An inland rail route between Melbourne and Brisbane?

The North-South rail corridor study

14 June 200714 June 2007BTRE Transport ColloquiumBTRE Transport Colloquium

Slide Slide 22

Structure of presentation

IntroductionTotal freight marketMode choice modellingAccess pricesPassenger market modellingProject outcomesAreas of future research

Slide Slide 33

The task

Background: freight growth, Auslink upgrades, lobbying for inland rail route

To consider options for the Melbourne - Brisbane rail corridor over the next 25 years

Consortium:

• Ernst and Young (project leader, financial anaylsis)

• Hyder (route options, other infrastructure, environmental)

• ACIL Tasman (demand, access prices)

Slide Slide 44

Analytical approach

• Identify current total freight market

• Forecast growth in total freight market for 25 years

• Determine current mode shares

• Estimate mode shares over 25 years and their sensitivity to changing service quality

• Estimate rail freight over 25 years

• Integrate with other models in consortium

Slide Slide 55

Path of far western route

Slide Slide 66

Slide Slide 77

Freight movements (excl. coal)

4.5m

4m

5.3m

10.3m

1.2m

2.9m

9.0m

9.2m

0.8m

5.1m

7.0m

19.3m

To/from WA & SA into NS Corridor

5.4m

Slide Slide 88

Analysis of base (2004)

• Origin - destination tonnages by commodity

• Data from rail operators, BTRE, ABS, FDF

• FreightSim for forecasting model. Structure: production, imports, consumption

• ACIL Tasman model of freight inducement effects

Slide Slide 99

Drivers of future demand

GDP growth (production, imports, consumption)

Transport freight to GDP growth ratio

• Growth of industrial concentration

• Growth of agricultural production

• Growth of imports, service sector

• Scenarios – High/medium/low GDP

– Growth transport/GDP ratio

Slide Slide 1010

New East Coast demand with an inland route

Coal in southern QLD, northern NSW

• But questions about which route, which port

Little else

Mainly a through route with a stop at Parkes

Slide Slide 1111

Freight diversion – northern NSW

27% of grain from Northern Plains to Brisbane from Newcastle

50% of cotton from Northern Plains to Brisbane from Port Botany

Brisbane-Perth freight via Parkes

No other material freight diversion

Slide Slide 1212

Future demand modelling results

-

5,000

10,000

15,000

20,000

25,000

30,000

2004 2009 2014 2019 2024 2029

Kto

nnes

Melbourne-Brisbane (case A) Melbourne-Brisbane (case B) Melbourne-Brisbane (case C)Melbourne-Sydney (case A) Melbourne-Sydney (case B) Melbourne-Sydney (case C)

Sydney-Brisbane (case A) Sydney-Brisbane (case B) Sydney-Brisbane (case C)

Slide Slide 1313

Road, rail, sea or air ?

Current market shares by mode

Drivers of mode choice

Sydney

Convenient departures

Logit model

Results

Slide Slide 1414

2004 snapshot

Current Rail mode shares

• Melbourne-Brisbane ~30%

• Melbourne-Sydney ~7%

• Sydney-Brisbane ~11%

Rail more price competitive on longer routes, less on shorter routes because of PUD time and costs

Rail outperformed by road in service quality

Slide Slide 1515

Mode performance 2004 – M to B

Road SeaRail

linehaulRail door to door

Relative price

0-20% above d-d

rail

20-40% below d-d

rail

30-45% below road

0-20% below road

Reliability 95% 90% 35-45% 35-45%

Availability 99% 10% 40-45% 40-45%

Transit time

21-27 hrs 3-3.5 days 36 hrs 42 hrs

Slide Slide 1616

Explanatory variables Price

• $/tonne (but complexities)

Reliability

• within 15 minutes of scheduled arrival time

Availability

• % of times the freight carrier is available within an hour of customers’ preferred time

Survey:

• how does demand for rail (at the expense of road) vary with changes in price, reliability, availability?

