ACCC may throw a roadblock in the way of PN, Aurizon

The ACCC has raised preliminary competition concerns about Pacific National’s proposed acquisitions of Aurizon’s Queensland intermodal freight haulage business and intermodal rail terminal at Acacia Ridge in Brisbane.
Currently, Pacific National and Aurizon are the only providers of intermodal rail linehaul services in Queensland and compete closely with each other.
“Aurizon’s decision to sell its Queensland intermodal operations and the Acacia Ridge Terminal to its closest competitor, while shutting down its remaining intermodal business, will fundamentally change this market. We are concerned about the impact on competition in the freight industry,” ACCC chairman Rod Sims said.
The ACCC has published a Statement of Issues outlining concerns about the reduction of intermodal rail linehaul providers from two to one in Queensland, raised barriers to entry for rail companies if Pacific National controls the Acacia Ridge terminal, and the reduction in options for freight-forwarders on most interstate rail routes from two to one.
Although freight services company SCT Logistics will remain on interstate rail routes, it is vertically integrated with freight forwarding and does not generally haul many containers for other freight forwarders.
The ACCC has received extensive feedback from interested parties who say there is no close alternative to rail for many types of freight, particularly to and from far north Queensland.
“We are concerned the proposed acquisitions would lead to increased prices and reduced service for freight hauled between Brisbane and Far North Queensland,” Mr Sims said.
The ACCC is also concerned about Pacific National’s proposal to acquire the Acacia Ridge Terminal.
“The Acacia Ridge Terminal is an important infrastructure asset, and would be a key component in the strategy of any potential supplier of intermodal rail freight that wants to compete with Pacific National.”
Pacific National has offered a section 87B undertaking that it would not discriminate in providing access to the Acacia Ridge Terminal if the acquisition went ahead.
The ACCC is consulting on the proposed undertaking as part of the Statement of Issues consultation.
“The ACCC’s preliminary view is that a section 87B undertaking won’t resolve the concerns arising from the dominant provider of intermodal rail linehaul services nationally also owning the Acacia Ridge Terminal,” Mr Sims said.
“We welcome feedback from all interested parties on the issues we have outlined.”
The ACCC is inviting further submissions from interested parties in response to the Statement of Issues by 3 April 2018. The ACCC’s final decision is expected to be announced on 24 May 2018.
The Statement of Issues and the s 87B undertaking are available on the public register here: Pacific National / Linfox – proposed acquisitions of Intermodal assets from Aurizon.
Background
Pacific National is the largest provider of intermodal rail freight services in Australia. Currently, Pacific National and Aurizon are the only providers of intermodal rail freight services within Queensland. Aurizon previously also competed with Pacific National and SCT on interstate routes.
The interstate rail network is a standard gauge rail track, while the rail network north of Brisbane is narrow gauge and requires specific locomotives and wagons.
The Acacia Ridge Terminal has both a standard gauge terminal (supporting interstate transport), which was used by both Pacific National and Aurizon, and a narrow gauge terminal (supporting transport within Queensland) used only by Aurizon. Pacific National’s Queensland rail operations currently use a separate terminal at Tennyson, which is owned and operated by Pacific National.

Ettamogah rail to get government money

The CRG Ettamogah Rail Hub has been shortlisted for funding in the next stage of the NSW Government’s Fixing Country Rail infrastructure program.
The project involves extending the rail siding by 3,500 metres and creating standing room to accommodate an 1,800-metre long train, improving access to the Ettamogah Rail Hub.
The use of longer trains will cut delivery times and allow more goods to be transported by rail, reducing costs for both producers and consumers.
The declared aim of Fixing Country Rail is designed for both small and large projects that will provide productivity and efficiency benefits that reduce the cost to market for the movement of freight in regional NSW.
Transport costs can make up a third of the price of goods sold by regional producers harvesting grain, cotton, citrus, meat or other commodities and moving them to market. Regional NSW produces around 210 million tonnes of freight a year, with freight volume expected to double over the next 40 years.
An economic case for the Ettamogah Rail Hub expansion will now be prepared for consideration by Infrastructure NSW early next year.
The NSW Government has set aside more than $1 billion for regional road and rail projects under its Fixing Country Roads, Fixing Country Rail and Bridges for the Bush programs.

