www.ara.net.au

ABN 64 217 302 489

Heavy Haul

Bryan Nye OAM- CEO

27 August 2014

www.ara.net.au

6TH Largest Rail Network Globally

www.ara.net.au

OUR ANNUAL CUSTOMERS...

930 million tonnes

of freight

(23.4% + since 2008)

620 million heavy

rail

journeys

787 million customer journeys

(11.8% + since 2008)

An extra 80 million trains trips in the last 4 years!

167 million

light rail

journeys

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Coal

Ore

Sugar

Bauxite

Grain

Other Bulk

Source: Royal Bank of Scotland Transport Equities Update (2012)

Grains 3-4%

Bulk Commodities

930 million tons

Non-Bulk Commodities

20 million tons

Rail Freight

Rail Freight moves nearly 1billion tons of goods p.a. (2011)

Coal Ore Sugar Bauxite Grain Other Bulk

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Rail freight – The big picture

2010/11 2011/12 Change

Ore 435.08 496.25 14.06%

Coal 305.06 306.77 0.56%

Sugar 25.23 25.43 0.79%

Bauxite 17.79 17.35 -2.47%

Other Bulk 56.76 61.52 8.39%

Non-Bulk 19.58 22.32 13.99%

Total 859.5 929.64 8.16% * Numbers in million tones.

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Rail Industry: Size

• Labour force: 44,210 people

(+70,000 working in industries supporting

rail)

• Investment commitments in rollingstock

and track $36 billion

• Track 44,262 km in Australia

• Over 2,276 locomotives and 32,000

wagons and carriages

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Freight Rail key concerns

• Rail freights poor market share on North- South

corridor- i.e between Brisbane, Sydney and

Melbourne

• Decreasing market share of movement of

agricultural products by rail

• Declining investment in rail freight infrastructure

• Regulatory burden which disadvantages freight

rail

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Rail Market Share of

Interstate Freight Movements

TARCOOLA

BROKEN HILL

BRISBANE

ALICE SPRINGS

ADELAIDE

DARWIN

PERTH

SYDNEY

MELBOURNE

90%+

80%+

80%+

5% 5%

21%

5%

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Trends In Modal Share – Road vs Rail

Key questions:

• Is inter-city rail freight in terminal decline, or can it make a significant contribution to the national economy?

• If it can make a significant contribution, what in broad terms is required to make this happen? 20%

40%

60%

80%

100%

Road

Rail

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Rail’s share declining in some products

Rail’s share of agricultural products has significantly decreased in

some markets (source- Graincorp submission to QLD Parliament)

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Locomotive Fleet

0

20

40

60

80

100

0

100

200

300

400

500

600

less than 5 years 6 to 10 years 11 to 15 years 16 to 20 years 21 to 25 years 26 to 30 years more than 30years

Cu

mu

lati

ve t

ota

l (%

)

Nu

mb

er

of

loco

s

Diesel

Electric/XPT

Average age

Australia

21 years

Average age

USA

8 years

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Some lines need work!

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Objectives of ARA for rail freight

1. Equity of pricing

2. Increased rail infrastructure investment

3. Reduced regulatory burden for rail

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What do rail customers want?

14

• Reliability (meet advertised availability times)

• Right balance of service, cost and risk

• Understand customers needs

• Need to be able to compete with road freight –

productivity and flexibility

• Logistics – efficient terminal access and locations

• Price

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1. Equity of Pricing

• Trucks currently pay less than the true cost of

the infrastructure they operate on, in contrast

to the freight rail industry.

• Investment in road and rail are based on

different cost recovery principles.

• Through the efforts of the ARA and its

members, we are actively supporting

proposals for heavy vehicle charging and

investment reform.

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Equity of Pricing

• Levelling playing field, not

subsidising

• Supporting costs of

maintenance and new

infrastructure

• Transport Service Contracts

in Queensland are a positive

small scale example-

providing support for

livestock transportation

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Equity of Pricing

• A 36 tonne truck does as much equivalent

damage to roads as 9,600 cars.

