Les Wielinga Photo Transport Victoria UNSW

Andrews appoints big name to Transport Infrastructure Board

The Victorian Government has named the new chair of its Major Transport Infrastructure Board – the body tasked with the delivery of the state’s $15 billion in planned infrastructure spending.

Les Wielinga, formerly the director general at Transport for NSW, will chair the board.

“The delivery of the Andrews Labor Government’s unprecedented transport infrastructure program will be overseen by an expert board, to ensure all projects are delivered in a coordinated and cost-effective way,” the Victorian Government said last Friday.

Wielinga, who has also in the past been chief executive of the NSW Roads and Traffic Authority (what is now Roads and Maritime Services), will be responsible for governing the delivery of the Melbourne Metro Rail Project, the Level Crossing Removal Project, and the Mernda rail extension.

Minister for public transport Jacinta Allan said Wielinga’s appointment was a valuable move by the new government.

“With $15 billion of new transport infrastructure being planned and delivered by the Andrews Labor Government, it is critical that we secure the very best leaders in project delivery,” Allan said.

“Mr Wielinga’s experience will be invaluable in overseeing the governance and delivery of the Andrews Labor Government’s multi-billion dollar transport infrastructure program.”

The announcement of Wielinga’s appointment was made just days after Allan, and premier Daniel Andrews, announced the preferred alignment for the Melbourne Metro rail project.

“The Major Transport Infrastructure Board will work closely with the new project delivery authorities to ensure the projects this state needs are delivered on time and on budget, in partnership with local communities.”

In his time at Transport for NSW, Wielinga oversaw the development and planning of projects including the North West Rail Link and the Sydney Light Rail Project.

The Andrews Government will now work with Wielinga to make additional board appointments, “with a focus on securing highly skilled members with expertise in different project delivery disciplines”.

Wielinga retired from his role at Transport for NSW in September 2013, with sincere thanks from NSW’s then-minister for transport Gladys Berejiklian.

“Few people have ever made such a contribution to transport and infrastructure,” Berejiklian said in June 2013. “Les has left a lasting legacy for the people of this state.”

Pacific National - Creative Commons Marcus Wong

PN’s coal tonnes slip, NTKs lift

Australian operator Pacific National has recorded a decline in volumes for its coal handling operations, despite a rise in net tonne kilometres (NTKs), in the March quarter.

PN announced on Monday it handled 40.0 million tonnes (mt) of coal and other bulk products in the March quarter, down 2% from the 40.8mt recorded in the March quarter last year.

The decline was influenced by a 6.8% drop in coal volumes in the operator’s South East Australia business, which also saw a decline in contract utilisation from 91.5% to 83.9%, year-on-year.

PN put the South East Australia decline down to “lower coal availability for a number of customers, a train derailment that shut the Gunnedah Basin line for 5 days and recurring maintenance issues at Port Kembla Coal Terminal resulting in the cancellation of some planned services.”

A rise in coal volumes for PN’s North East Australia business wasn’t enough to counteract the decline in South East Australia’s figures. But PN, which is growing its business into Queensland to challenge the incumbent, dominant Aurizon, is confident that it can continue to succeed in the Sunshine State.

Tonnes hauled by PN in North East Australia increased 8.5% and NTKs rose 12.1% year on year, while contract utilisation rose from 85.0% to 89.2%.

“The strong haulage rates [in North East Australia] are expected to continue into Q4 2015,” PN commented.

Despite the net decline in volumes across PN’s Australian coal operations, coal NTKs were up 5.1%, from 7.3 billion to 7.7 billion.

And in an opposite trend to coal, Pacific National’s intermodal volumes rose slightly, while intermodal NTKs declined.

Intermodal NTKs declined year-on-year from 5.13 billion to 5.06 billion, while TEUs* handled on rail rose from 187,800 TEUs in March quarter last year to 191,000 TEUs this year.

Pacific National is a subsidiary of the ASX-listed business Asciano.

Asciano said the PN business was progressing well against its business improvement program, with the commencement of its new locomotive maintenance contract starting to contribute to operations in the second half of the financial year.

“The settlement of the final intermodal rail terminal property acquisition in Queensland with Toll Group will occur prior to the end of June,” Asciano continued in its ASX release.

“Recently Toll Group successfully renewed its freight forwarding contract with a major customer in Queensland which encompasses intermodal rail services provided by Pacific National.

