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Freight Transport Group 2017-19 Strategic Plan

Freight Rail in Australia

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FREIGHT RAIL IN AUSTRALIAThe freight task and rail

In 2013–14, the national domestic freight task totalled 726 billion tonne-kilometres, of which rail accounted for half. 99.8% of

the tonne-kilometres of Australia’s rail network is associated with intrastate freight, with the balance being longer-distance

interstate freight.

The main rail freight task consists of carrying bulk commodities. Bulk rail traffic is almost entirely intrastate. The biggest bulk

haulage task is in the Pilbara region of Western Australia, representing around 70% of Australia’s total rail freight task.

The growth in commodity exports has been achieved through the expansion of ports, terminals, processing, mines and

railways. Port Hedland is the world’s largest bulk export port and Newcastle is the world’s largest coal export port.

Rail accounts for the majority of inter-capital intermodal (non-bulk) freight on the East–West corridor. Of the freight travelling

between Brisbane and Melbourne, rail has approximately 30% market share of inter-capital intermodal freight. Rail performs

a key role in some regional freight flows, mainly between inland terminals and ports.

The north-south rail corridor provides a challenge, with low market share between Melbourne and Sydney, and Sydney and

Brisbane. However, 81% of freight is transported by rail on the east-west corridor which is more cost and time competitive

than road freight given the long distances and ability to double-stack freight cars between Adelaide and Perth (Ferrier

Hodgson, 2014).

The Bureau of Infrastructure, Transport and Regional Economics (BITRE) data (2015) shows the largest number of intermodal

trains are between Melbourne and Perth, followed by Melbourne and Brisbane (via Sydney where goods are loaded and

unloaded). The North-South transcontinental railway from Darwin to Adelaide is a key intermodal and bulk freight route.

The line operates six intermodal services a week from Adelaide to Darwin and carries around 800,000 tonnes of intermodal

freight every year. The line also operates 24 bulk trains a week between mining sites and the Port of Darwin, and carries in

excess of three million tonnes of bulk freight per annum (Infrastructure Australia, 2015).

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The freight network

The Australian rail network consists of a total of 41,461 kilometres of track on three major gauges, of which approximately

2940 kilometres is electrified. Except for a small number of private railways, most of the Australian railway network

infrastructure is government-owned, either at the federal or state level. The figure below demonstrates the Australian Rail

Network aggregated by gauge type.

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BITRE • Statistical Report

Figure 27 Railway network, by track gauge, July 2014

Notes: The lines shown here are the railways that are open for traffic at July 2014. There is discussion amongst interested parties to re-open a number of grain lines in WA as well as the Demondrille–Greenthorpe/Blayney lines in NSW.

Broad (“Irish”) gauge is 1 600 mm; standard (“Stephenson”) gauge is 1 435; narrow (“Cape”) gauge is 1 067 mm.

Table 13 shows route kilometres of open and electrified railway in each jurisdiction. Queensland, Western Australia and New South Wales have similar-sized networks. Most of the network is single-tracked (89 per cent) although with notable exceptions, such as the Sydney–Melbourne line (of which around three-quarters is now double-track) and the East Turner River corridor through the Chichester Range in East Pilbara (with some BHP Billiton double track and some Fortescue double track).

Broad (‘Irish’) gauge is 1600mm; standard (‘Stephenson’) gauge is 1435; narrow (‘Cape) gauge is 1067 mm. Source: National Rail Safety Regulator, 2014-15.

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The freight network includes the standard gauge track from Perth to Brisbane and a range of intra-state tracks. There are

25 rail freight operators with the top 3 accounting for 76% of market share. There are a number of track owners with the

major infrastructure managers shown in the map below (source BITRE 2015).

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Freight rail is cost-effective, proving it can deliver competitively and efficiently over long or short distances (e.g. port to

urban freight hubs) Rail is more energy efficient, produces less emissions and is safer when compared to road freight.

Freight rail added $13.2b to the Australian economy and made 0.7% of the total national economy in 2013. Over 15,000

people are employed in freight rail with a large proportion in regional areas, paying annually over $1.2b in wages (source

Freight on Rail Group 2016).

