AusRAIL, Market Sectors

NSW throws down gauntlet ? Part One

<span class="" id="parent-fieldname-description"> After years of losing cargo to other states, the once-premier state is looking for ways to fight back, writes Sam Collyer </span> <p>It is rarely advisable to fight a war on two fronts, let alone against two powerful foes in separate battles 1000km apart.</p><p>Such a scenario usually befalls an incumbent whose weakened condition has become so obvious to its neighbours as to make it a near necessity that someone take advantage of its vulnerability.</p><p>Some might argue New South Wales is such a beast – exposed to losing economic territory to the north and the south.</p><p>Once self-described as the premier state, NSW has lost some of its gloss – and there have long been fears that government bumbling has left its economic growth stymied at a time when Queensland and Victoria are only too happy to boost their own economies with cargo that started its journey interstate.</p><p>But NSW wants it known it will be fighting back. The multi-fronted assault has begun.</p><p>In an international export environment, state borders mean very little.</p><p>Economies-of-scale, price, efficiency and ease-of-access are central and experience has found that even the most partial NSW exporter would prefer to make a living than buy into any intercity or interstate rivalry.</p><p>So Sydney Ports Corporation has gone agricultural, pressing the flesh in south-western NSW to woo the people of the rich-soiled Riverina region to see Port Botany as a viable alternative for their produce.</p><p>As it prepares to add a third container terminal, Sydney Ports is on the lookout for potential new cargo – though the port corporation might consider the exports of the Riverina theirs to begin with and, therefore, less a case of gaining new cargo and more an issue of reclaiming it.</p><p>There is a hint of embarrassment in NSW that almost $1.6bn of containerised cargo originating in the state each year ends up on a ship at the port of Melbourne.</p><p>About 40,000 teu went south from the Riverina in 2008/09 – some 90% of the region’s container trade. More than a third of the container volume is wine. Other products include paper (19%), cereals (9%), meat (8%) and fruit/citrus (7%). About 762,000 tonnes of the Riverina’s containerised goods move through the port of Melbourne each year.</p><p><strong>Profitability</strong><br />And Sydney Ports is eager to bring it all back or at least a much bigger slice than the 4000 teu it currently claims.</p><p>Much of the attention has been on building relationships with local councils and major exporters in the region.</p><p>Senior Sydney Ports representatives have visited the region frequently to push the merits of sending a greater share of the region’s rich exports – worth some $40,000 per teu – to an expanded Port Botany.</p><p>But the port corporation is aware that other factors will play a role too, namely the way that the state’s freight rail network can better accommodate long-haul goods from the region.</p><p>Key projects such as the Moorebank and Enfield intermodal hubs and the construction of the Southern Sydney Freight Line will be considered crucial, both in terms of easing the pressure on the port itself and allowing long-haul general freight services a place to terminate at the Sydney end.</p><p>At a time when general freight rail operators are struggling to make money from east coast services – typically the profitability occurs on the east-west route – rail could be the means by which Riverina exporters can access Port Botany.</p><p>Sydney Ports can take comfort in the fact that, while it may not realise it fully, it already has a test case – an ally on the northern frontier where its other interstate rival, the port of Brisbane, has proven itself capable of cross-border cargo pinching.</p><p>When P&ampO Trans Australia saw that Asciano-owned Pacific National was pulling out of its Camellia operation its reaction was one of optimism.</p><p>The Camellia terminal is Sydney’s northern-most intermodal terminal strategically placed for container trade coming from Newcastle and further north.</p><p>POTA state manager Dan Coulton said the intermodal terminal operator saw it as an opportunity to expand its own operations.</p><p>Increased marketing of its Yennora facility has seen it expand throughput to 115,000 teu, almost three times the volumes before it took over and closing in on its capacity of 150,000 teu.</p><p>POTA’s rail business now operates 10 services each week and handles most of the other regional freight trains arriving in Sydney.<br />Independent Rail has five services connecting Sydney to Dubbo and the central west, Pacific National has a service from Tamworth and South Spur Rail Services operates three from the Forbes area.</p><p>The big growth is from the north of the state where Freightliner – which is also preparing its emergence as a third above-rail operator in the Hunter coal market – has three services each week servicing the cotton industry.<br />Coulton said the growth in rail services into Sydney came at a time of “lots of bad press in the bush about rail”.</p><p>The people in the bush are very jumpy about rail because of some of the statements that have been made,” Coulton said in the wake of the Camellia closure announcement.</p><p>“People now ask me ‘is rail a long-term solution’ and ‘are you going to be here’.”</p><p>The “trial by media” had discouraged regional and rural customers from committing to rail operations and made road transport look far more attractive.</p><p>“Some of the statements that have had air-time have put a few questions in people’s minds – we want to show people that it isn’t doom-and-gloom, there are positives – we’ve made it work,” he said.</p><p>POTA secured another regional rail contract servicing Agrigrain in Narromine just two months ago, with the service to call twice a week until November when an additional weekly service will commence.</p><p>The contract is for 12,000 teu of exports each year.</p><p>The success of the service comes despite the fact many customers in northern NSW find the port of Brisbane an equally-attractive option for export.</p><p>With the port of Brisbane likely to be privatised within months, there are growing rumblings within the shipping industry that a change of ownership could affect prices.</p><p>Higher costs and the uncertainty about the future viability of the port appears now to work in the favour of those advocating the benefits of shifting the goods south.</p><p><strong>To read Part Two of this story, click<a href="../../august-18-2010/other-top-stories/nsw-throws-down-gauntlet-2013-part-two"> here.</a></strong><br />Source: Lloyd’s List Daily Commercial News – <a href="http://www.lloydslistdcn.com.au" target="_blank">www.lloydslistdcn.com.au</a><br />&nbsp</p>