ARTC

ARTC extends payment terms and defers price increase for freight operators

The Australian Rail Track Corporation (ARTC) has provided financial relief for rail freight operators to allow them to continue supply Australians with essential goods during the coronavirus (COVID-19) pandemic.

The ARTC has extended payment terms for existing access charges and deferred the consumer price index (CPI) increase that was scheduled for July.

Deputy Prime Minister and Minister for Infrastructure, Transport and Regional Development Michael McCormack welcomed the ARTC’s decision.

“Rail freight companies have worked tirelessly to service the initial growth in consumer demand during the pandemic to keep Australia open for business by supplying the essential goods that have supported our nation through this global health crisis,” he said.

While demand initially peaked at the beginning of the COVID-19 pandemic, a fall in consumer demand followed along with drops in production, which have put strain on some operators. Finance Minister Mathias Cormann said that the ARTC’s measures would enable freight operators to manage the uncertain environment.

“The government is very pleased to see ARTC working with its customers, government and industry to build resilience in our freight and supply chain network during what is a difficult period.”

Pacific National CEO Dean Dalla Valle said that the ARTC’s decision would support the rail freight sector.

“Pacific National very much welcomes the initiative by the Australian Government and ARTC board to extend payment terms for rail freight operators for ARTC access charges from 30 to 90 days, not to mention the freeze in CPI increase from 1 July to 1 October. It’s a great step in the right direction for interstate rail freight.”

Dalla Valle also highlighted that the move would increase the competitiveness of rail, as road transport had benefited from fixed user charges for the past four years.

“We do need to point out that in the last 12 years, rail access charges on the ARTC interstate network have increased annually by CPI. In comparison, for the last four years the Transport and Infrastructure Council of Australia have frozen heavy vehicle road user charges (2015-16 to 2019-20). This pricing setting has now been extended for another financial year (2020-21),” said Dalla Valle.

“The lack of competitive neutrality in pricing between rail and road freight has created an uneven playing field. It has been a large contributing factor in perverse outcomes like 98 percent of containerised and palletised freight now being transported by truck between Sydney and Melbourne (equivalent to more than 700,000 B-double truck return trips on the Hume Highway each year).”

Dalla Valle said that the current decision reconfirmed the need to review freight transport pricing arrangements.

“Pacific National understands and appreciates ARTC is a ‘wholly-owned Commonwealth company’ and, as such, must earn a rate of return for the Australian taxpayer. However, when the focus on delivering government dividends becomes all-consuming to the point of making interstate and regional rail freight uncompetitive with road (and increasingly coastal shipping) and ignoring the many beneficial externalities of rail freight, then current pricing models must be seriously looked at.

“This is happening at a time when Australians want less traffic congestion, reduced road accidents and fatalities (of which we have seen a spate of terrible incidents recently), lower vehicle emissions, and less ‘wear and tear’ on roads.”

CEO of the Australian Logistics Council, Kirk Coningham, welcomed the ARTC’s decision.

“This is a positive move that provides practical support for freight rail operators at a challenging time as they keep our supply chains moving. ALC applauds this proactive approach from ARTC,” he said.

“This practical relief is a useful reminder of the incredible job freight and logistics operators are doing as they continue to deliver for Australian communities, despite the significant economic hurdles many are now facing.”

Both McCormack and Cormann highlighted how vital the freight network is to Australia.

“Our efficient freight network is critical to ensuring our supermarket shelves are stocked and our valuable export commodities can reach overseas markets – both of which have been vital during this pandemic,” said McCormack.

“Each year, Australia’s freight and supply chain networks deliver billions of tonnes of goods across the country,” said Cormann.

“ARTC plays a significant role in making this possible through its management of national rail infrastructure. We welcome its response to the COVID-19 crisis, which has ensured freight rail operators are able to continue providing an important service Australians and the Australian economy rely on.”

Strategy

First long-term infrastructure strategy released in SA

Infrastructure SA has released the first long-term infrastructure strategy for South Australia, and targets freight movements as an area for improvement.

