ANALYSIS: While the big end of town continues to put most of their eggs in the coal basket, there is a small but growing band of small- and medium-sized freight operators that seem prepared to pick up business the other guys reject. Mark Carter looks at the new kids on the block.
If there’s been too much doom and gloom in some of my recent columns, let’s try and lift the spirit a bit by looking at one of the positive aspects of the rail freight business today.
I stand by my criticism of the two major players’ laissez-faire attitude to the general freight segment of the market, but from personal observations during a trip east in October and other information sources there appears to be a mini-revolution underway amongst some of the smaller freight operators.
It would seem that in New South Wales, and to a lesser extent elsewhere, considerable volumes of containers and new grain flows are making their way onto rail, with the latter’s bumper harvest seeing locomotives and wagons hurriedly pulled from storage and pressed into service.
It has been refreshing to see businesses such as Fletchers and Crawfords being prepared to invest in new high horsepower locomotives and rolling stock to operate what are comparatively short haul operations linking regional freight flows to Port Botany.
Agricultural processor and exporter Fletchers has created its own rail intermodal division to handle its transport needs with a thrice weekly intermodal service between Dubbo and Port Botany carrying export containers and loading to over 6,000 tonnes per trip, requiring three 4400hp locos for the train.
Road haulier Crawfords Transport has purchased two similar locomotives to handle its daily intermodal service between Sandgate (Newcastle) and the Port.
Elsewhere we are seeing containerised logs being pulled out of Bathurst and Goulburn and substantial flows of mineral ores around the state.
It’s not all been plain sailing: The trial service started by Access Recycling in 2015 to move scrap metal from Canberra to Port Botany came to a sudden halt with the crash in the price for scrap and problems with the loading facility in Canberra.
Last word I heard though they were still keen for the service to restart and also expand their rail footprint in NSW. In a conversation with their MD at the time of the launch of the service, he was quick to point out how it was so much easier just having one train to deal with rather than the multiple issues associated with managing a fleet of trucks and drivers.
Talking to SCT Logistics MD, Geoff Smith a few weeks ago he raised a similar point saying, “Customers are expecting a medium to long term change away from road. They realise if you have one train replacing 60 B-doubles then you can significantly reduce your Chain of Responsibility exposure.”
While SCT remain primarily an interstate operator, in recent years they have established port shuttles in Adelaide, Melbourne and Perth and also service the Wimmera region in Victoria via the terminal located on the ARTC mainline at Dooen.
NSW-based Southern Shorthaul Railroad are quiet achievers who have been gradually building their business over the last decade. While having some of the hallmarks of a typical US shortline operation, they remain an open access operator – the Australian regulatory regime continuing to discourage the traditional shortline model.
SSR have used open access to provide services for a diverse range of customers, for example from managing the Fletchers Dubbo train through to heavy coal trains for Centennial Coal in the Blue Mountains and the Hunter. Their entry into the grain market in NSW has seen a number of innovative solutions initiated for producers and handlers.
In a state where just about every regional rail line has been shut down in recent years, Bowmans Rail in South Australia is a remarkable entrant to the market, growing in stature from its original business running port shuttles over 100km of ARTC mainline between Bowmans and Port Adelaide.
The company scored a major coup at the beginning of 2016 winning the Cristal Mining mineral sands traffic between Broken Hill and Port Adelaide away from Pacific National. With some critical mass behind it the company is now looking at further expansion opportunities in 2017 and hopes to commence an Adelaide to Leigh Creek intermodal service early in the new year servicing the mining and petroleum industries.
QUBE also deserve a mention despite their ASX listed status. Their expanding rail operations are more akin to those of a regional operator and they have picked up several traffic flows In Victoria and NSW that the larger operators had neglected or were on the point of abandoning. While many of its freight flows are tied to traditional port related supply chains, it had also taken up a number of more traditional bulk hauls including grain.
It will be interesting to see what happens with the erstwhile Freightliner intermodal operations associated with the cotton industry in NSW. Now under the ownership of Genesee & Wyoming Australia, will its current operations remain as is or will GWA use them to launch an expanded regional presence in NSW?
Of course this mini revolution is only scratching the surface and not everyone is popping champagne corks just yet. I had a long conversation with former CRT owner Col Rees late last year, who is in the process of growing his Regional Connect rail business based on Ettamogah hub near Albury/Wodonga.
He was quick to point out that transport decisions and government investment are still carried out in an ad hoc manner with little regard for policy or planning. He reminded me too that our current access regimes and regulations, especially in relation to regional branch lines are skewed against the little guy.
I have pointed this out in past columns that something more akin to the US shortline model would be more appropriate for our branch lines. More of that and Col’s thoughts in the New Year.