Thallon Rail Line Business Case Goondiwindi Regional and Balonne Shire Council January 2016

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Contents Executive Summary .........................................................................................................................i

Summary of findings .......................................................................................................................... i

1. Background ......................................................................................................................... 6 1.1 The South Western (Thallon) Railway Line ............................................................................ 7 1.2 Queensland Rail – Rail Track (Below Rail) Owner ................................................................ 12 1.3 Port of Brisbane ................................................................................................................... 19

2. Issues raised in consultation ............................................................................................. 29 2.1 Product specific issues ......................................................................................................... 31 2.2 Congestion ........................................................................................................................... 40 2.3 Energy use ............................................................................................................................ 41 2.4 Reliability ............................................................................................................................. 42 2.5 Heat Restrictions .................................................................................................................. 42 2.6 Safety ................................................................................................................................... 44 2.7 Infrastructure quality ........................................................................................................... 46 2.8 Competition ......................................................................................................................... 47 2.9 Heavy vehicle growth and productivity ............................................................................... 48 2.10 Cost competitiveness of rail ................................................................................................. 49 2.11 Incentives for rail ................................................................................................................. 52 2.12 Consultation, Collaboration, Conversation .......................................................................... 59

Appendix A : Record of consultation ........................................................................................... 62

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Executive Summary This Report has been prepared on behalf of the Goondiwindi Regional and Balonne Shire Councils as part of the Murray Darling Basin Regional Economic Diversification Programme, to outline a business case for the greater utilization of the Thallon (South West) Rail line into the future. The process of preparing this report, including the consultation undertaken, has assisted in clarifying relevant information about the railway line, its current and potential use. There are many views – including many that are well embedded – which arise because of the lack of relevant, accurate and timely information with respect to all aspects the railway, its costs and its opportunities. There is also a lack of transparency with road and rail operations and their relative costs and benefits. Coal transport has been a mainstay of the Western line (which connects with the South West line). The South West line has been primarily focused on agricultural production. By nature, agriculture is generally more variable in terms of seasonality and across years. Water is a key determinant of agricultural production. However, the South West rail catchment area has the competitive advantage of both irrigated and dryland farming thus reducing the variability of agricultural production and rail supply parameters. The objective of this report is to provide factual information as requested by the Terms of Reference provided to Deloitte Access Economics. This Report outlines the current state of the railway from Thallon to the Port of Brisbane. It then identifies some of the key impacts on utilization of rail and focuses on actions suggested to effect a greater utilization of the railway. Differentiating “fact from fiction” has been a far more difficult task than anticipated, and is one reason for the difficulty faced in increasing rail’s utilization. In the absence of any other action, the key requirement to enhance rail’s future, is timely, accurate information with respect to rail’s potential, its costs, benefits and indeed, limitations. Road and rail transportation are both required to effectively and efficiently service the agricultural and other sectors in the region. Our findings are summarized below, and discussed throughout the report proper.

Summary of findings The South West system (see map at Figure 1 below) is a 446 km single track, with passing loops. The Toowoomba Range is the apex where the South West, West Moreton and Western Systems traffic meet. It is recommended that the status of the Toowoomba Range Capacity and Clearance Rail project be clarified as a priority. If available, the release of further details on the 11 tunnel dimensions and passing loop/crossover extensions proposed would reduce the current confusion and facilitate the consideration of both above and below rail options to enable high cube container transport by rail to the Port of Brisbane, and potentially longer trains also. Train length may continue to be limited by curves for example so the benefits of passing loops/crossovers extensions requires separate clarification.

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Queensland Rail has detailed survey measurements across the 11 tunnels. If rollingstock fits through tunnel 5, as the most constrained tunnel, it will fit through the other 10 tunnels. It is recommended that Queensland Rail model new rollingstock options (locomotives and wagons), such as the PR22 and potentially a narrow gauge version of the Astra lowliner wagon, to ascertain any future requirements for tunnel clearances. Whilst slot numbers are not constrained currently, slot times and timeliness (reliability) could potentially be enhanced (and increased) through to the Port. To this end, a review of reliable slot availability at nights and weekends for example would be a positive action, even from the point of view of providing information to current and potential users. This will aid transparency of the current and future potential (and constraints) of the publicly funded urban network. It may also provide additional efficiencies within the full supply chain, not only in terms of bulk unloading at port, but also with container traffics and the Brisbane Multimodal Terminal (BMT) opening hours as an example. It would be useful to confirm through comparison, the operating times of the BMT and the passenger rail priority/curfew times (understood to be from 7-9am and 4-6pm Monday to Friday), to ensure that the BMT is open at times that enable the most efficient rail solutions, without jeopardizing passenger priority. Such an analysis could also include the bulk rail trains that also terminate at the Port of Brisbane. To the extent not undertaken now, the provision of information and an understanding of necessary maintenance outages on the rail system is encouraged. Planned forward maintenance schedules can be published for the year ahead. It is acknowledged that unforeseen emergent outages will be required from time to time. New rollingstock is seen as a major requirement to ensure a competitive future for rail. Current rollingstock is generally old, expensive to maintain, and in many cases, does not take advantage of new technologies and materials. Any new rollingstock is also required to traverse through the suburban system and ensuring compatibility in this regard is required but not considered a major obstacle. Indeed, as demonstrated with the significant chickpea export in late 2015, additional rail services can and have been undertaken. Additional rollingstock is a current impediment that can be addressed, albeit with capital investment (in the order of $20 to $30 million1 per two loco, forty plus wagon consist with spares as an indicative range). The range of organisations that can invest in rollingstock is significant, including, but not limited to rail operators, rail managers, Governments, major producers or groups of users, representative organisations, commodity traders and packers whose viability improves with enhancements to transport efficiency. It is recommended that main line loading, at least as a short term, proving measure be investigated, to compare costs and benefits. Minimum standards and agreements would be required and as such could be explicitly documented for future reference. It is also recommended that investment in efficient loadout facilities such as the GrainCorp Thallon facility be acknowledged and that such best practice be described in detail to undertake the benefits of such investments in the future and where main line loading is not available.

1 Costs are variable dependant on rollingstock options, and whether ongoing maintenance contracts are included.

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Obviously, there are benefits to such capital investment such as shorter loading times and enhanced storage facilities. Greater innovation and some flexibility with respect to track access and freight rate contracts is an area of potential advantage to above and below rail operators in Queensland in the near future. With respect to access rates, Queensland Rail have advised that they are keen to look at more flexible commercial arrangements to assist in increasing the transport of Agricultural products on rail. Queensland Rail would like to understand where industry sees that existing arrangements could be enhanced to encourage greater movement of product by rail. A certain proportion of costs may always be required for take or pay, to provide certainty not only to the above and below rail asset owners, but also for the producer who requires the transport. The public ownership and funding of the majority of roads makes it difficult to accurately price and compare the total costs of road use, including the share of road maintenance / damage inflicted and the share of common costs (construction and services such as street lights) that should be attributed to each road based heavy vehicle relative to rail, for which all costs are generally identifiable and chargeable.2 Inconsistencies in pricing such as this suggest that Government support for rail, albeit on a transparent or competitive basis, is justifiable. There are various options available to encourage appropriate increased utilization of rail. The Victorian Mode Shift Incentive Scheme (MSIS) is an example of an incentive program used to encourage industry to shift more containerised freight from road to rail. The aim of the scheme has been to increase efficiency and cost effectiveness in the freight sector and reduce congestion on roads in and around freight and port precincts. It is understood that the current Victorian Government will not continue the programme, other than meet the existing contractual arrangements. The proposal is supported strongly by regional Councils and other beneficiaries. The Queensland Government’s transport service contracts with Queensland Rail (for infrastructure) and Aurizon (for livestock and regional freight services) are also aimed at encouraging greater utilization of rail for agricultural and other regional products. In both cases, the success of these programmes requires further assessment to understand what works and does not work to ensure the best value outcomes are achieved with public funds. 3 A significant recent initiative of the Queensland Government includes opening up the livestock and regional freight contracts to competitive tender, at the conclusion of the current two year contracts and the State’s agreement to purchase new cattle crates to provide more diverse transport options for customers and rail operators. Importantly, the new cattle crates, intended to be loaded onto a standard 40 foot flat bed wagon, will initially be purchased for Aurizon (the current above rail operator of the Transport Service Contracts), but will later become available for any future rail operators.

2 Deloitte Access Economics, The true value of rail, 2011, page 40

3 These (Qld) contracts were designed to provide equitable access to freight services and facilitate regional development and employment. However, the basis for these contracts beyond 2015 require further monitoring and review to ensure they respond to industry and community needs, deliver value for money, and reflect emerging rail developments. (Moving Freight, 2013, DTMR, page 36)

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It is recommended that discussions be continued with the natural gas industry, a major contributor to economic growth in the region. Such discussions could be facilitated by the Queensland Resources Council, APPEA or DTMR, to consider the future potential utilization of rail by this major, long term industry. It is, subject to anti competition legislation, proposed that the South West rail region catchment producers collaborate in regard to smoothing out where practicable, train utilisation each year, and increasing freight volumes for rail. Key questions to answer to facilitate more freight on rail in a practical sense include: • What products are produced? • Where does this produce need to be transported from / to and in what time frame? • When does it need to be moved and is it time critical? With the above information, a transport solution can be designed which meets the requirements for the produce to arrive at the right destination in the appropriate condition in the right timeframe. At a regional level, and to achieve best use of rail, the best solution arrives when competitive transport operators are able to combine all of the information for all of the commodities that need to be moved across the year. A sustainable, effective group for the future, focussing more on growth rather than current operations would provide a forum to focus on Thallon Rail utilisation into the future. Such a group could include, as required (bearing in mind the high value of time): • Shipping Company representative (for example, from Shipping Australia); • Port of Brisbane representative; • Queensland Rail as infrastructure owner; • Department of Transport and Main Roads as provider of below rail subsidy, regulator

and policymaker (including custodian of the passenger priority requirements); • Rail Operators – realistically this would normally be current rail operators, however

given the issues with a lack of competition and significant information asymmetry creating barriers to entry, potential operators (who operate elsewhere in Australia) may benefit from involvement at least at the strategic, if not the operational week to week level;

• Users such as New Hope Coal and GrainCorp; • Representative of the agriculture industry in the catchment area – potentially sourced

from the Department of Agriculture and Fisheries (Qld). Such a group may require ACCC clearance. An organisation such as the Queensland Transport and Logistics Council may also be considered to be included in the consultation group. Mining outputs often provide the backbone of a successful railway line but with tough economic times for this industry can also benefit from cost sharing with greater utilization of the railway. The experience of coal companies transporting coal through to the Port of Brisbane will be of great benefit to a focused group. This group would be best suited to focus on growth and ensuring appropriate accountability of parties to encourage and effect increased appropriate utilization of rail. It may also benefit from independent participation and a monitoring role.

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1. Background The Balonne and Goondiwindi Councils, as part of the Murray Darling Basin Regional Economic Diversification Programme requested Deloitte Access Economics to prepare a report on the South West Rail Line (also known as the Thallon rail line) and the potential for additional freight on rail to be obtained in the near future. The scope of works for this engagement is set out in our Engagement letter of 10 September 2015 and includes:

a) An overview of the Thallon Railway line, including the structural/physical capability of the line and existing contractual capacities – to the extent information is available (from DTMR, Queensland Rail and Aurizon).

b) Level of historical freight movements (to the extent available), up to five years

c) Impediments to utilization of the existing railway

d) Potential opportunities identified and outlined through consultation as necessary with stakeholders

e) Identification of opportunities for a transfer/growth of freight from road to rail.

Significant consultation was requested and undertaken as part of this Report’s preparation. The report does not however, encapsulate every parties within industry sectors as time did not permit or representatives did not wish to participate. The report seeks to present facts and to this end, where facts are not available, recommendations are provided for the future in order to ascertain facts.

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1.1 The South Western (Thallon) Railway Line4

Figure 1: The South Western Railway Line- Courtesy - Queensland Rail 2015

The South West system (see map at Figure 1 above) is a 446 km single track, with passing loops. There are 22 passing loops between Toowoomba and Thallon, ranging from 411 metres to 968 metres in length. Between Toowoomba and Thallon, track structure is primarily 41kg/m rail, on a one in two steel/timber sleeper pattern. There are 54 steel bridges, 7 concrete bridges, and 167 timber bridges. There are 840 drains. The track is rated at 15.75 tonnes per axle load. The South West line was opened as far as Thane in 1904 and was completed to Dirranbandi in 1913. The Thallon to Dirranbandi section was Red Boarded in 2010 following flood damage. This means that it is not currently operational. Should there be a requirement for this section to be utilised again Queensland Rail would have to undertake an inspection to identify what works would be required and then secure the necessary funding. The closure of any track is done by the State by way of direction from Queensland Rail’s Responsible Ministers. The Toowoomba Range is the apex where the South West, West Moreton and Western Systems traffic meet. The capacity across the range for above rail services is outlined below.

4 For further details than provided in this report, please see Queensland Rail’s South Western System Information Pack, Issue 2: September 2005. This pack is to provide potential railway operators with background infrastructure and operational information for the South Western System in Southern Queensland.

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Figure 2: Current capacity of the rail system as it is governed by the Toowoomba Range slots

The Toowoomba Range capacity has been a key point raised during consultation for this report. In particular, the tunnel heights and passing loops (length and number of) have been a point of debate. The Toowoomba Range Capacity and Clearance Rail Project was announced by the (then) State government in 20135 and is currently under review by the current state government. “In the context of rail priorities the government is considering short and longer term benefits.6”

5 http://www.brisbanetimes.com.au/queensland/rail-tunnels-to-be-expanded-to-make-way-for-more-freight-20130827-2snbu.html. See also “A $50 million upgrade of Toowoomba Range rail infrastructure will take 25,000 trucks a year off south-east Queensland's roads, according to the State Government.” Source - http://www.sunshinecoastdaily.com.au/news/50-million-rail-upgrade-toowoomba-range/1870673/

6 Source – Email DTMR 11 December 2015 Toowoomba Range Capacity

Queensland Rail’s Annual Report 2013-2014 (page 40) advised that “The project scope proposes the construction of two one-kilometre rail passing loops at Harlaxton and Ballard to provide additional capacity on the Toowoomba Range and the lowering of the tunnel floors on the Toowoomba Range and Little Liverpool Range to allow haulage of higher containers to meet agricultural industry requirements. This project is expected to be completed post-2015.”

