Pacific National container. Photo: Cameron Boggs

ACCC opens review into Asciano takeover

The proposed takeover of transport and logistics business Asciano by Brookfield has taken another step towards legitimacy, with the Australian Competition & Consumer Commission opening an informal review of the acquisition.

The ACCC is inviting comments from interested parties on the matter.

Its review will concern the potential competition and market implications of an acquisition of Asciano – parent company of rail operator Pacific National and ports and terminals operator Patrick – by a consortium assembled by Brookfield Asset Management.

Comments are welcomed by the ACCC until September 4.

The major player in the takeover consortium is Brookfield Infrastructure Partners. Brookfield Infrastructure Partners is managed by Brookfield Asset Management, with the parent company owning a 41% share in the business since it spun off in 2008.

Brookfield Infrastructure Partners owns Brookfield Rail in Western Australia. It also owns a majority share in the Dalrymple Bay Coal Terminal in Hay Point, Queensland, as well as Tasmania’s gas network.

Asciano advised the market on July 1 that Brookfield had formally bid $9.05 a share to acquire 100% of the ASX-listed business, giving it a valuation of $8.83 billion.

Just prior to the offer, Asciano sat at around $6.47 a share – giving it a market capitalisation at that time of $6.31 billion.

Since the offer was announced, shares have surged to close on Monday, August 10 at $8.10 – giving the company a market capitalisation of $7.90 billion, a 40-day rise of nearly $1.6 billion.

Upon announcing the offer on July 1, Asciano’s board concluded it was “in the interests of its shareholders to engage further” with Brookfield.

Brookfield provided an update in its second quarter results announcement, on August 5.

“In late June, we were required for regulatory reasons to prematurely disclose to the market that we were engaged in exclusive discussions to acquire Asciano Limited, a large rail and port logistics company operating across Australia,” the Toronto- and New York-listed firm explained.

“It is a high quality company with an established market position in both the rail and port sectors in the country.

“At this stage, we continue to have work ahead of us in determining whether a transaction of this nature can be progressed.”

Fremantle railway station. Photo: Creative Commons / Greg O'Beirne

New power station, rail crossover for Fremantle line

The installation of a new power supply substation and a train crossover facility near City West Station will increase reliability for passengers on the busy Fremantle line, WA transport minister Dean Nalder has said.

The substation and crossover installations, part of a $23.8 million upgrade, will allow a train to turn back on the line.

Until now, one main substation at East Perth has provided power to the Midland, Armadale/Thornlie and Fremantle lines. The new substation will mean the Fremantle Line has its own source of power to run trains between Fremantle and City West Station if there is an unexpected interruption in the city.

The new crossover means that, in such an event, trains will be able to use both platforms at City West Station, Nalder’s office explained.

“Ensuring public transport remains a reliable, affordable, safe and comfortable way of travelling throughout Perth is well worth this kind of investment,” the minister said. “The benefits generated by this kind of project cannot be overstated.”

Works to install the power station and crossover were completed during night and weekend closures of the Fremantle line, to minimise passenger disruption.

More than eight million passengers travelled on the Fremantle line in 2014/15.

The line runs from Perth Station – the city’s central station – to Fremantle, via 15 stations along 18.7km of railway.

Nalder said more than 30,000 boardings were recorded on the Fremantle line on an average weekday between Perth and the port city, making the addition of greater operational flexibility and resilience all the more important.

Napier-Gisborne operations go to tender

KiwiRail is inviting tenders from tourism and freight rail operators for the opportunity to run services on the Napier-Gisborne rail line on the east coast of the North Island.

Almost three years ago, KiwiRail said that the line would be mothballed due to the costs of repairing storm damage and maintaining the rail line over coming years.

But now the state-owned rail company has put out this Request for Proposal (RFP), after several companies reportedly expressed an interest in the line.

Part of the Palmerston North-Gisborne line, the Napier-Gisborne line runs along the North Island’s eastern coastline, between the port towns of Napier, to the south, and Gisborne, to the north.

KiwiRail’s GM for asset management, engineering and innovation David Gordon said on Tuesday the tender is an opportunity for the company to work with other interested parties to investigate alternative uses on the line.

“A number of people have expressed interest and we hope to receive some high quality, commercially viable bids through the tender process,” Gordon said.

Tender documents are now available on the Government Electronic Tenders Service (GETS).  Tenders close on 10 September 2015, with final decisions expected to be announced by mid-October.