The 20-Year State Infrastructure Strategy covers all aspects of infrastructure, from education and health, to energy and digital connectivity, however, makes a number of recommendations for the state’s transport network.

SA’s freight network is particularly addressed as an area that needs improvement. The report notes that there are limited options when it comes to bulk minerals, and that roads supporting industry in the regions are in poor condition.

Although road is expected to continue to carry the majority of freight, investment in rail spurs is one area where the efficiencies of rail can be realised. In addition, with forecast growth near Adelaide Airport and congestion at ports, more efficient rail connections should be focused on, highlighted Australian Logistics Council CEO, Kirk Coningham.

“ALC welcomes the Strategy’s recognition of the need for improved landside road and rail connections for freight at SA’s ports and airports to address congestion. We continue to encourage the SA Government to pursue the standardisation of SA’s freight rail gauges to enhance network efficiency.”

For passenger transport, buses are expected to remain the dominant public transport mode, however trunk corridors for future growth are where further investment should occur, write Infrastructure SA.

While the Infrastructure Strategy did not identify key projects, Infrastructure SA also released the Capital Intentions Statement, which identifies works such as level crossing removals as needing investment.

In addition to individual projects, the Infrastructure Strategy recommends an integrated planning approach, which Coningham welcomed.

“ALC strongly endorses the Strategy’s call to break down silos in the planning system by moving toward a more integrated approach. As part of this, we call on the SA government to adopt ‘freight and logistics lands’ as a distinct land use category within South Australian planning instruments.”

cargo

Preference shifts towards rail to deliver international cargo

Transcontinental rail networks could have the potential to overtake cargo movements via air and sea.

Mail-only trains from China are helping clear the large backlog of mail destined for Europe and deliver essential medical supplies.

In a world first, The ‘China Post’ CR Express, carried mail and two containers of medical supplies from Chongqing, China to Vilnius, the capital city of Lithuania on April 4.

The ‘China Post’ CR Express block train has a total of 44 containers with about 300 tons of postal parcels, including 42 containers of international postal parcels from Beijing, Guangdong, Hunan, and Chongqing, and two of medical supplies purchased by the Lithuanian government. 

China Post decided to start an emergency program to send out those international postal parcels via Youxinou International Railway instead of mailing them by air from Beijing, Shanghai, and Shenzhen.

It cuts what was a five-week shipping period to about two weeks, and costs 80 percent less than airfreight.

Yuxinou International Railway stated in early April that it plans to dispatch one or two block trains of international postal parcels every week.

Following this initiative, Maersk has now introduced its first rail service from China to Turkey as a part of the Maersk Intercontinental Rail service network.

Kasper Krog, head of AP Moller – Maersk Intercontinental Rail, said after successfully launching its Intercontinental Rail (ICR) service from China to Europe three years ago, the company has seen an increase in demand by its customers for this particular service from different locations across both Asia and Europe.

“Due to its strategic geographical location, wide industry sector, as well as all ambitious initiatives taken by the government to improve the rail infrastructure across the country we decided to launch ICR in Turkey not only for those companies located within the country but also as a link between Asia and Europe,” he said.

With the help of a feeder network of Sealand, owned by Maersk, the ICR offers its customers links to Black Sea, Eastern Europe, and Southern European countries through the port of Korfez in Izmit.

The rail service is expected to benefit customers who require fast delivery of goods in the automotive and technology industries.

Australia is improving its rail infrastructure at the port by providing a new rail operating framework inside the Port of Melbourne.

Brendan Bourke, CEO of Port of Melbourne said the $125 million project is aiming to increase the amount of containers moved by rail, improving operations at the port, with construction expected to commence before the end of this year.

Sal Milici, Freight and Trade Alliance (FTA) head of border and biosecurity, said increased rail utilisation is necessary to meet the long term forecasted trade growth.

“We applaud the initiative being driven by the Port of Melbourne which will ultimately facilitate the expansion and incentivisation for commercial interests to invest in metropolitan intermodals,” he said.

“An important element of our post COVID-19 economic recovery will be on a strong and vibrant manufacturing and agriculture sectors. A seamless interface to the port for these exporters will be essential.”

