TRANSPORT COLLOQUIUM 05TRANSPORT COLLOQUIUM 05

Infrastructure for the Rail Freight IndustryInfrastructure for the Rail Freight Industry

Bryan NyeChief Executive Officer

• Today’s Challenge

• Look into the Future

Freight operations

Industry structure

• Vertical separation on inter-capital city network and NSW

• Integrated networks in Qld, Vic, SA, WA, Tas - most with access arrangements in place

• Heavy haul sector all integrated, some with access arrangements

Freight operators

Hire and Reward• Queensland Rail (QR)• Pacific National (PN) includes

Tasrail• Australian Railroad Group (ARG)• Specialised Container Services • CRT Group• FreightLink• Interail Australia• Austrac Rail • Silverton Rail• Southern Shorthaul Railroad

Freight operators

Ancillary

• BHP Billiton Iron Ore

• Manildra Group

• Pilbara Rail Company

• Comalco

• Sugar cane railways

Passenger Operators

• Rail Corp (NSW)• Connex (Vic franchise)• Yarra Trams (Vic franchise)• TransAdelaide• WA Public Transport

Authority• QR

Heritage and Tourist sector

Approx 200 Operators, less than 10 major operators• Great Southern railway• 3801 Ltd• South Spur Rail• Pichi Richi• Puffing Billy railway• ARHS• Lachlan Valley Railway

Track ownershipQR 9521 km

RailCorp (pre ARTC/NSW lease)

7310 km

ARG 6622 km

ARTC (pre ARTC/NSW lease)

4430 km

Sugar Cane Railways

4150 km

VicTrack (leased out)

3676 km

Asia Pacific Rail

2251 km

• Bulk Freight- All iron ore, 80% local Coal, 70% Grain

- 20% Australia’s exports worth $15 Billion

• East/West Freight 70+% - Investment in infrastructure - Single access manager - Double stacking West Adelaide/Parkes - No passenger interface problems

• North/South Route <20% - Lack of investment in track - Multiple track access managers - Sydney curfews - Complex safety environments

Freight Movement Today

• Volume & movement of freight will double over next 10 years

• Congestion cost 13BN in 1995, 30BN by 2015

• Current road & rail inadequate

Transport Challenge

Benefits

• Safest form of land transport

• Environment

9 times more energy efficient

one train, two drivers = 150 trucks & 45,000 litres of fuel

• Efficient rail is a cheaper mode of freight transport than road on all inter capital corridors

20

15

25

23

31

27

25

Syd - Bris

Melb - Syd

Melb - Bris

Melb - Adel

Adel - Perth

Melb - Perth

Syd - Perth

$ per '000 NTK's, at 2014

Source: PJPL Analysis

Road RailCost benefit of Rail

Variable Operating cost*Fixed operating cost*

Capital recovery cost

Externalities

Below

Variable operating cost

Capital recovery cost

Pick Up and Delivery (rail)Above Fixed operating cost

* assumes 50% reduction in RIC's cost base and impact of volume growth on rail fixed cost base

68

64

73

64

63

60

58

48

50

48

42

32

33

33

Average = 20

Total Cost Comparison

Investment Challenges

• Ongoing microeconomic reform

• National plan development

• Industry reform

Microeconomic Reform

• The next big Agenda• National Regulatory

framework• Access Pricing-

certainty• Heavy Vehicle/Rail

Pricing

National Plan Development

• Auslink and Political agenda

• Focus on regional freight

• Long term plan for terminals

• Urban planning

• ARTC challenge

Industry Reform

• Align above & below rail investment

• Improve insurance arrangements

• Efficiency improvements

• Maturity – “Grow the Pie”

• Establish a framework for assessing and allocating incident costs

• Future structure of Industry

Technology and People

• Communication

• Train control systems

• Age, profile, skill levels

• Image

• Rail Skills & Career Council

Outcome

• Industry - return on investment

- increase freight/passenger numbers - Improve price, time, reliability and service availability - continuous improvement to infrastructure - better investment environment• Government

- employment - regional and rural impacts - reduction in road investment costs

- social benefits - an improved economy

Next Opportunity

The Eastern Freight Corridor

Cryon

Broken Hill

Menindee

Ivanhoe

Condobolin

Tottenham

Griffith

Willbriggie

HillstonBurcher

WestWyalong

YancoTemora Young

Koorawatha

Cowra

NarranderaJunee

Boree Creek

The Rock

Wagga Wagga

Culcairn

Albury

Moss Vale

Goulburn

Harden

Queanbeyan

Canberra

Bomaderry/Nowra

Cootamundra

Gulgong

Ulan

Singleton

Newcastle

Sydney

Maitland

Dubbo Muswellbrook

Blayney

Weemelah

Grafton

Casino

Taree

Port Kembla

Kempsey

Narrabri

Burren Jnct

Merrywinebone

Walgett

MoreeCamurra

Nevertire

Nyngan

Coonamble

Gwabegar

Cobar

North Star

Armidale

Dumaresq

Warren

Lithgow

Narromine

Werris Creek

TamworthGunnedah

Merrygoen

Binnaway

Bathurst

Kandos

Orange

Parkes

Naradhan

To Adelaideand Perth

To Melbourne

To Brisbane

Wee Waa

NarrabriWest

ARTC Lease

Possible extension to lease

Eastern Corridor

Intrastate lines (ARTC to manage as agent for NSW Government)

Eastern Freight Corridor - Why• Rail has less then 20% share on the eastern corridor,

Melbourne to Brisbane and declining share on the shorter Melbourne – Sydney and Sydney – Brisbane routes

• Sydney is a corridor bottleneck• Range of track and operating constraints, single track,

train length limitations, no double stacking, terminals, access pricing

• The eastern corridor is the highest volume freight corridor • A new eastern route would carry Melbourne – Brisbane

freight freeing the coastal route for the Melbourne- Sydney and Sydney-Brisbane freight

Eastern Freight Corridor - Benefits• A major new microeconomic reform to improve the efficiency of the Australian

economy

• A boost to Australian GDP of $12 billion

• 2,400 jobs per year in rural and regional Australia over five years during construction

• 2,400 permanent new jobs

• A 50 percent reduction in the number of heavy vehicles on our interstate highways

• A reduction in greenhouse gas emissions and a saving in road accident costs

• A reduction in road construction and maintenance costs

• An 80% rail market share of the

Melb-Brisbane freight corridor

• A 50% rail share of the shorter

Sydney-Melb and Melb-Sydney corridors

Achievables

• A new $2.5 billion Melbourne to Brisbane corridor will deliver transit times of 22 hours (35 currently) and unprecedented rail reliability

• Train speeds of up to 110 km/h• 2 km trains and double-stacking of containers• Major capital works in regional NSW, Victoria and Queensland• This investment, together with already announced Government

commitments, will give rail the following market shares:

- Melbourne - Brisbane 80% (currently 21%)

- Sydney - Melbourne 50% (currently 10%)

- Sydney - Brisbane 50% (currently 10%)

Eastern Freight Corridor – the Business Case

• The Business Case is hampered by the costs associated with construction through the Toowoomba and Little Liverpool ranges

• The preferred route is through the ranges for a number of environmental, cultural and engineering reasons

• The costs of construction through the Toowoomba and Little Liverpool ranges is in the order of $850m

Eastern Freight Corridor – Investment Structure

• One option is a joint venture between Government and the private sector

• AusLink private/public partnership