Jim Wilson

Rail line at Port Botany. Photo: Sydney Ports Corporation / Brendan Read

With trucks running well at Botany, focus turns to rail

Ian Ackerman

Everybody knows freight is important to the economy, but the amount of freight moving throughout New South Wales is growing, and so is the task of getting that freight from A to B efficiently.

Speaking at the recent AusIntermodal conference, Transport for NSW director of transport performance and analytics Phil Bullock said freight transport is worth about $60 billion per year to the state economy, or 13% of the gross state product, and employs about half a million people.

“We’re expecting freight volumes to increase from 409 million tonnes transported within the state in 2011, which our models are aligned to, going up to 794 million tonnes by 2031,” he said.

“We expect to see increases in specific sectors and particular forms of freight like containerised freight.”

Costs are high in the freight market, with up to 30% of the price of goods sold going to transport costs, Bullock explained.

“We’re in a high cost environment; you don’t need me to tell you that,” he said.

“One of the stats is around a typical Australian importer/exporter who pays in the region of $200 to $250 more in transport costs compared to a UK or US competitor.”

The cost of maintaining and operating the network is an important consideration, according to Bullock, and Transport for NSW is looking at how to get more out of the existing network.

“When we talk about congestion and competition for network capacity, all of those issues come together in Port Botany,” he said.

Port freight traffic has to compete with commuter traffic, which is a significant issue in Sydney and around Port Botany.

“We’re looking at how transport is performing now and how it will perform in the future” Bullock said.

“It is a good case study, we’re tipping a lot of employment and population growth into that area, you’ve already got network reliability is a problem for passengers and freight in that area, and you’ve got freight competing with passengers for space.”

Bullock went on to say the government and industry has made had much success in improving the efficiency of road operations at Port Botany.

“Some operational performance measures and mandatory standards that have come in have really helped to improve the efficiency of the transport network by improving the transparency of performance to everyone, and helping initiate a stronger level of accountability to those players in the supply chain to each other,” he said.

“Truck turnaround times have more than halved over the past six years; they’re down from an average of 53 minutes in 2010 to an average of 23 minutes for the 2015/16 financial year,” Bullock said, referring to Port Botany.

“The work that we’ve been doing with industry enabled on-time performance movements at the port to remain at a level of around 95% plus, which is great.

“We’ve done our own work to estimate the financial benefits of that, and they’re significant. We’ve estimated that it provides a benefit of around $96 million over a period of 2009-2018 as the estimates were done at the time.”

Having improved road transport efficiency around the port, Mr Bullock said it was time to turn toward rail transport.

“Now we’re really focused more on the rail side of things, and we’re trying to up the ante and lift the efficiency of rail operations into Port Botany,” he said.

“This is a fairly sobering statistic, but in 2015/16 only 22% of country trains into Port Botany ran on time, and 33% for metropolitan trains; a vastly different picture, compared to the road side of things.”

The NSW Government has set a target of doubling the amount of freight moved into NSW ports by rail by 2020, and Mr Bullock said the numbers are progressing toward that goal.

“We’ve seen mode-share go from 13.5% in 2014/15 to 16.3% in the 15/16 financial year, and we’re currently at 18% for the first quarter of the current financial year. It’s tough, but it is moving in the right direction, which is positive,” he said.

“A lot of that comes down to innovation by the main stevedores and the changes that they’ve made, but we’re doing our bit, which is looking at infrastructure improvements to the landside network.”

An initiative for the cargo movement co-ordination centre at Transport for NSW has been bringing important stakeholders together with the aim of improving freight transport efficiency.

“A big initiative for us was to establish the Port Botany Rail Optimisation Group, or PBROG, it’s a group that comprises CEOs from the stevedores, the rail operators, NSW Ports, and its agenda is about providing that advice on performance standards, really important stuff like data exchange, and communication protocols between the different groups that are involved in operations, as well as those longer term policy and regulatory impediments that we in government need to think about and start to deal with,” Bullock said.