A resilient freight network is key in times of uncertainty

In her column, CEO of the Australasian Railway Association Caroline Wilkie highlights that Australia’s rail freight network is facing challenges during the COVID-19 pandemic but its importance now is greater than ever.

Australia’s population is forecast to double by 2070, reaching almost 45 million people. This growing population requires an increased allocation of goods, adding pressure on our existing freight networks to deliver. According to the National Freight and Supply Chain Strategy, Australia’s freight task is expected to grow by over 35 per cent between 2018 and 2040, an increase of 270 billion tonnes, bringing the total volume moved to just over 1,000 billion tonne-kilometres.

The role of rail freight is critical in meeting this future demand and maintaining our international competitiveness. The Value of Rail study commissioned by ARA in 2017 highlights that a one per cent improvement in freight productivity could generate $8-20 billion in savings to the national economy over 20 years. Rail freight provides a cost-effective, safe and environmentally sound solution for reducing congestion from heavy vehicles on urban, regional, and interstate roads. Just one freight train alone can take 110 trucks off our already congested roads and rail is up to nine times safer than road freight. In light of these significant benefits, the ARA is working with governments and industry on behalf of our members to get more freight on to rail, and to improve the efficiency and productivity of Australia’s rail freight supply chains. Achieving modal shift to rail is critical to increasing economic growth, improving the liveability of our cities and supporting regional communities.

Delivery of the Inland Rail project is an important step in achieving this. This nation building project will see a 1,700km freight rail line directly connecting Melbourne and Brisbane, via Toowoomba, Parkes, and Albury. The route will utilise approximately 1,100 km of upgraded existing track and 600 km of new track in Queensland, New South Wales, and Victoria. Most importantly though, it will bypass the heavily congested Sydney network and bring rail freight travel times between Melbourne and Brisbane down from 33 hours to less than 24 hours. This is a game changer and will make rail freight much more competitive over long haulage routes.

In a period of economic uncertainty, the Inland Rail project is bringing a much needed boost to the economy. Construction is already underway on the Parkes to Narromine project and planning is well advanced on a number of other sections. Approximately $747m has already been spent, with much of this spend being injected into rural communities.

Inland Rail has been in the public domain for over fifteen years. It is also one of the most heavily studied projects in recent Australian history, having been through an extensive consultation, planning, route analysis, engineering and costing process.

We are aware of issues that have been raised in relation to flooding of the Condamine crossing in Queensland.

Without a doubt, the project is receiving the best possible expert advice and can manage these issues using tested and proven mitigation measures. These issues need to be worked through carefully and collaboratively, but they should not delay the delivery of the project.

The delivery of Inland Rail is a start, but more must be done. Investment in rail freight delivers enormous benefits in the long term. Improved supply chain connectivity and productivity benefits the economy and the environment and helps provide resilience in the face of emergencies like to COVID-19 pandemic.

The current crisis has just reinforced the importance of a highly productive and efficient supply chain. This unprecedented event has challenged our supply chain like never before, but our rail freight members continue to ensure that essential goods such as canned food, toilet paper, and cleaning products are moving across the country and to customers.

When state border crossing restrictions came into force in later March, the ARA wrote to state and the Commonwealth transport minsters to ensure rail freight was considered an essential service and exempt from border restrictions.

However, the stark difference between road and rail freight regulation is never more apparent than it is during times like these. Regulation by the National Heavy Vehicle Regulator (NHVR) has a focus on both safety and productivity, whereas the Office of the National Rail Safety Regulator (ONRSR’s) remit is purely safety-related.

The ARA have long held the view that we must take a national approach with all modes working together to deliver an integrated freight market. However, this approach can only work if all modes operate from a level playing field with equal treatment in terms of access pricing, government policies, and the role of productivity in regulation.

At the beginning of the COVID-19 pandemic, trucks were able to have curfews lifted to extend delivery windows in NSW and Queensland. However, due to the nature of our infrastructure and the shared tracks of passenger and rail networks, our industry does not have the same flexibility. As a result, we must look for other solutions to improve the productivity of rail freight.