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Finding It is recommended that the status of the Toowoomba Range Capacity and Clearance Rail project be clarified as a priority. If available, the release of further details on the 11 tunnel dimensions and passing loop/crossover extensions proposed would reduce the current confusion and facilitate the consideration of both above and below rail options to enable high cube container transport by rail to the Port of Brisbane, and potentially longer trains also. Train length may continue to be limited by curves for example so the benefits of passing loops/crossovers extensions requires separate clarification.

Figure 3: 9 of the 11 tunnels referred to above, are on the Toowoomba Main Range, with two in the Little Liverpool Range. Source - http://www.thechronicle.com.au/news/tunnel-works-make-rail-super-highway-rural-freight/1995688/

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Figure 4: Main Entrance to Tunnel 4 - East Portal

Queensland Rail advise that 9’6” hi cube containers do not fit within the profile of all of the tunnels on the range with existing container/flat bed wagons that are used now. Queensland Rail have provided the diagram (below – Figure 5) to demonstrate the amount of clearance in tunnel 5, which has the tightest track curvature on the range. It is approximate only, as the wall measurements were done many years ago and the track was in fact re laid after the 2011 floods. It is the best representation available at this time for this Report. The profiles are for a wagon at maximum rock and roll and track at maximum maintenance limit. The speed of trains through the tunnels is restricted to 20 km/h to 30 km/h depending on the tunnel. Finding Queensland Rail advise that they now have detailed survey measurements across the 11 tunnels. It is recommended that Queensland Rail model new rollingstock options (locomotives and wagons), such as the PR22 and potentially a narrow gauge version of the Astra lowliner wagon to ascertain any future requirements for tunnel clearances. Transparency of what work is required to each of the 11 tunnels to enable current and future rollingstock options through, including with hi cube containers would be a significant step forward.

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Figure 5: Indicative Clearance Tunnel 5

Figure 6: Astra Lowliner wagon

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-2500 -1500 -500 500 1500 2500

RS1 LocoDesign Vehicle

Two SlotWagon - 8ft 6in

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Tunnel 5 -Indicative Clearances at Maximum Track Limits and Maximum WagonRoll - based on existing rollingstock used

Tunnel

The Astra Lowliner wagon with 2 platforms is designed for transportation of 9’6” high 2500 mm wide containers within W8* and SB1-C gauge on a loading deck of 40’. Wagon platforms are connected by the tie rod. This is achieved through the use of the LTF13 bogie and Ø540 mm wheels. The basic dimensions are 2549 width, for the carriage of 2500 containers, which is similar to current container wagons in Queensland, but the deck is lowered to 715 mm above rail to allow for the 9ft 6’’ height.

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Utilisation of rollingstock is a key issue as it is with any capital intensive equipment. The seasonality of agricultural produce within a year, and across years, has been a challenge for the bulk train approach generally adopted in recent years. Rail operators have focussed on cost reductions given the competitive transport environment. This has been particularly evident since the 1990s with the advent of high performance road freight outcomes.

1.2 Queensland Rail – Rail Track (Below Rail) Owner

Queensland Rail is a statutory authority established under the Queensland Rail Transit Authority Act 2013 (Qld) (QRTA Act) and is a statutory body for the purposes of the Financial Accountability Act 2009 (Qld) and the Statutory Bodies Financial Arrangements Act 1982 (Qld). Queensland Rail’s functions are detailed in Section 9 of the QRTA Act. Queensland Rail discharges its statutory functions through its wholly-owned subsidiary QRL. QRL does not employ any personnel, but owns all non-employee related assets and contracts. It performs the role of railway manager and railway operator under the Transport Infrastructure Act 1994 (Qld). Section 9 of the Queensland Rail Transit Authority Act 20137 outlines the functions of Queensland Rail: (1) The Authority has the following functions to the extent they are consistent with its operational and strategic plans— (a) managing railways; (b) controlling rolling stock on railways; (c) providing rail transport services, including passenger services; (d) providing services relating to rail transport services, including—

(i) engineering services; and (ii) services for operating or maintaining infrastructure; and (iii) business management services; and (iv) consultancy and training services;

(e) establishing, constructing, maintaining, operating and arranging for the provision of transport infrastructure, including rail transport infrastructure and other rail infrastructure; (f) using or managing its land in ways that benefit the State or the community; (g) providing advice to the responsible Ministers about its functions or the rail industry, if requested by the responsible Ministers; (h) doing anything else likely to complement or enhance a function mentioned in paragraphs (a) to (g); (i) another function conferred under an Act. (2) The Authority may carry out its functions directly, or indirectly through its subsidiaries. The Queensland Rail Board is accountable to two responsible Ministers for the successful operation of Queensland Rail: Minister for Transport and the Commonwealth Games, and the Treasurer. An Operational Plan and Strategic Plan are prepared and submitted by the Board each year for responsible Ministers’ approval in accordance with the QRTA Act. The

7 https://www.legislation.qld.gov.au/LEGISLTN/ACTS/2013/13AC019.pdf * The UK W8 outline gauge is very similar to the Queensland narrow gauge outline.

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Operational Plan is a formal performance agreement between Queensland Rail and responsible Ministers detailing proposed undertakings and target performance for the financial year. Queensland Rail owns all of the former QR Ltd rail network in Queensland, apart from the tracks in central Queensland owned by Aurizon Network Pty Ltd. Queensland Rail’s major businesses include passenger trains (including inner-city commuter and long distance trains), rail holidays, travel centres and managing access to its rail network for a wide variety of trains including for agricultural products, passengers, general freight, bulk minerals and coal. The needs of trains on Queensland Rail’s network vary greatly due to their different supply chain dynamics, geographic locations, rail corridor characteristics and interactions with other rail traffics. While Queensland Rail’s responsibilities regarding passenger trains are important, the provision of Access to the Network for freight trains is also a significant activity for Queensland Rail. Queensland Rail seeks to provide a safe and efficient rail based transport option for freight. Much of Queensland Rail’s network is supported by Transport Service Payments from the Queensland Government. The absence of these Transport Service Payments would result in large parts of the rail network being commercially unviable. 8 While Queensland Rail is vertically integrated, this is only in respect to its passenger services.

Queensland Rail's network business provides services to rail operators on the regional freight systems, including negotiating access to the network. The regional freight network extends south to Brisbane, Wallangarra and Thallon, north to Cairns and Normanton, east along the coast and west to Mount Isa, Winton and Quilpie. Queensland Rail manages over 7000km of freight and passenger rail track throughout Queensland as outlined in Figure 7 (below).

8http://www.qca.org.au/getattachment/6ed2cc19-d743-47db-a3ef-fddd7dd4e768/QRail-2013-DAU-Clean-Version-(including-standard-a.aspx

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Figure 7: Queensland Railway Network (Source - QCA 2015)

Rail operators and other access seekers interested in access to the regional freight network negotiate terms and conditions under the process set down in the 2008 QR Network Access Undertaking. 9

Regulated Rail Access Queensland Rail's intra-state below rail network is declared for access under Part 5 of the Queensland Competition Authority (QCA) Act 1997 (the QCA Act). It is also subject to the terms of the access undertaking the QCA approved in 2008, as amended by a Transfer Notice at the time of the separation of the former QR Ltd.

9 http://www.qca.org.au/Rail

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While the entirety of Queensland Rail's intra-state network is subject to the declaration and the 2008 undertaking, a reference tariff only exists for coal train services on the western system. Pricing for other train services and the remainder of Queensland Rail's intra-state network is subject to the negotiation-arbitration framework and the pricing principles contained in Part 5 of the QCA Act and in the 2008 undertaking.10 The 2008 Access Undertaking sets out the terms and conditions under which Queensland Rail will provide access to its rail infrastructure. It also sets out the process required for an access seeker to negotiate access to the infrastructure and how any disputes in relation to access are to be resolved. The 2008 access undertaking came into effect in October 2008 and was due to expire on 31 December 2014. While work continues on a replacement access undertaking, the 2008 Access Undertaking remains in effect. On 8 October 2015, the QCA released its draft decision on Queensland Rail’s 2015 DAU. As the QCA notes, “For clarity, this document is not a draft version of a final decision, and it has no force of itself. There should be no expectation that it presents views and recommendations as to how to amend the 2015 DAU which will prevail to the end of the decision making process unless the QCA is persuaded otherwise. This document represents the QCA's preliminary view and is intended to give stakeholders an insight into that view to encourage further contributions. The QCA's application of s. 138(2) and its thinking may change towards its final decision, which will be informed by submissions made in response to this document. The QCA will consider submissions received within the stated timeframes (submissions due on 24 December 2015) prior to making a final decision.”11

Brisbane Urban (City) Rail Network The Brisbane urban (city) rail network is considered by some as an impediment to the efficient operation of freight trains to the Port of Brisbane, the current destination for all South Western line traffic. The City network is an integrated passenger and rail access service that extends from the centre of Brisbane, south to Beenleigh and Varsity Lakes on the Gold Coast, north to Ferny Grove, Shorncliffe, Doomben, Caboolture and Gympie, east to Cleveland and west to Richlands, Ipswich, Rosewood and Springfield. On each weekday, about 140,000 people travel on the rail network in south-east Queensland to get them to and from work, school and other places. 12 The on-time running of Citytrain services is a priority for Queensland Rail. Queensland Rail advises that it makes every effort to ensure services adhere to the published timetable and

10https://www.queenslandrail.com.au/business/RegulatoryFramework/Documents/QCA-Consultation-paper-on-western-system-coal-tariffs-June-2014.PDF, page 2

11http://www.qca.org.au/Rail/Queensland-Rail/More-on-QLD-Rail/Draft-Access-Undertaking/In-Progress/Qld-Rail-2015-Draft-Access-Undertaking

12 Queensland Rail Annual and Financial Report, 2014-15, page 6

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that their on-time running performance targets are the most stringent in Australia. Queensland Rail aim to have more than 94.53% of our peak period services arrive. All services, including peak and off-peak, are measured on time when they arrive within three minutes and 59 seconds13 of their scheduled time (5 minutes and 59 seconds on interurban services; ie Gold Coast, Rosewood and Nambour). Sometimes incidents beyond Queensland Rail's control may delay services (force majeure). Such incidents may include onboard medical emergencies, security incidents, vehicles striking level crossing boom gates or severe weather activity. Because these incidents are out of Queensland Rail's control, they are not included in the contractual results. However Queensland Rail recognises delays, regardless of their cause, affect customers, and this is reflected in the customer impact figures. 14 For the last quarter of 2015, Queensland Rail’s on- time running performance for all Citytrain network services, including off-peak and weekends was 95.07% 15 Queensland Rail also advises that in order to maintain a high standard of safety and reliability sections of the network are closed to complete maintenance and upgrade works. “We do our best to minimise disruption to our customers by scheduling these closures in advance on weekends and outside of peak times. Replacement buses are also provided to get our customers to where they need to go.” 16 Freight travelling through the south-east Queensland network and particularly on the North Coast Line includes general and bulk industrial, construction, cattle and bulk fresh food supplies for north and far north Queensland. A common general area of concern to freight operators is the impact, particularly of unplanned or extended maintenance closures on lines servicing freight trains. Finding To the extent not undertaken now, the provision of information and an understanding of necessary maintenance outages on the rail system is encouraged. Planned forward maintenance schedules can be published for the year ahead. It is acknowledged that unforeseen emergent outages will be required from time to time.

13 Other Australian metropolitan passenger rail operations use the OTR threshold of 4 minutes and 59 seconds. Queensland is the only state that uses the lower threshold.

14 http://www.queenslandrail.com.au/forcustomers/otr

15http://www.queenslandrail.com.au/Customers/Pages/Quarterly247OnTimeRunningResults.aspx

16 http://www.queenslandrail.com.au/forcustomers/trackclosures

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Passenger priority legislation Queensland Rail is obliged to endeavour to bring delayed passenger train services back on time ahead of non-passenger train services. This is due to the requirements of section 265 of the TI Act. AU1 and the Standard Access Agreement are consistent with section 265 of the TI Act. Queensland Rail operates almost all passenger train services in Queensland. Passenger train services receive special treatment under the TI Act as follows: • Section 265 of the TI Act – sets out an obligation for a railway manager to bring a

delayed passenger train service back to its scheduled running time (including where this may result in a freight train service being delayed);

• Section 266 of the TI Act – sets out a right for the Director General of the DTMR to identify the requirements for regularly scheduled passenger train services (e.g. identify the capacity requirements) and obliges railway managers to allocate rail capacity that is available or will become available to meet those requirements; and

• Section 266A of the TI Act – provides for the preservation of train paths for regularly scheduled passenger train services and for non-coal freight services.

All of Queensland Rail’s passenger train services use either preserved train paths or train paths that are the subject of the Director General of DTMR’s passenger train service requirements. Rail services through the urban area are (likely) subject to curfews due to amenity issues (primarily noise). The route through the urban network to the port for western freight services is identified in Figure 8 (below).

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Figure 8: South Eastern Queensland Freight and Urban Network - highlighting the Rosewood to Port of Brisbane section.

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Finding Whilst slots are not constrained currently, slot times and timeliness (reliability) could potentially be enhanced through to the Port, and to this end, a review of reliable slot availability at nights and weekends for example would be a positive action, even from the point of view of providing information to current and potential users. This will aid transparency of the current and future potential (and constraints) of the publicly funded urban network. It may also provide additional efficiencies within the full supply chain, not only in terms of bulk unloading at port, but also with container traffics and BMT opening hours as an example.