Industry council to advise on Victoria’s freight rail network

Victorian Minister for Public Transport Jacinta Allan has announced the establishment of a Rail Freight Advisory Council to share information and make recommendations to improve Victoria’s rail freight network.
The council will be chaired by former president of the Victorian Farmers Federation Peter Tuohey and provide advice to V/Line on the requirements of the rail freight industry to deliver a customer focused, safe and efficient rail freight network.
Mr Tuohey’s expertise and knowledge of the freight and farming industries will be vital in identifying the requirements of the entire supply chain and finding solutions to issues, the Minister said.
“With the Murray Basin Rail Project underway to revitalise our freight network, this group will look at the entire supply chain from farm to port and recommend ways to make it easier for farmers to transport their produce.”
The group will start by reviewing V/Line’s proposed heat restrictions for this summer.
Going forward, the group will provide regular communication and consultation across the entire rail freight industry, including farmers, freight train operations and V/Line.
It will provide advice to V/Line on operational requirements, restrictions and rail freight project delivery, including the Murray Basin Rail Project currently underway.
“This group will enable regular communication across the entire rail freight industry, including farmers, freight train operators, port managers and V/Line,” Mr Tuohey said.
 
 

Will Melbourne’s port shuttle work?

The Australian and Victorian Governments are committing significant funds to connect the Port of Melbourne to major freight hubs using the existing rail network, but container operators are warning that the success or otherwise of the concept is in the detail.
Governments come up with the money
Expressions of interest will soon to be sought to deliver a series of rail freight ‘shuttle’ initiatives on the existing rail network by connecting the port to major freight hubs and businesses.
Federal Minister for Infrastructure and Transport Darren Chester said the proposal would take advantage of rail’s ability to shift larger volumes of freight than trucks.
“[We] are seeing a boom in exports, which has led to trucks taking more produce and freight to the ports. This project will provide the ability to shift larger volumes of freight via rail compared to trucks, and reduce congestion on our roads,” Mr Chester said.
“The freight and logistics industry had identified rail’s potential to reduce transport costs by about 10 per cent, with the proposal potentially improving Australia’s competitiveness.”
Victorian Minister for Roads, Road Safety and Ports Luke Donnellan said the initiative will take trucks off local roads in Melbourne’s inner west.
“The Port of Melbourne will remain our primary freight hub for a generation. With container numbers expected to double over the next two decades we need to act now to share the load between road and rail.
“Alongside the West Gate Tunnel, 24-hour truck bans in the inner west and the Port’s rail access plans, this project will help shift containers from residential streets onto dedicated routes to the port.”
The Australian Government has committed $38 million and the Victorian Government will provide $20 million to the initiative. Funding will be available to upgrade rail connections and improve terminal access.
The devil’s in the detail
The largest conglomeration of container transporters in Victoria the Container Transport Alliance Australia (CTAA) has welcomed the recommitment of $58 million in funding by the State and Federal Governments towards port rail shuttle services in the Port of Melbourne, but has warned that there is ‘much to do’ to make metropolitan rail freight services commercially viable.
“There is no doubt that moving more containerised freight to and from the Port of Melbourne and metropolitan intermodal terminals must be part of the future for Australia’s largest container freight port,” CTAA director Neil Chambers said.
“To date, however, next to no containers move to and from metropolitan areas and the port due to the lack of adequate rail infrastructure and the added costs of using rail for intermodal movements.
“The optimal landside movement of an import container once discharged from a ship involves around six “lifts” if delivered direct from wharf to customer then direct to the empty container depot for de-hire by road.”
“This number of ‘lifts’ rises with the current situation where many containers are ‘staged’ through transport yards to take account of the mismatch of operating hours and other logistics management reasons, both the full container as well as the empty. This can increase the number of ‘lifts’ to as many as ten.
“However, unless we can achieve true ‘on-dock’ rail operations to remove the need for the last-mile movement of the containers within the Port to be undertaken by truck or some other form of transfer vehicle, the number of ‘lifts’ for a typical intermodal operation would be twelve or more.
“Every time you touch the container it costs money, and the current lack of rail integration is the killer from a competition point of view.
“Truly viable intermodal terminals in Australia and overseas also provide the value-added services in situ that reduce local freight journeys and strip out costs for the cargo owner. This is what we need to aspire to through strategically located intermodal terminals in Melbourne’s west, north and south-east.
“It’s important, therefore, that the Port of Melbourne complete its rail strategy development in a timely manner, that the state’s overall freight strategy is refreshed, and the national freight strategy finalised, to ensure that intermodal rail operations are considered as a complete system, not just a series of disjointed nodes with no adequate integrated port connections and infrastructure
“I think we need to be cautious that the community isn’t given the impression that rail intermodal operations will be a panacea to the removal of trucks from our roads,” Mr Chambers said.
“That won’t be the case, because even if we get this right, which we all hope we will, the future still involves thousands of truck movements to and from the port, as well as to and from intermodal terminals for final delivery to the end user.
“We need integrated planning that enhances and protects the future viability of road and rail freight, reduces community amenity impacts where possible, but doesn’t harm freight productivity and cost competitiveness.”
 

