www.ara.net.au
ABN 64 217 302 489
Heavy Haul Conference
Bryan Nye, CEO ARA
31 July 2013
www.ara.net.au
The ARA
• Who we are: a member-based association that represents
the interests of the rail sector
• Our purpose: to create an environment that will permit
the Australasian rail industry to prosper
• Who we represent: all rail operators, both private and
government, track owners and managers, manufacturers
of rollingstock and components, and other aspects of the
rail industry
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5 Election Platforms for 2013
• Public Transport -The future of our cities
• Freight by Rail- Keep our economy moving
• Rail Manufacturing- Skilled jobs for the future
• High Speed Rail- Catching up with the world
• Rail Technology- A smart, efficient and safe network
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PUBLIC TRANSPORT
The future of our cities
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Benefiting all Australians
Whether they travel on public transport
or not, every Australian benefits from it
• One passenger train takes 525 cars off
our roads
• Less cars on the road =
– Less road congestion
– safer roads
– reduced greenhouse gas emissions
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Congestion in context
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Rail Patronage
That means an
additional 60,000
people are travelling by
train each 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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Environmental change
*Marchetti Travel Principle
Relative change 2004 to 2008
Petrol price +31%
Population +6%
Private road vehicle use +1%
Heavy rail +23%
Light rail +10%
Bus +11%
Public transport +18%
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Innovative funding and IA
• Sustainable, reliable funding is needed
• Alternative funding options should be
explored:
– Tax mechanisms to fund rail and public transport
eg fuel tax, parking levies, 0.5% GST increase,
property tax, property development charges
– Hypothecation is crucial
• We support Infrastructure Australia (IA)
evaluation and priority listing
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FREIGHT BY RAIL
Keep our economy moving
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Rail Freight around the world
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Freight Network
Rail’s share of containerised freight
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Trends In Modal Share – Road vs Rail
Key questions:
• Is inter-city rail freight in terminal decline, or can it make a significant contribution to the national economy?
• If it can make a significant contribution, what in broad terms is required to make this happen? 20%
40%
60%
80%
100%
Road
Rail
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Coal
Ore
Sugar
Bauxite
Grain
Other Bulk
Source: Royal Bank of Scotland Transport Equities Update (2012)
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
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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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Inland Rail
A $4.4 billion
Melbourne – Brisbane
41% existing, 25% upgraded, 34% new track
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Inland Rail benefits
• 7 hours faster than the coastal route- whole of supply chain
benefits.
• Would remove trucks from Pacific, Newell, Hume and New
England Highways
• Allows for 1800m double stacked trains- increased benefits of
scale.
• Freeing of rail capacity through Sydney- currently no freight rail
can enter Sydney from the north during peak hours.
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Inland Rail- delivery strategy
• 2010 ARTC Study is key
• NPV assumed 7%. Today projects such as HSR 4%
• Inland Rail is financially net beneficial when you take
into account positive externalities generated.
• So far secured $300 million in funding for planning
and acquisitions – commencing late 2014
• ARA’s view- Inland Rail needs to be completed by
2020
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Inland Rail- demand analysis
• There is demand for the railway that would result in a freeing of capacity through Sydney (removing 5 northbound M-B services from the Main North Line by 2030)
• Rail mode share increases to be greater than road’s share
Melbourne to Brisbane freight modal share without Inland Rail Melbourne to Brisbane freight modal share with Inland Rail commencing
in 2020
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Carbon Pricing- objective
Ensure equal pricing treatment for road and rail
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Message
• The current exemption for trucks fails logic.
• This exemption is effectively promoting more
carbon emissions by moving freight off rail.
• In any future carbon pricing scheme, road and rail
should be treated equally.
• Government incentives for carbon abatement
initiatives and alternative fuels are encouraged.
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Supporting funding for emissions reduction
1. Supports changes
to fuel standards that
are implementable 2. Introduction of
alternative fuels e.g.
Gaseous fuels or
Biodiesel
3. Greater use of
more-fuel efficient
locomotives and
vehicles
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Heavy Haul- Project example Roy Hill
• Roy Hill will build, own and
operate a 342 kilometre single
line, heavy haul railway to
transport processed iron ore to
the south of Port Hedland
• Five ore trains will operate per
day, with a total payload of
31,450 tonnes of ore
• An advanced communications
based signalling system will
provide improved safety and
operational efficiency, while also
making the rail system ready for
future autonomous operations
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Port Project Overview
• Roy Hill has been
allocated 55Mtpa of export
capacity through the Port
Hedland inner harbour
Port design includes:
• Stockyard with the
capacity to store over five
million tonnes of ore.
• Two berth wharf, 800m
long, caters for 2 vessels
with a combined capacity
up to 420, 000 tonnes
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Project Overview Remote Operations Centre
Mining Processing Rail Ports
Remote Operations Centre
Rapid problem identification
& rectification
Better decisions, faster.
Better people, cheaper.