1.3 Port of Brisbane The Port of Brisbane17 is one of Australia’s fastest growing container ports, and Queensland’s largest multi-cargo port. The Port of Brisbane is located at the mouth of the Brisbane River, and is managed and developed by the Port of Brisbane Pty Ltd (PBPL), under a 99-year lease from the Queensland Government. There are currently 9 dedicated container berths at Fisherman Island and a further 4 berths that cater for general cargo and motor vehicles. There is an oil refinery and multiple bulk liquid terminals. Crude oil is one of the port's principal imports. Other imports include fertilisers, chemicals, motor vehicles, cement clinker and gypsum, paper and building products and machinery. Exports include coal, refined oils, grain, woodchips, mineral sand, scrap metal, meat products and cotton. Cruise ships are catered for at the cruise ship terminal at Hamilton and the Fisherman Island Multiuser Terminal. Naval vessels are also frequent visitors.18 Within the Port of Brisbane, the BMT is the interface between rail, road and the container terminals at the port. The facility currently operates during the following times: • Monday to Friday: 7.00am to 9.00pm • Saturday: 10:00am to 2.00pm

17 PBPL is owned by the Q Port Holdings (QPH) consortium, comprising four of the world’s largest and most experienced infrastructure investors. The members are: Caisse de dépôt et placement du Québec; IFM Investors; QIC Global Infrastructure on behalf of its managed funds; and Tawreed Investments Ltd, a wholly-owned subsidiary of the Abu Dhabi Investment Authority.

PBPL’s role, as defined by the port lease, includes:

• the maintenance and development of the port and related facilities • operation of the Brisbane Multimodal Terminal • leasing and managing land for port-related services • facilitation of the development approval process for developments on Brisbane core port land • maintaining navigable access to the port for commercial shipping • operating the Visitors Centre.

Other port operations, including stevedoring and towage, are carried out by private operators who lease land from PBPL. Vessel traffic services are the responsibility of the Queensland Department of Transport and Main Roads, and pilotage services are carried out by a private operator. Source - https://www.portbris.com.au/about-us/about-us )

18 http://www.msq.qld.gov.au/shipping/port-procedures/port-procedures-brisbane.aspx

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• Sunday: Closed Importantly, the Port of Brisbane advise that the BMT has in the past, and can with short notice open at times outside the hours specified above, to facilitate increased rail traffic and can operate 24/7 should demand exist. Finding It would be useful to confirm through comparison, the operating times of the BMT and the passenger rail priority/curfew times (understood to be from 7-9am and 4-6pm Monday to Friday), to ensure that the BMT is open at times that enable the most efficient rail solutions, without jeopardizing passenger priority. Such an analysis could also include the bulk rail trains that also terminate at the Port of Brisbane and the potential to increase freight paths in anticipation of future demand. The Port of Brisbane notes the importance of a long term solution that includes dedicated freight rail access to the Port.

The integration of these transport modes, a dual-gauge rail link, and the location of the BMT behind the container terminals, enables the movement of large volumes of interstate and intrastate cargo into and out of the port by rail. The BMT can also offer interim depot solutions for import and export containerised cargo (i.e. providing short-term storage for import containers and pre-receiving containers for export). The BMT has significant capacity available for utilization within the existing facilities which can cater for approximately 400,000 TEUs per year and also has room to expand further if necessary. Aurizon runs services to the BMT, connecting the port to major and regional Queensland centres as well as the eastern capital cities of Sydney and Melbourne. The BMT has the ability to monitor freight containers as they move through the port. An electronic interface with rail, shipping, and container-terminal operators provides rapid communication links, contributing to a cost-effective and highly efficient transport service. It is also a licensed Customs bond facility. Pacific National currently run trains to Acacia Ridge and truck containers to the Port of Brisbane. There are several bulk terminal facilities at the Port of Brisbane. GrainCorp19 has bulk terminal facilities including at Fisherman Islands - export grain, cottonseed, woodchip and sugar and at Pinkenba - import fertilisers, export livestock and sugar. The Fishermen Islands terminal which was originally designed for receiving grain in bulk by rail is now also seeing an increase in deliveries by truck. The GrainCorp Fisherman Islands Port Terminal is located at the Port of Brisbane. The terminal handles the shipment of wheat, barley, sorghum, legumes and non-grain commodities. The facility has rail and road intake, grain storage and weighing facilities and one ship loader. The Fisherman Islands Port Terminal

19 GrainCorp has operations in Australia, New Zealand, Asia, North America, Europe and the United Kingdom. These markets collectively represent over 50 percent of the global export trade in wheat, barley and canola. GrainCorp has four reporting segments: • GrainCorp Storage & Logistics • GrainCorp Marketing • GrainCorp Malt • GrainCorp Oils GrainCorp also owns 60 percent of Allied Mills.

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has an annual elevation capacity of 2 million tonnes and an ability to service vessels up to 70,000 DWT. Grain is received by rail at a rate of up to 2,200 tonnes per hour and road at a rate of up to 400 tonnes per hour. The facility has one ship loader which can load at a rate of up to 2,200 tonnes per hour. 20 Queensland Bulk Terminals21 facility is road accessible only. An overview of the facility is pictured below. (Figure 9).

Figure 9: Queensland Bulk Terminal Facility overview

Road Networks servicing the Port of Brisbane The Port of Brisbane has major road connections north, south and west, although all traffic initially travels west on the Port of Brisbane Motorway which is the major road freight link to the Gateway Motorway. To the south and west, the Gateway links via the Pacific and Logan Motorways to the Pacific, Newell and New England Highways, linking the Port to Sydney and major regional centres of New South Wales. Further west, the Warrego, Cunningham and Moonie Highways provide important links to Queensland rural areas. To the north, the Gateway links to the Bruce and Burnett Highways which link the port to Queensland major regional centres. In addition, the Gateway, Pacific and Logan Motorways provide access to the nearby regional growth areas of Gold Coast, Ipswich, Toowoomba and the Sunshine Coast.

20https://www.accc.gov.au/system/files/15-06-01%20ACCC%20Submission%20-%20Brisbane_for%20publication_2_0.pdf, page 8 21 QBT is a wholly owned subsidiary of Wilmar Gavilon Pty Ltd, a 50:50 joint venture between Wilmar International Ltd and The Gavilon Group, LLC. Wilmar Gavilon purchased QBT in 2009 to further cement its supply chain networks and have greater autonomy over the distribution of its feed ingredients, oils and fats. Today Wilmar Gavilon is part of a sophisticated vertically integrated supply chain with approximately 1.8 million tons of commodities traded or handled annually. Source - http://www.qldbulkterminals.com/company.html

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Kingsford Smith Drive, Nudgee Road, Breakfast Creek Road, Sandgate Road, Lytton road and the Gateway Motorway are the major local roads that provide access to the Port of Brisbane.

Figure 10: Port of Brisbane Road and Rail Connections - (Source – Port of Brisbane Shipping Handbook, 2015/2016 page 39)

Containers and Containerisation Continued growth is expected to drive a stronger market for containers throughout the Port of Brisbane catchment in South East Queensland. Three automated container terminals have a capacity greater than 2.5 million TEUs (twenty foot equivalent units) per annum at the Port of Brisbane. Common shipping containers in use throughout the Queensland market include:

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• Twenty-foot (6.1m x 2.44m x 2.59m) and forty-foot (12.2m x 2.44m x 2.59m) dry bulk containers are widely used for the movement of commodities that do not require refrigeration. Due to its high bulk density, grain is predominately transported in twenty-foot containers, as the allowable payload for twenty and forty foot containers are very similar. Other commodities such as cotton that do not require refrigeration are also primarily transported in such containers.

• Twenty-foot and forty-foot refrigerated containers are used for the transport of chilled and frozen meat products, as well as horticulture. These containers require a power source be available in transit and during dwell prior to loading in order to retain temperature.

• Forty-foot (12.2m x 2.44m x 2.89m) high-cube containers are becoming more common within a number of supply chains due to their additional capacity (30cm of extra available height compared to a standard container). Note, that there are very few high –cube twenty foot containers. Consideration must be given to surrounding infrastructure, in particular bridge and tunnel heights, and potential conflicts in urban environments (eg platforms) when high-cube containers are to be used.

Factors influencing the choice of container for each industry include buyer requirements, payload, vehicle and infrastructure considerations and freight cost. Of particular interest are containers used for transporting food products for consumption. Container cleanliness standards for food containers are shown below.

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Figure 11: Container Cleanliness Standards

Container flows for food grade exports currently suffer from supply problems. This is due to the fact that the bulk of containerised goods coming into Australia do not carry food in bulk – but rather retail and packaged goods. Australia is a net exporter of food. In addition, much of the food is exported in twenty foot containers, whereas inbound goods are delivered predominantly in forty foot containers. This leads to empty traffic of twenty foot containers into Australia, and forty foot containers leaving Australia. Produce for export is generally denser than import consumer goods, and therefore is only able to be generally packed in full in twenty foot containers or partially full forty foot equivalent units (FEUs). see the attached chart (this time in TEU) showing our total imports by container size and type, for the last few years. You can see the import vs. export balance. The Port of Brisbane receives more imported TEUs (highlighted in yellow) than are required for exports, and the surplus is exported empty. For twenty foot dry containers, the surplus is considerably less than for forty foot dry containers (highlighted red). To reiterate, this is because imports – which are generally light and bulky, e.g., furniture, white goods, electrical good etc. come in forty foot containers, while most of our exports are heavy, e.g., grain, scrap metal, and need a twenty foot container, or may use a partially filled forty foot container. Only cotton and waste paper are exported in forty foot containers in high volume from Brisbane, hence the shipping lines export many of these size containers empty.

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Compounding the problem for twenty foot containers is the ‘food quality’ grade/standard that most of the cereal/grain exporters require. Not all containers will be at this high quality standard, therefore this requirement reduces the number of available useable empties, and industry can quickly end up with a shortage of available containers. Containers are owned and individually operated by the shipping line, and are not generally transferrable between lines. Therefore it is often the case that shipping line ‘A’ has a lot of empties, but if the exporter is only using shipping line ‘B’, and ‘B’ is short, then as far as that exporter is concerned there is a shortage of containers. The table below provides details of container types by import and export at the Port of Brisbane22 for the three years ending June 2015.

22 Information and table provided by the Port of Brisbane, December 2015

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Actual Teus Arr 2012/13 Arr 2013/14 Arr 2014/15

Import Full 20ft Dry 148,195 153,049 153,259 20ft Reefer 6,850 6,756 6,783 40ft Dry 301,437 301,601 313,542 40ft Reefer 23,348 26,098 28,548 Total 479,830 487,504 502,132

Empty 20ft Dry 14,899 16,066 15,055 20ft Reefer 19,248 22,388 28,338 40ft Dry 9,386 6,741 6,857 40ft Reefer 19,560 22,242 21,460 Total 63,093 67,437 71,710

Total 20ft Dry 163,094 169,115 168,314 20ft Reefer 26,098 29,144 35,121 40ft Dry 310,823 308,342 320,399 40ft Reefer 42,908 48,340 50,008 Total 542,923 554,941 573,842

Export Full 20ft Dry 118,567 115,096 120,937 20ft Reefer 26,193 29,204 34,136 40ft Dry 150,099 134,558 118,544 40ft Reefer 40,496 44,604 45,684 Total 335,355 323,462 319,301

Empty 20ft Dry 32,979 46,326 40,548 20ft Reefer 384 488 559 40ft Dry 154,164 168,920 199,364 40ft Reefer 4,076 3,228 5,092 Total 191,603 218,962 245,563

Total 20ft Dry 151,546 161,422 161,485 20ft Reefer 26,577 29,692 34,695 40ft Dry 304,264 303,478 317,908 40ft Reefer 44,572 47,832 50,776 Total 526,959 542,424 564,863

Arr 2012/13 Arr 2013/14 Arr 2014/15

Import less Export Surplus

20ft Dry 44,527 54,019 47,377 40ft Dry 160,724 173,784 201,855

Figure 12: Actual Container Movements Port of Brisbane

Approximately 80% of import DRY forty foot containers are 9’6” high cube, and almost all import REEFER forty foot containers are 9’6” high cube. About 85% of full export DRY forty foot containers are 9’6” high cube, and again almost all full export forty foot REEFERs are 9’6” high cube. Almost all twenty foot containers (import &/or export – dry & reefer) are standard 8’6” – there’s only a handful of 9’6” units currently used and they are not a common container at all globally. With only around 15% of the total forty foot container dry stock currently suitable for use, the ability to utilize hi Cubes is already a significant issue for the cotton shipper(s).