Linfox Logistics, Pacific National expand capability

Linfox has entered into a consortium with Pacific National to purchase the containerised freight haulage and end-to-end freight forwarding capability on Queensland’s northern freight line. The two companies are purchasing separate parts of the Aurizon rail assets.
Forming a consortium with Pacific National is the first step towards purchasing these strategically significant assets that are currently owned by Aurizon Queensland Intermodal.
Linfox
This acquisition will enable Linfox to improve the scale and scope of the freight forwarding services it offers to national and large Australian freight forwarding customers, including those delivering freight to Northern Queensland.
If the Pacific National transaction is cleared by the ACCC, Linfox will acquire and use the rail haulage capacity supplied by Pacific National to supply intra-state and interstate freight forwarding services to customers in Queensland and Northern Queensland.
The acquisition will also include pick-up and delivery and warehousing services, but exclude standard gauge haulage to and from Acacia Ridge and hook-and-pull contracts for train services.
Pacific National
Pacific National has signed a binding agreement to buy the Aurizon Queensland Intermodal business as part of a consortium with Linfox.
This transaction includes the transfer of approximately 350 Aurizon employees, as well as assets, commercial and operational arrangements to the Linfox and Pacific National consortium.
The parties are aiming to finalise these transaction by the end of FY2018, both transactions are subject to:

  • Approval by the Australian Competition & Consumer Commission
  • Approval by the Foreign Investment & Review Board

Separately from Linfox, Pacific National has also signed a binding agreement with Aurizon to purchase the Acacia Ridge Intermodal Terminal in Brisbane.
This transaction includes the transfer of 30 Aurizon employees, as well as assets, commercial and operational arrangements.
The Acacia Ridge Terminal will supplement Pacific National’s national network of terminals and provides security for Pacific National’s interstate operations out of the terminal for the long term.
 