“The group has bet several times already, and there has been some positive outcomes as a result of establishing that group and some minimum benchmarks have been set around things like lift rates, minimum train lifts presented and gap time – that’s been a really positive thing for us.”

This article was originally published on Rail Express affiliate site Lloyd’s List Australia.

container

National strategy for freight “critical” says Aus Logistics Chairman

Ian Ackerman – Sydney

A national strategy for freight is necessary, as it is critical that “everybody’s playing to the same tune”, Australian Logistics Council chairman Ian Murray said last night (Monday Sept 12).

Speaking at an ALC Parliamentary Function at Parliament House in Canberra, Mr Murray said MP Anthony Albanese put together a good strategy for ports and freight.

“What we’re talking about is getting Government to go one step further and put together a national freight strategy,” he said.

“Unless we’re all playing the same tune – industry, federal government, state government and local government – we’re not going to achieve the outcomes that we want.”

Logistical infrastructure issues will become more critical as the national population increases, and plans need to be made with the long-term benefits in mind, Mr Murray said in his speech.

“It’s always difficult to plan for the long term when it comes to the government because there’s always a short-term orientation,” he said.

“But, in terms of what we do in this industry, if you don’t have a long-term plan or a long-term vision, there’s no point in having a plan or a vision at all.

“This industry is built on long-term activity and long-term activity is one of the things that governments tend to shy away from.”

Other themes touched on in Mr Murray’s speech included the need for more freight to be carried on rail, improving safety, and heavy vehicle reform.

A promotional video by ALC was debuted at the cocktail function, with the theme of “get the supply chain right”.

“The video highlights how greater focus by governments on improved fright planning investment, reform, corridor protection and safety will support more efficient supply chains, and through that, a stronger economy,” ALC managing director Michael Kilgariff said in a statement released by the ALC.

“Headlining the video is the need for a national Freight and Supply Chain strategy which sets a long-term strategic framework for more efficient freight movements across our supply chains.

“The development of an overarching national freight and supply chain strategy is needed to drive improved decision making across all levels of government, and to provide industry with the confidence it needs to make long term investment decisions,” Mr Kilgariff said.

“A national freight and supply chain strategy would build on the Port and Land Freight strategies which were developed under former Minister for Infrastructure and Transport, Anthony Albanese, and which established a solid foundation for future work in this area.”

This article was originally published on Rail Express affiliate website Lloyd’s List Australia.

Marika Calfas, chief executive officer of NSW Ports. Photo: NSW Ports

Intermodal is the future for NSW, says local ports boss

Ian Ackerman – Sydney

Rail transport is on the rise in New South Wales, and new connections to Port Kembla are in the offing as it builds container capacity, according to NSW Ports CEO Marika Calfas.

Speaking at the Biennial Port Kembla Shipping Australia luncheon in Wollongong on Friday (August 26), Ms Calfas said there was an aspirational goal of moving 3m TEU on rail over the next 30-year period.

“A container terminal in Port Kembla in the future; this will also be part of the solution,” she said.

“And that will also involve a connection – which could be a freight rail connection such as the Maldon to Dombarton – which would connect Port Kembla to the freight rail network in the western part of Sydney, out to the Moorebank Intermodal and other intermodals that are necessary to support the container growth needs of the state.”

The freight rail links would also connect back round to Port Botany, connecting the two ports with rail, Ms Calfas said.

“The growing rail is really core to what we see as being a sustainable port supply chain and keeping the supply chain efficient,” she said.

Along with increasing freight movements by rail around the state, Ms Calfas said NSW Ports was working to use land infrastructure more efficiently.

“We’re looking to drive optimal utilisation of existing land and infrastructure in order to cater to for growing trade needs going forward,” she said.

