Below Rail Infrastructure, Freight Rail

ARTC extends payment terms and defers price increase for freight operators

ARTC

The Australian Rail Track Corporation (ARTC) has provided financial relief for rail freight operators to allow them to continue supply Australians with essential goods during the coronavirus (COVID-19) pandemic.

The ARTC has extended payment terms for existing access charges and deferred the consumer price index (CPI) increase that was scheduled for July.

Deputy Prime Minister and Minister for Infrastructure, Transport and Regional Development Michael McCormack welcomed the ARTC’s decision.

“Rail freight companies have worked tirelessly to service the initial growth in consumer demand during the pandemic to keep Australia open for business by supplying the essential goods that have supported our nation through this global health crisis,” he said.

While demand initially peaked at the beginning of the COVID-19 pandemic, a fall in consumer demand followed along with drops in production, which have put strain on some operators. Finance Minister Mathias Cormann said that the ARTC’s measures would enable freight operators to manage the uncertain environment.

“The government is very pleased to see ARTC working with its customers, government and industry to build resilience in our freight and supply chain network during what is a difficult period.”

Pacific National CEO Dean Dalla Valle said that the ARTC’s decision would support the rail freight sector.

“Pacific National very much welcomes the initiative by the Australian Government and ARTC board to extend payment terms for rail freight operators for ARTC access charges from 30 to 90 days, not to mention the freeze in CPI increase from 1 July to 1 October. It’s a great step in the right direction for interstate rail freight.”

Dalla Valle also highlighted that the move would increase the competitiveness of rail, as road transport had benefited from fixed user charges for the past four years.

“We do need to point out that in the last 12 years, rail access charges on the ARTC interstate network have increased annually by CPI. In comparison, for the last four years the Transport and Infrastructure Council of Australia have frozen heavy vehicle road user charges (2015-16 to 2019-20). This pricing setting has now been extended for another financial year (2020-21),” said Dalla Valle.

“The lack of competitive neutrality in pricing between rail and road freight has created an uneven playing field. It has been a large contributing factor in perverse outcomes like 98 percent of containerised and palletised freight now being transported by truck between Sydney and Melbourne (equivalent to more than 700,000 B-double truck return trips on the Hume Highway each year).”

Dalla Valle said that the current decision reconfirmed the need to review freight transport pricing arrangements.

“Pacific National understands and appreciates ARTC is a ‘wholly-owned Commonwealth company’ and, as such, must earn a rate of return for the Australian taxpayer. However, when the focus on delivering government dividends becomes all-consuming to the point of making interstate and regional rail freight uncompetitive with road (and increasingly coastal shipping) and ignoring the many beneficial externalities of rail freight, then current pricing models must be seriously looked at.

“This is happening at a time when Australians want less traffic congestion, reduced road accidents and fatalities (of which we have seen a spate of terrible incidents recently), lower vehicle emissions, and less ‘wear and tear’ on roads.”

CEO of the Australian Logistics Council, Kirk Coningham, welcomed the ARTC’s decision.

“This is a positive move that provides practical support for freight rail operators at a challenging time as they keep our supply chains moving. ALC applauds this proactive approach from ARTC,” he said.

“This practical relief is a useful reminder of the incredible job freight and logistics operators are doing as they continue to deliver for Australian communities, despite the significant economic hurdles many are now facing.”

Both McCormack and Cormann highlighted how vital the freight network is to Australia.

“Our efficient freight network is critical to ensuring our supermarket shelves are stocked and our valuable export commodities can reach overseas markets – both of which have been vital during this pandemic,” said McCormack.

“Each year, Australia’s freight and supply chain networks deliver billions of tonnes of goods across the country,” said Cormann.

“ARTC plays a significant role in making this possible through its management of national rail infrastructure. We welcome its response to the COVID-19 crisis, which has ensured freight rail operators are able to continue providing an important service Australians and the Australian economy rely on.”

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