, 23 October


Reducing the Economic Cost o Freight

Transport Accidents & Saving Lives

The cost o road accidents in 200627

was calculated bythe Bureau o Inrastructure, Transport and RegionalEconomics (BITRE) to be nearly $20.1 billion per annumin 2010 dollars (assuming 3% rate o infation).

Based on this research, it is estimated that the costattributed by BITRE to heavy vehicle accidents to beapproximately $2.1 billion per annum28.

However the above estimates have been criticisedor using a very low statistical value o a humanlie (VSL) in calculating the cost o road accidents.International comparisons would suggest a VSL oaround $6.8 million29, while the BTE research used a VSL

o around $3 million in calculating their estimates or thecost o road crashes (in 2010 dollars).

Using a VSL o around $6.8 million, and using themethodology o BITRE, would increase the cost o roadaccidents to around $31 billion and the cost o heavyvehicle accidents to approximately $3 billion per annum

(in 2010 dollars).

Research conducted by LECG Consulting puts the gureo road accidents closer to $35 billion per annum.

Saety costs resulting rom heavy vehicles could besignicantly reduced by regulations promoting a modalshit towards rail. Around 80% o all heavy vehicleatalities occur on highways30. I this reight was movedonto rail, 110 lives and $1.9 billion would be saved. Giventhe expectation that land reight volumes will doubleby 2020 rom 2006 levels, our estimated savings shouldincrease correspondingly.

0

5

10

15

20

25

Ancillary RailHeavy RailArticulated Heavy VehiclesRigid TruckLight Commercial Vehicles

22.21

3.18

1.010.32

0.09

Source: ARA Rail Industry Report 2008


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Environmentally Friendly and

Fuel Ecient

Rail reights environmental perormance speaks oritsel. Rail reight uses 10 times less energy comparedto road reight, or every tonne o reight carried onekilometre. Given the Federal Governments climatechange commitments, a modal shit towards rail reightwould have signicant positive impacts on Australiasemissions perormance.

Given the possible introduction o an emissions tradingscheme and other policy mechanisms to reduce GHGemissions and increasing energy prices, a shit to railreight will provide signicant cost savings to theAustralian economy.

Rail reight is the most ecient land transport mode,rom an urban planning perspective, because it avoidsroad congestion, reduces exhaust emissions and provideshealth benets or the urban community31 throughimproved air quality. A modal shit towards rail has thepotential to remove signicant numbers o heavy vehicleso the road and, with adequate intermodal acilities,reduce the number o light commercial vehicles.

The United Nations Environment Programme hassupported the International Union o Railways inhighlighting the signicant emissions savings that could

be achieved by a modal shit away rom road transportto rail reight32.

Solution to Congestion

Road congestion costs Australia up to $15 billion perannum33. With an increasing population, increasingincidence o passenger and reight transport,congestion costs will rise signicantly withoutappropriate transport policies.

Investment in dedicated rail reight inrastructure will

have massive benets in relieving road congestion. Ithas been oten quoted that one reight train has thecapacity to remove up to 150 trucks rom the road34.Investment in dedicated reight inrastructure willuntangle rail reight rom urban and regional passengerrail inrastructure, increasing uture capacity to providepassenger transport. This will translate into a signicantreduction in private car journeys.

Current State o Rail

HIGHLIGHTS

Under-investment in rail inrastructure inthe past 30 years has let the rail networkin a dilapidated state, inhibiting modalshit towards rail despite its cost advantageand superior saety and environmentalperormance

Poor planning and government policieshave distorted the reight transport marketin avour o road reight and severelyrestricted rail reights competitiveness(reliability, fexibility, cost-eectiveness).

The impact o such policies has beento create an unhealthy reliance on roadtransportation and inhibit the operation oecient, cost eective land transport market.

The rail industry is still grappling with the same issuesthat it aced some 20-30 years ago. There have beenincremental increases in capacity through programsimplementing clearways, duplication and reducing trackcurvature. However the basic structural issues acing theindustry have not been addressed:

Dierent track classications, quality and gaugesinhibiting the ability to run reight services acrossAustralias network using a single locomotive.

Track quality curvature and kinematic enveloping(tunnel, bridge widths etc.) reducing maximumspeeds, loadings and double stacking and ability touse cheaper, environmentally riendly cutting edgelocomotive technology rom overseas.

