Qube

Port Botany
 Freight Rail

Freight coalition unite in calling for rail container incentive scheme

Freight and logistics groups have called out the NSW government’s undermining of its own mode share target for containers carried by rail into Port Botany.

The Australian Logistics Council (ALC), Freight on Rail Group of Australia (FORG), Freight and Trade Alliance (FTA), and the Australasian Railway Association (ARA) along with individual port rail freight operators are questioning the wisdom of allowing more high productivity vehicles on Sydney’s roads.

“By incentivising HPVs, government is perversely derailing their own policy to grow rail’s mode share target – at a time when Sydneysiders want safer roads and less traffic congestion and vehicle emissions,” said ALC board member and Qube managing director Maurice James.

The NSW government has been issuing permits for high productivity vehicles to access the Sydney road network and major motorways such as WestConnex. By allowing trucks which can carry two containers to travel within Sydney, this reduces the competitiveness of rail for the metro import container market.

The NSW government has set itself the goal of having 28 per cent of the container trade through Port Botany being handled by rail by 2021, however just 17.6 per cent is currently hauled by rail.

Instead of having each mode compliment each other, with rail for longer distances and trucks for the first and last mile, road transport was monopolising container traffic, with impacts on the local community, said FORG chair and Pacific National CEO Dean Dalla Valle

“Today, many HPVs are doing ‘every mile’ of the freight task in Sydney, placing heightened pressure on traffic congestion, road safety and vehicle emissions,” he said.

Dalla Valle advocated for a measure such as the Western Australian government’s Port of Fremantle container incentive scheme was needed in NSW.

“Prior to introduction of the incentive scheme at the Port of Fremantle in 2006-07, rail mode share was a meagre two per cent. The scheme underpinned growth of rail’s mode share which is now above 20 per cent – the highest in the country,” said Dalla Valle.

Director of the FTA and secretariat to the Australian Peak Shippers Association Paul Zalai said that governments should encourage importers to use rail services.

“Governments must maximise port assets and manage our trade gateways through incentivisation of rail usage for imports to metropolitan sites and importantly, streamlined connectivity to regional areas to cost effectively reach export markets.”

ARA CEO Caroline Wilkie said communities would be feeling the brunt of the lack of rail transport.

“The balance has tipped so far we run the risk of Sydney’s roads being over-run with trucks unless there is urgent action to use more rail.”

 Below Rail Infrastructure, Freight Rail

Patrick and Port of Melbourne sign agreement for rail terminal at East Swanson Dock

Patrick Terminals and the Port of Melbourne have agreed to construct a new rail terminal to enable more freight to be delivered by rail to East Swanson Dock.

The new rail terminal, expected to be completed by mid 2023, will handle up to 200,000 TEUs annually, and provide a direct rail connection between the Port of Melbourne and suburban intermodal terminals, enabling more freight to be transported to and from the port via rail.

“The new facility will provide a direct interface with Patrick’s East Swanson Dock Container Terminal, reducing cost of last mile between the rail terminal and quayside for rail based container movements,” said Patrick CEO Michael Jovicic.

The announcement of the rail terminal is part of a wider push to get more freight onto rail at the Port of Melbourne. The Port of Melbourne is investing $125 million in on-dock rail as part of the Port Rail Transformation Project (PRTP) and this project is a significant part of that, said Brendan Bourke, CEO of the Port of Melbourne.

“The PRTP is a key project of our Port Development Strategy and Our Plan for Rail and is vital to successfully accommodating future growth at the port.”

In August, the Victorian and federal governments announced funding for a new freight rail connection in Melbourne’s South East.

The Victorian government is also providing funding for the Port Rail Shuttle network, which aims to reduce truck movements in metropolitan Melbourne by linking the port with intermodal facilities on the urban fringe.

“This new on dock rail terminal supports the introduction of the government’s Port Rail Shuttle Network, which will reduce truck trips on the Melbourne road network,” said Bourke.

The Patrick rail terminal will be constructed at the Coode Road site and is co-funded with the Port of Melbourne. Patrick is contributing $15m to the project.

Construction is expected to begin in early 2021 and the Port of Melbourne is currently undertaking a request for tender profess for the infrastructure works associated with the Port Rail Transformation Project.