Government backs Port of Melbourne rail shuttle

The Australian and Victorian Governments have announced that they will back several projects aimed at taking trucks off local roads and connecting major Victorian freight hubs with the Port of Melbourne, using the existing rail network.
The Governments will soon seek expressions of interest to deliver a series of rail freight ‘shuttle’ initiatives on the existing rail network by connecting the port to major freight hubs and businesses.
Federal Minister for Infrastructure and Transport Darren Chester said the proposal would take advantage of rail’s ability to shift larger volumes of freight than trucks, while also busting congestion in Victoria’s capital.
“The Australian Government’s free trade agreements are seeing a boom in exports, which has led to trucks taking more produce and freight to the ports,” said Chester.
“This project will provide the ability to shift larger volumes of freight via rail compared to trucks, and reduce congestion on our roads.
“The freight and logistics industry had identified rail’s potential to reduce transport costs by about 10 per cent, with the proposal potentially improving Australia’s competitiveness, which is why the Australian Government is investing $8.4 billion in the Inland Rail project connecting Brisbane and Melbourne.”
Victorian Minister for Roads, Road Safety and Ports Luke Donnellan said the initiative will take trucks off local roads in Melbourne’s inner west.
“The Port of Melbourne will remain our primary freight hub for a generation. With container numbers expected to double over the next two decades we need to act now to share the load between road and rail,” Donnellan said.
“Alongside the West Gate Tunnel, 24-hour truck bans in the inner west and the Port’s rail access plans, this project will help shift containers from residential streets onto dedicated routes to the port.”
Michael Kilgariff, Managing Director, ALC, welcomed the Governments’ support of rail freight.
“Moving more freight to rail, where it makes sense commercially, has the potential to significantly improve freight efficiency, while at the same time improving urban amenity, reducing road congestion and decreasing queuing times at ports,” Kilgariff said.
“[The] ALC has been a consistent supporter of the Port Rail Shuttle project, which will be a significant enhancement to the Port of Melbourne, producing real benefits for freight efficiency in Victoria, and across the nation’s supply chains.
“In NSW, the state government is committed to doubling the amount of freight entering and leaving Port Botany by rail, which currently sits at 19.3 per cent. NSW Ports is likewise committed to moving 3 million TEU by rail over the longer term.
“There needs to be an equal focus on promoting greater use of short haul rail services for freight movement in Victoria.
“The Port Rail Shuttle will build on other significant investments being made in freight infrastructure – including the Inland Rail project, which will link the Port of Melbourne with the Port of Brisbane when fully completed.
“Constructing the Port Rail Shuttle to provide a rail connection between the Port of Melbourne and inland ports in Victoria is a crucially important aspect of improving the state’s freight network and driving greater supply chain efficiency and safety.”
 

Ten-point plan for supply chain efficiencies

The Australasian Railway Association (ARA) has submitted its ‘Ten Point Plan to Creating Greater National Freight and Supply Chain Efficiencies’ to the Department of Infrastructure and Regional Development’s inquiry into National Freight and Supply Chain Priorities.
“The ARA supports the development of a national freight and supply chain strategy to guide long term decision making and investments by both government and industry,” said Australasian Railway Association chief executive officer Danny Broad.
“With Australia’s freight task expected to grow by more than 80 per cent between 2011 and 2031 combined with our national population expected to increase to 30.5 million by 2031, it is critical that we act now to ensure that we are able to meet the freight needs of tomorrow.
“The ARA, on behalf of the rail industry has identified ten areas that require attention to enable greater efficiency and productivity for rail freight. They include linking future infrastructure funding to the delivery of reform, commitment to a competitively neutral policy approach to ensure domestic rail freight markets can operate as far as possible on a level footing with other modal choices, a national framework for corridor protection, equitable access pricing for road and rail, as well as Commonwealth, state and territory government investment into rail.
“Other areas for improvement also include maximising efficiency on the existing network, addressing ‘externalities’ that impact upon the Australian community negatively, supporting technology developments, addressing jurisdictional inconsistencies and continuing to identify ways to address challenges associated with different track owners.
The ARA’s ‘Ten Point Plan to Creating National Freight and Supply Chain Efficiencies’ submission to the Inquiry into the National Freight and Supply Chain Priorities is available here. A summary of the 10 Point Plan is available here.