Fragmented supply chains inhibiting operationaleciency in the provision o reight.

Lack o adequate multi-modal acilities near industrialcentres and adequate connection to rail networksand ports.

31 UIC website, see URL http://www.railreightportal.com/spip.php?article1132 UIC (2009), Keeping Climate Change Solutions on Track: The Role o Rail, see URL http://www.railreightportal.com

33 BITRE (2007), Estimating urban trafc and congestion cost trends or Australian cities , Working Paper 71

34 American Association o Rail 2010, see URL: http://reightrailworks.org/open-highways-one-train-at-a-time.php


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Inrastructure Expenditure Road Rail % o Total Road

Rail Inrastructure Expenditure


These structural impediments have arisen due to ahistorical underinvestment in rail inrastructure, thede-prioritisation o rail as a transport policy solution andmarket ailures and distortion in the land reight market.

The recent announcement by the Federal Governmento increased rail inrastructure expenditure alongwith the prioritisation o reight as the number onetransport agenda or COAG is a welcome rst step inaddressing these issues. The Federal Government hasearmarked a urther $7.9 billion over six years towardsrail track inrastructure, increasing annual expenditure by$1.3 billion.

Inrastructure

Historically there has been an underinvestment in railinrastructure, with rail inrastructure only receivingbetween 20-30% o the investment or the combinedinvestment in road and rail inrastructure. This has letrail networks in a sub-optimal state and has signicantlyimpaired the ability o rail reight service providers tocompete with road reight.

The total Government expenditure or road in 2007-08was approximately $13.1 billion consisting o:

$2.7 billion rom the Federal Government

$7.3 billion by state and territories (includes grants

provided by the Federal Government)

$2.1 billion by local governments

Total expenditure on roads, including private expenditurereached approximately $14 billion. Under the NationBuilding Program, Federal unding or roads will increaseto an average o $4.6 billion per year or the period rom200809 to 201314, an increase o $1.9 billion.

Total expenditure or rail track inrastructure (privateand public expenditure) in 2007/8 was approximately$2.1 billion dollars. This gure is set to increase by

$1.3 billion as a result o recent Federal Governmentannouncements. As the diagram on the ollowing pagedemonstrates, rail inrastructure expenditure has notexceeded 25% o total land transport inrastructure orthe past 30 years.

Source: ARA Industry Report 2008; Media Release Minister Albanese (2009), Budget Provides Historic Investment in Rail, 12 May;Productivity Commission (1991), Rail Industry, Report no 13

$15.9 B

$3.4 B$2.1 B

$14B

2007/08 2009/10

(estimate)

Road Rail

82%

18%

87%

13%

77%

23%

2007/08 2009/10

(estimate)

1989/1990

Road Rail


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27/44


recommended that B-double prime movers be explicitlysubsidised to ensure they pay no more than road trainprime movers. The grounds or the subsidy is to ensurethe heavy vehicle pricing system does not encourage the

use o less sae, less ecient vehicles that might causemore environmental damage.

It is strange that such subsidisation is not extended torail reight, which is the saest and most environmentallyriendly mode o land reight transportation. Thesubsidisation o B-double prime movers may correctmarket distortions within the road transport market, butcreates urther distortions in the road-rail transport market.

Emissions Trading Scheme (ETS)

With respect to the ETS and uel excise reductionsor liquid uels, the rail industry believes the currentproposal, to provide price osets or liquid uels butnot electrically generated energy, will distort the landtransport market in avour o road transportation. Thisdistortion will lead to poor emissions perormance, byavouring road transportation which is up to 9 timesless uel ecient than rail transportation. In light o theshit towards renewable sources o electrical energy, thispenalty on electrical powered reight movements willurther deteriorate Australias emissions perormance.

Source o Inrastructure ExpenditureThe public nature o road inrastructure and thesignicantly more private nature o rail inrastructureinvestment urther distort the land reight market. Whilegovernment investment decisions are made based oneconomic evaluations, private sector investment decisionsare made based on nancial evaluations which havehigher risk premium thresholds, higher unding costs,shorter time-rame or ull recovery o investment andtend not to actor in all social benets to the community.

These actors create a situation where investment in

economically viable rail inrastructure is not madebecause this investment would not urther the protmaximising goals o private rms. This problem does notexist in road inrastructure investment. This urther distortsthe land transport market in avour o road transportation.

