Carl Knaggs and David Skerrett from Colliers International explore the economic resilience and growing importance of rail and intermodal.
As weather and climate patterns change and the veracity and frequency of weather and climatic events becomes more severe and prolonged, ensuring that communities have access to more robust and resilient freight and logistics infrastructure is becoming more important.
Much like the resilience of regions in tropical areas, Governments and the private sector across the eastern seaboard need to ensure continued investment in new infrastructure. The rebuilding of existing freight infrastructure needs to be delivered in a way that ensures better adaptability and resilience to weather events to allow for the faster recovery of regions and to reduce the prolonged economic hit to local economies after a major event.
The significant investment in rail infrastructure, particularly the Inland Rail project, as well as follow on investment in intermodal facilities, are two significant measures for improving distribution capabilities, freight efficiencies and reducing supply chain costs. Appropriate additional investment may also assist regions to be better prepared for major climatic events and to recover more quickly.
This article explores the current Inland Rail project along the East Coast of Australia and the rise of intermodal facilities and how investment in infrastructure development plays a significant part in building the economic resilience of regions affected by natural disasters.
Inland Rail
Comprising 13 individual projects and spanning more than 1,700 km across Victoria, New South Wales and Queensland, Inland Rail is the largest freight rail infrastructure project in Australia. Construction of Inland Rail commenced in late 2018 and it is expected to be fully operational sometime in 2025.
The impact of Inland Rail will be far reaching, and it is expected to generate significant investment into regional Australia. Around two thirds of Australia’s export earnings come from these regional industries including agriculture, tourism, retail services and manufacturing. Inland Rail will improve the volume, efficiency and the cost of transporting those products and services to capital cities and global markets, particularly for long haul bulk commodities.
Inland Rail will also impact distribution structures such as the spatial layout of the freight transport and storage system used to move goods between production and consumption locations. Decision-making on distribution structures, including DC locations will influence logistical costs and service levels along the supply chain. Logistical costs include transport costs, inventory costs and warehousing costs (handling, storage). The trade-off between logistical cost categories will influence the location and optimal number of DCs and determine how the potential relocation of these facilities may benefit from co-location with Inland Rail.
The recent bushfires and severe weather events have shown that some climatic change events can extend beyond regional and even state boundaries and that there is a need for businesses to be able to adapt more readily to weather uncertainties through an integrated and connected freight and logistics network becomes even more important in reducing the economic recovery time.
Intermodal Facilities
Major rail investment has seen the rise of new intermodal facilities (in addition to the expansion of existing intermodal facilities) which act as the freight doors to unlock much of the operational benefit of major rail investment.
Broadly defined as any site or facility along a supply chain that contributes to the transfer of goods from one mode of transport to another, intermodal facilities are the most common form of infrastructure transferring goods from road to rail, or rail to port. However, intermodal facilities or hubs are increasingly providing wider functions including storage, packing, distribution and value-added services. Some intermodal facilities may also provide multi-modal options (more than two freight options) at a single location.
Many regional centres along the eastern seaboard, including those that have a strong or developing agricultural, manufacturing or processing focus, are likely to benefit greatly from the development of regional intermodal facilities. Benefits will be derived from an improvement in regional supply chains, assisting producers, processors and manufacturers gaining better access and reduced freight costs to deliver products to key markets. For example, in the case of a road-to-rail intermodal facility, this may allow for bulk goods and containerised freight to be loaded in-situ and rail freighted directly to major ports, reducing road freight costs and potential double handling. In addition, investment in regional intermodal facilities may also have significant flow on benefits to the broader economy and Governments. These benefits may include, increases in regional employment, a reduction in heavy vehicle demand on intra and interstate road networks (reducing maintenance costs), a reduced risk of road-based fatalities (by taking freight off roads) and potential environmental benefits by reducing emissions.
In times of natural disaster, and post disaster events, bringing transport and logistics infrastructure back online becomes even more critical to ensure that emergency supplies can be distributed to where they are needed most and allows goods to be moved via different modes of transport to assist with the recovery efforts.
Colliers considers that continued and more concentrated investment in rail, from Federal and State Governments, and the development of intermodal facilities as the gateways to this significant infrastructure is likely to have far reaching benefits across a number of sectors within the Australian economy. If this investment is delivered correctly it may also assist in making Australia more resilient economically, to the impacts of natural disasters and help affected regions get back on their feet quicker.
About the authors
Carl Knaggs is National Director at Colliers International and David Skerrett is Director – Strategic Advisory at Colliers International.