Road to grow faster than rail, but fuel won't help

Road and rail transport to grow steadily, but rail still financially-uncompetitive and infrastructure-constrained

Road transport will grow more than 3 percent by 2030, still faster than the financially-uncompetitive and infrastructure-constrained rail freight sector.

The new figures from the federal Bureau of Infrastructure, Transport and Regional Economics (BITRE) show road transport growing by 3.2 percent and rail freight growing by 3.1 percent.

The Road and rail freight: Competitors or complements report summarises the results of recent research into the economics of road and rail freight, showing rail freight rates are still not competitive with road transport.

According to the report, road freight is "relatively unresponsive" to road and rail freight rates, "except on long distance corridors where road has the smaller share of freight".

Rail is generally more affected by rate changes.

"Rail freight demand is relatively more responsive to freight rate variations than road, but demand is still inelastic for all but medium-distance corridors, such as Melbourne-Brisbane, where rail has greater potential to attract freight from road," the report says.

Also included in the report is the outlook for both modes of transport between 2005 and 2030, which are both expected to grow at a steady pace each year.

Growth in road freight is shared between both urban and long distance delivery.

"Where the two modes compete, road and rail freight growth will depend not only on economic activity, but also relative modal costs," the BITRE says.

It says the Federal Government's $2.1 billion investment planned for the north-south interstate rail line will reduce transit times, improve reliability, increase capacity and reduce ongoing track maintenance costs.

"However, continued investment in the Hume and Pacific highways will help reduce transit times and reduce road freight operating costs, countering somewhat the improvements on rail," the report says.

Fuel prices - expected to jump much higher as global economies recover from recession - could hit road transport in the future.

"Freight transport input cost trends are likely to be even more influential on future modal competition, most especially fuel prices," the report says.

"For oil prices around US$100 per barrel, road freight costs are above door-to-door rail freight costs across all Australian inter-capital corridors.

"Sustained oil prices at around this level would significantly boost rail’s competitiveness and intercapital modal share."

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