1. Standardised KPI’S
2. Improved communication
across roles
3. Integrated production visibility
Mine planning Mine scheduling Asset management
Integrated
planning
Integrated
planning
Commercial in Confidence1
• Roy Hill’s Remote
Operations Centre
(ROC) will introduce a
significant new
dimension and standard
to the mining industry
• The end-to-end, state-
of the-art automation will
deliver a higher level of
safety, reliability and
operational efficiency to
Roy Hill’s operations
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Locomotives
Locomotives • 21 x GE EVO – ES44 ACI
Locomotives
• 15 by July 2014 with 6 to follow
in 2015 and 2016
• Locomotive Superintendent
• Maintenance Planner
• Ramping up to 20 Locomotive
Maintainers in 2016/17
• 30 Day Minor Services
• 184 Day Maintenance cycle for
Major Services
• Capability for minor to major
maintenance (Engine and Bogie
changes on site)
• Major component repairs off site
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Rolling Stock Wagons
• D & C Contract - CSR
• 1196 x Ore Cars – Standard Pilbara Design
– Tandem Pairs
– 40TAL
– ECP Brakes
– Auto Park Brakes
– Amsted bogies
• 12 x Rail Tank Cars
• 5 x Flat Tops
• 3 x Ballast Wagons
• Maintenance Superintendent
• 15 Ore Car Maintainers
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Lessons learned
• Pit to port
• Total supply solution
• Safety, Safety, Safety
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RAIL MANUFACTURING
Skilled jobs for the future
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Impacts of increased demand
• Every additional
1 million tonne means
1 new train set
• More tracks
• More skilled employees
- Skill shortage
• Increased cost for all
projects
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ARA Economic Analysis of Rollingstock Procurement: Industry Brief
Deloitte Access Economics | 32
• Time gaps between orders creates significant
resourcing issues for the industry. For instance,
Future Australian Passenger Rolling Stock Report Phase 2 Sporadic Ordering
• Repeated re-tooling and
disassembly of production lines
increases costs.
• Investments in R&D or equipment
may also need to be recouped over
a shorter timeframe.
• Ongoing uncertainty regarding the
timing and size of orders impact on
how industry is able to invest.
• Over 1,200 rail cars are aged 30
years or over
• Over the next 20 years national
fleet will grow from 4,000 to
11,000 cars.
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ARA Economic Analysis of Rollingstock Procurement: Industry Brief
Deloitte Access Economics | 33
Australian rolling stock orders over the past 10 years suggests
that economies of scale is reached when the order size is
around 200 rail cars.
Future Australian Passenger Rolling Stock Report Phase 2
Order Size
Small orders tend to lead
to higher costs per car as:-
• many of the ‘fixed’
costs of building a
train, such as
• research and
development and
• production line
mobilisation,
can only be spread over
fewer units.
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HIGH SPEED RAIL
Catching up with the world
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The preferred route
• 1,748 km
• 4 city stations
• 4 city-peripheral
stations
• 12 regional stations
• 144km tunnels
(8% of the line) or
29% of costs
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Competitive travel times…
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Study proposed stages
• Stage one: Sydney, Southern Highlands,
Canberra, Wagga Wagga, Albury Wodonga,
Shepparton, Melbourne.
– Sydney, Southern Highlands, Canberra = $23 billion
– Canberra, Wagga Wagga, Albury Wodonga, Shepparton,
Melbourne = $26.9 billion
• Stage two: Sydney, Central Coast, Newcastle,
Taree, Port Macquarie, Coffs Harbour, Grafton,
Casino, Gold Coast, Brisbane.
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Forecast travel demands
• 355 million East Coast trips forecast
by 2065 without high speed rail
• Our cities, highways and airports are
congested today.
• In 2065, without alternatives our East
Coast will be gridlocked.
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Without alternatives by 2065
• All airports will need additional runways
• Sydney will need a 3rd airport
• The 800km Hume Hwy will need
duplicating again
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2020: China’s 25,000km HSR Network
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Creating new living circles
What about here in
Australia?
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We have the population for HSR
Source: John Daly, GRATTAN Institute
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RAIL TECHNOLOGY
A smart, efficient and safe network
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ARA analysing cost of Rail v Road
Drivers of cost under the current paradigm
• Higher safety standards/more sophisticated infrastructure than roads
• Operators won’t wear disruption and limit construction access
(build with teaspoons)
• Operators’ conservatism driven by high public profile of disruptions
and fear of backlash
• Commercial drivers put on Rail Operators
• Unique regulatory burden placed on rail projects (red tape)
• Unnecessary gold plating of specifications. (Projects more than 5 years
old would not meet current specifications).
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Rail v Road - Cost Benefits
Bridge Construction nominal 100m long bridge:
Two lane road bridge ( D&C sell price)
• Structure, 100m x 8m wide @$9k / sqm = $7.2M
• Road Furniture = $1.0M
Total $8.2M
Single track bridge ( D&C sell price)
• Structure, 100m x 4m wide @10k/sqm = $4.0M
• Rail systems, Track, OHL, Sigs 100m@$5k/m = $0.5M
• Stations allowance, $12m station every 3km, 100m @$4k/m = $0.4M
Total $4.9M
Key Take-Away Points
• Comparing two lanes of road against single track is conservative
• Rail infrastructure is more cost effective
• If planned properly, rail will deliver step-change results
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Design Benchmarking – Rail v Road
Benchmarked a number of projects across the east coast,
results as follows:
• For large rail projects, design is generally in the order of 4 to 9% of D&C
sell price (including construction phase services and development).
Greenfields were at the lower end, brownfields at the higher end.
• For road projects, design is generally in the order of 5 to 8% of D&C sell
price (including construction phase services and TOC development)
• In both rail and road, the costs of design during bid was high
“As a % of construction cost, it is no more expensive to design
rail against road projects on the east coast of Australia”
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Road v Rail – The New Paradigm
• Gold Coast rail corridor is 1/3rd the width of the
Pacific Motorway
Smaller footprint results in a lower environmental impact
Much more viable solution for every day commuters
Catalyst for growth – build it and they will come
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Rail… it’s always better
• Travelling to work
• Sending freight
• Getting there safely
• The impact on the environment
• Costing less
• Rail… it’s always better