“While the market for new projects in coal is subdued Pacific National is continuing to work with its customers on incremental haulage growth opportunities.”

*TEU refers to a twenty-foot equivalent unit, where a twenty-foot shipping container is 1 TEU and a forty-foot container is 2 TEU.

Photo: DP World

Stevedore considers competition ruling in Melbourne rent stoush

One of Melbourne’s biggest container stevedores, DP World, has told Rail Express affiliate Lloyd’s List Australia it’s considering filing an application to the National Competition Council for services provided by the port to be declared under the National Access Regime.

If the port infrastructure is established as officially vital to national infrastructure, access to it could be mediated or regulated by the government.

This potential application follows the proposal of a 767% rental increase at the stevedores’ Melbourne terminal.

Under the Port of Melbourne’s proposal, rent at DPWA Melbourne’s West Swanson Terminal would rise from $15 per square metre to $120 per square metre.

“We have started down that path, but [the application] is all very much in speculation-land at the moment,” a spokesperson for the stevedore told Lloyd’s List Australia, adding that the stevedore was “considering all options, including asking for regulated access at the port of Melbourne.”

Lloyd’s List Australia understands from one well-informed executive that, contrary to speculation in the general media, a National Access Regime declaration would not “sink” the privatisation of the port on a 40-year lease.

But any potential future lessee of the port would be subject to greater restrictions than previously anticipated.

Such uncertainty would impact the level of market interest and may impact the price paid.

The Department of Treasury and Finance, which represents the port’s owner – the state of Victoria, said that the Port of Melbourne is “rigorously regulated” by the Essential Services Commission.

“Preparations for the lease transaction will continue with policy settings designed to maximise the overall economic outcome for all Victorians,” the department’s spokesperson said.

A spokesperson for Victorian ports minister Luke Donnellan said these issues are part of normal business lease negotiations between the PoMC and its users, over which disagreements around market-based rent are not unexpected.

“This is why there are provisions in the lease to appoint an independent third-party valuer to assess what the market based rent should be,” the ministerial spokesperson said.

Shipping Australia chief Rod Nairn argued that access to essential infrastructure and services under the National Access Regime needs to be considered generally, owing to pricing issues.

“This is something that needs to be considered because prices seem to be getting out of hand in a number of areas, and maybe it is not limited to Melbourne,” Nairn said.

Andrew Hudson, a partner at law firm Gadens, thinks the suggestion that Melbourne’s port infrastructure may fall within the scope of the National Access Regime will give potential bidders for the privatisation/lease reason to even more carefully consider their bidding.

And that is because a declaration could, ultimately, put some conditions on how the port can be operated.

“Basically, it comes down to the ACCC to prescribe how they charge things. It will still be in the hands of the buyer to run the regime, to run the port and the like,” Hudson said.

“But how the buyer will charge things and how it will operate the place will be subject to a competition regime, which is probably more prescriptive than they anticipated.

“So it will be a more limiting and restrictive operation. The declaration hasn’t been used very much, but it certainly could be of concern.”

Port of Melbourne Corporation declined to comment.


This is an edited version of an article which originally appeared on Lloyd’s List Australia. Additional reportage by Jim Wilson.

Iron ore train - credit BHP Billiton

Loc8 to deliver asset management at BHP’s rail repair shops

BHP Billiton Iron Ore will use the Loc8 platform to manage the full robotic automation of its rail car maintenance tasks at its Mooka and Nelson Point ore car repair shops in WA’s Pilbara region.

Loc8 on Thursday announced its cloud platform has been selected for use by BHP following “a stringent review process.”

Touted as a solution which combines asset management, planned and reactive maintenance, and field service control, Loc8 delivers information both online and to mobile device devices.

The Loc8 contract underpins BHP’s $1 billion capital productivity project that involves full automation of previously manual processes and procedures at its rail operations.

For BHP, Loc8 will manage automation, data dissemination and control of over 200 process rules, managing 67 robots that operate the Rolling Stock Reliability System which BHP employs at its Mooka and Nelson Point ore car repair shops.

Mooka, in particular, is key to BHP’s overall expansion strategy, as the miner’s ore car fleet has been significantly expanded to cater for increased throughput.

“Every company, no matter how large or small in the service supply chain, strives to run as efficiently as possible,” Loc8 chief technology officer Owen Batt said.