KiwiRail said on the GETS website the RFP is being conducted so the rail company can “identify organisations interested in and capable of running a rail based freight or tourism operation,” and/or “identify different methods of providing such services”.

Click here for tender information.

DP World West Swanson Dock, Port of Melbourne. Photo: David Sexton

Port sale to fund Victorian paddock to port infrastructure

The long-term lease of the Port of Melbourne to the private sector will fund the development of better infrastructure between Victorian farms and export markets, the Andrews Government has said.

A $200 million Agriculture Infrastructure and Jobs Fund will be established once legislation for the privatisation of the port gets through parliament, the government said on Monday.

State minister for agriculture Jaala Pulford said the new fund will support investment in agricultural infrastructure and supply chains to boost productivity, increase exports and reduce costs.

She said the fund will be available for practical projects and programs that wholly benefit the agriculture sector.

That includes transport, irrigation and energy projects, she explained, as well as skills development programs and market access campaigns.

“The new fund will invest in critical infrastructure,” Pulford said, “providing concrete benefits to the many thousands of hard-working farmers in Western Victoria that depend on this important sector.”

Victorian Farmers Federation president Peter Tuohey welcomed the funding package.

“The Labor Government has listened and delivered on our call for a fair share of the estimated $5 billion in revenue from leasing the port to be re-invested in rural infrastructure,” Tuohey said.

“We’re also expecting the government to announce a further commitment to upgrade and standardise the Mildura rail freight line and its feeders,” he added.

Premier Andrews said the agricultural funding was another reason the Liberals and Nationals should change their mind and support the Delivering Victorian Infrastructure (Port of Melbourne Lease Transaction) Bill 2015, which they are both challenging in parliament.

“Food and fibre is the future of our economy,” Andrews said. “Before the election, we promised that a Labor Government would lease the Port of Melbourne. We will deliver on that promise, to ensure our farmers and regional communities get the support they need.”

This is not the first transport funding package the Andrews Government has tied to the privatisation of the Port of Melbourne.

Funding for Victoria’s level crossing removal program has also been closely tied to the port sale.

Toll Group boss Brian Kruger (left), DP World Australia boss Paul Scurrah (right). Photo: Oliver Probert (left) / PhotoSydney (right)

SSFL critical to Toll, DP World joint venture

A joint venture between freight and logistics operator Toll Group and stevedore DP World could see more containers moved in and out of Port Botany by rail.

The partners announced the proposed 50/50 venture on Tuesday morning.

Under the deal, a dedicated container staging port at Port Botany will be connected to an intermodal freight terminal in Villawood, 25km west of Sydney.

A Toll spokesperson told Rail Express that most of the infrastructure was already in place to execute the joint venture. “There’s some things we’ll need to do,” he said, noting the rail alignment at handling sites would need to be changed slightly. “But [the infrastructure] is already in place,” he said.

DP World Australia’s chief strategy and new enterprise officer Brian Gillespie told Rail Express sister publication, Lloyd’s List Australia, the project could see between 180,000 and 200,000 teus* moved between Port Botany and Villawood by rail, every year.

He said the project would not be possible without the Sydney Southern Freight Line, the dedicated freight rail line completed in 2013.

“Direct connection to the Sydney Southern Freight Line is one of Villawood’s biggest advantages and means almost unlimited capacity,” he said.

“Rail shuttles can go in and out without disrupting transport.”

Gillespie said some rail construction would be required at Villawood, including three new rail tracks through the middle of the site and realigning some curved tracks. Very little construction would be required at Port Botany.

Current talks are centred on a minimum of six shuttles a day travelling to and from each of the sites.

With the average truck travelling to or from Port Botany with around 1.5 teu in containers on board, Toll boss Brian Kruger was confident the project could have a big impact on road congestion around the port.

“A rail shuttle running between Port Botany and Villawood on the Southern Sydney Freight Line will remove around 100,000-plus truck movements off Sydney’s roads each year,” Kruger explained.

“That’s 100,000 less trucks on the already-congested roads around the port and Sydney Airport.”

Toll Group was acquired by Japan Post in a $6.5 billion deal in May. Toll’s partner in this joint venture, Dubai-listed DP World, is one of the biggest port operators on the planet, with 65 container terminals around the world.

At Port Botany, DP World competes with two other terminal operators: Patrick, a subsidiary of ASX-listed Asciano; and Sydney International Container Terminals, owned by global giant Hutchison Port Holdings.

DP World Australia’s managing director Paul Scurrah said utilising the experience and resources of both joint venture partners would see a new quality of end-to-end service for customers.

