The recent Covid pandemic and associated constraints in global and domestic supply chains, and the related cost of living crisis, have placed a spotlight on the need for Australia to enhance the productivity and cost efficiency of its freight and logistics networks, operations and facilities.
In a boost to both the Victorian and national supply chains, the Intermodal Terminal Company (ITC), backed by Aware Super, is investing $400 million to deliver a state-of-the-art intermodal terminal and IMEX facility in the heart of Melbourne’s northern industrial zone.
Aware Real Estate, in partnership with global asset management firm Barings, is also investing $600 million to develop a major integrated industrial and logistics precinct to surround ITC’s terminal. In doing so, for the first time in Victoria, it will give tenants the benefits of co-location.
In total, this equates to a $1 billion privately-funded investment in the Victorian freight and logistics sector – one of the largest in recent history.
Kicking goals
ITC Chair and industry leader John Fullerton said the intermodal terminal being constructed in Melbourne’s north is progressing well, with interstate intermodal and IMEX (port shuttle) operations due to commence in late 2025.
Fullerton said intermodal terminals play a critical role in the efficient consolidation, storage and transfer of freight between rail, road and shipping, resulting in improved productivity and cost efficiency for customers in the supply chain.
“Intermodal terminal capacity that’s located where the freight is can reduce traffic congestion and road damage and improve road safety, while offering customers cost efficiency and reduced emissions,” he said.
The ITC intermodal terminal will be open to all third-party customers – including above-rail freight operators, freight forwarders, and regional shippers – in accordance with a best practice open access regime.
Fullerton said this is a great example of the private sector directly responding to industry and government needs in a timely and efficient manner.
“Better still, this major development for both the Victorian and national supply chains is being undertaken at no cost to either state or federal taxpayers,” he said.
Key to Inland Rail success
Fullerton added that the future ITC terminal at Somerton is ideally located to bring Inland Rail into the heart of an existing large industrial and logistics precinct in Melbourne.
“As someone who has been deeply involved in rail freight networks and operations for decades, I’m a firm believer that a large part of the success of the future Melbourne-Brisbane Inland Rail will depend on utilising ITC’s intermodal terminal at Somerton,” he said.
“A key premise of the future Inland Rail is to connect freight demand and volumes where they are concentrated.”
Major milestones
ITC Chief Executive Officer Mishkel Maharaj said the company had achieved major construction and commercial milestones in 2024, including completion of 70 per cent of the entire project, of which 85 per cent of the future Inner Terminal is now built.
“The Inner Terminal features approximately 15 hectares of terminal hardstand and six rail sidings – two standard and four dual gauges (standard and broad) – to seamlessly provide ITC customers with the flexibility to transfer freight volumes between the Victorian and Australian Rail Track Corporation (ARTC) rail networks,” he said.
Once construction of the 45-hectare intermodal is complete, there will be more than 30 hectares of concrete terminal hardstands (equivalent to 14 Melbourne Cricket Ground AFL fields), including 15 hectares at the Outer Terminal.
“The terminal is being built to the highest quality to ensure excellence in safety, reliability and next-level efficiency in both operations and emissions,” Maharaj said.
Installation of Konecrane rail-mounted gantry cranes – which are fully electric and can regenerate energy while lifting and loading containers – at the Inner Terminal is due to start in May 2025. Electric-powered Kalmar reach stackers and specialised empty container handlers will arrive in the same month.
Workshops to service and maintain the gantry cranes and reach stackers have already been built.
Maharaj said that on the commercial front, ITC was delighted to have received strong interest from tier one organisations. It recently entered into an agreement with respected and experienced rail freight operator Southern Shorthaul Railroad (SSR) for the provision of interstate, regional and port shuttle haulage services at the future terminal in Somerton.
“Over the past two decades, SSR has developed a strong reputation with customers in the intermodal and bulk freight sectors for safe, cost-efficient and reliable above-rail haulage operations,” he said.
Perfectly positioned in the supply chain
Maharaj added that the future ITC terminal at Somerton is perfectly positioned in the Victorian and national supply chains, including providing future customers such as freight forwarders and regional shippers with direct access to major rail and road freight transport connections.
