2015 Cover Stories: Stevenson Logistics

By: Steve Skinner


One of Australia’s oldest trucking families is now also into rail freight in a big way, out of a port that leads the nation in moving containers by train

2015 Cover Stories: Stevenson Logistics
Dynamic duo: Intermodal’s Darrin Smith, left, with Stevenson’s Ben Higgins.

 

In decades past, we used to hear a lot about road versus rail; ‘Us versus them’. It seems crazy now but there used to be all sorts of restrictions on what freight trucks could cart within state borders.

For example, state governments used to try to shelter their rail monopolies, and truckies used to try and get around the protectionist rules, often in the dead of night.

But the modern mantra seems to be all about trucks and trains working together.

That’s the goal at the Port of Fremantle in Western Australia, and at the centre of it is one of the west’s best-known names in transport.

George Stevenson set up a wharf cartage business at Fremantle in the 1930s with a single American ‘Fisher’ truck running on solid tyres.

Today, Stevenson Logistics is still based at the port and is chaired by George Stevenson’s grandson Jim, whose brother and sister also works in the business.

The Stevenson family also owns rail operator Intermodal, which runs trains between the port and Forrestfield, near Perth Airport to the north-west.

Common ownership

Forrestfield, with neighbouring Kewdale, Hazelmere and Welshpool, forms part of Perth’s biggest transport and logistics hub, which seems to be growing rapidly.

There are some massive depots and distribution centres (DCs) out there, run by the likes of Linfox, Coles, Woolworths and Bunnings.

Intermodal has some big names in transport among its 20-odd customers, including Toll, Linfox and K&S.

On the import side of things — with Toll as the biggest customers — containers are railed from the port to Forrestfield, then picked up by trucks for local storage and distribution.

Freight could be coming from overseas, or from the east coast of Australia — for example, beer and steel.

Intermodal’s biggest export customer, and its first client back in 2007, is giant WA grain exporter CBH.

CBH rails bulk grain to Intermodal’s terminal at Forrestfield, where it is transferred to containers and sent to the port.

CBH also has a massive bulk export grain loader down the coast at Kwinana, but apparently bulk can’t keep up with demand, is slower, and there are niche markets that don’t want whole shiploads of grain anyway.

With CBH as a customer, container trains from Forrestfield to Fremantle are usually full, but there is excess capacity on the return, import trip.

Intermodal is appealing to east coast consignors, who are currently benefiting from lower coastal shipping costs, to use its service.

It’s also trying to get the message out to all transport companies in the Forrestfield/Welshpool/Kewdale/Hazelmere hub area.

"It makes sense for a lot of the transport companies to use the train, but some of them don’t quite see that," Intermodal general manager Darrin Smith, who is also general manager of transport at Stevenson, says.

"The big ones seem to, but the little ones are a little bit harder to convince.

"I think they are just set in their ways."

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Major milestone

In June this year, Intermodal celebrated carting half a million TEU since it began operating the service in 2007. A TEU is a ‘20-foot equivalent unit’.

In other words a 40-foot  (12m) container, taking up the full length of a single semi-trailer, would be classed as two TEUs.

The Intermodal trains each currently carry 90 TEU out of the port. That compares with an average of 1.3 TEU per truck.

There are two trains a day Monday to Friday and sometimes more, and two trains over a weekend.

The WA Government, which contracts Intermodal to manage the North Quay Rail Terminal at Fremantle, estimates the trains take the place of about 100,000 truck trips per year.

That figure is arrived at because trucks often do empty running one-way. The train doesn’t.

"Every container that travels by rail reduces the impact on our road system," Stevenson Logistics chairman Jim Stevenson said at the time of the 500,000 containers milestone.

"More trucks off the road means reduced road congestion, leading to improved road safety, reduced greenhouse gas emissions and minimised road infrastructure wear and tear."

For these sorts of reasons every state government in Australia says it’s trying to increase the number of containers that leave their ports by rail.

From almost a standing start at the turn of the millennium, Fremantle is now the most successful, with the current rate at about 15 per cent and a target of 30 per cent.

Fremantle was actually running at 18 per cent for the December quarter last year, according to Waterline port statistics produced by the federal Bureau of Infrastructure, Transport and Regional Economics.

