Increased geopolitical tensions around world trade – including the Iranian conflict and ensuing fuel crisis – combined with COVID pandemic-induced constraints in global and domestic supply chains, continue to shine a spotlight on the efficiency of Australia’s freight networks.
Resilient supply chain infrastructure and reliable freight operations help support the commercial success of Australian exporters, such as farmers and miners, competing in international markets.
On the flip side, disruptions and delays caused by fragile and fragmented freight networks and services result in reduced profit margins for importers and exporters, with Australian families paying more at the supermarket checkout for both domestic and imported goods.
In addition, reaching the nation’s legislated mandate of net zero greenhouse gas emissions by 2050 depends on reducing emissions in traditionally hard-to-abate regional and interstate freight and logistics networks. Indeed, the transport sector is forecast to become Australia’s largest source of greenhouse gas emissions by 2030, according to the Australian Climate Change Authority.
Unlocking the future of rail freight for all
Bearing all this in mind, Intermodal Terminal Company (ITC) Chair John Fullerton said it’s timely that ITC has successfully commenced operations at its new $400 million Melbourne Intermodal Terminal (MIT) in Somerton, in the city’s northern industrial zone.
“Delivering strategically positioned intermodal terminals, which enable the seamless consolidation, storage, and transfer of freight between rail, road and shipping, is a smart way to enhance supply chain productivity,” he said.
“Underpinning this concept is a keen interest within government, and industry generally, to transport more freight on rail.
“In many cases, rail is the more cost-efficient and environmentally and community-friendly choice.”
According to a 2020 report by Deloitte Access Economics, commissioned by the Australasian Railway Association (ARA), rail freight produces 16 times less carbon pollution than road freight per tonne kilometre travelled.
“Another important feature of the MIT development is the fact that governments have long called for Australian superannuation firms to increase investment in domestic infrastructure,” Fullerton added.
“It’s pleasing to see Aware Super, which owns ITC, taking an active role in helping to unlock the future of rail freight for all.”
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We have seen this movie before
In Sydney, there are five Import-Export (IMEX) terminals. By using rail port shuttles, these terminals enable supply chain customers to avoid traffic congestion and road tolls in and around Port Botany. Trucks then fetch containers from the terminals to deliver them the ‘last mile’ to freight owners.
ITC Chief Executive Officer Mishkel Maharaj said this IMEX operating model lifts the daily cycle rates of truck trips, and combined with predictable port rail shuttle transit times, allows freight owners and forwarders to better control their costs.
Currently, the only IMEX terminal in operation in Victoria is the MIT. Unlike Sydney terminals, which are operated by a single freight forwarder, the MIT is open-access and owned and operated by an independent party (the ITC).
This means the MIT enables all freight owners and forwarders to unlock the value of rail freight.
“The MIT as an IMEX terminal is new for Melbourne, but such facilities are tried and proven operations in Australia, presenting an efficient rail solution for freight at a time when road congestion and its impact on the environment continue to grow,” said Maharaj. “In addition to IMEX operations, the MIT enables customers to repackage imported goods and use the terminal’s interstate capabilities to then send their products back on rail across the country.”
A ‘Goldilocks’ freight zone
To grow the share of goods and products moved on rail, there must be efficient access to existing and future transport networks and freight demand zones, Maharaj said. This means building modern, world-class intermodal terminals at the heart of major industrial and logistics precincts, away from port and city centre congestion. The MIT ticks that box and more.
“The MIT is in a ‘Goldilocks’ freight and logistics zone – not too far, not too close; only 20 kilometres by rail to Port of Melbourne, adjacent to the Hume Highway and with access to both the Victorian (broad-gauge) and interstate (standard-gauge) rail networks.
“Within a short radius of the MIT is approximately 20 per cent of Victoria’s containerised freight volumes and three-and-a-half million square metres of warehousing.”
The M80 Ring Road (Western and Metropolitan Ring Road) and new North East Link tunnels will allow customers in Melbourne’s west and southeast to efficiently access the MIT without having to battle congestion.
The MIT enables a multi-modal solution for freight to enter and leave Australia. For the first time in Victoria, imports can now leave Port of Melbourne docks on rail to a major industrial and logistics precinct. This allows MIT customers to avoid city traffic and tolls, including bypassing the new Westgate Tunnel.
The MIT is also central to a broader investment, backed by Aware Real Estate and Barings, called the Melbourne Intermodal and Industrial Exchange (MIIX) – the further development of a 99-hectare industrial and logistics estate in Somerton.
“The $1.6 billion MIT-MIIX integrated development provides precinct tenants with the advantage of having access to co-located warehousing and related logistical services,” said Maharaj.
“For example, the MIT-MIIX precinct will allow handling of containers above weights permitted on public roads and reduce transfer costs between the terminal and warehouses via the use of internal roads.”
Port of Melbourne enlists the MIT
Port of Melbourne (PoM) has enlisted the new MIT as an anchor in an incentive program to help shift more containerised freight from road to rail.