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Figure 13: Standard and Hi Cube Containers -(Image provided by Olam Queensland Cotton)

New rollingstock may bring advantages in terms of the 15.75 TAL limitations that apply to the South West line. Train length on this rail system is limited generally to 675 metres. Given a requirement for two locomotives, this leaves length for approximately 32 wagons (assuming existing BELY/BCZY type with 19.4 over coupling length). The average weight of a TEU is 1.9 to 2.4 tonnes, and 3 to 3.8 tonnes for an FEU, which must also be deducted in order to ascertain payload capacities. With the 15.75 TAL, each wagon can carry approximately 45 tonnes net or 48 tonnes gross. This means that the current wagons used can not carry two TEUs with a net payload of 25 tonnes each. The Astra low liner (discussed above as an example) for example, is an eight axle wagon, with 13 TAL for each pair of close coupled wagons. Each Astra Wagon is 14.2m long. They are 0short coupled together in pairs. Whilst existing wagons used on the South West Line are 19.4 metres long, it is possible to have a TEU or FEU on each Astra wagon, without “wasting” 5 metres in length. In addition, well wagons have also been used on occasion in Queensland. Historically, their use has focussed on double stacking of containers. Aurizon, for example, has recently purchased new wagons to use on the east-west rail service – “The specifications of Aurizon’s new intermodal wagons include: standard gauge with ability to convert to narrow gauge if required, flat-top, a mix of 5 pack articulated, triple-slot, well wagons allowing

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double stacking and more efficient twenty-foot equivalent unit (TEU) utilisation per service.”23 It is also relevant and important to understand the maximum container sizes, and importantly weights that can be handled at the destination. For example, South Korea stipulates that the weight of truck, trailer, container tare and cargo all together must not exceed 40.0 MT and that the pressure on each axle must not exceed 10.0 MT.24 Further, effective July 2016, shippers worldwide must provide a verified weight for every packed container preparing for transit and shippers must be aware that they are wholly responsible for their containers’ weight25, pursuant to International Maritime Organisation mandatory requirements adopted in 2014.26

23Refer http://www.aurizon.com.au/Media/MediaRelease/Pages/Aurizon-boosts-transcontinental-intermodal-capability.aspx 24Refer https://www.mcc.com.sg/Contact-Us/South-Korea For Japan, see http://www.mlit.go.jp/road/road_e/p7_vehicle.html 25Overweight containers played a role in the breakup and subsequent beaching of the MSC Napoli on the southern U.K. coast in January 2007, along with the partial capsizing of the Deneb, a 500-TEU feeder ship, in the Spanish port of Algeciras in June 2011. The crackdown on overweight containers — the number of which some estimates peg at 130 million annually — is part of a broader global effort to combat misdeclaration of exports. Source:http://www.joc.com/maritime-news/international-freight-shipping/shippers-told-prepare-global-container-weight-verification-rule_20150630.html 26In November 2014, the International Maritime Organization (IMO) adopted mandatory amendments to the International Convention for the Safety of Life at Sea (SOLAS) Chapter VI, Part A, Regulation 2 - Cargo information. The SOLAS convention is applicable global law. The SOLAS amendments become effective on 1 July 2016 for packed containers received for transportation (gate-in or off-rail).

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2. Issues raised in consultation Comments raised with respect to rail and road throughout consultation are provided at Attachment A to this report. In order to facilitate rail, track owners, rail operators and agricultural producers/suppliers see that rail particularly for many agricultural products will only be successful when the following key questions are answered, potentially in an aggregate sense within the rail catchment area. These key questions to answer to facilitate more freight on rail in a practical sense include: • What do the growers produce? • Where does this produce need to be transported from / to and in what time frame? • When does it need to be moved and is it time critical? • With the above information, a transport solution can be designed which meets the

requirements for the produce to arrive at the right destination in the appropriate condition in the right timeframe. At a regional level, and to achieve best use of rail, the best solution arrives when competitive transport operators are able to combine all of the information for all of the commodities that need to be moved across the year.

Queensland has enjoyed a significant economic benefit from the resources boom. Now that the boom is beginning to recede, Queensland’s challenge is to diversify its economy, transitioning towards industries where there is future growth potential. To create a more diverse economy, Queensland should invest in assets and capabilities in industries where it has a competitive advantage. A more diverse economy is the natural hedge to the volatility of commodity markets. The Queensland economy is more diverse than many think – 80% of the economy is services driven. Research undertaken by Deloitte Access Economics27 suggests that Australia and Queensland has a natural competitive advantage in a number of industries which will provide a future platform for economic growth. These industries include: • Agribusiness • International education • Wealth management • Tourism • Gas Queensland has a competitive advantage in many of these sectors. In order to exploit these advantages, government and business will need to ‘step up to the plate’. For Government this will mean: • Development of market aware economic policies • Prioritisation of investment into high growth sectors • Reducing support to low growth sectors

27 Deloitte Access Economics Positioning for Prosperity, (Report No 3) Catching the Next Wave, March 2014

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• Increasing the efficiency of the provision of government services • Ensuring that business and government work together on a common growth agenda. For business this will mean: • Creating new products and capabilities through investment in transformational

innovation • Deploying top talent into high growth area • Focusing investment dollars into areas with higher growth exposure • Active divestment in slower-growth sectors • Seek competitive advantage through better recruitment, productivity improvement and

development of non-replicable assets. In terms of Agriculture in Australia, Rabobank28 has identified five specific swing factors that they see as critical to shaping Australian agriculture now. These include: • weather conditions, and many areas will continue to require wetter than normal

conditions for some time in order for conditions to fully recover. It was noted through consultation that “if it rains tomorrow, future cotton production could increase five times on the last year’s production.” Generally, the cotton industry plans its future year production forecasts by November of the previous year. There has been cautious investment only given that 2015 is the third year of difficult (drought) weather conditions;

• changes in policies and barriers to trade, noting that foreign trade policies and

technical barriers to trade are often unpredictable, yet can impact significantly on the outlook for Australian agricultural products. For example, the Chinese Free Trade Agreement does not impact on Chinese imports of commodities such as wheat, maize, canola or cotton. Separately, Australia has recently signed a wheat and barley protocol with China to facilitate the continued $1.5 billion annual wheat and barley trade with China. Rabobank suggests a close eye be kept on Indonesian import quotas for beef and continuing Russian trade sanctions for example.

• Currency variations. A weaker Australian dollar lends considerable support to

Australia’s agricultural exports. It appears for example, that a strengthening US economy, combined with weakness in Europe and Asia, will contribute to further appreciation of the US dollar with the Australian dollar potentially depreciating a little further as a result. A weaker Australian dollar, however, increases the costs of imported inputs and machinery whilst a stronger US dollar can also lead to lower global commodity prices. Australian cotton is seen as a premium product. The decline in the $AUD has enhanced the competitiveness of this product in the global market, as we compete with lower quality cotton from Brazil for example.

• Lower world oil prices are generally expected to be positive for farm input costs and

global economic growth. This may also have a sting in the tail, given many agricultural commodity prices often tend to track in a similar direction.

28 Rabobank Agribusiness Outlook 2015

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• Finally, as its fifth indicator for 2015, Rabobank notes that a serious slowdown in Chinese economic growth has a broader and negative effect for the global economy, and there is some evidence of this occurring at this time.

BCA McKinsey29 acknowledges that agriculture is the only industry in Australia which is strongly competitive (when rated by their Revealed Competitiveness Score) and has plenty of untapped potential. “Australia has the most arable land per capita of any country, and in some cases, this translates into substantial market share…. Substantial demand increase is predicted, for example, China’s per capita meat consumption could increase by 40% over the next 20 years.”30 World food demand will increase 70% by 2050, and with the largest arable land per capita in the world, Australia is well positioned to play a significant role in filing it.31 The world's population is expected to increase from 7 billion people today to 9 billion people by 2050. Australian farmers export on aggregate approximately 60% of what is grown in Australia. Australian food production could be 77% higher by 2050. In terms of specific commodities of relevance to the South West rail catchment, these are discussed below.

2.1 Product specific issues

Cotton Over the past 15 years, the cotton industry has seen the introduction of genetically modified cotton and improved cotton plant varieties, thanks to our cotton industry researchers, the industry as seen an increase of 46% of cotton lint produced per hectare over this period. envisages the cotton lint yield will continue to improve at a similar rate as occurred over the 15 years to date. Also envisages that enhanced water efficiency measures will be introduced and this will increase production from a greater area. 32 Namoi Cotton operates a warehouse complex at MacIntyre in Queensland. This facility utilized rail from 1987 to 2014. The MacIntyre facility has on site capacity of 160,000mt of product (cotton lint, cotton seed, pulses, grains). Namoi have diverted product from northern NSW back to Wee Waa as the cost to deliver the product to MacIntyre or Wee Waa from Gwydir Valley is the same. OLAM (Queensland Cotton) has noted that cotton storage is moving away from the port of Brisbane – due in part to higher storage costs near to the Port.

29 McKinsey Australia, “Compete to Prosper: Improving Australia’s Global Competitiveness” 2014

30 Ibid, page 34

31 Ibid, page 35

32 Paul Brimblecome, CEO, Cubbie Ag, Presentation at Rail Forum, Goondiwindi, 4 December 2015

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Figure 14: Ideal drawing arc for grain and cotton as envisiged by OLAM (Queensland Cotton)33

Namoi Cotton, amongst others, has identified a need for a pricing structure for both below and above rail that is competitive with road transport. Competition on the network is seen as a key requirement along with infrastructure upgrades, in particular to facilitate high cube containers being able to traverse the Toowoomba Range down to the Port of Brisbane. Note that Namoi uses Freightliner Australia (recently purchased by GWA) in New South Wales to transport upwards of 17,000 mt per month by rail. Cubbie Ag acknowledges that currently, road provides efficient delivery with approximately 1500 bales from Dirranbandi to the Port of Brisbane being transported every 24 hours. Lempriere Global Logistics34, as a company associated with Cubbie Ag, undertakes the high level logistics and has access to competitive rates through Lempriere’s 150 year history in global trade. Currently, Cubbie Ag cotton is containerized at the port and at facilities at Archerfield.

Grain GrainCorp is a current user of rail on the South Western Rail Line. GrainCorp’s Project Regeneration35 was announced in 2014, with a $200 million transformation of its storage and logistics network. Representing the single largest capital investment in rail loading capability in the company’s history, Project Regeneration will deliver a more efficient and

33 OLAM, Queensland Cotton Presentation to Rail Forum, Goondiwindi, 4 December 2015

34 LGL has access to competitive rates through Lempriere’s 150 year history in global trade. LGL values its strong rapport with partner transport companies offering: All modes of transport (air, sea, rail & road), FCL, LCL, Consolidation & Warehousing distribution, and General, hazardous, perishable and refrigerated goods - http://lglogistics.com.au/what-we-do/

35 http://www.graincorp.com.au/regeneration

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reliable network for all customers, unlocking lower transport rates and higher grain prices for growers across the network.36 Project Regeneration involves developing a network of over 50 high capacity country sites to support an efficient rail operation. This will reduce rail costs by around $5 per tonne and return up to 1 million tonnes of grain to rail. The works at each site fall broadly into four categories: new country sites with new high speed over-rail loaders, new high speed over-rail loaders at existing sites, upgrades to existing rail loading infrastructure and capacity expansion. In May 2015,37 GrainCorp announced Yamala as a focus in Queensland, amongst other New South Wales and Victoria sites. Plans have more recently been foreshadowed to upgrade its Goondiwindi West grain facility as part of up to $22 million that could be expended in Southern Queensland. Currently, Thallon is an exemplar Queensland site in terms of its loading efficiency. Finding Ongoing improvements to commodity loading and unloading facilities are an important way to enhance the viability of rail, reducing for example, the overall transit times for train consists and thereby enhancing rollingstock utilization. “The predominant container size used for grains is the 20 foot container with usual load weights varying between 20 and 25 tonnes of grain. While 40 foot containers can be used, their weight limit is very similar to the 20 foot container and filling them with grains can easily result in exceeded capacity. A full 40 foot container of grain is simply too heavy for truck transport and generally has maximal pay load of 25-26 tonnes, only one or two tonnes more than a 20 foot container (See Table 15 below). The 40 foot container obviously utilises greater space on the ship for a similar net cargo weight, translating to a higher freight rate per tonne. The abundant supply of 40 foot containers has however encouraged exporters to use them. “38

Figure 15 – Grain Container Capacities - Sourced from Containerised Grain Industry Profile, Victorian Department of Economic Development, Jobs, Transport and Resources, December 2014, page 4

Livestock The livestock TSC is between the state government, acting through the Department of Transport and Main Roads, and Aurizon Limited. Through this contract the state government purchases 325 rail services per year that transport live cattle from regional hubs throughout Queensland to designated abattoirs for processing. The only current route of some relevance is the Quilpie to Brisbane route.

36 Project Regeneration Fact Sheet, GrainCorp

37 GrainCorp Media Release, Project Regeneration site rail upgrades for 2015, 11 May 2015

38http://agriculture.vic.gov.au/__data/assets/pdf_file/0010/292186/8-Containerised-Grain-Industry-Profile_December-2014-Update_MASTER.pdf, pages 3 to 4

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In its submission to the Parliamentary Inquiry into Rail freight use by the agriculture and livestock industries, AgForce is firmly in support of the Livestock TSC and its continuation, there are a range of issues associated with the current arrangement. These include but are not limited to: • The service provider would appear to have done everything in their power to make

these services difficult to fill. It appears there is little desire to grow the cattle rail business.

• The service provider is subsidised for the freight routes irrespective of if the trains run or not. For example, no cattle services ran on the South West line in 2013 however a significant subsidy was still provided for these services.

• The minimum deck numbers needed to viably run a service is apparently 36 decks. This is a significant change to the previous minimum capacity.

• No on ground marketing is actively provided to producers for the railway service, rather this is left to individual producers to engage with processors on an ad hoc basis.

AgForce understands the State Government is seeking to address these limitations through a tender process for Livestock TSCs in anticipation of the 2015 expiration of the current TSC. AgForce is supportive of this process provided it does not result in the discontinuation of the option for rail freight of livestock. However, there are various concerns with the ability for other operators to viably compete for the TSC, including access to assets and infrastructure and above ground (sic) competition. 39 Aurizon advises that it is working hard to improve services for the agricultural industry. For example, in 2013 Aurizon commenced the cattle haulage season early at local farmers’ request and ran an additional 27 services to support local demand in the north and central west rail corridors. Aurizon increased volumes and trains on the north coast line to support local farmers, running additional trains from Brisbane to Gladstone and Rockhampton to support the abattoirs in Rockhampton.