International Shipping Permits

Permits42 granted to international shipping to carrycoastal trade between Australian ports counters theoutcome o competitive neutrality, where oreign ownships are not required to meet Australian industrial andOH&S regulations.

Impacts

Reliability and Service Perormance

Reliability and transit times are a major determinanto market share in the land reight industry. An Ernst

& Young study (2006) ound that time sensitivityand reliability were o greater importance to reightorwarders than price or cost eectiveness.

Freight

Type

Sydney-

Melbourne

Sydney-

Brisbane

Melbourne-

Brisbane

Express 5% 5% 5%

Availability&

Reliability70% 70% 60%

Price

Sensitive

25% 25% 35%

Source: Ernst & Young 2006

Due to the de-prioritisation o rail reight and inadequatetrack and acilities inrastructure, rails transit times andreliability has suered. As the table below demonstratesrail transit times are much higher than road reight andrails reliability varies greatly with actual transit timesvarying rom anywhere rom 2-10 hours on scheduledtimes. Due to poor inrastructure, on some corridors railonly reaches average speeds o 45 km/h while heavy roadvehicles reached average speeds o around 70km/h43.

42 Permits granted under Navigation Act 1912 (Cth)

43 BTRE (2007),Australian Rail Freight Perormance Indicators 2005-6, Inormation Paper 59


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Typical Freight Transit Times Door-to-Door (Hours)

ModeSydney-

Melbourne

Sydney-

Brisbane

Melbourne-

Brisbane

Melbourne-

Adelaide

Melbourne-

PerthRoad 11 15 23 9 43

Rail 17 21.5-26 36.5-45 14.5-16.5 58-68

Source: BITRE (2008)44

44 BITRE (2008), Road and Rail Freight: Competitors or Compliments :Department o Inrastructure, Regional Development & Local Government

45 Port Jackson Partners (2005), The Future o Freight, published by the Australasian Railway Association

46 ACIL Tasman (2010), Study into the Perceptions o Rail, published by the Australasian Railway Association

The inability to provide timely and reliable services haseectively ruled rail reight out o 65-75% o the North-South reight task.

Cost

Rail has the potential to be the most cost-eective modeo land reight transportation. However, under-investmentin rail inrastructure and taxes and subsidies avouringroad transportation has stymied rails low cost potential.

Average Freight Costs or Australian

Inter-Capital Road and Rail Freight

500

Rail

Road

Rail (excl. PUD)

1500 4000

Cost

Source: BITRE (2008)

The above diagram demonstrates the price disadvantage

rail is placed under due to poor multi-modalinrastructure within Australia. When excluding the highcost o multi-modal transport, rail becomes cost eectiveor reight journeys over 500 km. However, when thecost o multi-modal transportation is actored in, rail onlybecomes cost eective or reight journeys above 1500km. This severely restricts rails ability to compete on theNorth-South corridor.

Access pricing also signicantly limits the costeectiveness and competitiveness o rail reight. Due tothe subsidised nature o road pricing, only 5% o total roadreight costs stem rom road access charging while trackcharges accounts or between 30-40% o rail reight costs45

Customers Perception

Customer perceptions o rail reight have deterioratedas a result o the deciencies in the rail reight serviceoering. A recent survey o reight orwarders by ACIL

Tasman46 has indicated that customers who have accessto rail reight are reluctant to use such services due to aperception o:

being unreliable (possibly due to a lack o dedicatedreight lines, and de-prioritisation o reight services);

being excessively bureaucratic with processes andpaperwork (possibly due to the volume o regulatoryburdens imposed on rail)

lack o coverage (due to poor inrastructure and lacko inter-modal acilities); and

this lack o coverage leading to higher costs and timewasted on administration or the reight orwarder.