“And, this is before investing in new land and infrastructure, which will definitely need to be delivered and will be required. But, it’s important to utilise what we have and make that the most efficient that we can before we use scarce money resources to invest in more.

“Port Kembla has significant opportunity to grow the volume of existing trade, and also handle new trades within the infrastructure that exists, but there’s also plenty of opportunity to grow the infrastructure to provide more capacity.”

A 2011 economic study by consultants Hyder and ACIL Tasman for the Department of Infrastructure & Transport found that there is no economic justification for building the Maldon-Dombarton rail line even though the route is part-prepared.

“The net present value using a 7% real discount rate is estimated as negative $206 million – that is, constructing a Maldon-Dombarton line would not generate sufficient benefits to cover its costs. The benefit cost ratio is 0.56 – that is, estimated economic benefits are only 56% of the costs. The reasons for this result are the high cost of construction because of the terrain, and the existence of spare capacity on the Moss Vale-Unanderra line which can be increased if necessary,” the report says.

This article originally appeared in Rail Express affiliate Lloyd’s List Australia.

Qube train. Photo: Qube

Qube & Brookfield complete Asicano deal

Acquisition of rail, automotive and stevedoring giant Asciano completed on Thursday/Friday last week according to a statement from one of the main buyers, Qube.

On Thursday, August 18, Qube acquired all of the shares in Asciano Holdings (Containers) Pty Ltd, the entity that holds Asciano’s Patrick Terminals business.

Completion of the scheme of arrangement for Patrick took place on Friday, August 19.

Qube Managing Director Maurice James said, “I am delighted that the lengthy process of acquiring the Patrick terminal business is now completed and we are looking forward to working closely with our partners and the management team at Patrick.”

In the most recent (August 18, 2016) results for the Patrick business (then still a subsidiary of Asciano), the revenues of the Patrick business fell 9.9% from $1,454.7m in the year to June 30, 2015, to $1,310.1m in the current year to June 30, 2016.

Container terminal volumes as measured in lifts (including volumes subcontracted both out and in) stood at 2,095,400 for the year ended June 2016, which is a 1.3% increase on figure for the year ended June 2015 of 2,069,500.

In TEU terms the results were a little stronger again. TEUs were 3,122,200 for the current period, up 2.0% on the year to end June 2015.

Patrick operates container terminals at East Swanson Dock, Melbourne; Port Botany, Sydney; Fisherman Islands, Brisbane; and at Fremantle.

Qube has also the appointment of Michael Jovicic as the CEO of Patrick.

Immediately prior to his appointment, Mr Jovicic held the position of “Director – Commercial” at Qube from August 2011.

Prior to that he was the Managing Director (Platinum Infrastructure Advisory) from May 2010 to August 2011 (1 year and 4 months).

In the role before that, he held the role of Director – Head of Business Development & Projects Asia Pacific APM Terminals, for four and a half years. During that time he drove and managed the development of investment opportunities (greenfield, M&A, expansions) for APM in the Asia Pacific Region.

In the immediately prior role, he held the position of Director – Head of Investments & Strategic Partnerships at Maersk Logistics from August 2002 to October 2005 for just over three years. He developed and executed investment strategy and business plans for the region’s new and existing joint ventures (including warehousing, depot, forwarding, customs & container services); identified, developed and implemented new profitable investment and strategic partnership projects within the greater China area, developed and drove profitable expansions in existing joint ventures.

This article originally appeared on Rail Express sister site Lloyd’s List Australia.

Pacific National containers. Photo: Cameron Boggs

PN parent Asciano slashes profits

Asciano, the ports-rail group that was the subject of fevered takeover bids, hasn’t done too well in this last financial year. Its results this year are written in a swathe of red ink.

Statutory revenues for the year ended June 30, 2016, were down 5.4% from $3.63 billion from the $3.84 billion recorded in the previous corresponding period being the year to June 30, 2015.