Related story: Rail port shuttles growing trend in Europe

“By using the expertise and existing assets of DP World Australia and Toll, this proposed joint venture will create new efficiencies and competition in the Sydney import-export supply chain,” Scurrah said.

“Importantly, the introduction of a new multi-user intermodal terminal in Western Sydney with a direct rail connection to DP World Australia’s staging facility next to the wharf will increase freight transport options for local importers and regional exporters.”

The partners said their proposed joint venture will leverage DP World Australia’s capability in container handling, and Toll’s capability in warehousing, delivery and end to end customer solutions.

Expanding the joint venture into other markets will be investigated, “if sensible opportunities arise over time,” they added.

The project is planned to start operations in 2017.

*A twenty-foot equivalent unit (teu) refers to a twenty-foot shipping container, or the equivalent of one twenty-foot container. A forty-foot container therefore counts as 2 teu.

With additional reportage by Danielle Shaw

Originally published as Toll, DP World to team up on Sydney rail freight

A dual-gauge railway track in Wallaroo (Yorke Peninsula, South Australia). The outer rail is for Irish gauge, the inner for standard gauge. Photo: Creative Commons / Ymenkov

20 years on; A pair of interstate milestones

Mark Carter takes a nostalgic look at the 20-year anniversaries of a pair of key events in the development and expansion of the interstate rail freight network, away from the government owned freight operators and track owners of old.

Twenty years ago on June 4, 1995, Prime Minister Paul Keating officially opened the new standard gauge route between Melbourne and Adelaide, which had been converted from 1600mm broad gauge, heralding in a new era for rail transport In Australia.

There was much fanfare made over the fact that for the first time all mainland capitals were now connected by standard gauge, and that trains could run from Sydney through to Adelaide and Perth direct.

What the spin doctors of the day had conveniently ignored, however, was the existing east west route via Broken Hill had allowed a Sydney to Perth transit since 1970, and had even been used for diversions during the gauge conversion process.

It must be remembered that while the conversion of the corridor was the most visible aspect of rail reform, at the time it was just part of a much wider range of reforms transforming the rail industry.

In parallel were the final manoeuvres in the establishment of National Rail Corporation and National Competition Policy, moving the industry towards separation of above and below rail, and opening up the network to competition.

The launch of the standard gauge project was used as an opportunity to announce the first steps to forming a national track authority, which eventually became ARTC.

The $160m Adelaide to Melbourne standardisation project was part of the Keating Government’s wider $430m One Nation contribution for rail infrastructure upgrades across the interstate network. The biggest investment in rail for decades, it laid the framework for significant federal financial contributions over the next 20 years.

It was not all plain sailing and for several years afterwards there were piles of concrete sleepers lying alongside the track around Cressy and other locations in Victoria, where the money had run out before they could be inserted. The story even made Channel 9’s erstwhile ‘Sunday’ programme.

Standardisation also left a legacy in both Victoria and South Australia where a number of broad gauge branch lines were isolated by the project. In Victoria the lines affected were all converted to standard gauge within a reasonable time frame along with the Maryborough to Ararat line.

But in South Australia, three Mallee branch lines were isolated along with the Wolseley to Mt Gambier line, and in the end the latter was sacrificed in order to see the branch lines converted to standard gauge.

Ironically as we celebrate the twentieth anniversary of the standardisation project, those SA branch lines have all seen their last trains – as highlighted in my previous column.

Related story: No more train to the Mallee

There were also other anomalies created by the standardisation project that saw rail traffic lost to road, such as the Contrans traffic when no-one would pay for conversion of the small yard at Islington, essential for that traffic.

While it is easy to focus on the negatives, what the project did do was allow private operators such as SCT and Toll to commence running their own trains between Melbourne and Perth, without the need for costly bogie exchanging in Adelaide, of course providing National Rail with the same advantage and allowing NR over time to operate with one universal loco fleet.

Where it failed was that the gauge conversion project largely revolved around what National Rail wanted at the time, and anything outside of NR’s interest was left for the states and the Commonwealth to scrap over, which usually ends in tears.


Enter SCT

One of the biggest success stories resulting from the Melbourne-Adelaide gauge conversion project has been the East West rail service established by Specialised Container Transport (now SCT Logistics), which commenced operating just a few weeks after the official re-opening of the corridor

SCT was the first company to take advantage of open access across interstate borders and the ability to get from Melbourne to Perth without the need for bogie exchanges.

