Terminals and Rail Freight Industry Performance

1

• Terminals and Rail Freight Industry Performance
• David Marchant, Chief Executive Officer, ARTC
• Presentation to BTRE Transport Colloquium 05,
  Canberra, 19 May 2005

2
Key areas to be covered

• Rail Freight Performance on the East West Rail
  Network
• Key impediments to increasing north south
  interstate rail freight transport
• Investment in the north-south interstate rail
  network
• Intermodal terminals and competition
• What are the options?

3
Performance on the East-West Rail Network.

• STRONG GROWTH IN INTERMODAL VOLUMES CONTINUES..
• Volume over the last 12 months has been nearly
  15 higher than the previous 12 months.

4
Performance on the East-West Rail Network.

• Rail efficiency has improved ...
• and
• access costs have fallen

5
Rail market share of interstate intermodal
markets.

• Significant differences in markets and
  competitiveness between corridors

6
Performance on the East-West Rail Network.

• It has been reported that rail reliability levels
  have deteriorated on east-west corridors over the
  last 2 years
• This has been reflected in
• rail reliability measures on
• the ARTC network.
• On time exit from the
• network generally tracks
• on time entry to the
• network.
• In many cases, trains enter the network late from
  terminals due to congestion in the terminal
  arising from the rapid growth of container
  volumes that have been experienced over the last
  few years. Terminal capacity has become
  constrained. Key east-west intermodal terminals
  are in Melbourne and Sydney. Access to the
  intermodal terminal in Melbourne is also
  congested.

7
Key impediments to increasing north south
interstate rail freight transport

• Infrastructure performance capacity
• Above rail capacity
• Terminal availability capacity in Sydney
  Brisbane
• Regulation network access, safety, operating
  practises
• Ability to integrate into wider logistics
  networks
• Flexibility
• Information flow
• Efficiency at interfaces (terminals, ports)
• Infrastructure pricing

8
Investment in the north-south interstate rail
network

• GETTING THE INVESTMENT RIGHT
• Around 1.7bn over the next 5 years
• ARTCs Initial Investment Program in NSW/Victoria
  around 700m
• predicated on the National Audit Objectives, and
  marketplace expectations for transit time, axle
  load, service reliability, etc.
• 450m Australian Government grant ARTC proposes
  to invest in the important Sydney Brisbane
  corridor
• 550m AusLink commitment improve rail market
  share and urban efficiency
• A further 145m to improve the Hunter Valley coal
  chain capacity.

9
Investment in the north-south interstate rail
network.

• PROPOSED PROJECTS OUTCOMES

10
Investment in the north-south interstate rail
network.

• GROWTH PROJECTIONS - GTK

11
Investment in the north-south interstate rail
network.

• IMPACT OF NORTH-SOUTH GROWTH ON EAST COAST CITIES
  INTERMODAL TERMINALS
• 10 Year Terminal Throughput Growth
• Achievement of north-south interstate growth
  projections resulting modal shift and underlying
  transport growth will more than double throughput
  of intermodal terminals in Melbourne, Sydney and
  Brisbane
• Includes in/out movements only (not through
  movements)
• Excludes impact of further east-west growth
  (around 4pa)
• Excludes regional movements (eg northern
  Queensland, NSW/Victoria country)
• Excludes ancilliary movements
• Port-generated traffic in metropolitan areas
  places another strain on intermodal terminal
  capacity.
• Existing terminal capacity appears to be
  affecting rail freight performance at existing
  volume levels.
• Without investment in existing and new intermodal
  facilities in all of these locations, volume
  growth projections will not be achieved.

12
Investment in the north-south interstate rail
network.

• IMPACT OF NORTH-SOUTH GROWTH ON EAST COAST CITIES
  INTERMODAL TERMINALS
• Intermodal Terminal Development Considerations
  Constraints
• Planning responsibility
• Location (Near major highways/rail connections,
  proximity to existing industry)
• Land (flat/space, buffering from conflicting land
  usage)
• Ability of surrounding road network to handle
  heavier usage
• Terminal-port connections (rail/road) most
  governments have targeted rail market share of
  30-40.
• Cost (land/infrastructure) funding
• Management (Multi-user/dedicated user)

13
Intermodal Terminals and Competition.

• Key elements necessary to compete in the rail
  transport market
• Access to available network capacity at the right
  time and at reasonable terms conditions
• Access to Terminal space
• Locomotives
• Rolling Stock
• Critical mass (high fixed cost industry)
• Access to key intermodal terminals is a primary
  pre-requisite to being able to enter and compete
  in the rail market
• Terminal space is a scarce resource in Melbourne,
  Sydney and Brisbane, and duplication is
  prohibitive.
• Most intermodal facilities are not subject to
  access regulation.
• Terminal operators tend to be subsidiaries of
  large vertically integrated service providers
  with interests competing against other providers
  and new entrants for timely access to terminals.
• Intermodal terminals become a key strategic asset
  for owners that can be used to constrain
  competition in the intermodal rail transport
  industry.

14
What are the options?

• Hubbing
• Inland or outer metropolitan intermodal terminals
• Shunting to/from main intermodal terminal or port
• Opportunity for rail
• Environmental/congestion benefits
• ARTC is working with the industry and relevant
  agencies to explore options for greenfields
  terminal development in Sydney and Brisbane
• Ultimately market forces will dictate where
  terminals will exist and how they will be
  integrated with wider logistics networks.
• ARTC is a track owner. Why is it interested in
  terminals?
• To protect its investment in the north-south rail
  network.
• ARTC needs strong intermodal growth and healthy
  competition in rail transport.
• Terminal capacity is fundamental to achieving
  these objectives.