The group’s statutory Earnings Before Interest Tax Depreciation & Amortisation (EBITDA) stood at $973 million in the year to June 2016, down 9.2% on the $1,072 million recorded in the year to June 2015.

Statutory Net Profit After Tax (NPAT) after minority interests was down 24.4% to $272.0 million, down from the previous year’s figure of $359.6 million.

 

Pacific National

Asciano’s rail freight haulage business reported a drop in revenues of 2.3% from 2015 to the 2016 figure of $2.37 billion.

Decline was driven by drops in bulk rail and national intermodal.

Bulk rail (net of coal access) was down 3.8% from $1,331.2 million in 2015 to $1,280.1 million in 2016. National intermodal was down 3.7% from $912.2 million in 2015 down to $878.1 million in 2016.

Asciano commented that declines were driven by falls in export grain and mineral volumes.

TEU (container) volumes hauled by Pacific National increased from 771,500 in the year to June 2015 to 799,100 TEU in the year to June 2016 – a 3.6% increase.

 

Patrick

As a whole, the revenues of the Patrick ports business fell 9.9% from $1,454.7 million in the prior period to $1,310.1 million in the current period.

Asciano’s Patrick business is further sub-divided for financial reporting purposes into “Terminals & Logistics” T&L and “Bulk & Automotive Port Services” (BAPS).

T&L operates container terminals at East Swanson Dock, Melbourne; Port Botany, Sydney; Fisherman Islands, Brisbane; and at Fremantle. It is also in a joint venture with ACFS Port Logistics. BAPS manages bulk ports and port related logistics at 40 sites in Australia and New Zealand. It also operates a transport, processing and storage business for motor vehicles.

Patrick Terminals & Logistics revenues were a shocker – down 15.2% from the 2015 figure of $692.8 million to $587.5 million in the year to June 30, 2016.

There was a 91% decrease in logistics revenues from the ACFS joint venture – down from $134.2 million in 2015 to a mere $11.9 million in the 2016 year.

Patrick BAPS revenues were down 5.1% from $761.9 million in the previous period to $722.7 million in the current period. Asciano commented that the BAPS fall was due to decline in revenues from the Gorgon project and lower activity levels at a number of bulk port sites along with a decline in revenues from asset sales.

In a letter to shareholders, non-executive director Chris Barlow wrote that: “In a challenging year, the business has delivered a solid performance.

“The business has faced both challenging market conditions and has also had to manage the impact of the protracted transaction process associated with the Asciano takeover. As a result, the impacts of both the transaction and some particular industrial relations issues experienced in the Patrick business during the year have been taken into account as one-off items.”

Elsewhere in the annual results, Asciano described the takeover as having a “significant detrimental impact”.

This article originally appeared in Rail Express affiliate Lloyd’s List Australia.

Canavan launches massive North Australian fund

Ian Ackerman reports.

A $5 billion infrastructure initiative for northern Australia is picking up speed, with the independent body overseeing spending meeting for the first time last week.

The Northern Australia Infrastructure Facility, or NAIF, will offer $5 billion in concessional finance to encourage and complement private investment in the region.

Headquartered in Cairns, the NAIF was officially launched on August 10 by federal minister for resources and Northern Australia, Matt Canavan, who said the lack of infrastructure finance expertise in the north is not a limitation, but an opportunity.

“The Northern Australia Infrastructure Facility that we are launching today will spread $5 billion right across northern Australia,” he said

“However, that is not the end of the story. In my view, having this facility here will not simply spread investment, it will attract investment, too.”

Canavan said Northern Australia encompasses 40% of Australia’s land area and has lots of untapped natural resources.

“Imagine how much of a contribution our region could make to the Australian economy if we could harness more of these resources for the production and export of food, energy and mineral commodities and tourism,” he said.

“The right infrastructure is a fundamental driver of economic change. It can stimulate productivity and growth, encourage further investment, increase accessibility to markets, especially for remote areas, and help attract and retain workers.”