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30/44


31/44

A CALLTO ACTION

3


32/44


Freight Transport Policy

Action Plan

HIGHLIGHTS

Address market distortions (ensuringeconomically neutral and consistenteconomic regulations or all modes acrossall jurisdictions through a single economicregulatory ramework)

Integrated planning (nationally integratedland and transport planning)

A single national land transport policy ramework

Rationalise and consolidate regulatoryrequirements (uniorm and consistent saety,OH&S competition and environmentalregulations or all modes o transport)

Encourage inormed and costs eectiveinvestment (Redress the current andhistorical underinvestment in railinrastructure)

Internalise externalities (saety, environmental

and congestions related costs)

Clearly state and incorporate environmental,social and economic govt objectives intothe transport policy ramework

Single Australian Land Transport

Economic Regulator

Creating an economically competitive level playing eld

or road and rail reight providers is o utmost importanceor the reight industry, reight orwarders, customers andin ensuring Australias productive capacity to maintaininternational competitiveness. Competitive multi-modalreight transportation will ensure highly ecient, sae,innovative, environmentally riendly and cost eectivereight solutions or Australia.

Road-Rail Pricing

The current disparity between road pricing and railaccess charges has distorted the land transport market

in avour o road transportation, depriving Australia othe economic, saety and environmental benets o railtransportation. The principal o ull cost recovery mustunderpin both road pricing and rail access charges

The establishment o a single Australian land transporteconomic regulator that determines road and rail accesscharges across all jurisdictions would ensure uniormcost recovery principals and subsequently competitive

neutrality amongst all land reight modes andconsistency o economic regulations on a national level.

This regulatory unction can be administered by anexisting regulator such as the Australian Competition andConsumer Commission, or the creation o a new regulator.

Mass distance road charging is one tool to ensurecompetitive neutrality in the land reight market, wherepricing or heavy vehicles and rail would be governedby principals o ull cost recovery. Access arrangementssimilar to those or rail could also be considered.

Integrated Land & TransportPlanner & a Single Australian Land

Transport Policy Maker

The rail industry believes current decision-makingby governments is incremental, short-term andsubsequently leads to sub-optimal outcomes.A longer-term inrastructure planning ocus will ensurean holistic approach to developing a viable and ecientnational rail network.

Australia has no coordinated national strategy orinvestment in rail inrastructure, investment in rollingstock, and the location, capacity and access to railterminals. A nationally coordinated reight strategyaligned to land-use planning and coordinated across alllevels o government will provide greater certainty orpublic and private inrastructure expenditure.

Inrastructure Australias proposed National FreightNetworks Plan, Ports Strategy and COAGs transportpriority o reight is a step in the right direction. Thescope o these strategies should be expanded to includean holistic approach to transport planning, addressing

the key policy issues such as economic and operationalregulations, modally neutral transport policies andintegrated transport and land use planning. The bestlong-term solution is the establishment o a singleAustralian integrated land transport planner and a singleAustralian Land Transport Policy maker.

Some criteria to guide integrated planning and nationaltransport policy development include:

nationally consistent reight inrastructure investmentregime (Federal, state, local governments andprivate sector);

linking uture reight inrastructure investment to demand orecasting and uture population growth

and movements;


33/44

33A Call to Action

ensuring adequate acilities to maximise utilisation oexisting and uture rail networks;

co-location o rail inrastructure and rail acilities near

commercial centre;modal neutrality, where government reight policydecisions encourage modal competition;

increased Government incentives to ensure privateinvestment in rail is optimised and thus enjoy thesaety and environmental o rail;

ensuring viable modal competition on highvolume corridors;

internalising externalities (saety, environment, landuse, congestion) when making reight inrastructureinvestment decisions; and

ensuring maximum interoperability o theinrastructure with existing reight network, rollingstock and acilities.

Inormed & Cost-Eective

Investment

The rail industry understands the need or cost-eectiveinvestment and recognises the need to invest ininrastructure that will maximise social, economic and

nancial outcomes or Australia.As a part o a national transport policy, the rail industrywould seek investment in rail inrastructure whereexpected current/uture demand will be high, supplychains are acing capacity or bottlenecks, where theinrastructure promotes interoperability betweenrail networks, control systems and rolling stock, andwhere the investment decision has been based on theprinciples enunciated in this strategy.

Appendix 1 highlights specic inrastructure investmentsput orward by the rail industry that would meet theabove criteria. While members have diering views

on which projects should be prioritised the ollowingprojects had signicant support:

Gauge standardisation across state borders;

Progressive improvement o track quality across thenetwork (concrete slabs, improved track curvature,gauge standardisation etc) that will allow longertrain congurations and the use o leading edgelocomotive technologies rom overseas;

Further investment in multi-modal acilities nearcommercial centres such as ports;

Kinematic enveloping improvements on highdemand inrastructure that will allow the doublestacking o trains; and

Improved North-South reight train inrastructure

(whether it be through reight corridors north andsouth o Sydney or through the provision o aninland corridor).