Rail freight operators are committed to the highest levels of safety compliance but are routinely challenged by Rail Safety National Law (RSNL) derogations that exist, most notably the differing fatigue management requirements in NSW and Queensland, and the different drug and alcohol management requirements in NSW.

As I outlined in my March 2020 article, these inconsistent, state-based regulatory requirements go against the objective of national regulation and add costs to rail freight without any proven safety benefit. The ARA believes that multiple layers of often conflicting regulation impacts rail freight productivity.

A modern, risk-based approach to rail safety that focuses on productivity will improve our supply chain resilience and unlock significant economic and environmental benefits for the whole country.

ALC lobbies for freight to receive JobKeeper subsidy

The Australian Logistics Council (ALC) has called upon the federal government to extend the JobKeeper Payment scheme to freight and logistics businesses as they are businesses providing essential services.

In a letter to Treasurer Josh Frydenburg, CEO of the ALC Kirk Coningham wrote that while freight and logistics businesses, including freight rail operators, have been deemed an essential service, they have missed out on government support for businesses.

“ALC is concerned that the blunt application of a reduced turnover test at 30 per cent for small and medium businesses and 50 percent for larger businesses to qualify for the JobKeeper Payment fails to adequately account for [freight and logistics businesses],” wrote Coningham.

While rail businesses and organisations welcomed the announcement of stimulus in March, some were concerned that the threshold would limit their ability to access the scheme and ensure workers who may need to be stood down are continued to be paid.

Coningham outlined that the particular circumstances of the freight sector means that stimulus is required.

“The reality is that most businesses within Australia’s freight and logistics sector operate on tight margins that flow from high fixed costs associated with the purchase and maintenance of freight vehicles, equipment and infrastructure.”

Since the coronavirus (COVID-19) pandemic has hit Australia, freight businesses in the rail sector have been called upon to ensure that essential goods such as groceries continue to get on the shelves of supermarkets around Australia. Rail has continued to play a role as borders have been closed and in some areas has seen up to a 15 per cent increase in services.

Coningham wrote to Frydenburg that if businesses such as these were allowed to fail there would be significant consequences.

“If major freight transport businesses are forced to close due to financial pressures arising from COVID-19, there will be a range of deleterious consequences for the entire supply chain, and the ability of Australian households to access essential goods in a timely fashion could well be threatened. Moreover, there would also be significant consequences for Australian exporters, who rely on freight and logistics service providers to take their goods to market.”

The ALC recommended that essential service providers be eligible for JobKeeper Payments automatically, that if a threshold is imposed it should be set at 15 per cent for businesses providing essential services, and ensure that the first two JobKeeper payments are done quickly.

Summer events show need for resilience focus

Kirk Coningham, CEO of the Australian Logistics Council, outlines how the effects of this summer will continue to be felt in the freight rail sector.

It is reasonable to say that many Australians have experienced a challenging beginning to 2020, and the flow-on effects are likely to affect our industry in a variety of ways over the months ahead.

The bushfires that burned through vast swathes of the continent had a devastating impact on families, local communities, and businesses. The immediate scale of the tragedy is recorded in lives and homes lost and understandably, that is where the initial focus of recovery efforts has been.

Yet in some respects, that is only the beginning of the story. With the fires now extinguished and the immediate physical threat having passed, it is becoming apparent that recovery efforts – and the cost of those efforts – will be significant.

These costs will include significant repairs that will have to be undertaken to repair damaged transport infrastructure.

Throughout the early weeks of this year, ALC has been participating in regular industry discussions convened by the Deputy Prime Minister and Minister for Transport, Infrastructure and Regional Development, Michael McCormack, which are focused on providing industry advice and assistance to the federal government in shaping its recovery response to the fire crisis.

What was already a difficult beginning to 2020 is now being further compounded by the challenges associated with the coronavirus.

As in the case of the fires, the initial focus is on protecting lives through containment and quarantine efforts. Yet, as with the fires, once the immediate threat is contained, there will be significant economic effects to consider.