The Port Rail Shuttle Network (PRSN) Start up Incentive Program is aimed at supporting base load import 20-foot equivalent unit (TEU) volumes during the MIT’s ramp-up phase and encouraging the timely take-up of rail freight services now that the MIT is operational.
The current proposal contemplates an offer of $100 per TEU and $200 per 40-foot equivalent unit (FEU) for import containers moved by rail from the port to the MIT. PoM Chief Executive Officer Saul Cannon said: “Improved landside connectivity for freight operations, particularly rail, is a focal point for future growth at the port.
“Strong industry uptake of metropolitan port rail shuttle services will be required to increase the port’s rail mode share over the medium and long term. To encourage this, Port of Melbourne has introduced this incentive program.
“Port of Melbourne welcomes the addition of the MIT in the Victorian supply chain to enhance the rail offering to beneficial freight owners in our state.”
MIT volumes ramp up
The ITC’s Chief Operating Officer Brendan Gibson said the MIT is ideally positioned in the market to benefit from solid underlying IMEX and intermodal containerised volumes, as well as state and federal government programs and projects designed to help shift more freight from road to rail.
In terms of containerised freight volumes in Australia, in 2022-23, the Bureau of Infrastructure and Transport Research Economics reported approximately nine million TEUs were exchanged at the five principal container ports in Melbourne, Port Botany, Brisbane, Adelaide and Fremantle.
Gibson said: “The MIT has undertaken six months of successful operations with significant volumes of containerised freight being procured during this period.
“ITC has already secured a host of Australian exporters and importers as early adopters of the terminal, with products and commodities being processed at the MIT including large-scale import customers, manufactured products for export and primary timber.
“Since operations commenced late last year, more than 10,000 TEUs have been hauled to and from the MIT, including port shuttle services hauling 40-foot containers filled with imported goods for local assembly, as well as products for export.”
In terms of the haulage of containerised freight between the MIT and port, Southern Shorthaul Railroad (SSR) deploys rail shuttles 600 metres in length, which transport about 80 TEUs each trip.
“Trucks deliver product from the local catchment or regional Victoria to Somerton before being loaded into containers at the MIT and then seamlessly hauled by rail to port via the Australian Rail Track Corporation (ARTC) standard-gauge network,” Gibson said.
“The ITC is now moving into the next phase of operations for its expanding customer base, including increasing daily rail shuttle services to and from the Patrick and DP World stevedoring terminals.
“ITC has also established an empty container park to enable the efficient hire and de-hire of boxes without having to drive through traffic and tolls from the north to the west of Melbourne.”
Gibson said discussions with long-distance rail haulage companies for interstate services, with TEU volumes originating from the MIT, are also well advanced.
“Australia’s largest rail freight operator, Aurizon, has signed an agreement with ITC to use the MIT for the handling of containerised freight for up to nine years,” he added.
Somerton one stop shop
Gibson said that given its location in both the Victorian and national supply chains, the MIT is on track to become an epicentre of short (IMEX/port shuttle) and long-distance (interstate) container movements in Victoria.
Initially, the MIT is planned to have a total annual capacity of one million TEUs, with approximately 650,000 and 350,000 TEUs for interstate and port shuttle operations, respectively. The MIT also acts as a “one-stop shop” for customers by providing customs-bonded storage areas to process and recycle empty cargo containers back into the supply chain as well as on-site facilities to wash, fumigate and repair containers.
The intermodal terminal features sophisticated freight handling equipment and machinery, including 350-tonne rail-mounted gantry cranes, which are fully electric and can regenerate electricity back into the grid by the kinetic process of lifting and loading containers.
ITC’s Chief Development Officer Leigh Cook said: “In the 15-hectare inner terminal of the MIT, we now have four rail-mounted gantry cranes commissioned and operational.
“To increase future TEU handling capacity at the MIT, another three gantry cranes have been erected in the outer terminal and will be undergoing commissioning in May.”
A single rail-mounted gantry crane at the MIT can load/unload between 32 and 36 boxes each hour.
Cook added: “The design and construction of the MIT, including more than 30 hectares of concrete terminal hardstands, has been delivered in only two years.
“From the first sod of soil turned at the MIT, the ITC and our lead construction contractor ACCIONA have worked closely with various state and federal departments and agencies, including the ARTC, to deliver the most state-of-the-art intermodal terminal in the country.”
Future capacity unlocked
Maharaj said that combined with existing intermodals, the MIT supports growth in Victoria’s freight task by providing sufficient capacity across its various phases of development until the late 2050s.
“This is timely, as the first phase of the Australian Government’s Melbourne-Brisbane Inland Rail project is forecast to open towards the end of the 2020s.
“As such, the MIT enables this dedicated rail freight ‘corridor of commerce’ – and broad-gauge services from regional Victoria – to reach deep into Melbourne’s existing industrial and logistics zones.”
