East West Freight Corridor Trends

29 May 2014FLC WA

THA 1

Study aim

To test the thesis that east-west Australian freight volumes and growth rates are being reduced by an increase

in north-south freight into WA

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Study Approach

• Review of available data on east-west corridor freight

• Examination of observed new supply chain behaviour in retail logistics sector

• Suggestions for improved freight analysis

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Available data

• National data sources including BITRE, ABS

• Rail data from network operator

• Sea freight data from BITRE, port authorities

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BITRE 2010Interstate Freight in Australia

• estimated freight on interstate corridors 1972-2007

• disaggregated into separate modes

• forecasts freight to 2030

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East West Freight Task tonne kilometres

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East West Freight Task estimated and forecast growth rates

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East West Rail Freight Task

• Brookfield can supply high level rail data

• Gross tonne kilometres and train counts

• Otherwise data confidential to customers

• No data available on the nature of the freight

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East West Rail Freight Task

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Sea Freight Data

• BITRE annual summary of Australian Sea Freight and port activity

• Aggregated data, difficult to separate bulk from general freight

• Container freight limited to containers carried under coastal voyage permits

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Available data limitations

• Some national time series data (ABS, BITRE etc) available but highly aggregated and questionable

• Often rely on industry surveys• Forecasts usually based on statistical techniques

rather than underlying analysis of freight generating activity

• Lack of good modal data at industry segment level (retail, manufacturing, food etc)

• Understanding container freight made complicated by large empty container volumes

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East-west freight understanding

• East-west volumes have grown strongly since 1970s

• Rail dominates land transport, but coastal sea freight significant

• Volatile bulk minerals freight movements (especially by sea) can disguise trends in general freight (household and manufacturing)

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Container Freight into Fremantle

• Trade data accumulated into broad industrial groupings for last 10 years

• Full International imports 272,000 TEU, growing 9% per year to 2013

• Full Coastal ‘imports’ 56,000 growing at 3.5%

• 2014 volumes estimated from ytd April

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Import Freightby country of origin (TEU)

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Chinese imports growing

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• High growth, especially in household goods

Australian imports static

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•Trade fairly steady in recent years over a variety of commodities

East West Freight - best available estimates

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-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

9,000

10,000

2007 2008 2009 2010 2011 2012 2013

Inte

rsta

te T

on

ne

s (0

00

's)

Sea

Rail

Road

Best estimates suggest modal split: 7% sea, 62% rail, 31% road

Data woefully inadequate to identify trends in general freight

Retail Supply Chain Trends

• Two sectors:– Supermarkets and grocery– Consumer goods

• Supermarket sector highly concentrated, Coles and Woolworths controlling 73% sales (est 12k TEU pa)

• Consumer sector relies more heavily on imports and is much more disaggregated (est 60k TEU pa)

Source THA,IBIS World G4111

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Retail Study 1 – Kmart (Sydney)

• Example of increased dependence on imports affecting supply chain

• 50,000sqm warehouse opened Eastern Creek 2003• Receiving point for all NSW supplies• Handles 400 TEU per week• Large container storage space – long supply chain• Low value high volume product• WA supplied direct from overseas to local DC• No significant interstate movements

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Retail Study 2 - Target

• National Melbourne centred distribution model to 2013 • Replaced with regional DC model, increased imports,

potential for streamlining• Malaysian hub packs store-specific containers from

various Asian sources• Also imports from China and Bangladesh direct into

Fremantle• Reduction in east-west freight movement• CTI Logistics facility growing from 2000sqm to 30,000sqm

in 5 years

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Target chain realignment

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Target’s Supply Chain – 2013 Target’s Supply Chain – 2014

Retail study 3 – Supermarket Supply Chains

• Woolworths and Coles (73%) have large DC’s near airport

• More local product than consumer goods• Private labels imported and increasing (28%)• Aldi (10%) opening DC at Jandakot• Higher level of private label (imported) product• IGA, part of Metcash group (hardware,

liquor,automotive) • IGA have DCs but large proportion product

delivered direct to store by supplier

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National Retail chain models

• Major retailers migrating to new large DCs in logistics precincts in most cities, consolidating smaller warehouses

• Greater reliance on imports, especially in consumer goods

• National distribution models (based in Sydney and Melbourne) being replace by regional distribution by some major retailers

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Supply Chain Findings

• Significant reorientation around Asian supply networks for some if not all retailers

• Scale of Perth warrants move away from east coast DC model

• Potential significant impact on land use in Forrestfield/ Hazlemere

• Volumes small in overall east-west context but growing

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Freight data and analysis improvements

• Seek systematic disaggregated data from Brookfield Rail and rail operators

• Engage with major rail freight forwarders to understand their customer bases and design a qualitative long term survey re rail usage

• Use Fremantle Ports database to design a regular reporting protocol on containerised commodities

• Seek engagement with local retail sector to understand import v domestic supplier reliance

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