The NAIF announced it had already begun to receive applications for projects back in July.

A spokesperson for the Department of Industry, Innovation and Science said applications had been received for projects from industry stakeholders seeking funding assistance for a range of economic infrastructure including port, rail, telecommunications, airport and pipeline infrastructure.

The NAIF is led by an independent board – chaired by Sharon Warburton – which will make the decisions on financing infrastructure projects. The board met for the first time on Wednesday August 10.

This article originally appeared on Rail Express affiliate site Lloyd’s List Australia.

Port of Fremantle - Photo Fremantle Ports

Trains handle increasing numbers of boxes at Fremantle

Ian Ackerman reports.

Fremantle Port’s North Quay Rail Terminal handled more than 100,000 TEU over the year that ended June 30.

Container throughput at the terminal has increased an average annual rate of 9% since 2011, according to a statement from the terminal manager, Intermodal Group.

Intermodal’s chairman Jim Stevenson said rail was the most efficient means for Fremantle Port to grow without causing more road congestion.

“We currently remove approximately 400 truck trips each day, or the equivalent of a line of trucks 13km long,” he said.

“This year should be an exciting year for the rail service between Fremantle and Forrestfield, as land becomes available to expand the intermodal precinct in Forrestfield, and logistics providers fulfil their obligations to use rail where their final destination is in its catchment area.”

“These two factors should enable the percentage of Fremantle Port’s containers using rail to increase from 15% to 20%.”

In addition to managing North Quay Rail Terminal at Fremantle, Intermodal Group also manages Forrestfield Intermodal Terminal near the Perth Airport.

Intermodal freight hub regenerates local economy

Four large businesses have purchased land and set up shop at a business park following an announcement by the local port to set up a major freight hub.

“The Port announcement was a real catalyst and I’m now getting solid enquiry from domestic investors and from overseas, especially now they know a rail siding is being established,” said Northgate Developments managing director Graeme Lee.

Universal Precast, Speedwall Ltd and Waikato Chocolates have all purchased land, joining anchor tenant, Waikato Milking Systems on the 109 hectare site at Horotiu, in the Waikato district of the Northern Island of New Zealand.

Northgate adds that other businesses are also expressing interest.

Port of Auckland announced its decision to build a freight hub on 33 hectares of land at site, which is adjacent to the North Island city of Hamilton, in February this year.

The site just north of Hamilton was chosen because of its position next to the North Island main trunk rail line and Waikato Expressway, according to the local government.  That road runs north to Auckland, south to Hamilton, and through several Northern Island cities south to the capital, Wellington.

“I’m getting a lot of enquiry from Auckland.  It’s common to hear that costs in the Waikato are a lot lower and that it’s just getting too hard to get around in Auckland to do business,” Mr Lee said.

Local Waikato mayor Allan Sanson added that freight from any seaport would have access to the Waikato-based freight and logistics hub.  His council was dealing with a noticeable increase in enquiries from potential investors.

“Over the past six months, the number of consents we’ve issued for new dwellings has been higher than in Queenstown and that’s also reflected in business growth. The Waikato district is growing faster than most other parts of New Zealand and has been since 2013.”

Ports of Auckland CEO, Tony Gibson, said at the point of the investment that a freight hub in Waikato can balance freight flows around the North Island and eliminate unnecessary movement of empty containers.

“There will be significant investment in the site over a number of years, with the first step being to establish road and a rail connections. Rail forms a key part of our supply-chain strategy.

“The Northgate site was chosen because it is beside the North Island Main Trunk line, with a direct link to our other freight hubs and our Waitematā seaport.  The site is also located close to State Highway 1.

“We are committed to increasing our use of rail and creating a more sustainable transport system, which will in turn help generate infrastructure savings at a national level. Our target is to increase the use of rail from 13% to 30% of traffic to our Waitematā port in Auckland. The development of our inland freight hub network is critical to achieving this target,” Mr Gibson said at the time.