• Yet weight is not a factor in what road freight is

charged, in contrast to rail freight.

• Proper road pricing not a new concept. Even

Adam Smith advocated road pricing in 1776!

From ‘The Wealth of Nations’: “When the carriages which pass over a highway or bridge…pay tolls

in proportion to their weight or their tonnage, they pay for the

maintenance of those public works exactly in proportion to the wear

and tear which they occasion of them. It seems scarce possible to

invent a more equitable way of maintaining such works”.

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2. Increased rail infrastructure investment

• Along with much publicised scrapping of federal funds for passenger rail, freight rail funding is also in decline.

• The partially funded Inland Rail is arguably the only major new federally funded infrastructure project on the horizon.

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Complementary modes

Road

-Flexible, responsive

-Door to Door

-Suits small volumes

-Large Volumes helped by

increasing access to High

Productivity Vehicles

Rail

-Suits long haul

-Large volumes

-Fixed times and often

long term contracts

-Emissions and safety

benefits

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Variability of Agricultural Production

Source: ABARE 2010

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

20 000

kt

Variability of production

New SouthWales

WesternAustralia

Victoria

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Funding challenges of Rail

• Almost every state has a different ownership structure for rail freight lines

• Differences within state networks also (eg John Holland and ARTC in NSW, Aurizon and QR in QLD)

• New project funding hard to ‘sell’ to politicians. Maintenance funding even harder.

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Inland Rail: TRANSFORMING the

transport sector

• Increase rail’s reliability and efficiency

– double stacking, longer trains

– agricultural benefits- terminals etc.

– avoids Sydney bottlenecks

– 2m tonnes of freight each year simply pass through Sydney

– reduce travel times by up to 7hrs, train speeds of 110kmph

• Increase rail’s market share

– 80% on Brisbane - Melbourne

– up to 25% for shorter legs

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Inland Rail- demand analysis

• There is demand for the railway that would result in a freeing of capacity through Sydney (removing 5 northbound M-B services from the Main North Line by 2030)

• Rail mode share increases to be greater than road’s share

Melbourne to Brisbane freight modal share without Inland Rail Melbourne to Brisbane freight modal share with Inland Rail commencing

in 2020

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Inland Rail – progress

• $300m currently in Federal budget from 2014/15 for pre

construction works

– A 10 year timeline for construction from 2016-2026

– Stated link to a Port of Brisbane proposed new corridor through

Brisbane.

• Critical element is the tunnel through the Toowoomba

Range and route down to Port of Brisbane

• Remainder of funding to be determined

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Inland Rail- Implementation Group

• Announced November 2013

• First priority is to settle alignment and reserve

corridor.

• Chaired by former Deputy PM John Anderson

• VIC, QLD, NSW Governments each have a

representative on the group, as does the

ARTC

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3. Reduced regulatory burden for rail

• Environmental and emissions standards and

measures which fail to look at the big picture

are a risk to the rail industry

• The newly established National Rail Safety

Regulator is a win for the industry, but some

states are still yet to sign up

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Reduced regulatory burden for rail

• Safe, environmental benefits, efficiency

• Safety and Environmental benefits not fully appreciated

• Progress requires investment in infrastructure,

processes and systems

• It requires the rail industry to play its part

According to BITRE reports- Rail is the cheapest mode of

transport for all inter-capital freight movements

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Rail – Future is bright

• Massive investment in national network

• Funding for urban projects – Cross City Tunnel, Melbourne Metro, electrification of Adelaide’ s urban network, Perth expansion Untangling freight and passenger networks

• Access to ports

• New train control technology (ATMS)(GSMR)

• Light Rail emergence

• High Speed Rail

• Intermodals being developed

• Level Crossings being upgraded

• Inland Rail

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Rail… it’s always better

• Travelling to work

• Sending freight

• Getting there safely

• The impact on the environment

• Costing less

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Thank you