Incentives or Investment

Unlike road inrastructure, the private sector contributessignicantly to investment in rail inrastructure. Becauseo the prot maximising imperatives o the private sector,many economically viable rail, but not commerciallyviable, projects are over-looked. This is a poor policy

outcome or Australia, given rails superior environmentaland saety perormance. Through incentives and subsidies,the Government can ensure such projects are initiated.

Rationalise and Consolidate

Regulatory Requirements

The myriad o, oten inconsistent and duplicativeregulations governing transportation must beconsolidated and simplied.

Separate state operational and economic regulations

create a signicant compliance cost or national reightcarriers as does modal based regulations or multi-modalreight service providers. Any unnecessary additionalcosts reduces Australias ability to compete internationallyand increases costs to domestic consumers.

Internalising Externalities

The superior saety and environmental perormance orail reight must be recognised and incorporated into thetransport inrastructure investment decision process andinto transport policy development. In the absence o a

mechanism to ully internalise such negative externalities,the Federal Government should provide both supplyand demand side incentives to encourage the use orail reight. The UK Government actively encourages thegreater utilisation o rail via the ollowing schemes47:

Freight Facilities Grants (FFG) - The rail FFGscheme is a capital grant scheme that aims toencourage the transer o reight rom roads tothe more sustainable rail options by helping railservice providers to invest in the acilities neededto compete in nancial terms with road.

47 Cavill & Humphreys (2001), Rail Freight Grants: Promoting Rail reight Growth in Britain, Association o European Transport


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Rail Environmental Benet Procurement Scheme(REPS) (Scotland48) - The scheme assists reightcustomers with the operating costs associatedwith running rail reight transport instead o road.

Track Access Grant (TAG) Grants are paid to railservice operators to cover some o the costs o railtrack access.

Clearly Stated & Quantifed Social,

Environmental & Economic

Outcomes

Governments need to clearly articulate and supporttransport policy objectives. The market alone may not

be able to deliver these objectives. These objectivesmay include:

Environmental perormance (emissions, noise,land use)

Saety

Congestion

Competitive markets (ensure reight users have aviable modal choice on high volume corridors)

Eciency

Flexibility

Energy Security

The terms o reerence o the National TransportCommissions (NTC) review o Freight Rail SubsidyFramework49 also acknowledges the need or clearlystated Government objectives to support Governmentdecisions on investment and expenditure.

There is broad industry support or a national policyramework, with economic, social and environmentalgovernment objectives.

Flexibility should be added as an objective to ensure

inrastructure investment is able to respond to changingmarket demands.

The Government should also ensure that theirsocio-economic objectives are clearly and accuratelyincorporated in Governments inrastructure investmentdecision making.

Industry Action

HIGHLIGHTS

The rail industry has invested two dollars orevery one dollar spent by government toensure operational eciency (or example theMelbourne-Perth journey has been cut romover 7 days to 3-4 days through investment inintermodal acilities).

The rail industry acknowledges the need orcooperation in the provision o reight transport.

The rail industry is aware o customer

perceptions o its reight services and is activelyseeking to change these perceptions throughinnovative products and new marketingstrategies.

Operational Eciency

The industry has committed to improving the operationaleciency o its services. The industry has been activein ensuring uture interoperability o rail networks and

systems and improving supply chain management toensure greater reliability and eciencies.

Freight operators have invested heavily in rail acilities toensure the quickest handling, loading and loading timesor trains. It should be noted that or every one dollar inGovernment investment the rail industry has invested twodollars50. This private investment has ensured signicantimprovements in journey times and reliability, withproviders able to provide Melbourne to Perth services in3-4 day as opposed to the previous journey times o over7 days. Operational eciency can be improved urtherand the industry will continue to invest in operational

capabilities and improve its service provision.

The rail industry has also developed innovative systems toimprove uel eciency and environmental perormance.The Freight-miser driving system, developed by the railindustry, provides real time inormation to long-haul traindrivers to allow best-practice driving techniques thatensure uel eciency maximisation51.