For rail to continue to strengthen its role in supply chains in Australia it needs to be both competitive and integrated. A key

issue the rail freight industry is pursuing is the introduction of direct heavy vehicle user charging and investment reforms

by way of mass distance and location charging, based on economic principles of cost reflective pricing - to support a level

playing field between rail and road. Other key issues also include the need for port shuttles to reduce urban congestion

and the development of freight hubs (combining an intermodal with a distribution centre).

THE FREIGHT TRANSPORT GROUPThe Freight Transport Group (FTG) is an Executive Committee of the ARA and includes above rail operators, track managers

and port and intermodal managers in Australia and KiwiRail in NZ. The FTG works in close alignment with the Freight on

Rail Group (FORG), an independent group of seven major freight businesses in Australia. FORG is leading work on a limited

number of specific public policy matters.

THE VISIONThe key matters for the rail freight industry are:

• The creation of a visible, long term freight transport plan including a pipeline of infrastructure improvements funded in part by the private sector. This should include new freight lines, intermodal terminals and rollingstock

• Ongoing review and rationalisation in environmental, safety and economic regulation

• Improved productivity, enhanced operations and lower costs through new technology or innovative approaches

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THE ROLE OF THE ARAAs the peak body for rail in Australasia, the ARA has an important role to play in promoting the case for the freight rail

sector to all levels of government throughout Australia and New Zealand.

Between 2017 and 2019, the FTG will work with the ARA to advocate and promote freight rail to all levels of government by:

• Establishing and maintaining strong relationships with Ministers, politicians and senior decision-makers at a Federal level and in each jurisdiction;

• Highlighting the benefits freight rail can generate including reducing congestion, reducing environmental impacts and improving safety;

• Developing promotional opportunities for the freight rail sector through events and other activities; and

• Lobbying for greater funding of freight rail through all levels of increased government and private sector investment as well as new and alternate sources for project funding and finance.

THE ROLE OF FORGFORG is an independent rail focussed industry group, independent of the ARA, which consists of the seven major rail freight businesses in Australia. The Group aims to contribute to a policy and regulatory environment that enables the development and operation of an efficient and commercially sustainable rail freight transport sector. The efficiency of the rail freight transport network is critical to the competitiveness of Australia’s industries in domestic and international markets and, therefore, contributes to the ongoing development and growth of the Australian economy. FORG works closely with the ARA, industry and government to achieve this outcome.

THE ROLE OF GOVERNMENTSTo ensure the future of our cities and regions, all levels of Government have a vital role to play in:

• Funding: Federal and State Governments must agree to co-fund transport infrastructure and take investment and support for infrastructure projects out of election cycles. Better coordination of funding across governments and businesses, including tendering out the provision of infrastructure will attract greater private sector innovation. Innovative funding should also be embraced by all levels of Governments.

• Planning: Cities should be viewed as a network to ensure interoperability between transport and urban planning. Planning must be holistic, provide certainty and include transport connections in the planning and construction phase, not post-construction. City blue-prints should be established and agreed to by all political parties to take infrastructure investment out of political cycles.

• Regulatory reform: Reduced rules and regulatory burdens on industry will heighten transport efficiency. Freight rail operators recommend moving to co-regulation which will enhance rail’s safety performance.

• Coordination: Ensuring state and commonwealth departments work collaboratively with Infrastructure Australia and transport operators will see continued network efficiency and improvements.

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KEY OPPORTUNITIES FOR FREIGHT RAILThe freight rail industry recognises a range of opportunities including:

• Raising productivity through improved reliability, faster transit times double stacked clearance heights around the nation, longer passing trains and passing loops and heavy steel tracks capable of supporting heavier trains.

• Using technology to improve transport pricing for land freight transport, implement safer signalling, provide better customer service by tracking freight, investigate new freight loading techniques and monitor the condition of the assets.

• Working with Governments and key national bodies in long term planning with strategic investment in tracks and intermodals, particularly those connected to a port by rail.