Slide Slide 1717

Reliability - problems in Sydney

Brisbane

Sydney

Trains traverse

the ARTC &

Railcorp

Network from

Melbourne-

Brisbane

(arrow does

not follow

actual train

path)

40% on-time reliability ( average for both

directions)

ARTC

Network

ARTC

Network

(exception of

north of the

Queensland

boarder)

60% on-time reliability

Melbourne

80% on-time reliability

Loss of 20% reliability in South Western Sydney

Loss of 50% reliability in Northern Sydney

30% on-time reliability

40% on-time reliability

RailCorp Network

Slide Slide 1818

Transit time & availability

0%

1%

2%

3%

4%

5%

6%

7%

8%

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Time of day

% o

f T

ota

l de

pa

rtu

res

pe

r h

ou

r

24 hour distribution of truck departures

2009

departure

time from

customer

Current

departure

time from

customer

Slide Slide 1919

Survey results – all customers

41%

21%

15%

10%

6%7%

Price Reliability Availability

Transit time Flexibility Loss/damage

Slide Slide 2020

Survey results - manufactured

51%

26%

23%

Price Reliability Availability

Slide Slide 2121

The manufactured market

Melbourne-Brisbane

Melbourne-Sydney

Sydney-Brisbane

Express freight 5% 5% 5%

Freight sensitive

to reliability and

availability

60% 70% 70%

Price-sensitive freight

35% 25% 25%

Slide Slide 2222

Mode choice

Logit model to predict modal shares

• Calibrated to explain current shares

• Forecast changes based on expected route characteristics– Price (incl fuel price, driver shortage)

– Reliability following AusLink upgrade

– Availability following AusLink upgrade

Key parameters estimated from

• Surveys

• Econometric analysis of past data

Slide Slide 2323

Logit model

Gives probability (%) of freight forwarder choosing mode n

Simple logit (two modes) formula

Where U is utility of using rail or road

• linear utility functions: constant + variable1 x coefficient1 +

etc

Slide Slide 2424

Logit model – hierarchical structure

• Logit model can be used at each level of the freight decision making process

• Nested logit useful for inland rail analysis

Slide Slide 2525

Values/inputs to use in the model

Current estimates of road and rail performance and mode share were derived from

• Rail operators, BTRE, ARTC, surveys

Future estimates of road and rail performance were derived from

• ARTC, BTRE, ACIL Tasman, Hyder, freight operators

Standalone road and rail freight pricing model developed

• Access prices, fuel costs, labour

Slide Slide 2626

Scenarios

Case A (reference), Case B (high rail), Case C (low rail)

Fuel price assumptions

Road and rail labour cost assumptions

Slide Slide 2727

Elasticities and coefficients

Price Reliability Availability

Melbourne- Brisbane -0.5-1.2 0.4-0.7 0.5-0.8

Melbourne-Sydney -0.7-1.15 0.3-0.7 0.08-0.36

Sydney-Brisbane -0.3-0.9 0.3-0.7 0.3-0.8

All routes -0.3-1.2 0.3-0.7 0.08-0.8

Slide Slide 2828

Testing of the logit model

Price (ave charge

$/tonne)Reliability

Service availability

Observed mode share

Road 186 95% 99% 30%

Rail 113 66% 80% 70%

• Observed performance (Melb-Perth 2000)

• Logit modelling of same input variables

Price (ave charge

$/tonne)Reliability

Service availability

Observed mode share

Road 186 95% 99% 27%

Rail 113 66% 80% 73%

Slide Slide 2929

Results – rail market share

Slide Slide 3030

Revenue maximising access charges

0

10

20

30

40

50

60

$0.00 $1.26 $2.53 $3.79 $5.05 $6.31 $7.58 $8.84 $10.10 $11.36 $12.63

Access charge ('000gtk)

Reve

nue

($ m

illio

n)

0% Efficiency gains 5% Efficiency gains 10% Efficiency gains15% Efficiency gains 20% Efficiency gains

Slide Slide 3131

Financial and economic results

Summary of results

Interpretation of results

Coastal route: problems and solutions

Inland route: problems and solutions

Full report including Ernst & Young and Hyder chapters not covered here, on www.aciltasman.com.au