“BHP Billiton’s newly created iron ore car maintenance facility in Mooka, WA, has taken the opportunity to set a high standard in efficiency from the ground up in using Loc8 effectively as its ‘digital oil’ to run its maintenance operations.

“We are proud to work with the team to deliver this innovative project,” Batt added.

BHP recently expanded its iron ore capacity in the Pilbara, and added the ore car repair shop at Mooka siding along the existing Port Hedland to Newman mainline.

BHP identified the need for additional rolling stock maintenance capabilities as the business exceeds a capacity of 200 million tonnes per annum.

Mooka will initially be able to service 18 ore cars per 10 hour shift totalling 36 cars a day. Further stages of the development will see the capacity increase to 58 cars per day, Loc8 said.

Bryan Nye photo Informa

National prosperity drives Nye’s passion for reform

Departing ARA chief executive Bryan Nye says the industry needs to continue working together to achieve future prosperity for Australia’s economy, and its people.

Nye doesn’t describe himself as a rail tragic. Instead, he sees himself as being passionate about transport reform.

“We’ve got it wrong in Australia,” Nye told Rail Express, “and we’re lagging behind the rest of the world … We’ve got to change that.

“You think about Australia’s geography, the demographics, the size of the country and where the centres are: Rail is a mode of choice that we have failed to address, and we’re just beginning to address it properly now.”

Nye this week announced his decision to leave the ARA after 12 years of hard work as its chief executive. When he joined the association in 2003, he and his staff had to build from the ground up.

“We had to build a credibility within the industry first, to establish ourselves,” he explained.

“We did that by getting the companies to work together, developing some policies, papers … As soon as the government realised the industry could get itself together, it started to listen.

“I think that’s the importance of it,” he continued. “If everybody says, for example, ‘The number one priority right now is Inland Rail,’ then the government will sit up and listen.

“That’s what excites me. Trying to get governments to pick up good reforms.

“Look at Sydney: it’s getting another harbour crossing, new light rail, the North West Rail Link … all of that comes from the public and the industry getting together to put pressure to make the government respond.

“That’s the benefit of the industry working together.”

Nye, who championed the establishment of the Rail Industry and Safety Standards Board in 2005, was awarded the Medal of the Order of Australia for his services to the rail transport industry in January 2014.

He plans to continue to work with the rail industry, and feels he can be a valuable contributor to industry boards and panels in the future.

“Rail is crucial to Australia’s economy, and it’s whole productivity,” Nye said.

“If we’re going to get greater government involvement and investment in rail, the industry needs to come together and be of one voice. That’s vital.”

 

A full profile of Bryan Nye and his career with the ARA will feature in the AusRAIL edition of Rail Express, which will be released at this year’s AusRAIL PLUS, scheduled for Melbourne from November 24 to 26.

(Left to Right) R U OK? chairman Mike Connaghan, ARA chief executive Bryan Nye, Sydney Trains chief executive Howard Collins, TrackSAFE chairman Bob Herbert, Minister for Health Sussan Ley, R U OK? ambassador Phil Waugh, NSW Trains chief executive Rob Mason. Photo: Oliver Probert

Rail boss calls for cultural shift for mental health

Sydney Trains chief executive Howard Collins says the Australian rail industry needs to undergo a cultural change if it is to get serious about the mental health of its employees.

Speaking at the launch of the inaugural Rail R U OK? Day at Central station on Thursday morning, Collins said the rail industry needs to shift away from its stiff upper lip culture, and also needs to be more aware of the multicultural nature of its workforce.

“We as an industry … face a lot of issues,” Collins said. “We see everything that the public throws at us, and sometimes that is a real, tragic experience.

“As an ex-train driver – someone who’s been on the front line – I think there’s a lot of issues. Culturally, ‘macho blokes’ don’t talk about it.

“Now, not only have we been male-dominated – and that’s changing – but culturally, 50% of my employees are from other places around the world. And different cultures can also find it difficult to talk about things, like saying ‘Are you okay?’ We must support them in this exercise as well.”

Collins was joined at the opening event by his counterpart at NSW Trains, Rob Mason, as well as outgoing ARA chief executive Bryan Nye, federal minister for health Sussan Ley, TrackSAFE chairman Bob Herbert, R U OK? chairman Mike Connaghan and several other key R U OK? figures.