FOCUS AREASThe freight rail industry has four key focus areas:

1. SAFETY

2. CAPACITY AND GROWTH

3. FUNDING AND INVESTMENT

4. ASSET MANAGEMENT

Focus Area 1: Safety

While rail is the safest form of land transport, the industry strives for further improvement. Safety is the number one

priority for freight operators and track managers. The industry continues to invest in safety and looks towards the

efficiencies the creation of a single national safety regulator will generate. A single national rail safety law is paramount in

line with the maturing of the co-regulatory approach. Harmonisation and interoperability of telecommunications is also

critical to safety. In 2015 the industry established its own Safety Vision:

“Working as one industry in an effective co-regulatory framework, Australian rail will strive to be a world leader in

passenger and freight rail safety.”

A co-regulatory regime would include:

1. Agreeing on risk issues and industry safety priorities

2. Sharing data and information on incidents and investigations

3. Working to enhance the safety culture within the rail industry

4. Exploring ways to create regulatory efficiencies and subsequently reducing costs and allowing greater

resources by industry and the Office of the National Rail Safety Regulator (ONRSR) to be dedicated to identifying

and driving safety improvements

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Industry has subsequently developed a Safety Strategy with themes consistent with the safety vision and a range of related

actions which they will implement over the next 3 years.

Actions

1. Review the cost recovery methodology and fee levels applied to industry by the Office of the National Rail Safety Regulator (ONRSR)

2. Lobby for a truly national rail safety regulator to maximise efficiencies and savings to the rail industry

3. Clarify the definition of rail safety work and rail safety workers and ensure appropriate common training and competencies are a focus

4. Implement a common Signal Passed at Danger (SPAD) categorisation framework and investigate new approaches to SPAD management, including risk ranking and pre and post-SPAD processes

5. Aim for a single Rail Safety National Law including reviewing drug and alcohol law and fatigue management and their application by industry and the ONRSR to gain national consistency and ensure safety is maximised

6. Implement technologies than enhance safety e.g. ATMS, ATP and ensure there is spectrum available and

ensure telecommunication systems are harmonised and interoperable

Focus Area 2: Capacity and Growth

Getting more freight on rail is a key objective. This can be through the construction of new freight lines, improving the

capacity of existing lines through high improved movement control as well as enhanced productivity through longer,

heavier and faster trains. A coherent logistics solution is required where road and rail work together to maximise efficiency.

Port shuttles are a key part of this, along with the development of efficient intermodal hubs.

Actions

1. Review access agreements and arrangements

2. Work with the road sector and other industries and relevant authorities to gain a coherent logistics solution

3. Push for equity with other modes in terms of costs and regulation

4. Continue to promote short-haul rail particularly port shuttles including working with port owners/managers to

promote freight rail into ports

5. Continue to promote the benefits of freight on rail

6. Continue to separate freight and passenger networks in our cities

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Focus Area 3: Funding and Investment

A long term freight supply chain plan is essential. Governments need to commit to funding freight rail that will improve the

nation’s economy. Inland Rail must be completed to provide a range of benefits including reduced transit time, removing

freight trains from Sydney and promoting regional development. The private sector should have incentives available to

invest in freight rail projects. The playing field should be levelled in terms of pricing of freight transport.

Actions

1. Lobby for the construction of Inland Rail

2. Lobby for sustained investment in freight rail – both interstate and regional - by all levels of Government

3. Lobby for initiatives that increase rail freight productivity

4. Push for longer term planning of land transport and develop a freight rail infrastructure 25 year plan and list

of projects

5. Preserve corridors for future growth of freight rail

6. Promote the introduction of direct heavy vehicle user charging and investment reforms by way of mass

distance and location charging, based on economic principles of cost reflective pricing.

Focus Area 4: Asset Management

Freight operators and track managers manage multi-billion dollar asset bases. Methods used to manage these assets need

to be modernised through standards for operations and identification being set and automation being introduced. Smart

asset management is the key to reduce costs.

Actions

1. Benchmark asset management activity to assist members in pursuing efficiencies

2. Develop and implement an industry guideline for the implementation of industry wide inventory

management identification standards

3. Develop a rail industry response to adoption and implementation of ISO55000/1/2 suite of standards on asset

management

4. Investigate options for government funding support for the upgrading of locomotives and wagons

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