Initial services used leased locomotives, crews and rolling stock hired in from government operators Australian National and V/Line Freight.  Rolling stock was largely former Commonwealth Railways and Australian National boxcars that had been made redundant by National Rail as it took over the interstate freight operations.

SCT’s first through service departed Melbourne on 7 July 1995, with just 19 boxcars in tow, which after a quick loco change in Adelaide headed west for Perth. Today’s trains regularly load to 80 vehicles west of Adelaide.

The SCT business has since grown rapidly with some the longest and certainly the heaviest services on the interstate network. There are now five return services to Perth each week; four from Melbourne and one from Parkes (NSW). There are also a number of intermodal shuttle services in Victoria and South Australia.

From its humble beginnings and being dependent on government owned operators the company’s rail operations are now largely self-sufficient with its own locomotives, own wagons and own crews.

It has led the way in purchasing its own locomotive fleet, firstly with 15 GT46C-ACe locomotives from Downer Rail delivered in 2007/8 and augmented recently with 10 Chinese built SDA1 locomotives.

The wagon fleet has grown in size with new build wagons including refrigerated vans, well wagons for double stack containers and also SCTs unique eye-catching high cube boxcars.

Of course there has also been the establishment of its major rail integrated distribution centres in Melbourne, Perth and Adelaide.


So we have had two big twentieth anniversaries in 2015. I wonder what we will have to celebrate in another 20 years?

Subway station. Public Domain

$280m contracts continue New York’s CBTC rollout

VIDEO: The installation of Communications-Based Train Control (CBTC) in one of the world’s most-used rail networks will continue, with a pair of contracts handed out in New York this month.

New York’s Metropolitan Transportation Authority (MTA) announced on July 20 that 67-month contracts had been awarded to Siemens Industry Incorporated, and Thales Transport & Security Incorporated, currently the only two MTA-qualified vendors for CBTC projects.

The Siemens contract is for approximately US$156.2 million, and Thales contract is for US$49.6 million. Together they are worth US$205.8 million, or roughly A$280 million.

The contracts cover the installation of a CBTC signalling system on the Queens Boulevard Line.

Known around the world as the Subway, New York City’s rapid transit system is one of the world’s largest, with 1,355km of track along 373km of defined routes, and 468 stations in operation.

The New York Subway served 1.75 billion passengers in 2014, making it the seventh-busiest metro system globally, behind only the Beijing Subway, the Shanghai Metro, the Seoul Subway, the Moscow Metro, the Tokyo Metro and the Guangzhou Metro.

The Queens Boulevard Line is one of the Subway’s busiest, with a daily ridership of more than 250,000 in 2014.

CBTC signalling, which is replacing the existing interlocking system, is currently in operation on the Canarsie Line (567,000 daily ridership in 2014), and is being installed on the Flushing Line (818,000 daily ridership in 2014).

“The CBTC signalling system is a vital part of our plan to address issues of overcrowding, record ridership and service delays,” MTA boss Thomas F. Prendergast said.

“CBTC represents the MTA’s efforts to bring advanced technology to a century-old subway system that, in some parts, has not been updated in decades.

“On the L Line [the Canarsie Line] where CBTC has been installed for several years now, we have seen improved service and we have been able to increase capacity significantly.

“Once we’re done installing CBTC on the 7 Line [the Flushing Line], those customers will also benefit from similarly improved and increased service, and the Queens Boulevard project is a continuation of our efforts to make those improvements system-wide.”

As well as awarding the two CBTC contracts to Thales and Siemens, MTA also approved a separate US$1.2 million contract for Mitsubishi Electric Power Products Incorporated, to develop and test CBTC software and systems, with the goal of qualifying an additional supplier for future CBTC projects.

“This process widens the pool of vendors to compete for such projects and increases the potential for cost savings for the MTA,” the authority said.

Eastern Goldfields Railway.

Loan repaid for Kalgoorlie to Perth line

A $1.3 million payment from WA to the Commonwealth has settled a 50-year, $106 million loan to build the Kalgoorlie to Perth standard-gauge rail line.

Known as the Eastern Goldfields Railway, the line between Perth and Kalgoorlie was built in stages in the 1890s. It was converted to standard gauge in the 1960s, as part of a Menzies-era plan to build a standard-gauge line from Sydney to Perth.

Minister for infrastructure and deputy prime minister Warren Truss announced on Thursday that 50 years on, the money lent to WA by the Commonwealth to convert the line has been repaid, with the cost of administering the loan now disproportionate to the amount outstanding.

“The project reflected the forward-thinking nature of the Menzies Government,” Truss said.