39http://www.parliament.qld.gov.au/documents/committees/THLGC/2013/INQ-RAIL/submissions/021_AgForce1.pdf, page 10

“Data from the Department of Transport and Main Roads (DTMR) shows more than 250,000 head were transported on Queensland's Western rail network in 2012. This figure dropped two around 148,000 2014. A spokesperson from the DTMR said the decline was a direct result of the drought….. Mr Brodie said cattle travel well on trains and it is often favoured over road networks, with more stringent heavy vehicle regulations….Out the west here you can only go as far as Mitchell with a six deck (cattle train) load if you’re going to truck cattle to Brisbane. Then you got to switch over two threes (three-deck cattle trucks) two go down to Dinmore or Beenleigh.” (Source Qld Country Hour By Hailey Renault, 16 April 2015 ABC Rural) Mr Brodie knows cost plays a big part in his choice to send cattle on rail too. He said producers would pay around $2700 per deck to get cattle to Brisbane on a road train, and only $2000 to get them there on train. That’s a saving of $30 per head to go on the rail… There’s a lot of cattle coming out of the north here and it's probably best if they go on rail rather than rubber all the way to Brisbane and scrunching up the roads.” Mr Colclough from DTMR noted “when we see a particular demand out of a particular area we will certainly work with the above rail provider to ensure there are sufficient cattle train services to ensure the carriage of those cattle to the abattoirs.” Ibid

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A recent announcement by the Minister for Transport advises of an extension to the livestock and regional freight transport service contracts with Aurizon, until December 2017. 40 It was further announced that that the Department of Transport and Main Roads will undertake an open tender process for future rail services beyond 2017. It is understood that DTMR has sought additional advice due in 2016 with respect to regional rail and this may assist in longer term consideration. Aurizon advise that the renewed contracts will ensure more than 900 rail freight services continue to run each year for Queensland producers and farmers. The Livestock contract will ensure cattle producers continue to have access to more than 300 cattle train services each year. The renewed contracts include the introduction of performance targets and an increased focus on customer service. The State Government has agreed to purchase new cattle crates to provide more diverse transport options for customers and rail operators. Aurizon has also invested in new wagons to support the livestock business. In addition, Aurizon has committed to run all livestock services to schedule with no minimum orders.

Meat The production of meat occurs at abattoirs, which in Queensland are primarily located in the Darling Downs, West Moreton, Brisbane’s outskirts and on the central coast. The level of production in Queensland has increased steadily over the past 50 years, with the recent drought leading to record turn-offs and the sharp increases in exports in the years since 2012. Abattoirs located in Queensland, along with daily slaughter capacities, are shown below. Abattoirs in Queensland 41

40 . Media Statement, Minister for Transport and the Commonwealth Games, The Honourable Stirling Hinchliffe, Thursday December 31, 2015.

41Australian Government Department of Agriculture, 2015 “Market consolidation and the red meat processing sector: Submission to the Senate Rural and Regional Affairs and Transport References Committee”

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Figure 16: Abattoirs in Queensland indicating relative throughput

Queensland is the largest state in terms of cattle numbers on feed with approximately 60% followed by NSW with 30%, Victoria with 7% and the remainder shared between South Australia and Western Australia.42 Chilled and frozen meat is currently transported on rail from Central and Northern Queensland to export at the Port of Brisbane via the Sea-Freighter service. This service has a capacity to move over 20,000 TEU per year and indicates rail’s ability to transport containerized meat. 43

Horticulture Horticulture, both annual and perennial, is a significant agricultural activity within the South Western rail catchment area. Key commodities produced in the region include: • Apples • Lettuce • Tomatoes • Onions The horticulture sector is challenging for rail, due to the requirement for short timeframes for transit and the requirement often for refrigerated storage and/or fresh delivery of perishable products. A summary of estimated future freight volumes for cotton, grain and meat is contained in table 17 below.

42 http://feedlots.com.au/industry/feedlot-industry/about/

43 QTLC, 2015, ‘Supply Chain Perspective: Livestock/Meat ‘

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Figure 17 – Estimated Future Freight Volumes In terms of backloading opportunities44 (ie from east to west), the following have been proposed as possible opportunities.

Fuel The retail fuel market is the source of significant road traffic within South West /East Queensland and Northern New South Wales. Imported and (in the past) locally refined fuel products are held at fuel terminals in Brisbane for all major retail fuel operators (Viva Energy (formerly Shell), Puma45, IOR46, Mobil, Caltex and BP) prior to distribution, both to fuel depots and retailers. Lowes Petroleum, based in Boggabilla is a major petroleum wholesaler delivering fuel throughout Queensland, New South Wales and Victoria, making us one of Australia’s largest distributors. Lowes Petroleum has invested heavily in its own delivery fleet to ensure the highest standards of customer service are offered to all our

44 The Cubbie Group also identified backloading as an opportunity stating:

... The major inputs for the cotton industry, we talked about those inputs, and also inputs for the grain industry. There are substantial fertiliser requirements, so there are substantial backload requirements, and then even more so relocating containers back in upland warehouses.” as cited in Transport, Housing and Local Government Committee Report 45, Rail freight use by the agriculture and livestock industries, June 2014

45 Puma Energy has 383 retail sites across Australia with a comprehensive commercial, retail, fuel card, distribution, storage and transport offering. The Australian-run operation services remote and regional areas and runs extensive retail network, terminal and depot facilities. In all we transport over one billion litres of fuel products every year. We own and operate bulk seaboard terminals in Brisbane, Mackay and Townsville, with total storage of 201,000m³, and another under construction in Perth. We also have access to industry terminals in Darwin and Perth. Source: http://www.pumaenergy.com/en/regions/asia-pacific/australia

46 Responding to the needs of its customers, IOR now has over 50 diesel stops sites across all mainland states in regional and remote Australia. A number of these regional locations have become fuel depots from which IOR distributes bulk fuel to surrounding communities and regionally based industries such as the long distance transport, farming, mining, oil and gas sectors businesses. IOR’s fuel network is a very modern and safe transport and fuel distribution fleet comprised of rigid tankers, B Doubles and Road Train configurations.

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customers. Lowes “can provide a high degree of flexibility in delivery scheduling to accommodate any challenges that any given site may present.”47 Fuel Imports and Exports – Port of Brisbane48 Financial Year

2009-10 2010-11 2011-12 2012-13 2013-14 Variance Amount

Variation %

Import Tonnes – Crude Oil

7,271,591 7,717,419 7,864,876 8,350,646 8,521,016 170,370 2.0%

Import Tonnes – Refined Oil

2,012,891 1,701,451 1,900,137 1,786,299 1,976,120 207,821 11.8%

Export Tonnes – Crude OIl

7,209 16,081 7,321 40,186 28,089 -12,097 -30.1%

Export Tonnes – Refined Oil

2.344,307 2,429,580 2,463,542 2,779,629 3,043,362 263,733 9.5%

BP ceased production at its 102,000 barrels-per-day (bpd) Bulwer Island refinery in Brisbane in May, 2015. Following the closure of BP's Bulwer Island refinery, Caltex has adjusted elements of its Queensland fuel supply chain. This agreement means that the surplus petrol and diesel from Caltex's Lytton refinery is now supplied to BP in Brisbane instead of needing to be shipped elsewhere by Alexander Spirit.49 Figure 18 – Fuel Imports and Exports – Port of Brisbane Fuel is subject to the Australian Dangerous Goods regime, as outlined in the section on fertilizer (below).

Fertiliser The majority of fertilizers used in large-scale agriculture and horticulture are applied in solid form… The most important physical problems that can be encountered in the handling and use of these products are caking or setting (the formation of aggregated particles or lumps), excessive moisture uptake, dustiness, and segregation of particles. Physical properties are most important for their influence on the handling and storage characteristics of fertilizer products, but can also influence the agronomic performance of some. Transport is generally undertaken in accordance with the transport of dangerous goods legislation. The Dangerous Goods Act (1975) and Regulation (1999) together with various Australian Standards and the Australian Code for the Transport of Dangerous Goods by Road and Rail

47 Our truck fleet consists of semi-trailer, B-double and AB-triple combinations providing direct deliveries from terminal to customer, a cost efficient method of supply. Our network of depot locations utilise a fleet of multi-drop capable vehicles consisting of rigid trucks and truck and dog combinations. The carrying capacity varies but we can suit the load to your order with one of the above units. http://www.lowespetrol.com.au/fuels/

48 Trade Statistics for Queensland Ports, Transport and Main Roads, February 2015

49Refer - :http://www.smh.com.au/business/oil-product-imports-set-to-soar-as-bp-shell-close-australian-refineries-20150413-1mkf0u.html#ixzz3ulrjDAK7 and http://www.caltex.com.au/LatestNews/Pages/NewsItem.aspx?ID=13541

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(ADG) control the storage, transport, packaging and labelling of those farm chemicals classified as Dangerous Goods. All vehicles transporting Dangerous Goods must comply with the ADG Code. Fertiliser Australia has produced a Fertilizer Handling Code of Practice,50as has the Australian Fertiliser Services Association (ASFA). While fertilizers are essential to productive and efficient farming systems in Australia, unfortunately they have the potential to cause environmental harm, particularly to water quality. As these impacts are most likely to originate at the point of use (on farms), special care needs to be taken in all aspects of the use of fertilizers – including storage and transport. The AFSA Code for example, is based on applying the right amount, of the right fertilizer, in the right place and at the right time.51 Major fertilizer providers in Queensland include, for example, Incitec Pivot Limited52 and Pacific Fertilisers,53 amongst others. Fertiliser Imports and Exports - Port of Brisbane54 Financial Year

2009-10 2010-11 2011-12 2012-13 2013-14 Variance Amount

Variation %

Import tonnes

107,156 221,243 300,044 218,734 244,904 26,170 12.0%

Export tonnes

248,282 131,851 130,535 118,323 98,895 -19,428 -16.4%

Figure 19 – Fertiliser Imports and Exports – Port of Brisbane Whilst not raised directly, it is also considered that the $70 billion Queensland gas industry provides ongoing opportunity for rail to provide transport services in conjunction road. In its 2015 World Energy Outlook Report, the International Energy Agency confirmed Queensland’s opportunity to expand the natural gas export sector, with demand for the commodity in Asia set to skyrocket by 160 percent. 55 The gas industry is progressive in its modularization for example, which lends itself to containerization. It is recommended that discussions be continued with the gas industry, potentially facilitated by the Queensland Resources Council, APPEA or DTMR, to consider the future potential utilization of rail by this major, long term industry.

50 http://www.fertilizer.org.au/files/pdf/cop/Fertilizer%20Handling%20Code%20of%20Practice.pdf

51 http://www.afsa.net.au/userfiles/file/Code_of_Practice_20100617133449.pdf

52 As a global manufacturer and marketer of commercial explosives and fertilisers, Incitec Pivot Limited (IPL) is contributing to the production of the infrastructure, food, clothing, shelter and energy people need every day. Working at IPL provides the opportunity to progress your career with an industry leader in both the agriculture and mining industries. See http://www.incitecpivot.com.au 53 Pacific Fertiliser is an Australian owned company, based in Brisbane, formed to supply high quality products to the agricultural, civil and industrial companies specifically on the east coast of Australia. Pacific Fertiliser supplies numerous resellers such as Elders, Landmark and Ruralco on the eastern seaboard with agricultural products. See http://pacificfertiliser.com

54 Trade Statistics for Queensland Ports, Transport and Main Roads, February 2015

55 QRC Media Release, 11 January 2016 - https://www.qrc.org.au/01_cms/details.asp?ID=3840

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2.2 Congestion A major imperative for future utilization of rail is the increasing congestion on the nation’s road network. This is a particular issue for ports not only in Queensland, but also those in Sydney and Melbourne. The Port of Brisbane is one of Queensland’s fastest growing ports, with consistent growth forecast through to the year 2040, including56: • full import containers forecast to grow by 3.6% p.a. and full export containers forecast

to grow by 3.1% p.a. • when empty containers are taken into account, the total movement of containers to

and from the port is expected to grow by 2.9% p.a. • non-containerised trade is expected to grow by 2.1% per year. SEQ consumer demand and congestion

Figure 20: Forecast growth in container trade for Queensland - Source – Port of Brisbane (2013)

The Port of Brisbane advises that by 2040, the Port is forecast to handle approximately 4.5 million containers annually. Forecasts show this will result in between 8 million to 14 million truck movements going to and from the Port for containers alone – there is currently more than 3.5 million truck movements annually. Greater than 90% trucks will move along Gateway Motorway. The Port Drive is expected to be at capacity by 2035. 57

56 Port of Brisbane, 2013, ‘Import/Export Logistics Chain Study, Summary Report’

57 PBPL/SMEC, March 2013. Cited as part of Port of Brisbane presentation, December 4, 2015

02,000,0004,000,0006,000,0008,000,000

10,000,00012,000,00014,000,00016,000,000

2001 2011 2021 2031 2041

Container trade - actual

Container trade - forecast

Truck movements - actual

Truck movements -forecast

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Road congestion costs Australia up to $15 billion per annum. 58 Rail has a particular advantage over very long distances moving from point to point where economies of scale can be achieved (BITRE 2009d) but can also play a key role over shorter distances, particularly within cities where rail offers ways to manage congestion and staffing concerns. For example, rail already performs very well in the movement of freight between the West and East coasts of Australia. As Australia’s population grows and the freight task between major population centres also grows, rail may be the most efficient transport mode for the movement of goods between cities. Like in the case of metro passenger transport, it offers benefits in terms of congestion, safety, health and environmental costs. 59

2.3 Energy use Rail freight uses 10 times less energy compared to road freight – for every tonne of freight carried one kilometre. 60

Figure 21: Road vs Rail freight comparison - Source: Deloitte Access Economics, The true value of rail, 2011, page 41

58 Towards 2050 National Freight Strategy, The case for a national freight strategy and the role of rail, page 24.

59 The true value of rail, Deloitte Access Economics, 2011, page 12

60 Towards 2050 National Freight Strategy, The case for a national freight strategy and the role of rail, page 24.

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2.4 Reliability Reliability is one of the key requirements in the transport chain. Service quality, responsiveness to requests, flexibility, financial stability, reputation, understanding client supply chain needs, customer orientation, expert knowledge in a processes, products and specific markets, useful mechanisms for dispute resolution, the ability for the provider ability to stay updated to new technologies and finally, risk and reward sharing

2.5 Heat Restrictions Rail is constrained by sleepers, fasteners and ballast (Figure 18 below). A well constrained track prevents the longitudinal and lateral movements of the rail caused by thermal force and / or train load. Track condition can be impacted by various factors such as initial misalignment, lack of consolidation of ballast, inappropriate rail to sleeper fastening, track works, sleeper types, sleeper spacing or ineffective maintenance activities. A weak track cannot provide the required resistance to the loads and this then causes buckling. For rail tracks to remain stable, a balance must be achieved between environmentally induced changes in rail-track temperature (which cause thermal expansion and subsequent instability), and the counteracting resistive forces provided by sleepers and ballast (which keep tracks in position).

