A rail connection for Qube’s Moorebank freight hub has been delayed by up to six months due to regulatory approval issues, but the company said rail access will be ready in time for warehousing operations to commence.
Qube on Thursday revealed the opening of a rail line to the Moorebank import-export (IMEX) terminal was now forecast for midway through 2019, “due to delays in receiving regulatory approvals for access and an environmental protection licence”.
The rail connection in question is between the Moorebank site and the Southern Sydney freight line, which connects to the port.
The logistics company told the ASX it didn’t expect the delay to have a “material impact” on the Moorebank project’s returns, however, with the rail connection still expected to be in place by the time warehousing activities begin.
When construction is complete, Moorebank will include an IMEX terminal and an interstate terminal, allowing the interface between rail and road for importers, exporters and other freight movers.
The minimum expected cost of Moorebank over the first five years is expected to be around $642 million. This includes building warehouses for Qube Logistics and one of Moorebank’s first major lessors, Target Australia.
It also includes the cost of a planned transition for the IMEX terminal from manual container handling to the use of automated straddle carriers by 2022.
Qube’s Patrick container terminal subsidiary already uses automated straddle carriers at its port sites in Brisbane and Sydney.
Qube also said there is still considerable market interest for more tenants at the Moorebank site.
“The [Moorebank] development is experiencing considerable leasing/tenant interest with prospective tenants attracted to the logistics opportunity that the location and operation of the site presents, particularly given limited alternative competing sites within the area of the Sydney industrial market,” the company said.
“However, Qube continues to expect a progressive signing of formal leases with some interested parties expected to wait until the rail terminal and initial warehouses are built and operational, and the expected efficiencies demonstrated.”
Qube profit up despite rail struggles
Qube reported a 4.5% increase to underlying net profit to $107 million in FY18, and a statutory (i.e. actual) net profit growth of 158%, to $199 million, but rail activity was down.
Qube Logistics, which includes the company’s rail operations, saw a 5% decline in EBITDA to $62.8 million due to “several headwinds”.
The company said “very low” volumes of grain affected its bulk rail and containerised grain haulage activities. It also experienced reduced terminal services revenue at North Dynon, Victoria, “following the exit of Aurizon from its interstate operations”.
Looking ahead to FY19, Qube said it expects “broadly similar overall conditions and volumes across most areas,” including containerised transport, bulk commodities and forestry products.
“Qube does not presently expect a significant improvement in grain volumes,” the company added.