48 See the Scottish Government website at URL: http://www.scotland.gov.uk/Topics/Transport/FT/reightgrants1

49 National Transport Commission (2009), Freight Rail Subsidy Framework, November

50 Victorian Freight and Logistics Council (2010), Business gets behind rail revival, Media Release 18 February51 CRC or Rail (2008), Transormational Change in Australian Railwayssee URL: http://www.railcrc.net.au/media-centre/downloads/CRC-IRSE-

KeyNote-speech.pd


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35A Call to Action

The issue o interoperability is an ongoing one andthe industry is working in a cooperative manner toensure that a myriad o operational unctions includingtrain protection and communication systems will be

interoperable across state networks.

Industry Cooperation

Supply Chain Cooperation

The industry has shown a willingness to coordinatesupply chains; however cooperative eorts led by theprivate sector are constrained. The Australian LogisticsCouncil (ALC) believes many companies shy away romcollaboration projects because o perceived competitionand access law breaches. Various government reviewso national competition policies have indicated therestrictive nature o competition laws in relationto the provision and administration o large scaleinrastructure52.

Data Framework

Australia has no national data ramework. The AustralianStanding Committee on Transport (SCOT) WorkingGroup report recommended a National Transport Data

Framework governed by an independent national bodyin 2004. The rail reight industry is supportive o anycollaborative eorts in collating data and through theAustralasian Railway Association, has been instrumentalin collating and publishing rail reight data throughthe Annual Rail Industry Report and collaboration withBITRE in publishing the annual Australian rail reightperormance indicators.

Research

Research in rail is coordinated by the Rail CRC and

unded by government, industry and universities. TheCRC is undertaking research to address key issues acedby rail reight. The rail industry provides $4 million perannum to the CRC in nancial and in-kind contributions.

Uniorm National Rail Saety Regulations

& Standards

The rail industry ully supports the COAG agreement toestablish a national regulator or rail and progress madeon uniorm model saety legislation. The rail industry iskeen to oer its continuing support in participating in theprocess to establish the National Rail Saety Regulator.

Improved Customer Oering

The rail reight industry is working hard to improvethe product oering to customers. A recent survey oreight orwarders by ACIL Tasman53 has indicated thatcustomers who have access to rail reight are reluctant to

use such services due to a perception o:

being unreliable (possibly due to a lack odedicated reight lines, and de-prioritisation oreight services);

being excessively bureaucratic with processesand paperwork (possibly due to the volume oregulatory burdens imposed on rail)

lack o coverage (due to poor inrastructure andlack o inter-modal acilities); and

lack o coverage leading to higher costs andtime wasted on administration or the reightorwarder.

The rail reight industry, through the ARA, is developinga marketing and advertising strategy to address thendings o the ACIL Tasman report. The industry hasalready made signicant improvements in its customeroerings, including prioritised express premium servicesbetween Sydney to Perth and Melbourne and Perth anddoor-to-door delivery.

52 COAG (2005), National Partnership Agreement to Deliver A Seamless National Economy

53 ACIL Tasman (2010), Study into the Perceptions o Rail, published by the Australasian Railway Association


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Outcomes o a

Freight Strategy

Competitive Neutrality

The objective o competitive neutrality is a leveleconomic playing eld or all modes o reight transportto ensure a competitive reight market.

A air and level competitive playing eld will allow theAustralian economy to choose the right reight transportmode or the right job. Competitive neutrality willinevitably lead to the increased utilisation o reight railservices or medium-long distance journeys and ensurethat Australia benets rom the social, environmental andsaety benets o rail.

To achieve competitive neutrality, the FederalGovernment must:

make wIn the absence o such measures,Government incentives and increased inrastructurespending or rail is required to address these marketdistortions and to ensure Australia benets rom thesocial, environmental and economic benets o thegreater use o rail.

Maximise PerormanceA collaborative, ully integrated supply chain or reightwill ensure the levels o productivity needed to maintainAustralias international competitiveness. Given thesheer size o Australias reight task, all modes o reighttransport must be utilised and rail will play an integralpart in this supply chain. Rail reight is the best suitedland based mode or medium-long distance transportwith superior environmental and saety perormance. Therail industry can identiy and a make a case or addressing:

Bottlenecks in the rail reight networks

Interoperability between various rail networks,

locomotives and operating systems

Cumbersome, duplicative and sometimesinconsistent regulations that govern the operation orail services

Land use planning

Industry and Federal Government cooperation willensure the delivery o such measures. The industryhas also put in place concrete measures to improve itsinternal operational perormance.