Figure 22: Typical track configuration 61 In very hot conditions, Queensland Rail advises there is a need to restrict speed and encourage night freight to avoid buckling of the rail. At 38 degrees Celsius, there can be issues and from 40 degrees, the line is likely to be shut down.

61 Track Stability Management – Part 1 Literature Review: Theories and Practices CRC for Rail Innovation, Australia 2009, page 11

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Figure 23: Western System South Western System – A history of buckles recorded within the Toowoomba district62

Queensland Rail advise that there were four (4) buckles and heat related track misalignments recorded for the South Western System (including Thallon to Toowoomba, Toowoomba to Rosewood and the Wyreema to Brookstead Branch) in 2014/15, and one (1) recorded in 2015/16 year to end December 2015. There are two areas of interest in relation to the prevention of buckles on the South Western System:

· Reduction/prevention of the compressive stresses in the rails; and · Maximising the track structure’s resistance to buckling.

Quarterly creep Inspections are used to identify longitudinal movement in the rails that cause changes to the stress in the rails, and annual curve inspections monitor the alignment of the curve, to identify any changes that could influence the stress in the rails. Changes to the stress in the rails leads to increased risk of track buckling. Annual Track Stability Inspections (TSIs) assess the track’s ability to resist buckling. Information from these inspections is used to prioritise buckle prevention work, which occurs generally before the summer heat (ie in Spring). Rail joint maintenance, including greasing of joints, is done to ensure that the joints are functioning correctly and allow the rails to expand and contract as temperatures change. Rail joint regulation adjusts the amount of rail in the track and reinstates the correct expansion gap in the joints for the design neutral temperature. This allows the rails to

62 Track Stability and Buckling - Rail Stress Management A dissertation submitted by Zayne Kristian Ole in fulfillment of the requirements of Courses ENG4111 and 4112 Research Project towards the degree of Bachelor of Engineering (Civil) Submitted: October, 2008

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expand and contract as temperatures change and hence minimise buckling. In the South Western System rail joint regulation is targeted at areas where rail creep has caused the joints to close up and not allow for expansion. This targeted rail joint regulation typically covers 4km per year. Where it is identified that a curve has pulled downhill from its design alignment over the cooler months, the curves are resurfaced/realigned to the design alignment prior to Summer. The track’s ability to resist buckling forces as the rails attempt to expand with temperature increases is provided by the track structure, expressed as a percentage of total lateral resistance. The rail, sleepers, and ballast provide 15%, 25% and 60% of total resistance respectively. As Queensland Rail advise, evidence suggests the best effort for ensuring the track structure can resist buckling forces is to maintain adequate ballast profile. Approximately 17,500 tonnes of ballast is used in the South Western System per year for resurfacing and for reinstating ballast profile, which strengthens the track’s resistance to buckling. Sleepers provide resistance to buckling, and sleeper condition is maintained in the South Western System with annual sleeper cluster management and a resleepering cycle approximately every 5 years. The ongoing upgrade of the track structure, which includes larger rail and concrete sleepers, in the Toowoomba to Rosewood section of the South Western System, will contribute to increasing the tracks resistance to buckling. Curves in the South Western System are progressively being surveyed and monumented and re-lined, which enables better monitoring and management of rail stress. Importantly, new non-destructive methods/technologies for measuring rail stress have been investigated and trialled. The technologies which have been trialled produced inconclusive results and required further refinement. Further technologies are being investigated. Given the history of track buckling outlined above and the costs associated with repairs and derailments, these investigations are likely to yield commercial gains for both above operators and below rail managers which is most welcome.

2.6 Safety The safety benefits of rail are clear in terms of human life. “Freight rail is by far the safest form of land freight transportation, maintaining a superior safety record as compared to road based freight transportation.” 63 Rail transport is 7-9 times safer than road transport in relation to both passenger and freight. Switching long distance land freight transportation to rail will save up to 110 lives and $2.1 billion p.a.” 64 In addition to deaths caused by accidents, injuries create ongoing effects in terms of pain, reduced ability to work and the need for ongoing, expensive care and a potential diminution of quality of life.

63 Towards 2050: National Freight Strategy, The case for a National Freight Strategy and the Role of Rail, page 21

64 ibid

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Figure 24: Rail vs Road Accident Costs. Source: Deloitte Access Economics, The true value of rail, 2011, page 43

Namoi Cotton note that the move to export via truck increases labour costs, and safety concerns. Multiple labour shifts are required to handle the volume of trucks being unloaded and loaded. The current 2016 cotton crop is a 2.3 million bale crop, but when they get back to 5.0 million bales, (with a break in the current drought), the challenge will be enormous.65 Data efficiencies through rail, as more efficient to produce export documentation for 1000mt of lint in one movement, instead of 20 plus trucks. Safety on site is compromised with additional truck movements, compared to rail. The real costs of freight transport are difficult to measure, and many costs remain hidden. The external costs of road transport are often hidden, or borne by society as a whole, rather than individual transport users. The average external costs for road transport are more than four times higher than rail for freight, and are summarized for 27 European countries below. External costs can include climate change impacts, air pollution, accident costs, congestion, noise and eco system losses for example.

Figure 25: Average external costs for freight transport (excluding congestion) in 27 European countries, 2008 66

Overall in Australia, Phillip Laird has found that the total average external costs for the movement of one tonne of freight one kilometre in a non urban area by an articulated truck

65 Namoi Presentation, Rail Forum, Goondiwindi, 4 December 2015 66http://www.cer.be/sites/default/files/publication/FINAL_CER_MegatrucksBrochure_WEB.pdf (note that the 27 countries exclude Cyprus and Malta which do not have railways, but includes Switzerland and Norway).

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is 2.79 cents, and by rail freight is 0.24 cents. The average accident risk cost for freight moved by articulated trucks is cited as 0.85 cents as against 0.04 cents per tonne km for rail. Articulated trucks continue to be over represented in road fatalities in Australia – in 2012-13, articulated trucks were involved in 12% of Australia’s road fatalities when articulated trucks account for 3.2% of all vehicle kilometres driven. 67

2.7 Infrastructure quality As identified previously, the South Western rail infrastructure has been in place generally for over 100 years, and has served the catchment area well. The potential bottleneck at the Toowoomba Range is not yet at capacity, and there is ample scope, with cooperation for rail freight services to increase substantially. The 11 tunnels identified previously require examination in terms of flexibility of rollingstock options, as do any future requirements for cross over and passing loop extensions. Finding Any new rollingstock is also required to traverse through the suburban system and ensuring compatibility in this regard is required but not considered a major obstacle. Indeed, as demonstrated with the significant chickpea export in late 2015, additional rail services can and have been undertaken. Additional rollingstock is a current impediment that can be addressed, albeit with capital investment (in the order of $20 to $30 million per consist as an indicative range). Infrastructure may also be used more flexibly in certain circumstances, as demonstrated in late 2015 with the Main Line loading by Thallon Grains. This is not possible in all locations or where capacity is limited (which is not currently an issue on the South West Line). It is however, a potential lower capital, and / or short term solution to encourage utilization of rail. Loading and unloading points can be a barrier to entry. SSR (NSW) for example, is currently undertaking and looking to expand loading from the main lines as a way to compete with road. Effective facilitation of main line loading in appropriate circumstances where safety is not compromised could potentially bring additional business to rail and be considered a positive initiative by and for the Queensland rail industry. It is acknowledged that issues to be considered include for example: • Safety –and the associated liability – cannot be compromised, but can be regulated to

the specific circumstances. • Operational efficiency – trains may need to be turned to be able to return to port and

this may need to take place beyond the loading location. Loading/ unloading equipment may need to be moved into place and then moved out of the main line vicinity. Whilst augers work quite effectively in loading bulk wagons, there may be difficulties in loading into containers, although this is not considered a major impediment, given the various options available including forklift/crane loading for containers.

67 Philip Laird. "Too many loads on our roads when rail is the answer" Faculty of Engineering and Information Sciences - Papers (2014): 1-3.

Available at: http://works.bepress.com/plaird/17

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• Capacity – main line loading obviously takes up main line capacity. Finding It is recommended that main line loading, at least as a short term, proving measure be investigated, to compare costs and benefits. Minimum standards and agreements would be required and as such could be explicitly documented for future reference. It is also recommended that previous investment in efficient loadout facilities such as the GrainCorp Thallon facility be acknowledged and that such best practice be described in detail to establish the benefits of such investments in the future and where main line loading is not available. Obviously, there are benefits to such capital investment such as shorter loading times and enhanced storage facilities.

2.8 Competition Whilst there has been significant road - rail competition, Queensland does not have currently a highly competitive above rail sector outside of the bulk coal and minerals business. Queensland’s legislative framework enables above rail competition through the Transport Infrastructure Act (1994), and the Transport (Rail Safety) Act (2010). In addition, the Transport Infrastructure (Dangerous Goods by Rail) Regulation 2008 aims to reduces risk by giving effect to the standards and requirements of the Australian Dangerous Goods code. It also promotes consistency between rail and other modes of transport in relation to the transport of dangerous goods. Pacific National, GrainCorp, SCT Logistics GWA for example are some of the accredited rolling stock operators in Queensland. QUBE Logistics (Rail) received accreditation in December 2015. Not all entities are currently operating in Queensland, but demonstrably accreditation is not a barrier to entry. The lack of available rollingstock for the existing narrow gauge system has been cited as a barrier to entry to what are considered lower yield potential operations such as the South West Line (as opposed to the historically higher yield / higher volume coal business). As discussed earlier in this report, fit for purpose lighter weight rollingstock for narrow gauge rail is available. It is also, more likely to be far less costly to maintain than the existing aged rollingstock generally within the possession of Aurizon Rail as the incumbent (ex Government owned) rail operator.68 There remain concerns regarding the potential stranding of narrow gauge rollingstock and this suggests a potential role for Government. To some extent, this has been acknowledged with respect to the transport of livestock by rail, as outlined below. On December 31, 2015, the State Minister for Transport, the Hon Stirling Hinchliffe MP announced that the Department of Transport and Main Roads will undertake an open tender process for future rail services beyond 2017 in regard to the Regional Freight Transport and Livestock Transport Service Contracts. The State Government has agreed to purchase new cattle crates to provide more diverse transport options for customers and rail operators. Importantly, the new cattle crates, intended to be loaded onto a standard 40

68 It is noted that new operators face the issues of rollingstock maintenance and storage depots.

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foot flat bed wagon, will initially be purchased for Aurizon (the current above rail operator of the Transport Service Contracts), but will later become available for any future rail operators. The Parliamentary Committee which looked at putting more agricultural product on rail recommended that the Minister for Transport and Main Roads investigate the following options for facilitating above-rail competition for agricultural freight in Queensland: • leasing or other commercial arrangements that facilitate access to locomotives and

rolling stock to alternative operators • the waiving of, or rebate of, line access fees to incentivise third-party operators • opportunities for Queensland Rail to operate hook and pull arrangements for private

operators • leasing rail stock owned by Queensland Rail to private operators • opportunities for local government authorities to be involved in running train services

allowing them to underwrite, lease or even own rolling stock; and be involved in the operation of associated infrastructure such as yards, loading facilities and depots.

Further, the Committee recommended that the Minister for Transport and Main Roads assess the benefits of Queensland Rail re-entering the agricultural and general rail freight business, in the short term, through the provision of both the rolling stock and above-rail services until alternative operators are ready to provide services. It is understood that the (then) Queensland Government rejected this recommendation – “Queensland Rail will not be returning to the freight industry after the Queensland Government rejected a parliamentary recommendation… (Queensland Rail’s) re-entry into a rail freight operator role would be contrary to government objectives to make better use of the skills, capacity and innovation of the private sector.” 69

2.9 Heavy vehicle growth and productivity BITRE Modelling suggests that future heavy vehicle productivity growth is likely to be more muted. In particular: • In the absence of further heavy vehicle productivity enhancing regulatory reform, fleet-

wide heavy vehicle average loads are likely to increase by less than 5 per cent between 2010 and 2030, which contrasts sharply with the 40 per cent growth in average loads over the past two decades.