“The terminal’s ability to bring containers via rail directly from Port of Melbourne into the heart of an existing large industrial and logistics zone allows customers to save costs, avoid traffic congestion and lower their emissions,” he said.
Earlier this year, rail turnouts were installed, linking the intermodal terminal to the ARTC standard-gauge network which helps to service the port.
Maharaj said the intermodal terminal at Somerton provides future ITC customers with the “best of both worlds” – direct access to ARTC’s vast 7500-kilometre standard-gauge interstate network and Victoria’s standard- and broad-gauge metropolitan (including the dual-gauge Port Rail Shuttle Network) and regional branch lines.
“Customers can ‘pull’ imports from the port on rail, then repack and ‘push’ them back out across the country, also on rail,” he said.
“Additionally, primary producers can use the terminal as a staging area in preparation for exporting their goods and commodities to global markets via the Port of Melbourne.”
Maharaj said Victoria’s road infrastructure upgrades will enable Somerton to be a terminal for “all of Melbourne”. The Western (M80) Ring Road will connect freight from Melbourne’s west to Somerton, while the future North East Link will seamlessly connect the south east to the terminal. Somerton also enjoys direct connections to the key road freight corridors of the Hume Freeway and Craigieburn Bypass.
“This means ITC freight customers will be able to easily access the intermodal terminal by road from every direction in the Greater Melbourne Area,” he said.
Maharaj said that with freight volumes in Victoria expected to grow from 360 million tonnes a year in 2014 to nearly 900 million tonnes by 2051 – including metropolitan freight volumes that are expected to grow at an average annual rate of 2.6 per cent over the same period — the future intermodal terminal at Somerton plugs a critical capacity gap in the state’s supply chain.
“Once operational, the ITC intermodal terminal will also provide a significant and long-term capacity boost to the Victorian rail freight network.”
Customer benefits
ITC Chief Commercial Officer Julian Zeltinger said about 20 per cent of Melbourne’s containerised freight volumes – and growing – are currently delivered to the northern freight catchment, which features large-scale distribution centres, warehouses and business parks.
“Customers of the ITC will benefit from co-located warehousing at the adjacent Somerton industrial and logistics precinct, customs-bonded storage, an empty container park, and on-site facilities to wash, fumigate and repair shipping containers,” he said.
Zeltinger said ITC customers at Somerton will have the ability to co-locate with the terminal via electric transfer vehicles if they opt to be part of the new logistics precinct development.
“The terminal development is the first of its kind in Victoria, enabling the efficiencies of rail to be experienced at full potential for both importers and exporters.
“Customers say they want to use rail and this terminal gives them the ability to experience rail at its best. Within the ITC intermodal terminal there are a total of nine rail sidings under construction to facilitate the future decoupling and loading/unloading of 600-metre port shuttle services and 1500- and 1800-metre interstate freight trains.”
Beyond the immediate terminal precinct, it is estimated there is about three million square metres of warehousing capacity already located within a seven-kilometre radius of the intermodal terminal.
Environmental benefits
ITC Chief Operating Officer Brendan Gibson said future ITC freight customers will also benefit from the environmental and social credentials of the new intermodal terminal, including helping to reduce Scope 3 emissions for end customers in the supply chain such as supermarket chains and retail businesses.
“ITC estimates the future intermodal will help remove the equivalent of 500,000 truck trips each year off already heavily congested Melbourne streets, roads, and motorways, notably in inner city suburbs surrounding the Dynon and Docklands precincts,” he said.
ITC estimates removing this number of truck trips will help reduce emissions in the traditionally hard-to-abate national supply chain to the tune of 189,000 tonnes each year: equivalent to carbon dioxide emissions from consuming about 64 million litres of diesel.
The new intermodal terminal at Somerton will assist in shifting more freight volumes from road to rail, in the process helping to boost productivity, reduce traffic congestion, vehicle emissions, and road accidents and damage in national and state transport networks.
ITC Chief Development Officer Leigh Cook said that 200 construction workers are on site on any given day, many of them living in Melbourne’s north, close to Somerton.
“Furthermore, the first phase of operations of the new intermodal will employ 60 to 70 highly trained and skilled workers, including freight train crews, terminal operators, and maintenance and administration staff.
“ITC will also establish a training school focused on locals from Melbourne’s north to enable skilled essential freight workers to live and work locally.”