Once complete, the terminal will include two dual gauge 23 tonne axle load sidings of 600 metres and interface with the Patrick international container terminal options.

The agreement is part of the extension of Patrick’s tenure at the Port of Melbourne to 2066. Maurice James, managing director of Qube which owns 50 per cent of Patrick, said in a statement to the ASX the project will enable more freight to be moved via rail.

“The development supports Patrick’s landside efficiency focus and is expected to facilitate the development of metro-based rail shuttle services over the medium term.”

Once complete, the Swanson Dock Rail Terminal will be an open access facility, in line with the Port of Melbourne rail access protocol, allowing Qube and other rail operators to use the facility.

Jovicic said that the terminal will be a key node in the Melbourne freight rail network once new intermodal facilities are completed.

“Over time, it is expected that rail modal share for will increase, with metro rail being a major driver of growth alongside the development of metropolitan inland terminals. Rail modal share and volumes on rail will be dependent on the take up of rail, particularly for metro container movements – which today are dominated by trucks.”

Qube
 Freight Rail

Qube invests in rail despite COVID hit to profits in 2020

Qube has reported a net profit drop of over 50 per cent due to the impact of COVID-19, bushfires, and floods during the 2020 financial year.

These impacts were offset by growths in Qube’s revenue and the commencement of new rail contracts.

During the past financial year, Qube began rail operations from the IMEX terminal at the Moorebank Logistics Park as companies including Woolworths committed to significant distribution centres at the site.

Qube also signed new contracts with Shell and BlueScope Steel. For BlueScope, Qube will provide interstate rail haulage services as part of a 10-year contract and intermodal operations at Qube’s North Dynon facility in Melbourne. To deliver the contract Qube will invest $73 million in new rollingstock and infrastructure, as well as leased equipment.

Qube managing director Maurice James said that the company’s overall performance was sound.

“The events of 2020 tested the strength and resilience of the company in ways which no-one could have predicted. This result once again demonstrates the success of our diversification strategy which protected the company as markets were hit by the COVID-19 pandemic,” he said.

“We were also able to adapt rapidly as an organisation to protect the health and safety of our people, deliver on customer requirements and minimise the economic damage to the Group. We are also well positioned for growth post pandemic with conservative gearing, and a strong balance sheet with substantial funding capacity.”

Rail will continue to play a major part in Qube’s operations during the next financial year as the company constructs the interstate rail terminal at Moorebank Precinct West along with further warehousing space. Further capital expenditure is planned in the 2021 financial year on rail terminals, precinct infrastructure and locomotives and wagons for the BlueScope contract.

Operations at Qube’s intermodal terminals will also become more automated as the company shifts from manual to automated mode at the IMEX rail terminal.

Moorebank Intermodal Terminal. Graphic: MICL
 Environment and Sustainability, Freight Rail

Moorebank Logistics Park recognised for sustainability

The Infrastructure Sustainability Council of Australia (ISCA) has awarded the first stage of the Moorebank Logistics Park an Excellent Infrastructure Sustainability (IS) rating for design.

The IS rating scheme seeks to evaluate and promote sustainability in infrastructure programs, projects, networks, and assets, and looks a broad range of indicators to assess a projects governance, economic, environmental, and social sustainability. Excellent is the second highest rating a project can receive.

Michael Yiend director of development at Qube, which manages the development of the Moorebank intermodal site, said that the rating highlights the innovations that were a part of the project.

The Moorebank Logisitics Park’s use of automation in particular helped the project reduce its greenhouse gas footprint. By using automated gantry cranes, straddle carriers, sortation systems and terminal operation systems, Qube can reduce energy use, while enhancing safety and productivity.

Overall, the site’s energy efficient design will save two million tonnes of CO2 equivalents over 40 years of operations, however through transporting freight via rail, rather than road, the site will contribute to a reduction of four million tonnes of CO2 equivalents.

CEO of ISCA Ainsley Simpson said that with 70 per cent of Australia’s greenhouse gas emissions enabled by the infrastructure sector, with the majority coming from transport, projects such as Moorebank are critical.