Rail R U OK? Day is a new initiative; the result of a joint effort by the TrackSAFE Foundation and R U OK?.

“We now understand that this day is important to us,” Collins said.

“To our rail employees, to their partners, to our contractors – the whole industry is coming together today.

“It’s all about being safer, being supportive, and doing what managers often fail to do: To use your two ears, and one mouth to communicate, and understand what people have to say.

“We’re all busy people … But you do need to find the time to ask.”

Sydney Train

Rail takes proactive approach with R U OK? initiative

TrackSAFE chairman Bob Herbert says the launch of the inaugural Rail R U OK? Day is a sign that the Australian rail industry is proactive when it comes to the emotional wellbeing of its 110,000 employees.

“The rail network is a workplace,” Herbert said. “Train drivers, guards, emergency services and other rail industry employees are the first people on the scene when incidents take place on the network and for them, severe mental, physical and emotional trauma can result from witnessing such an event.”

Launched at Sydney’s Central Station on Thursday morning, Rail R U OK? Day is a joint initiative between suicide and harm prevention charities R U OK? and the TrackSAFE Foundation.

It’s aimed at giving rail staff the confidence and capacity to talk about their mental wellbeing, and to help them feel safe and supported while at work, by asking the simple question: ‘Are you ok?’

“Rail R U OK? Day supports our existing trauma management program and aims to increase awareness about the importance of looking out for each other in the workplace, which is crucial to an industry that is too often affected by suicide and the consequential trauma suffered by rail employees,” Herbert said.

Suicide is the biggest cause of death for Australians under the age of 44, with more than 2400 Australians suiciding each year, and 65,000 attempting suicide.

Mike Connaghan, chairman of R U OK?, said the partnership with TrackSAFE promotes an important message to a national industry.

“Rail R U OK? Day will see industry employers and employees foster an environment of support and encouragement, so that asking ‘are you ok?’ becomes standard practice,” Connaghan said.

“We believe that this day of action will empower people to help a workmate, whether it be on Rail R U OK? Day or any day,” he said.

Federal minister for health Sussan Ley, who spoke at the launch in Sydney, said the Government was committed to working with communities to raise awareness of suicide risk, to help those at risk of taking their own lives and to assist those affected by suicide.

“Any suicide is one too many and it is devastating for families and communities,” Ley said.

“I am committed to working with communities and organisations such as R U OK? and the TrackSAFE Foundation to reduce the tragic impact of suicide.”

Aurizon Train

Aurizon pushes Pilbara railway plans back to 2016

Rail operator Aurizon has reportedly delayed its final decision on a 430km rail line in the Pilbara to 2016, as a result of bearish conditions in the iron ore market in recent months.

Aurizon partnered with Chinese steelmaker Baosteel to acquire iron ore miner Aquila Resources last year, with plans in place to build a 40mtpa iron ore mine, rail and export project.

In February, Aurizon chief executive Lance Hockridge warned that the viability of a Pilbara line would be “very challenging” if iron ore stayed at the US$60 a tonne trading price reported at that time.

Since then, the iron ore price has degraded further, to as low as US$46.70 last week. Some long term forecasts are for an iron ore price below US$40 a tonne – a price which would leave almost all iron ore producers (apart from the majors Rio and BHP) operating at a loss.

Aurizon already earns just over 10% of its pre-tax profit from its iron ore haulage deals in WA’s mid-west region, but does not currently operate in the Pilbara.

The Baosteel-Aurizon project would be a major investment for the operator, but one it has reportedly been trying to make for some time. Now the pieces are in place for Aurizon to get its Pilbara railway, however, the timing could not be worse.

According to Fairfax reports, the company has decided to delay its investment decision until 2016 as a result.

In the meantime the company plans to work with its existing customers to improve productivity, and reduce costs, according to the report.

“Our aim in improving supply chain efficiency is to create long-term mutual value and to assist our customers’ products to remain competitive in global markets,” an Aurizon spokesperson was quoted to have said.

A market announcement from Aurizon is anticipated later this month.

FMG railway - photo FMG

Dour outlook for Fortescue

Analysts say Australian miner and railway operator Fortescue Metals Group could be worth even less than the $1.84 a share price it closed at overnight, with iron ore prices now tipped to dip as low as US$37 a tonne in the long term.

The share price for Fortescue, Australia’s third-biggest iron ore producer, has dropped by nearly 70% from its peak of roughly $6 in February last year.