Value or Money

The reight strategy seeks value or money and

investment or reight customers, the Government andthe private sector. The strategy advocates using the rightmode o transport or the job and does not advocatea rail only solution to reight. The strategy advocatesa multi-modal solution or Australias reight task andreadily acknowledges the role o road transport inproviding short-medium reight transportation solutions.It would not be nancially or economically viable to relyon rail or such transportation.

The rail industry seeks the end to policies that leadto market distortions and advocates adequate modalcompetition on all high volume corridors. This will

ultimately lead to greater choice or reight customers,lower prices, greater innovation, better social outcomesand better quality services.


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CONCLUSION ANDAPPENDIX

CONCLUSION ANDAPPENDIX

4


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ConclusionTo meet the impending challenges posed by the

tripling o the reight task by 2050 and related issueso population growth, congestion, environmentalstewardship and energy security, governments andindustry must work together to address the operational,regulatory and nancial barriers to a truly nationalecient integrated reight transport system.

To address these barriers and provide an environmentin which the reight industry is able to respond touture challenges, it is recommended that the FederalGovernment establish an integrated Australian landtransport planner, and a single Australian land

transport policy makerthat provide:a long-term truly integrated, multi-modal vision

or reight transport;

Alignment o reight transport policy withGovernment social, environmental and economicpolicy objectives including land use planning;

The identication and internalisation, wherepossible, o externalities; and

The identication o key investmentrequirements based on uture needs.

To address the market distortions in the landtransport sector created by the current economicregulatory regimes, it is recommended that theFederal Government establish a single independent

Australian land transport regulatorto ensure:modally neutral economic and operational

ramework or the transport sector; and

principles o cost recovery or inrastructure thatare the same across modes and jurisdictions;

These reorms will be the key vehicles that will ensureintegrated planning, competitive neutrality and an holisticapproach to transport policy that considers a diverse seto issues including unding, economic and operationalregulation, transport and land use interactions and theimpact o other policy issues, such as the environment

and energy security, on transport planning.

Industry must also play it part in ensuring the long-term vision or a national reight network. Industrymust commit to improving its operational eciency,customer oerings and must work cooperatively to

ensure priority inrastructure needs are identifed

and actioned. Above all, the industry must ensureinteroperabilityo inrastructure with capital equipment,control systems and acilities.


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41Conclusion and Appendix

Appendix 1:

Specifc Government

Investment ProjectsThe ollowing list o projects has been identied byindustry players as priorities in ensuring the ecientoperation o the rail network. The ARA does not purportto present a whole-o-industry view in identiyingprioritised inrastructure.

Asciano/Pacifc National, ARTC &

Queensland Rail

passing loop extension on the Maitland-Brisbaneline or double tracking o Maitland-Brisbane

Dedicated northern Sydney reight corridors andenhancements o existing lines

Provision o double-stacking capability betweenSydney & Melbourne

Investment in multi-modal terminals in Sydney,Melbourne and Brisbane

Improvement o track quality to allow orleading edge rolling stock technology rom

overseas markets

Upgrade o the East-West Line

Asciano

Investment in inrastructure to allow or reliablejourneys between Parkes and Port Augusta

Standardisation o track gauges between Victoriaand NSW

SCT

Standardisation o track gauges between Victoria

and NSW

Inland North-South reight corridor, ailing thata North South Corridor that has guaranteed andreliable access south and north o Sydney

Incremental improvement o track quality to allowor leading edge rolling stock technology romoverseas markets

Investment in multi-modal terminals in Sydney,Melbourne and Brisbane

Investment in inrastructure to allow or reliable

journeys between Parkes and Port AugustaStandardisation o grain lines with rest o networkto allow locomotives to be shited to other reighttasks during grains o-season

WestNet

Upgrade o 200 km o East-West rail line to meetDIRN standard

Further investment in East-West rail line to enable

the accommodation o leading edge rolling stocktechnologies rom overseas markets

Duplication o Brunswick to Bunbury Harbour line

Incremental improvement o track quality ograin lines

RailCorp

Greater rail access and acilities in and aroundports acilities

Freight line linking Western Sydney industrial area

with rail acilities

Rail corridors (reight and passenger) north oSydney CBD


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ara - national freight strategy - towards 2050

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