“Moorebank Intermodal demonstrates that freight infrastructure presents an opportunity for decarbonisation through better measurement, reporting and implementation of reduction initiatives.”

Ian Learmouth, CEO of the Clean Energy Finance Corporation (CEFC) which invested in the project, said that Qube had exceeded Australia-first sustainability standards.

“Qube’s success reflects its commitment to sustainability and demonstrates the possibilities for decarbonisation across even the most complex infrastructure operation,” said Learmouth. Infrastructure is considered a challenging sector to decarbonise, yet this project shows that it also offers great potential. Qube tapped into that potential to find many creative ways to lower its carbon emissions.”

Half the energy required for the 243-hectare precinct will be generated by solar power, and the first warehouse will have one of the largest rooftop solar arrays in the southern hemisphere, generating 3MW. In addition, the project used a unique modelling technique to address climate risks related to the urban heat island effect, a first for Australia.

Learmouth said that the project would serve as a guide for future developments.

“The lessons learned from the design and construction of Moorebank will see the benefits of this project multiplied across the infrastructure sector – another significant step towards its decarbonisation and Australia’s transition to a clean energy economy.”

Simpson concurred.

“The leadership demonstrated thought this project could shift the freight industry to move beyond compliance on multiple fronts – decarbonisation, reliability and safety. It sets a new standard for intermodal infrastructure.

“There is real potential to influence wider supply chain activity, shaping a resilient freight sector that delivers innovation and improved productivity now and in the long term.”

Moorebank Intermodal Terminal. Graphic: MICL
 Freight Rail

New CEO appointed to manage Moorebank Intermodal Company

James Baulderstone will take over as the new CEO of the Moorebank Intermodal Company for a five year term.

Baulderstone most recently comes from GFG Alliance Australia, the owner of the Whyalla Steelworks, where he was strategic projects director. He has previously held executive roles at Santos and BlueScope Steel and has 30 years of experience in commercial, corporate, finance, and legal roles.

The Moorebank Intermodal Company is the federal government-owned entity which facilitates the development of an intermodal terminal at Moorebank. Sydney Intermodal Terminal Alliance, a wholly owned subsidiary of Qube, is developing and will operate the terminal.

Finance Minister Mathias Cormann welcomed Baulderstone’s appointment.

“Baulderstone has extensive leadership experience and he will work with the Board to provide strong strategic direction to support the Moorebank Intermodal Terminal Precinct to progress from construction to a fully operational precinct,” said Cormann.

“The project is expected to deliver $11 billion in economic benefits over 30 years and to support 6,800 jobs in south-western Sydney once fully operational.”

Minister for Population, Cities and Urban Infrastructure Alan Tudge said that Baulderstone will work to move more freight via rail.

“We look forward to working closely with Baulderstone to deliver the Moorebank Precinct which will increase warehousing capacity in south‑west Sydney and promote road to rail uptake so we can help stop future congestion on Sydney’s arterial roads.”

Previous CEO Erin Flaherty will continue as Chair of the Moorebank Intermodal Company board.

In June, Qube announced that Woolworths would be a major tenant at the Moorebank site and will utilise the site’s direct connection to Port Botany to remove freight from roads. Woolworths follows Target as a significant tenant.

Woolworths
 Freight Rail

Woolworths commits to Moorebank distribution centre

Woolworths has agreed to be a new, major tenant at the Moorebank Logistics Park in south west Sydney.

The supermarket giant has partnered with Qube, which is the manager of the Moorebank Logistics Park, to build a national and regional distribution centre across over 75,000sqm.

Qube managing director Maurice James said that a key advantage of the site was its rail connection.

“We’re delighted Woolworths has recognised the significant competitive advantages available to tenants at the Moorebank Logistics Park,” he said.

“The benefits of railing containers direct from Port Botany to a terminal co-located with warehousing across a site the size of the Sydney CBD will deliver Woolworths time and cost efficiencies.”

The recently developed Moorebank Logistics Park has a direct rail link to Port Botany and there are plans to develop an interstate rail terminal in the future. When complete, 1.5 million TEUs will be able to be transported between Port Botany, Moorebank, and the national rail freight network.