Australia’s freight rail sector plays a crucial role in getting imported freight
to customers, as well as transporting Australian products to the point of export. The disruptive effects of an episode like the coronavirus have obvious flow-on effects across the whole supply chain – and these will need to be managed effectively and responsibly.

Over recent weeks, experts have warned that the ongoing restrictions on the movement of goods and people in China – our largest trading partner – are likely to adversely impact Australia’s agricultural exports. The effects are also being felt in other export sectors, including minerals and resources.

On the other side of the coin, restrictions on the departure of vessels from China means those importing goods to Australia – and road transport businesses which supply them – are also likely to feel a slowdown.

Improving the resilience of Australia’s supply chains to withstand the effects of natural disasters and international events was clearly identified in the National Freight and Supply Chain Strategy released last year.

It was a theme echoed in the 2020 Infrastructure Priority List released by Infrastructure Australia in February. The updated list placed a renewed emphasis on enhancing the capacity of national infrastructure to cope with disruptive events – whether they be as a result of natural disasters or through other unexpected events such, as global epidemics or terrorism.

The early part of 2020 was a powerful demonstration of why our governments must join with industry in acting more urgently to address that challenge.

Operators meeting strengthening demand for rail freight

Figures released by Aurizon show that there has been greater demand for rail freight services in the March quarter of 2020.

The Queensland based business, which operates the Central Queensland Coal Network, as well as coal services in NSW and South East Queensland and national freight services, saw a 2 per cent increase in total above rail volumes when compared to the 2019 March quarter.

The growth was driven by a 12 per cent increase in bulk volumes, however coal volumes remained flat.

In an ASX statement, the company attributed the growth to strong volumes of iron ore from Mt Gibson, in the Kimberly and Mid West of Western Australia. However, the overall level of growth in the bulk sector was affected by the flooding of the Mt Isa line in the March quarter last year, which restricted volumes in that period.

The flat demand for coal volumes were affected by the ramp down of New Acland mine, industrial action and adverse weather in February and march which impacted the Centre Queensland Coal Network.

Aurizon also noted that there has been greater demand for freight rail services from Linfox due to increased demand for consumer goods during the coronavirus (COVID-19) pandemic. Aurizon has put in place extra preventative measures and there have been no cases of COVID-19 among Aurizon employees.

Linfox has been redeploying some of its workforce from affected operations to manage this demand for grocery products and the company is ensuring that supply chains remain open, said Linfox Logistics CEO Australia and New Zealand, Mark Mazurek.

“It is critically important that Linfox’s warehousing, road and rail networks continue to function safely and efficiently and that we can work collaboratively to deploy our people into new roles.”

Moving freight by rail is easing Australia’s strained supply chains

Australia’s rail network is ensuring the nation’s supply chain stays intact.

People are working around-the-clock to ensure safe passage for 1,800-metre freight trains carrying essential products for all Australians.

John Fullerton, ARTC CEO said in a recent interview that was broadcast on Sky News that transport companies are moving as much as they can to boost the flow of essential goods and services.

“Rail is no different, we move around five million tonnes across the continent from the eastern seaboard to WA and a lot of our product involves groceries and the hardware that sits on those supermarket shelves,” he said on Sky News.

Fullerton said the sector is crucial and rail freight movements on the ARTC network are up approximately 14 per cent due to the unprecedented demand for goods.

“The COVID-19 outbreak has sparked an unprecedented challenge for Australia’s freight and transport industry, with the country’s demand for critical supplies prompting a surge in rail freight,” he said.

“The rail freight sector has stepped up to ease Australia’s strained supply lines.”

The ARTC CEO leads a team of more than 1600 employees to manage and maintain 8500km of the national rail network.

ARTC employs more than 300 people at its Keswick headquarters in South Australia including network controllers who ensure coordinated passage for the country’s freight trains.

“Freight trains are playing a crucial role in Australia’s response to the coronavirus pandemic – and our frontline teams are really part of a group of workers making sure the economy and society is able to keep functioning during these difficult times,” Fullerton said.

Moving freight has been highlighted by the government as an essential service. Fullerton says the sector has never been more important “which is putting a lot of responsibility on our shoulders”.