But experts have suggested this week that the miner may still be overvalued, as the market for iron ore still hasn’t reached its new, low, long-term mark.

A bearish report from Citi this week delivered a long-term forecast for the iron ore price to be as low as US$37 a tonne.

Iron ore rose slightly to US$48.80 overnight, but has been below Fortescue’s reported break-even mark of around US$53 since March.

Fortescue chairman Andrew ‘Twiggy’ Forrest rejected claims last week that he should look to sell his 33% stake in the company, saying he was looking at the company’s long-term outlook, and would not be tricked into giving his stock away to ‘short-sellers’.

But with the lower iron ore price forecast, and repayments on Fortescue’s $11.9bn debt looming, Citi analysis would suggest that the long-term outlook for Fortescue might be worse than its current state.

“If FMG is not able to refinance the debt before mid-year, then the company would have to look at other options to fund repayment of the debt as at our iron ore price forecasts they will certainly not be able to do it from cashflow,” a Citi analyst said.

Citi experts predict iron ore to settle at an average of just US$37 a tonne through the second half of this year, and just US$40 a tonne through to 2018.

Federal treasurer Joe Hockey has been in the news this week with an even lower outlook, with plans to factor in an iron ore price as low as US$35 a tonne in the May 12 budget.

“There seems to be no floor,” Hockey reportedly told the Australian Financial Review. “We are contemplating as low as US$35 a tonne.”

 

700 jobs to go at Fortescue

Fortescue yesterday announced that after a “thorough organisational review” it would “bring work rosters across its operations into line with the standard rosters worked in the Pilbara industry.”

The miner plans to change its eight-days-on, six-days off roster for a more standard fourteen-days-on, seven-days off plan – a move which analysts say could allow Fortescue to cut its 4000-strong workforce by as many as 756 workers.

“This will further strengthen Fortescue’s position to withstand the market challenges now and into the future,” chief executive Nev Power said.

“We have already reduced our cost base significantly since 2012 through sustained productivity and efficiency improvements and today’s announcement will further bolster our resilience in an uncertain and volatile market.”

Fortescue said there would be opportunities for internal transfers for those affected by the roster move, with options to be explored to minimise impact on employees.

The miner plans to implement the new roster by June 30.

“While we would prefer not to have to change what has been a successful and differentiating roster for Fortescue, we are taking steps in response to the threat of oversupply in the market over the medium term,” Power said.

“While Fortescue took a disciplined decision to cut its capital expansion budget last year and defer additional capacity in our system, it is the threat of oversupply in the medium term by our competitors that is causing ongoing damage to our industry, all companies in it and to the state and national economies.

“In this environment, bringing our costs down rapidly and sustainably is critical and will place our company in the strongest possible position for the future,” he said.

Rail turnout - RISSB

Nye, Tanner to leave ARA

Australasian Railway Association chief executive Bryan Nye will leave the organisation by April 30, following the association’s split with the Rail Industry and Safety Standards Board (RISSB) announced earlier this year.

ARA chairman Lindsay Tanner will also leave the association following the end of his term this year.

“This is a new phase for the ARA, and it will be led by a new CEO, following the decision by existing CEO Bryan Nye to stand down as of 30 April 2015,” Tanner said this morning.

“Bryan has made an enormous contribution to the industry since he was appointed as CEO of the ARA in 2003, some twelve years ago.

“In January 2014 he was awarded the Medal of the Order of Australia for services to the rail transport industry, and to the business sector.

“On behalf of all of its members, the ARA would like to thank Bryan for his leadership over the past 12 years and wish him the very best for the future.”

Tanner continued: “After a two year period assisting the organisation with its transition I will finish my term in April 2015.”

Bob Herbert has been appointed as interim chair to complete the review process.

The ARA has been undergoing lengthy reviews in recent months, with the first major result being the announcement of the separation of the ARA and RISSB.

“This decision was aimed at driving further progress in improving rail’s safety and productivity and to more closely align to the objectives of the newly established Office of the National Rail Safety Regulator (ONRSR),” Tanner said of the split.

RISSB will be formally established as a separate body on July 1.

“The ARA is now well positioned to review its own important role within the industry as the peak representative body for rail,” Tanner concluded.

“This review is being led by a sub-committee of the ARA Board and will be completed over the next three months.”