Moving more freight via rail will reduce heavy truck movement on Sydney roads, with Woolworth’s estimating that rail access will remove least 26,000 truck movements in NSW per year.

Australian Logistics Council CEO Kirk Coningham said the agreement between Qube and Woolworths showed the benefits of investing in rail.

“ALC has been a long-time advocate for the development of the Moorebank Logistics Park and its direct rail connection to Port Botany. This allows more freight to be moved via rail, helping to alleviate road congestion, which in turn delivers environmental benefits through reduced emissions.”

According to Qube, rail from Botany to Sydney’s south west enables containers to be delivered to the warehouse, unpacked and dispatched on the same day as the container is unloaded at the port.

Woolworths Group CEO Brad Banducci said that locating at Moorebank would improve the company’s operations.

The new facilities will help us improve on-shelf product availability with faster restocking, reducing congestion in stores, and enabling a safer work environment for our teams with less manual handling.”

The move to Moorebank is a consolidation of Woolworth’s distribution sites at Yennore, Mulgrave, and parts of Minchinbury.

Both the national and regional distribution centres are subject to NSW government planning approval and are expected to open in 2023 and 2024, respectively.

 Freight Rail, Research & Development

Qube remains in a strong financial position

Despite the continued uncertainty and impact of Covid-19, Qube is in a strong financial position.

Maurice James, Qube’s managing director said in a business update on Monday April 6 that Qube is well positioned to work with all its key stakeholders to address the current challenging environment.

“Qube is in a strong financial position with significant liquidity (cash and available undrawn facilities) of over $450 million after the payment of the interim dividend which will occur on the 7th April 2020. Qube has no near term debt maturities and material headroom to its covenants,” James said.

“Qube is pursuing several initiatives to further increase its liquidity.”

The board of directors of Qube Holdings Limited said in the business update that it is not presently able to forecast underlying earnings for FY20 and is withdrawing previous guidance.

“Qube continues to benefit from its diversified operations and variability in its cost base which has enabled it to continue to generate positive earnings and cash flow despite declining volumes in parts of its business,” the board of directors said.

The board of directors gave an update on the potential major tenant for Moorebank Precinct West, stating that formal agreements have now been finalised and an agreement has been made.

“The agreement is currently expected to be considered by the counterparty’s Board for approval in late April/early May although the current environment may delay this,” they said.

“Qube is continuing to progress the partnering / monetisation process focussed on Moorebank and certain other property assets.

“Qube has received significant interest from a high quality group of prospective partners who are keen to participate in the next stage of the process.”

Qube is continuing to operate as an essential service for transporting goods, however the company expects a decrease in volumes in several of its markets due to the impact of tighter restrictions, demand, and operations.

The board of directors said the effect from the pandemic to March 31 this year has impacted Qube productivity, but noted that bulk activities continue to experience normal volumes with minimal disruptions or slowdowns.

Container volumes across Qube’s operations have been weaker reflecting the general slowdown in economic activity in domestic and international markets, as well as other products including vehicles, bulk and general cargo.

 Freight Rail

Joint communiqué affirms indispensability of rail freight

Australia’s largest rail freight operators and infrastructure managers have welcomed statements by Australian governments ensuring that rail freight services continue despite state border closures and shutdowns of non-essential services.

Chair of the the Freight on Rail Group, Dean Dalla Valle highlighted that rail freight services are critical for the supply of domestic and imported goods such as food, medical supplies, cleaning products, and fuel.

“Paddock to port, pit to port, or manufacturing plant to port – essential rail freight services stretch across state borders, servicing finely-tuned supply chains across our continent,” he said.

In collaboration with truck drivers working the ‘last mile’ of supply chains, rail services have hauled significant amounts of items in urgent need during the coronavirus (COVID-19) pandemic.

“A single-stacked 1,800-metre interstate goods train can haul 260 shipping containers, thereby helping to free-up hundreds of truck drivers each week to focus on delivering goods and products the remaining ‘last mile’ from warehouses to stores where consumers need shelves restocked,” said Dalla Valle.

“To put this in perspective, a single shipping container can hold approximately 25,000 toilet paper rolls, 55,000 food cans or 1,500 cases of beer.”

