www.ara.net.au

ABN 64 217 302 489

AusIntermodal 2012

Bryan Nye, ARA CEO

30 Oct 2012

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Rail Industry: Size

• Labour force: 44,210 people (+9.5%)

(+70,000 working in industries supporting rail)

• Investment Commitments in rollingstock and track

$36 billion

• Track: 44,262 km in Australia

• 725 million annual customer journeys

• 853.5 million tonnes of freight moved across the

country

• Over 1,800 locomotives and 32,000 wagons and

carriages

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Transport and rail

Freight

• 1 billion tonnes of mining product transport on rail

• The state of intermodal freight

• The uncertainty of grain freight

• 1 new train consist needed every week to handle mining growth

Moving People (intra-region)

• 770 million passenger journeys p.a.

• Over 5% growth p.a.

• 60 thousand new passenger journeys every week

• 300 new passenger cars every year

Moving People (inter-region)

• Rail needs to pick up it game in this area

• Solution: High Speed Rail

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Passengers

That means an

additional 60,000

people on our trains

every week!

Urban Passenger Rail 769.9 million journeys in 2010

(6.1% increase since 2008)

Non-Urban Passenger Rail 13.38 million journeys in 2010

(12% increase since 2008)

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Congestion in context

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Rail freight - Big picture

2008/09 2009/10 Change

Coal 282.73 318.62 12.7%

Ore 350.7 412.02 17.8%

Sugar 25.88 27.57 7.7%

Bauxite 18.03 17.91 -0.67%

Other Bulk 56.74 56.79 -

Non-Bulk 18.84 17.94 - 4.8%

Total 755.29 853.46 13.39%

* Numbers in million tones.

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Grains 3-4%

Bulk Commodities

931 million tons

Non-Bulk Commodities

20 million tons

Rail freight

Rail Freight moves nearly 1billion tons of goods p.a. (2011)

Coal

Ore

Sugar

Bauxite

Grain

Other Bulk

CoalOreSugarBauxiteGrainOther Bulk

Source: Royal Bank of Scotland Transport Equities Update (2012)

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Rail freight

0

200

400

600

800

1000

1200

1400

1600

1800

Y2012 Y2020

Coal and Iron Ore

Source: Royal Bank of Scotland Transport Equities Update (2012)

818 million

tonnes

1530 million

tonnes

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Freight network

Rail’s share of containerised freight

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Optimise grain lines

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Freight: A drag on our international

competitiveness

Australia’s geography and relative isolation puts us at a disadvantage in

terms of international competitiveness

The cost of our freight supply chain is extremely high compared to all other

trade oriented economies:

• Some costs can be attributed to long shipping distances on land and sea,

but equally the cost is due to inefficiencies

• We have some of the highest costs in terms of land transport to port and in

terms of costs from the port gate to shipping

50% of market price

goes to logistics

Canada does it for ½

the price despite

longer distances

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Woolworths

14

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Woolworths

15

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– Price & reliability are key drivers of choice

– Reliability for freight owners means trains meeting advertised freight availability times

– East coast needs the same reliability level as West coast

– Stock levels have been reduced in supply chains therefore companies demand a reliable

transport mode to cover this cost saving

– Some freight owners would pay a premium for reliability

– Rail needs to improve its position Melbourne – Sydney, Sydney – Brisbane in terms of

transit times and costs

– Terminal ownership and their locations can be barriers to entry

16

Freight owners perspective

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– The safety and compliance offered by rail is considered an advantage by freight owners

– Some major retailers use safety, service, price as their key drivers

– Rail is very good at communicating to the freight industry during major disruptions

– Past experience influences choice

– Environmental considerations are not key drivers unless price is comparable

– Freight owners want more information about rail

– Coastal shipping is seen as a viable alternative to rail

– Regional freight opportunities exist

Freight owners perspective

17

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Freight: Solutions for the future

• Containerisation of grain/ changed ownership structure

• A terminals strategy and inland rail route

– Its all about reliability, the focus on transit time is just

wrong

• Pricing that actually reflects the true value of transport

choices

– We need to get smarter in how we price our transport

infrastructure

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40.0 42.1 41.1 42.1 41.1

48.353.3

38.335.0

25.0

Syd-Bris Melb-Syd Melb-Bris Melb-Perth Syd-Perth

Road

Rail

42.244.4 43.3 44.4 43.3

38.742.7

30.7 28.0 20.0

Syd-Bris Melb-Syd Melb-Bris Melb-Perth Syd-Perth

Road

Rail

48.2 50.2 49.2 50.2 49.250.355.3

40.337.0

27.0

Syd-Bris Melb-Syd Melb-Bris Melb-Perth Syd-Perth

Road

Rail

52.4 54.6 53.5 54.6 53.5

40.744.7

32.730.0 22.0

Syd-Bris Melb-Syd Melb-Bris Melb-Perth Syd-Perth

Road

Rail

?

??

Pro

pe

rly F

un

cti

on

ing

Ma

rke

t

Road / Rail Operating Cost Comparison ($ per 000 ntk)

High Scenario

Road / Rail Operating Cost Comparison ($ per 000 ntk)

Equitable Road & Rail Charges

Road / Rail Operating Cost Comparison ($ per 000 ntk)

Externalities Internalised

Road / Rail Operating Cost Comparison ($ per 000 ntk)

Equitable Road/Rail Charges & Externalities Internalised

The true value of rail!

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Freight: Solutions for the future

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Benefits

• Safety: Safest form of land transport

• Environment:

– 9 times more energy efficient

– One train, two drivers – 150 trucks & 45,000 litres

of fuel

• Efficient: rail is a cheaper mode of freight

transport than road on all inter capital

corridors

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Inland Rail

Inland Rail

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Inland Rail -Why

• Eastern Corridor: Highest freight volume in Australia

• Tripling of containerised freight by 2050 requires new freight infrastructure

• Demand supports an inland rail route (induced demand, increased market share and larger freight market)

• Use of rail benefits the Australian economy (see next slide)

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Inland Rail –State of Rail today

• Low market share on N-S (> 20%, btw10-15% for Syd-Brisand syd-Melb)

• Geographical constraints (Sydney bottleneck)

• Operational constraints (terminal access, no double stacking)

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Inland Rail: Changing the transport sector

• Increase rail’s reliability and efficiency – double stacking, longer trains,

– avoids Sydney bottlenecks

– reduce travel times by 15hrs, train speeds of 110kmph

• Increase rail’s market share – 80% on Bris-Melb

– up to 25% for shorter legs

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Inland Rail: Cost

A $4.4 billion Melbourne - Brisbane

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Inland Rail: Must haves

Must be supported by a terminal strategy- a new

terminal in western VIC and a new freight village

with terminal in Bromelton

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Inland Rail: Complications

The $2 billion cost of construction through the

Toowoomba and Little Liverpool ranges (for

environmental, cultural and engineering reasons)

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