• Increased uptake of higher productivity vehicles available under Performance Based Standards (PBS), such as B-triples and AB-triples, is likely to have a relatively small impact on national heavy vehicle productivity since freight that can take advantage of these larger vehicles represents less than 20 per cent of total road freight. Nevertheless, these larger vehicle combinations offer important increases in heavy

69 The Queensland Times, 12 December 2014 - http://www.qt.com.au/news/government-rejects-call-for-qr-freight-ship/2482681/

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vehicle productivity and freight transport efficiency for transport operators, produces and consumers in rural and remote areas.70

2.10 Cost competitiveness of rail

Figure 26: Rail Transport relative cost curves. Source - GrainCorp presentation 4 December, 2015, research and modeling acknowledged to Partners in Performance by GrainCorp

For all port zones, there is a significant catchment area where road transport costs are competitive with rail costs. The freight differential is dynamic, with road rates showing more flexibility and variability than fixed rail rates. The catchment area can be upwards of a 200 km radius from port depending on the season and subsequent road freight rates. In Western Australia and South Australia, the threshold distance is greater than the median distance to receival bins (Table 23 below). Road freight has advantages including scalability, lesser regulation and ability to redeploy to alternate industries in poor seasons. 71

70 https://bitre.gov.au/publications/2011/files/report_123.pdf, page v

71http://www.aegic.org.au/media/25873/aegic_supply_chains_report_2014_v3.pdf

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Figure 27: Comparative grain rail costs and modal share across Australian States

“A high percentage of the Australian grain rail freight task is carried out by rail systems dedicated to grain. These are lower-efficiency lines with 16–19 t axle loads, compared with the 23 t axle loads on the interstate lines and the 23 t and upwards axle loading in the US and Canada. The 16–19 t rail lines run 2000–3000 net tonnes of grain per train. 72 In Canada, the transport distance from upcountry storage to port is about six times longer than occurs in Australia, so the transport cost is higher: $49 per tonne for Canada versus $28 per tonne for Australia. However, the per tonne kilometre cost of rail freight is almost five times lower: 0.03$/NTK in Canada versus 0.14$/NTK in Australia.73” In other words, the study of Canadian rail demonstrates the benefits of rail over longer distances, with higher net tonne capacity trains, however, at the lower range of train capacity (ie 2,000 t net tonnes per train), there is a suggestion that relative rail costs in Eastern Australia will benefit from productivity improvements. It is also noted that the actual costs (rates) outlined in Figures 22 and 23 above are at least 10 to 20 percent lower than what appears to be charged currently by both road and rail per tonne in the South West region. Grain, like most agricultural products, has a variable output across years, due to the weather, global demand and supply and prices for example. Pacific National as evidenced in the slide below, exports significant tonnages in eastern Australia, and whilst highlighting challenges of seasonality, has also highlighted a positive upward trend line of PN Export Grain Volumes for the period from 2010 to 2014 on rail.

72 AEGIC 2014, ibid page 18 73 The puck stops here! Canada challenges Australia’s grain supply chains, AEGIC, May 2015, page 4

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Figure 28: Export Grain Market. Source: Asciano Investor Day presentation, June 2014 (http://asciano.com.au/investors/presentations)

It is acknowledged that the trains transporting grain to Newcastle port in New South Wales are approximately 10 per cent bigger than those in Queensland on average, as described in Figure 25 below.

Figure 29: Average grain train payload. Source: Goondiwindi Argus, Narrabri mega train rolls into the record books, December 3, 2015.

The largest cost associated with freight that is not covered in prices is the difference in infrastructure maintenance costs. Rail lines used for freight are required to earn a return, while roads are publically owned and can operate at a loss. The public ownership of roads makes it difficult to accurately price the share of the damage inflicted and the share of common costs (construction and services such as street lights) that should be attributed to

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each vehicle.74 Inconsistencies in pricing such as this suggest that Government subsidisation of rail, albeit on a transparent or competitive basis, are justifiable.

2.11 Incentives for rail Queensland Rail notes “There are no approved plans to upgrade the system rather continue to renew the asset to the same specifications.” 75 The majority of Below Rail Revenue (approximately 90%) is source from the TSC (Rail Infrastructure) between Queensland Rail and DTMR (Translink). It is suggested that the benefits of incremental asset upgrades rather than renewal to the same specifications be considered, even if this has an additional minor cost. A study to detail the benefits of upgraded infrastructure (for example, to 18 TAL or higher) would also be of interest, albeit, it is acknowledged that significant funding may be required for a whole of line TAL upgrade if done all at once, with ill defined real benefits and costs at this time. “These payments enable Queensland Rail to maintain the system at a level sufficient for the operation of trains without having to seek commercial returns from customers.” 76 “It is difficult to find any successful unsubsidised rail intermodal examples anywhere in the world. In Fremantle the Western Australia Government subsidises rail by $43 per TEU to carry containers from the port to the main freight distribution area at Kewdale, by rail. Despite this only 47,000, less than 10% of the ports TEU, travelled by this mode. Little mention has made so far in the extensive analysis of both the Enfield and Moorebank intermodal terminal expansion projects about the financial viability of them as shuttle operations from the port. At the same time Patrick Rail closed its rail shuttle service to Camellia in 2010 and earlier in 2007, in Melbourne, CRT similarly closed its port rail shuttle run with German sourced sprinter trains. Queensland Rail Ltd has advised us that they have looked at rail shuttles from Acacia Ridge to the Port of Brisbane for a number of logistics companies but found that the volumes forecast were not sufficient. The costs, particularly in purchasing fast accelerating locomotive engines that could traverse the Citytrain network intermingled with passenger trains, were also too high.77 The Canada Transportation Act of 1996 instigated the emergence of many short lines in Canada. By removing some of the regulatory restrictions on the discontinuance of rail lines, the Act allowed Canadian National (CN) and Canadian Pacific (CP), the two national Class 1 freight carriers, to reorganize their operations by selling or leasing some of their low-density segments. The result was an exceptional growth in the number of short lines from merely 12 in 1996 to around 50 in 2009 (QGI Consulting, 2009)78. At present, short lines in Canada have aggregate revenues of more than $650 million, employ over 3,000 workers across Canada and operate around 20% of total railway track

74 Deloitte Access Economics, The true value of rail, 2011, page 40

75 Queensland Rail presentation, Rail Forum, Goondiwindi, 4 December 2015

76 Email from DTMR, dated 11 December 2015

77 Final Report - A study of the potential for dedicated freight infrastructure in Australia Department of Infrastructure and Regional Development October 2014 Update, Ernst and Young, page 43

78 http://ctrf.ca/wp-content/uploads/2014/07/49McKinstryBounajmInvestigatingtheSocialBenefits.pdf

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miles. They originate approximately 28% of total railway tonnage and carry about 5% of the industry’s total revenue tonne-kilometres (rtkm). Additionally, they pay over $30 million annually in property, fuel, capital, and income taxes. Through their ability to operate at lower average costs, due primarily to less restrictive labour agreements, short lines uphold low-density lines that would have otherwise been abandoned by the Class 1 railways, thus retaining local shipper access to the broader Canadian and North American railway network while providing a range of flexible services. 79 Finding When we consider the 25% of main line freight in North America which comes from ‘short lines’, and the signs of inter-local and inter-regional cooperation we can see in Australia, there is merit in considering a more regional approach to rail governance. As recent infrastructure development on the interstate lines makes rail freight in general more viable, so too the prospects for branch line freight will rise. Such a movement may prompt reconsideration of related issues.80 The Victorian Mode Shift Incentive Scheme (MSIS) is an incentive program that encourages industry to shift more containerised freight from road to rail. The aim of the scheme is to increase efficiency and cost effectiveness in the freight sector and reduce congestion on roads in and around freight and port precincts. In the 2014-15 State Budget, the Victorian Government invested $20 million over four years to continue the scheme. 81 In 2015, the current Minister for Public Transport advised that the MSIS “has been a program that was designed to encourage businesses to shift the transport of their export containers from road to rail. And we did intend initially to reprioritise funds. However, on coming to government we have since become aware that the previous government had signed a four-year funding agreement with four companies who were to receive the funding from that scheme.”82 The proposal has been supported strongly by regional Councils and other beneficiaries. The Queensland Government’s transport service contracts with Queensland Rail (for infrastructure) and Aurizon (for livestock and regional freight services) are also aimed at encouraging greater utilization of rail for agricultural and other regional products. In both cases, the success of these programmes requires further assessment to understand what works and does not work to ensure the best value outcomes are achieved with public funds. 83 A significant recent initiative of the Queensland Government includes opening up the livestock and regional freight contracts to competitive tender, at the conclusion of the

79 http://ctrf.ca/wp-content/uploads/2014/07/49McKinstryBounajmInvestigatingtheSocialBenefits.pdf, page 3

80http://www.csu.edu.au/__data/assets/pdf_file/0015/1127013/Regionalisation_rail_freight_Gray.pdf

81 http://economicdevelopment.vic.gov.au/transport/freight/mode-shift-incentive-scheme

82 http://wongm.com/2015/09/subsidising-rail-freight-victoria/

83 These (Qld) contracts were designed to provide equitable access to freight services and facilitate regional development and employment. However, the basis for these contracts beyond 2015 require further monitoring and review to ensure they respond to industry and community needs, deliver value for money, and reflect emerging rail developments. (Moving Freight, 2013, DTMR, page 36)

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current two year contracts and the State’s agreement to purchase new cattle crates to provide more diverse transport options for customers and rail operators. Importantly, the new cattle crates, intended to be loaded onto a standard 40 foot flat bed wagon, will initially be purchased for Aurizon (the current above rail operator of the Transport Service Contracts), but will later become available for any future rail operators. Above rail competition has been raised as an important contributor to the future utilization of the branch rail network in Queensland. Genesee and Wyoming Australia Pty Ltd84, a subsidiary of Genesee and Wyoming based in North America, for example, operates grain lines in South Australia, in addition to the railway line that runs from Tarcoola to Darwin. Pacific National operate grain trains in New South Wales and coal trains in Queensland. Southern Shorthaul Railroad (SSR) operates an intermodal freight service for exports though Port Botany. Qube Logistics is currently operating and rail accredited in New South Wales, Victoria and South Australia.85 Qube Logistics and GrainX /Hendon Inland Port announced an intention to look to continue to work together in December 2015 with a view to developing the Hendon Inland Intermodal Hub in the location below.86

Figure 30 - Image – Courtesy of GrainX Australia 87

84 http://www.gwrr.com

85 http://www.qube.com.au/logistics/services/rail-services

86 Rail Forum Goondiwindi, 4 December 2015 87 http://grainx.com.au/index.html

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An intermodal facility is also envisaged by InterlinkSQ88, 13km west of Toowoomba, as outlined in the image below.

Figure 31 - Image Courtesy of InterlinkSQ 89 The lack of suitable rollingstock has been cited as a key barrier to entry for potential rail operators within Queensland. This has been exacerbated by the requirement to source rollingstock that would operate successfully on the light 15.75TAL track. For new rollingstock in the order of $20m to $30m for a train consist, the maintenance and operating costs will be less than maintaining and operating aged rollingstock. The new equipment is also likely to be safer, will have lower emissions and overall, greater efficiency and ease of use. The road industry since the 1990s has demonstrated great innovation in terms of more efficient, higher load, lower impact vehicles. The rail industry needs to actively foster and implement the incremental and step change improvements for which Australia has been known for over time.

88 With AQIS Clearing and Customs bonding facilities proposed for the site and a planned rail shuttle service to the Port of Brisbane, InterLinkSQ is ideally positioned as an Inland Port. 89 http://www.interlinksq.com.au/

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Finding To reduce the barriers to entry in terms of up front capital, there may be a role for Government to invest, potentially some of the funds used currently for TSCs, or invest on the basis of future enhanced returns (or lower subsidization or the marginal decrease in road maintenance and adverse social implications of greater road use). In any event, the review of the utilization of scarce government resources and directing those resources to their best use can only be positive. In terms of rollingstock leasing, CFCLA “operates the largest independent lease fleet of locomotives in Australia. The diverse fleet ranges from modern high horsepower mainline locomotives to smaller lightweight branch line and shunting locomotives.”90 CFCLA’s “combination of intermodal and bulk carrying equipment enable us to provide options for any type of commodities. The varied selection includes grain hoppers, 2-slot container flats, 3-slot container flats, container wells, ballast hoppers and bulk ore hoppers. Approved for operation Australia-wide, and gauge convertible for specialist movements, the CFCLA rollingstock fleet is the most versatile option for rail transport in the Australian rail market today.”91 A second company, Consolidated Rail Leasing “is committed to being at the forefront of asset and financial management solutions for Australasian rail markets through the provision of innovative and tailored rolling stock leasing solutions for our customers. “92 With respect to government funding, the Transport Service Contract regime is a key lever to influence the enhanced utilization of rail services for freight services. During the year, DTMR “began Implementing findings of the Parliamentary Inquiry Agricultural Rail Freight completed in June 2014, including: • finalising negotiations for a new Livestock Transport Services Contract (LTSC) to 2017

with the incumbent operator (with the view to moving to an open market tender process for a future LTSC)

• finalising negotiations for a new Regional Freight Transport Services Contract (RFTSC) to December 2017 with the incumbent operator.”93

These two actions have been finalized, as outlined throughout this report. The Rail Transport Service Contract between the Department of Transport and Main Roads and Queensland Rail commenced on 1 July 2013. This is a consolidated contract through which the department purchases services from Queensland Rail to enable: • Citytrain services

90 http://www.cfcla.com.au/locomotives.htm

91 http://www.cfcla.com.au/wagons.htm

92 http://crleasing.com.au

93 http://www.tmr.qld.gov.au/About-us/Corporate-information/Publications/Annual-report/Annual-Report-2014-2015/Our-performance/Objective-2/2-1.aspx

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• Traveltrain services • Rail Infrastructure services.