The move follows a meeting of the Transport and Infrastructure Council, made up of state, territory and federal infrastructure and transport ministers, on Wednesday, March 25, which affirmed that freight movements are an essential service, and will continue to operate despite restrictions on activity around the country.

“We, Australia’s Transport and Infrastructure Ministers, wanted to reassure Australians that supporting freight movements and supply of goods to individuals, businesses and service providers is a high priority for all governments,” wrote the ministers in a joint communique.

While Queensland was the latest state to close its borders, following Western Australia, South Australia, the Northern Territory, and Tasmania, the ministers confirmed that these would not inhibit the efficient movement of freight across Australia.

“All jurisdictions where restrictions are in place have provided exemptions to these measures to ensure Australia’s supply chains are maintained,” wrote the ministers.

“We want to thank all those Australians involved in the freight industry who are serving Australia so diligently despite the challenges we face.”

To ensure that rail freight operators do not become susceptible to COVID-19, additional measures have been put in place, said Dalla Valle.

“In recent weeks, rail freight operators have implemented strict hygiene protocols at depots, terminals and maintenance facilities, including social distancing, to protect the health of essential staff,” he said.

“Rail freight has the added benefit of operating within secure railway corridors and facilities prohibited to members of the general public.”

The Freight on Rail Group is made up of nine rail freight businesses, Pacific National, the Australian Rail Track Corporation (ARTC), Aurizon, Qube, One Rail Australia, SCT Logistics, Arc Infrastructure, WatCo Australia, and Southern Shorthaul Railroad.

Qube
 Freight Rail

Rail stocks see rebound

While stock markets around the globe have seen a series of wild weeks with swings some of the largest they have been for a century, one area of safety is rail freight.

ASX-traded Aurizon (AZJ) received a significant bump in trading, up 3.85 per cent over the past five days of trading. The stock was reportedly selected by Swiss investment bank UBS as one of the best defensive stock bets in Australian markets.

“We like [gas pipeline owner] APA and AZJ as they are two income names with highly defensive dividends given their ‘take-or-pay’ structure,” a UBS analyst told financial markets site The Motley Fool.

Aurizon’s share price has been lifted by stock buybacks by the company, as well as targeted buying by insiders, including chairman Timothy Poole and non-executive director Michael Fraser, how both bought tens of thousands of dollars worth of Aurizon stock, according to finance watcher Simply Wall St.

Other rail stocks that have been weathering the financial storm during COVID-19 is logistics provider Qube. The company, listed on the Australian Stock Exchange (ASX) as QUB, grew by 3.76 per cent over the past five days.

Although rallies elsewhere in markets have been driven by speculation on the size of the US stimulus and it passing through the legislature there, the strong performance of Aurizon and Qube could be linked to their role in continuing to move freight despite shutdowns elsewhere in the economy,

Qube container. Photo: Qube
 Freight Rail, Rolling stock & Rail Vehicle Design

Qube purchases four Australian-made locomotives

Qube has awarded the contract to build four locomotives to UGL, part of the CIMIC Group.

The four locomotives will be built in Newcastle at UGL’s workshops there, said UGL’s managing director Jason Spears.

“These contracts extend our light rail capability alongside our Adelaide heavy rail presence and commence our relationship with Qube Logistics. UGL has a strong reputation for quality and safety and we look forward to exhibiting that through these manufacturing, maintenance and operations contracts.”

Qube has recently signed extensions to its freight rail logistics business. Late last year, the company announced that it had signed contracts with Shell Australia and Bluescope Steel. In its Half Year results announcement, Qube indicated that it would spend $73 million on new rollingstock and infrastructure to support the Bluescope contract.

Additionally, its Moorebank Logistics Park began rail operations with a major warehouse for retailer Target.

Further agreements for tenants at other sections of the Park are in the final stages of being negotiated.

According to UGL, its base in Newcastle was key to the purchase by Qube.

“UGL’s long history of manufacturing is key to our success in Newcastle. We’re proud that UGL has had a presence in in NSW for more than 120 years, including a strong presence in Newcastle.”

The news follows the announcement that UGL, along with Transit Systems and John Holland will operate the Adelaide tram network from July 2020.