“Standardising the rail line was one of the most important projects in Western Australia and Australia’s history, facilitating mining development, improving the defence of Australia, and delivering stronger trade and commerce.

“The project connected Sydney with Perth in 1968, making it possible today for the Australian Rail Track Corporation to operate a modern railway that transports around 80 per cent of the freight across the continent.

“Then and now, the Australian Government’s focus is in helping fund transformational infrastructure projects that improve productivity and promote economic prosperity.”

Truss said repayment of the loan marked the final act of one of the important infrastructure reforms in the nation’s history and delivered on the Government’s deregulation agenda by removing the need for continued administration of the loan for both governments.

Repayment of the loan also means that the enabling legislation, Railway Agreement (Western Australia) Act 1961, can now be repealed.

“It is apt that repayment of the loan comes when we are commencing one of the next big rail reforms for the 21st century – the Inland Rail project between Brisbane and Melbourne,” he said.

“The Inland Rail will enhance the national standard gauge connection and, building on the full standardisation of the East-West transcontinental rail line, connect Brisbane to Perth and Adelaide, without going through Sydney and the 19th century coastal route.

“The Australian Government is committed to creating a rail freight network that will meet the needs of industry into the 22nd Century, supporting jobs and the economy more broadly.”

New ARTC chair appointed

Finance minister Mathias Cormann has announced who will succeed John Caldon as chair of the Australian Rail Track Corporation.

Cormann announced the appointment of Dr Helen Nugent as the ARTC’s new chair, appointing her for a period of three years.

Cormann was joined by deputy prime minister and minister for infrastructure and regional development Warren Truss to make the announcement on July 16. The pair praised Nugent’s significant executive management and board experience, which they said made her well suited to serve as chair.

“She brings extensive expertise in finance, governance, infrastructure investment, and risk management to the Board,” the pair said in a joint statement.

Nugent’s previous appointments include as Partner at global management consultancy, McKinsey & Company and as Director of Strategy at Westpac. Over the past 20 years, she has served on multiple boards, both private and not-for-profit, including at Swiss Re Australia, the State Bank of New South Wales and Opera Australia, as well as at infrastructure investment entities including United Energy, Macquarie Airports and Macquarie Group.

Nugent was a Menzies Scholar to Harvard University, where she gained her MBA. In 2004, she was made an Officer in the Order of Australia (AO) for services to business, the arts and the community.

She will replace acting ARTC chair Lucio Di Bartolomeo, himself standing in for former full-time chair John Caldon, who held the position of Chair of the ARTC for five years from 2010.

Truss and Cormann thanked Caldon for his service to ARTC over this period.

“Mr Caldon has overseen significant investments aimed at improving the competitiveness of the interstate rail network during his term,” they said. “Mr Caldon has made an invaluable contribution to ARTC and leaves the company well-placed to meet future challenges in the freight rail and broader transportation market. During his leadership, ARTC more than doubled in size since 2010.”

TasRail Wagons. Photo: TasRail

Tender kicks off Tasmania’s rail revitalisation

Tasmania minister for infrastructure Rene Hidding says the opening of a Request for Tender for the replacement of more than 10,000 sleepers marks the beginning of the state’s $120 million Freight Rail Revitalisation Program.

TasRail on Wednesday launched the Request for Tender for the Re-sleepering and Re-railing of track sections on the Melba and Main (South and Western) lines.

The railway operator opened the tender to experienced, qualified and competent contractor(s), and will conduct a pair of compulsory site visits at the Western line (July 21) and South line (July 22).

The tender includes the replacement of around 10,600 sleepers, and six kilometres of rail. Works are planned to be completed by October 4 on the South Line, November 8 on the Western Line and December 6 on the Melba Line.

TasRail will supply all railway specific materials for the project, including ballast, and timetabled rail traffic will be maintained during the conduct of the work.

The Freight Rail Revitalisation Program is a four-year, $119.6 million project, jointly funded by the state and federal governments. Hidding said he was pleased to see the re-sleepering and re-railing RfT, which signalled the start of work under the Program.

“These priority works will improve the safety and reliability of the TasRail network,” Hidding said. “This is the first tranche of a joint Commonwealth-State project to continue the upgrading of Tasmania’s rail freight networks.

“With the funding confirmed in May, it is pleasing to see the first tenders issued so promptly. The projects will provide a major boost for Tasmania’s civil construction industry, creating new jobs, and begin the task of building a more competitive rail freight network, which will strengthen our economy.”