It is currently a one year contract with an option to renew. The $1.6 billion per annum of funding provided under the Rail Transport Service Contract enables Queensland Rail to provide rail passenger services in suburban and regional Queensland, as well as ensuring the Queensland Rail managed rail network can support safe and reliable passenger and freight services in line with the needs of both community and industry. The Rail Transport Service Contract specifies minimum service levels for performance of both train services and the network. In addition to this, it includes a capital program to ensure the ongoing investment in existing rail infrastructure as well as provision of rail services in to the future. Take or pay contracts have been raised as a barrier to entry for utilization of rail. In 2014, the Queensland Resource Council noted that 25 percent of the coal currently produced in Queensland is being done so at a loss, including half of all thermal coal production and that ‘Some of these mines are only staying open because production is a more palatable option than closing operations locked into transport costs levied on a take or pay basis.94 All parts of the supply chain require a sustainable base from which to operate in terms of financial performance. This has often included an element of take or pay. As noted by GrainCorp, there is an element of take or pay contract in effect for the train consists that GrainCorp have contracted. It is likely that GrainCorp are covering the fixed costs of the three trains for the seven years of their current contract with Aurizon. The use of ‘take or pay’ contracts in a non-competitive environment can be detrimental to agricultural users because agricultural commodities are seasonal and volumes variable making commitments to long-term transport contracts high risk. No-one in the agricultural industry can sensibly sign a long-term take-or-pay contract if their product is determined by weather patterns, for example95 The Transport, Housing and Local Government Committee which prepared the report “Rail freight use by the agriculture and livestock industries noted their concern” that “the preference by above-rail operators for standard “take or pay” contracts is having a direct impact on the modal choice of the agricultural sector and that it is a significant disincentive to potential rail use. Even large contractors such as GrainCorp are finding it difficult to fulfil its obligations under its current seven year contract. The Committee is concerned that ‘take or pay’ contracts can be used to, in effect, discriminate against agricultural commodities moving on rail. The Committee is interested in the more flexible approach applied in Western Australia where a proportion of the contract is “take or pay” to provide the operator with a level of security while allowing more flexibility in terms of delivering the remainder of the contract. The Committee is of the view that above rail operators would be more likely to be more flexible in their approach if there was greater competition in the above rail sector in Queensland.“96

94 https://www.qrc.org.au/01_cms/details.asp?ID=3441 95 Port of Brisbane, Hansard Transcript, 25 Feb 2014:9 as cited in Transport, Housing and Local Government Committee Report, page 64

96 page 66, Parliamentary Committee into Rail freight use by the agriculture and livestock industries, 2014

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Finding Greater innovation and some flexibility with respect to freight rate contracts is an area of potential advantage to above and below rail operators in Queensland in the near future. A certain proportion of costs may always be required for take or pay, to provide certainty not only to the above and below rail asset owners, but also for the producer who requires the transport. This issue also raises again the need for both road and rail transport for agricultural products. Rail is likely to be able to focus on base loads, potentially with a hub and spoke approach. Road transport would support local transport in this approach and also provide the variable above base load production. The Inland Rail proposals which are currently the focus of discussion are envisaged to complete the backbone of the national rail freight network between Melbourne and Brisbane via regional Victoria, New South Wales and Queensland. A Melbourne to Brisbane standard rail connection has been discussed for many years. Two proposals were presented to the Toowoomba Transport Symposium in August 2015 – the National Truck Rail proposal and the ARTC Inland Rail Plan, to which the Federal Government allocated $300 million to get pre-construction activities underway, including detailed corridor planning, environmental assessments and priority land acquisitions. This work is continuing. It is anticipated that an inland railway will deliver freight out of the congested Sydney network, saving approximately 10 hours of travelling time. Trains travelling on this new, more direct route will travel at up to 115km/h, with a goal of transitting between Melbourne and Brisbane in under 24 hours. The Australian Rail Track Corporation (ARTC) proposed 1700km route leverages the earlier investment in the Australian rail freight network following the existing interstate line from Melbourne to Illabo. It then uses a combination of capacity improvements, major track upgrades and new track via Parkes, Moree, North Star, Oakey, Toowoomba, Gatton and Rosewood. The ARTC was appointed in 2014 to develop a business case and 10 year delivery plan for Inland Rail. ARTC lodged a business case with the Australian Government in September 2015. The full Inland Rail Implementation Group Report is available online.97 The Federal Government has advised it will consider the report in the context of the 2016 Federal Budget.98 The Queensland State government has advised of in principle support for the Inland Rail project but this is subject to there being no additional cost, significant risk or opportunity cost to the state government. Further, the state advises that Inland rail should adopt the state’s current strategic rail alignment (Gowrie to Grandchester and Southern Freight Rail Corridor). The state wishes to maximise the economic benefit to the state from inland rail. The inland rail proposal includes a dual gauging option and notes the importance of a link to the Port of Brisbane proper.99 It is an important future issue to be considered, in the

97 www.infrastructure.gov.au/rail/inland/

98 https://inlandrail.artc.com.au

99 Email 11 December 2015 from DTMR

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future in terms of leverage for the existing narrow gauge lines, but not to hold up utilization and investment in the existing network which has at least ten years of service to provide before it may indeed become an important branch line to an Inland Rail route.

2.12 Consultation, Collaboration, Conversation DTMR advises that it is actively engaged with agricultural producers and regional councils to facilitate discussions related to improving regional supply chain performance and productivity, including integrated options for road and rail logistics. 100

The successful operation of three trains for Thallon Grains in November 2015, has demonstrated the success that can be achieved when parties (in this case, GrainCorp, Aurizon and Queensland Rail) collaborate with, in this case, the desires of a trio of major grain growers in the Thallon region. It is, subject to anti competition legislation, proposed that the South West rail region catchment producers collaborate in regard to smoothing out where practicable, train utilisation each year, and increasing freight volumes for rail. As noted previously, key questions to answer to facilitate more freight on rail in a practical sense include: • What products are produced? • Where does this produce need to be transported from / to and in what time frame? • When does it need to be moved and is it time critical? With the above information, a transport solution can be designed which meets the requirements for the produce to arrive at the right destination in the appropriate condition in the right timeframe. At a regional level, and to achieve best use of rail, the best solution arrives when competitive transport operators are able to combine all of the information for all of the commodities that need to be moved across the year.

100 Email DTMR 11 December 2015

Queensland’s ageing road and rail network and its increasing maintenance demands are important considerations in how the state manages the increasing freight demand. There are also parts of the network such as bridges or road networks which were not designed to accommodate the demands associated with higher payload trains and heavy vehicles. Future freight network investment will therefore require greater collaboration from government, stakeholder and industry in order to maintain and develop the freight system. This will be critical to maximising state, federal and private sector funding sources and ensuring that freight investment is coordinated, delivers value for money and supports future freight needs. It will also require continuous alignment and balancing of individual stakeholder priorities, issues and interests. (“Moving Freight” December 2013, DTMR, page 26)

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Enhanced collaborative arrangements have been suggested by various parties consulted in preparation of this report. Pacific National for example, identifies the potential benefits to a collaborative approach to the South West rail utilization and in particular suggests establishing a group similar to the Dalrymple Bay Coal Chain Members Agreement and Charter. The introduction of a Dalrymple Bay Coal Terminal (DBCT) coal chain coordinator (DCCC) was approved by the ACCC in 2015, to improve short term planning and execution in the Goonyella system In addition, Pacific National works with other supply chain stakeholders such as Aurizon Network and the Ports to manage alignment of planned maintenance outages within this system.101 It is understood that a South West Rail Users Group including coal producers (New Hope being the major user), GrainCorp, and Aurizon is also in place and active. A sustainable, effective group for the future, focussing more on growth rather than current operations could include: • Shipping Company representative (for example, from Shipping Australia); • Port of Brisbane representative; • Queensland Rail as infrastructure owner; • Department of Transport and Main Roads as provider of below rail subsidy, regulator

and policymaker (including custodian of the passenger priority requirements); • Rail Operators – realistically this would normally be current rail operators, however

given the issues with a lack of competition and significant information asymmetry creating barriers to entry, potential operators (who operate elsewhere in Australia)

101 http://asciano2014.reportonline.com.au/sustainability-report-2014/performance/our-progress

The growers who got a private train by Andrea Crothers, Queensland Country Life 16 November, 2015

Two large southern Queensland chickpea growers have waved off their first private train load this week, destined for the port of Brisbane. The haulage was one of three 1700-tonne loads, totalling 5100t, which would be delivered privately from Thallon by rail this year, in a bid to get personal harvests running more efficiently. It’s the result of a partnership between Andrew Earle, Bullawarrie, and Ed Willis, Bullamon Plains; two of the biggest growers to supply grain to the Thallon GrainCorp depot. Mungindi grower Malcolm Harris is also involved in the group, but didn’t send any product on this occasion....Whilst it’s been a lengthy process to get to this stage, Mr Earle said he sees rail as becoming a more viable transport option for growers in years to come. Currently, the cost of rail out of GrainCorp is $55/t. In the long term, Mr Earle hopes to reach a savings of $20/t through site storage and rail. “Achieving $40/t when the potential road rate is $60/t – that’s the potential savings we’d like to see,” he said. But Mr Earle said bringing down overall running costs will require more farmers choosing rail over road trains for multiple commodities, seeing the “big picture” as a shire freight hub. Source: http://www.farmweekly.com.au/news/agriculture/cropping/general-news/the-growers-who-got-a-private-train/2748019.aspx

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may benefit from involvement at least at the strategic, if not the operational week to week level;

• Users such as New Hope Coal and GrainCorp; • Representative of the agriculture industry in the catchment area – potentially sourced

from the Department of Agriculture and Fisheries (Qld). Such a group may require ACCC clearance. An organisation such as the Queensland Transport and Logistics Council may also be considered to be included in the consultation group. Mining outputs often provide the backbone of a successful railway line but with tough economic times for this industry can also benefit from cost sharing with greater utilization of the railway. The experience of coal companies transporting coal through to the Port of Brisbane will be of great benefit to a focused group. This group would be best suited to focus on growth and ensuring appropriate accountability of parties to encourage and effect increased appropriate utilization of rail. It may also benefit from independent participation and a monitoring role.

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Appendix A: Outline of consultation With sincere thanks to those people listed below. Many people who also endured my endless questions over the phone or in person, with much patience, and are not named below – thank you also very much. Councillor Donna Stewart, Mayor, Balonne Shire Council Councillor Graeme Scheu, Mayor, Goondiwindi Regional Council Councillor Jo Kellock, Balonne Shire Council Messrs Michael Lucy and Graham Wilson, from the Department of State Development Ms Leanne Brosnan, for the promotion of the Thallon region Mr Ben Suttor and Mr Phill Ryan, Queensland Cotton Mr Paul Brimblecombe, Cubbie Ag Mr Andrew Earle and Mr Bill Willis, Thallon Grains Mr Rob Reardon, Reardon Farms, Worral Creek Mr Angus Woods, Woods Group Mr Phil Sloan and Mr Roger McCumstie, Cargill Messrs Shane McGregor and David Titterton, Namoi Cotton Mr Peter Brodie, PB Agrifood Messrs Chris Hood and David Brown, GrainX Dr Ben Lyons, Toowoomba Surat Basin Enterprise Mr Angus McKerrow, University of Southern Queensland

Mr Peter Corish, Corish Farms Messrs Glen Doyle, Andrew Matthews, Chris Long, Queensland Rail Messrs Craig Acutt, Patrick Coleman and Sean Mowen, Aurizon Mr Rob Mills, Pacific National Ms Michelle Reynolds, and Mr Blair Batts, InterlinkSQ Messrs Jock Benham and Kevin Doggett, GrainCorp Mr Damian Colcough, Department of Transport and Main Roads Mr Sam Fisher and Mr Gavan Clarke, New Hope Coal Messrs Peter Keyte, Andrew Rankine and Andrew Brinkworth, from Port of Brisbane Corporation Mr Geoff Dalgliesh, Chairman Shipping Australia, Queensland Branch Mr Rob Lomann and Ms Michelle Hinckfuss, Department of Agriculture and Fisheries Mr Luke Arbuckle, various roles – grain industry Mr John Randall, Balonne Shire Council Mr Bernie Morris, Lowes Petroleum Mr Michael Marlow, Building Queensland Mr Warren Phillips, RoadRailPort Messrs Brett McLennan and Frank Szanto, Downer Group (Rail) Mr Cameron Jackson, CRT Group Representatives, too numerous to name, who attended and in many cases, presented at the Goondiwindi Rail Forum held on 4 December 2015

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Comments raised with respect to rail and road throughout consultation are aggregated and provided below. Many thanks must go to those who provided detailed, specific information on a confidential basis – this report has sought to retain that trust. Aggregated, general comments are therefore provided in dot point form below:

• Rail must be competitive with or more economical than the road model. We need a combination of road and rail.

• Double handling incurs costs, risks damage to products and can increase transit time.

• Reliability – just such an important focus for users of transport services. • Control is the key – dangerous goods, the chain of responsibility, require

care and taking responsibility when you transport our goods. • There are hidden benefits to rail – Is safety is a major advantage for rail. • Timely, efficient delivery has to be mentioned – we cannot afford to lose

market share through failure of delivery. We are in a highly competitive global market.

• Parallel road and rail services are probably what we are looking for. Rail can carry the base load.

• The road model is currently more efficient, and cheaper – the dollar is king. • If only rail operators and potential users could see what I see – risk and

opportunity are two sides of the same coin. • There are two issues with rail – the first is cost, the second is capacity. • We don’t like trucks on the road, we would like to see more on rail. • Longer trains are the answer, but there is a lack of support, interest for this. • We need to utilize the rail paths we have more intensively. • More coal could mean another operator, and (much needed) competition. • There are significant barriers to entry above rail. • We need to support rail - and use it. • It’s hard to trust rail after all we have been through in recent years. • Uncertainty regarding the tunnels is so unhelpful. How can we invest? • The health of the economy relies on the health of our transport system. • One of the biggest issues Queensland faces is monopoly - we must have

alternatives. • Everyone grizzles about narrow gauge but coal makes it work – shipping

8mtpa to the port. • Ag whinges, but can’t muster more than a million tonnes – we (the ag

industry) need to support rail. • They say they are supportive, but commitment and actions speak louder

than words. • Where is the innovation, the trials for new, lighter rollingstock? • Let’s look above rail to solve what have been considered historically to be

expensive below rail infrastructure problems. • The infrastructure is, in reality, pretty much what we have now on the South

Western line, its too expensive to rebuild, let’s work with what we have and prioritise our scarce dollars.

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• Where is the research on the tunnels – do we need them lowered, and if so, by how much really?

• There is only so long the rail window will be open, once it shuts, we all lose. • We need competition particularly above rail. Its not enough to have one

railway operator who competes with road only. • If all the elements of the transport chain, from the shipping companies to

the growers wanted the best transport solutions, and worked on it collaboratively, it could happen, and both road and rail and shipping too would benefit.

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