However, in collaboration with rail freight customers, government, and industry partners, Fullerton said it’s been wonderful to see teams rise to the challenge to keep Australia’s supply chain intact and the nation’s economy moving.

“We’re really proud to be able to keep freight trains moving and do our bit for Australia, but like other essential service providers, these are testing times for everyone and there’s still a long road ahead,” Fullerton said.

The company also has teams maintaining rail assets across the nation, including in the middle of the Nullarbor, to help move vital freight to its destination.

“There’s definitely a lot of uncertainty surrounding COVID-19, but we’ll continue to work hard with our customers and partners to ensure supplies continue to ride the rails and get to where they need to be,” he said.

ARTC is continuing to implement strict hygiene protocols and preventative measures to protect the health and safety of staff and local communities in which it operates. 

Increase in freight services to meet consumer demand

Pacific National has increased key interstate freight services by up to 15 per cent to meet consumer demand.

According to Pacific National CEO, Dean Dalla Valle, extra services have between all mainland state capitals.

“For example, in terms of goods trains operating back and forth across the Nullarbor between Melbourne and Perth, we have lifted the number of services by 15 per cent in the last two weeks,” he said.

“Similarly, to meet customer requirements, Pacific National had increased rail freight services between Melbourne and Brisbane by 8 per cent.”

Pacific National has also been looking to streamline operations due to the unpredictability of current conditions.

“A zeal for constant innovation and a laser-focus on customer needs, both in frontline operations and the corporate centre, is vital,” said Dalla Valle.

“In these rapidly changing times, management and frontline staff must explore every operational and commercial angle to maintain an edge in the marketplace.”

To accommodate the increase in services, operating hours at freight terminals have been extended, consolidated assembly and staging of goods trains at Port Augusta, in South Australia.

“Port Augusta is at a key crossroad in the national supply chain, acting as an ideal launch pad location to provide high capacity rail freight services to every corner of the continent.”

Each of the 40 rail services that Pacific National have been operating back and forth across the Nullarbor have ensured that Western Australia remains connected to the rest of the nation, with 60 per cent of goods arriving in the state carried by rail.

Rail freight services have been particularly key during the coronavirus (COVID-19) lockdown as they operate on separate corridors, reducing the potential for contagion.

“The health and safety of our train crews are paramount, and I’m immensely proud of their ongoing efforts and dedication,” said Dalla Valle, who noted that hygiene and social distancing procedures are strictly adhered to.

Extra services running to transport household items

Linfox Logistics and Aurizon have upped their weekly intermodal services by 20 per cent, to meet the needs of households across Queensland and Australia.

Aurizon has added a number of northbound services from Brisbane, carrying finished products including food, groceries, and beverages in Linfox containers, with these carriages then filled with fresh produce on the return leg from Central and North Queensland.

The trains have been travelling between Brisbane and Cairns, Innisfail, Townsville, Bowen, Mackay, Rockhampton, Gladstone, Emerald, Alpha, Barcaldine, Longreach, and Winton.

According to Linfox Logistics CEO Australia and New Zealand, Mark Mazurek, each extra rail services is equal to 80 B-double trucks.

“Collectively, we have mobilised a significant number of additional truck and train services to ensure essential items flow through to regional Queenslanders,” he said.

“Everything from groceries, to cleaning and personal care products, to fresh produce from Far North Queensland farms are delivered via these critical networks.”

In delivering these extra services, both Linfox and Aurizon have ensured that they meet and exceed health and safety measures. With the coronavirus (COVID-19) pandemic, a focus on health and safety is more important than ever, said Aurizon group executive bulk, Clay McDonald.

“This applies not only in their everyday roles in the transport and logistics business but also in practicing safe distancing, enhanced cleaning procedures and high levels of workplace hygiene,” he said.

“Together, we are pleased that our supply chain is delivering such an important service to the community during a very testing time for customers and communities across Queensland.”

Linfox Logistics, which began in the road freight sector, has recently expanded its rail freight operations, purchasing Aurizon’s Queensland intermodal business a year ago. Linfox owns depots, rail wagons, and 4,500 specialised rail