Aurizon calls for vigilance at rail crossings

Rail transport business Aurizon is urging motorists and pedestrians to be vigilant around rail crossings after a recent high volume of near-miss incidents across its national operations.
Danny Harnedy, Head of Safety, Aurizon, said the company operates approximately 160 coal and freight trains a day on its 2,700km coal rail network in Central Queensland and other rail networks across Australia.
“Our drivers work around the clock to carry more than 250 million tonnes of freight for customers each year. That means they are on the tracks day and night and can travel in either direction,” he said.
“In the past two months, our drivers have been exposed to twelve near misses with vehicles in Queensland and Western Australia, one near miss with a pedestrian in Ipswich and two vehicles have collided with trains south of Townsville and in Gladstone.
“Just last week, south of Townsville, a vehicle towing a horse float collided with an Aurizon train at a level crossing. Our driver was traumatised by this incident and the driver of the vehicle also sustained injuries.
“In the near miss at Moura, the driver of the car recklessly drove around the flashing lights and boom gates and narrowly missed colliding with the train.
“While it’s fortunate that no one was severely injured in any of these incidents, people need to understand that there is a very real and emotional impact for our drivers and their families.”
Harnedy urged people in all communities to stop taking risks with their lives and the lives of train drivers, noting that if people continue to take risks, it will be only a matter of time before the outcome is fatal.
“When our drivers see a vehicle or a person on the tracks, they are fully aware they can’t immediately stop or swerve to miss,” he added. “They know they can apply emergency brakes, but when a fully loaded train can take two kilometres to stop, the outcome can be devastating.”
Harnedy said Aurizon’s commitment to safety extends to the people in the communities where the company operates.
“Our message regarding rail crossing safety remains simple. Always approach rail crossings cautiously and stop, look, listen and think,” he said. “Like road safety, rail safety is critically important and we encourage parents to teach their children from a young age about the dangers associated with rail level crossings.
“Aurizon’s website contains important messages and videos about rail safety, which we encourage all families to watch,” he said.
 

New Pacific National CEO appointed

Dean Dalla Valle has been appointed CEO of Pacific National.
Dalla Valle brings with him four decades of experience with BHP Billiton, most recently as its Chief Commercial Officer with responsibility for marketing and distribution of commodities, the global Health Safety and Environment program, technology and the Samarco recovery project in Brazil. Prior to this, Dean was President of BHP Billiton’s international coal business.
“With his depth of background in the successful management of large, capital intensive businesses, his knowledge of supply chain dynamics and his extensive hands-on operational knowledge and experience, Dean is an excellent fit for Pacific National,” said Russell Smith, Executive Chairman, Pacific National.
“As CEO, Dean will be extremely well placed to lead Pacific National as we continue to deliver on the company’s plans to strengthen and grow the business, leveraging the expected expansion in the national freight task over coming years.”
Dean will commence his role at Pacific National on 17 July 2017 and current Pacific National CEO David Irwin will step into an advisory role with the company, supporting the Board and Dean.
“I would like to express my gratitude to David Irwin for his many years of service with Pacific National,” Smith added. “The company is stronger for his leadership and I know we will continue to benefit from his deep knowledge of the freight and logistics sector in future.”
The Australian Logistics Council (ALC) welcomed the appointment.
“At a time of considerable change in the Australian freight logistics industry, Dean Dalla Valle’s will be a welcome addition to the policy debate around supply chain efficiency and safety and the requirements of the National Freight and Supply Chain Strategy,” the ALC said in a statement.

​New coal train record set

Aurizon has set a new record for the longest every coal
train sent through Queensland.

The company has sent a 2.3 kilometre, 136 wagon train
through the Central Queensland Coal Network, which carried 11,000 tonnes of
coal to the Wiggins Island Coal Export Terminal (WICET).

The average Aurizon train consists of around 100 wagons and
a payload of about 8500 tonnes of coal.

“The successful maiden run of this record-breaking coal
train is a positive sign of things to come when we commence railings to WICET
in earnest next month,” executive VP of Aurizon operations Mike Franczak said.

“We’re moving more
tonnes, on larger trains, from mine to port as we drive improved efficiency
across the coal supply chain,” he said.

“This is an
excellent outcome for customers, our supply chain partners and the Queensland
coal industry generally.

“We have achieved
this through innovative operational improvements in Queensland over recent
years, including lifting payloads, improving locomotive reliability and better
on-time performance.

“The drive to
improve train payloads at Aurizon draws on the very best available technology
and innovation in the areas of train marshalling, train handling and
track/train dynamics. This ensures that as we improve capacity and
productivity, we are also reducing in-train forces, making for a safer, more
energy-efficient mode of transportation.

The coal will be used as bedding to establish the stockpiles
at the terminal as it prepares for its first shipments of coal.

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