This article originally appeared in Rail Express affiliate Lloyd’s List Australia.

Logs move from road to rail at Wellington

Ian Ackerman: 

Log transport to Wellington’s CentrePort from the hinterland has transitioned from road to rail with the inauguration of the 2.8 hectare Waingawa log hub in the Wairarapa near Masterton.

KiwiRail freight trains run a daily service between the log hub and the port, about 100 kilometres to the south.

Log throughput at CentrePort increased by close to 100% over the past five years, with no sign of letting up as trees in the region reach maturity.

The log hub project was realised through a partnership between CentrePort, Forest Enterprises Limited and Farman Turkington Forestry, with the support of KiwiRail.

CentrePort chief executive Derek Nind said the Waingawa log hub would offer log exporters a reliable and economic way of moving logs to the port.

“Part of our long-term strategy is to invest in infrastructure, develop strategic partnerships and create seamless road and rail connections from the hinterland to our seaport,” he said.

KiwiRail group general manager for sales and commercial Alan Piper said the log hub was a great example of road and rail integration.

“Using Waingawa as a staging point for logs means that they can then be moved efficiently through to CentrePort on rail,” he said.

“I am certain the regular users of the Rimutaka Hill Road will appreciate the benefits that avoiding over 16,000 more truck trips on this stretch of road will have.”

Forest Enterprises managing director Steve Wilton said the hub would be “an efficient, secure and long term logistics channel to the port which is vital to our ability to successfully harvest in the Wairarapa”.

“This is why we have taken a long term lease of approximately 50% of the footprint at Waingawa, complementing our long term commitment to log storage at CentrePort.”

Farman Turkington Forestry partner Guy Farman said it was satisfying to see the hub and the port develop over the past few years.

“It’s certainly given us the confidence to take a long term lease at the Waingawa hub and expand our operations,” he said.

This article originally appeared on Rail Express affiliate site Lloyd’s List Australia.

A Pacific National container at Asciano's Chullora site. Photo: Cameron Boggs

Joint venture partner lobs lawsuit at Asciano

A legal challenge from one of Asciano’s joint venture partners has questioned the Scheme of Arrangement in place for the transport and logistics firm’s acquisition by a Qube-led consortium.

ACFS Logistics, a joint venture involving Asciano, has filed documents with the Supreme Court of New South Wales as it is seeking orders clarifying its rights under the recently filed Scheme of Arrangement.

ACFS and Asciano joined forces back in April 2013 by forming a 50/50 joint venture;  according to Asciano, its share of the  joint venture had a book value of $36.2m as at April 30, 2016 (thereby valuing the full joint venture at $72.4m).

Asciano’s equity interest in the joint venture will be part of the internal restructure to be undertaken as part of the Scheme of Arrangment.

An initial administrative hearing was held on Tuesday.

Asciano defended itself in a statement.

“The transaction was always subject to a number of conditions that needed to be satisfied before it could be completed,” the firm said.

“The parties are working are working through these conditions and will update the market as more information becomes available.

“Asciano believes the transaction is able to be completed without breaching the ACFS shareholders’ agreement. Asciano will defend any proceedings brought by the ACFS counterparties.

“If Asciano is shown to be correct, then the transaction will proceed as planned. Otherwise resolution will require a commercial negotiation to satisfy ACFS’s issues.

“However, the matter is immaterial to the overall scheme and we believe it can be resolved quickly.”

Asciano said it would update the market if the litigation looked to have any impact on the transaction.

The company also announced on Wednesday that it would delay its sale until after the federal election, scheduled for July 2.

Rail Express affiliate Lloyd’s List Australia sought comment from Arthur Tzaneros, managing director and CEO of ACFS Port Logistics, however, the paper understands he is currently travelling inter-state and was unavailable for comment.

This is an edited version of an article which originally appeared in Rail Express affiliate Lloyd’s List Australia.