By Jennifer Perry
While it hasn’t been an easy run for FreightLink, the owner and operator of the Adelaide to Darwin railway, chief executive John Fullerton spoke of the “enormous achievement” of constructing and starting successful operations of the Alice Springs to Darwin section of the line “against the odds”, at the recent Northern Territory Infrastructure summit.
While $475 million of the railway’s $1.2 billion construction price tag came from federal, Northern Territory and South Australian government funds, around half of FreightLink’s $900 million investment into the railway was debt, something that the company has obviously had to grapple with, and something that Fullerton hinted at, could have been avoided.
“Like many Public Private Partnership (PPP) projects in Australia, getting the balance right between the amounts of government investment compared to private investment is the trick to ensure viability of the project at the commencement of operations,” he said.
“It may be, if government had put in that extra one or two hundred million dollars the business could have been profitable from day one, though the fact is the long term prospects of the railway remain very sound given the emerging business opportunities.
“For one third of the construction cost of the railway, governments got a pretty good deal given the economic benefits that have been generated since the railway commenced operations.”
Fullerton maintained however, that the key features of the “first class” railway such as its long term profitability and viability, efficient linkages to road and port infrastructure and significant upside potential all demonstrate the railway’s ability to “exploit future opportunities”.
Despite the FreightLink board commencing a sale process in May 2008, handing control of the business to receivers in November 2008, with the railway continuing to operate under a Deed of Company Arrangement (DOCA) that was executed in May 2009, Fullerton said the business continues to generate “positive operating cash flows”.
“We were able to accomplish in the first five years of operation a market share in excess of 90 per cent of the intermodal freight between Adelaide and Darwin, which is round 10 to 20 per cent cheaper than road with similar transit time,” he said.
The railway has also taken around 500 heavy truck movements off the Stuart Highway each week, with the amount of fuel used to move that volume of freight just one third of what it would have been if the freight was still on road.
“The amount of greenhouse gas emissions is also one third of what they would have been if the freight was delivered by road the fuel savings alone for our corridor is something like 30 million litres of diesel each year or 50,000 litres for each train operated,” Fullerton said.
FreightLink currently operates 21 locomotives and 393 wagons on its 2,244 kilometres of standard gauge mainline track between Tarcoola and Darwin and operates from six intermodal freight terminals, three of which it owns. Its intermodal business operates 12 trains per week between Adelaide and Darwin and carried nearly 800,000 tonnes of intermodal freight and 71,000 tonnes of bulk liquids in FY2009.
According to Fullerton, FreightLink’s bulk minerals business is its “success story”. It operates 12 round trip services or 24 trains per week between rail loading sidings and Darwin carried 2,218,000 tonnes of bulk freight in FY2009 and has three major rail haulage contracts with OM Manganese, Territory Resources and OZ Minerals.
“The business is still in establishment and ramp up phase, and has strong long term prospects due to proximity of the railway to developing mines,” he said.
Fullerton also said that the FreightLink business is expanding along a rapid growth curve and there is nothing to suggest that this will “change any time soon”.
“We will continue to invest our funds to support further growth and I am sure a prospective buyer will be found to take full advantage of the future opportunities.
“NT’s economic development has been and will continue to be greatly aided by the presence of the railway and its successful integration into the transport landscape of the Top End.”
 
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