That compared with Adelaide and Sydney at 13 per cent; Melbourne at 11 per cent; and Brisbane at just 5 per cent.

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Benefit cost

There’s no doubt about the advantages of rail cartage out of ports, which include less road congestion for the trucks that still do the vast majority of the work.

That’s why the WA and federal governments between them recently invested more than $65 million in rail at Fremantle.

This included a passing loop and extending the North Quay Rail Terminal from 400m to nearly 700m.

But the catch is until Intermodal builds up greater freight volumes and therefore economies of scale, it can’t yet match road transport on price.

Double handling is a big factor in that.

That’s why the WA government subsidises the service, to the tune of $45 a box at present, reducing to $35 next year, and $30 in 2017.

But the total subsidy is capped at $15.5 million over three years, and Intermodal says it is negotiating with the government on the issue.

Intermodal says the bottom line for Fremantle customers is it costs about the same to transport a container by rail or road, once you take the subsidy into account.

Meanwhile, to further help rail, as part of port tenancy agreements with transport companies such as Toll, Qube, Australian Container Freight Services (ACFS)/Patrick and Stevenson, the government stipulates that they have to move 30 per cent of ‘contestable’ containers by train.

That includes to the Forrestfield hub area.

Of course there’s one major area where rail usually can’t match road, especially for short distances — speed.

The road trip from Fremantle using the Stirling, Leach and Roe highways takes about 45 minutes, compared with about one hour and 10 minutes on the train — which, incidentally, is pulled by big national rail freight operator SCT Logistics.

The round trip for both is about 40km.

But transit time is not the main issue.

Intermodal concedes because of factors such as extra handling at its Forrestfield end, and timings at the port, it’s delivery times can sometimes be, say, 12 hours behind a truck running direct from port to customer. (On the other hand, Intermodal trains cart a lot of freight after hours, and don’t have to queue like trucks.)

The company says the slower overall speed means the train service is best suited to big volumes of goods that are used to fill inventory or are non-perishable, for the likes of steel companies, paper and packaging producers and the big supermarket chains.

After all, even in this age of ‘just in time’ logistics, not all freight needs to be delivered immediately.

Intermodal says a DC in the hub area pulling 30 containers a week off the docks, could put them all on the one train, rather than trying to organise more than 15 trucks.

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Tough trucking

Speaking of trucks, Stevenson Logistics has more than 20 prime movers, most of them Freightliners.

The company also uses up to half a dozen subbies and has large undercover and container storage capacity at its big new site at North Quay, next door to Toll.

Stevenson is Intermodal’s biggest customer when you take both import and export into account.

The train frees up the sister company’s trucks for other work.

Stevenson’s biggest export is containerised square hay bales for Japan and Korea, trucked into Forrestfield in double road trains.

Stevenson also continues the wharf cartage business it’s been involved in for 80 years, and the official long-term forecasts for container trade are ever upwards for all Australia’s ports.

However, with the end of the mining construction boom in WA, overall import container volumes have dropped there by about 8 per cent for the 12 months to September, according to figures quoted by the company.

Competition is tougher, and rates and sales are under pressure, while of course, costs keep rising.

To help keep on top of things, Stevenson has developed its own computer software system to keep track of containers, fleet servicing schedules and just about everything else too.

Driver fuel usage, idling times, hard braking events, revving, maximum speeds and so on are monitored, and the company maintains drivers enjoy the competition of trying to increase their rankings.

They are paid above the award on individual contracts, and can also earn bonuses partly depending on what the computer spits out.

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Meanwhile, the software can also measure the costs of every leg of every job — depreciation on both prime mover and trailer; tyres; rego; insurance; wages and so on.

That means the company can put in accurate quotes that will make, not lose, money.

"There are tight margins and definitely stiff competition in this current market," Stevenson Logistics CEO Ben Higgins says.

"A lot of the clients are asking to re-tender jobs, and it’s essential that when we go back with prices that we are confident with, we can also be confident we are making a profit, and not in effect buying work."

Smith adds: "Your shippers are pushing for ‘cheaper, cheaper’.

"Unfortunately there are a lot of transport companies out there that are getting more desperate, so they’re actually dropping their rates in dollar terms, so the shipper goes ‘you beauty’ — they’re not going to knock it back.

"But we understand our costs, we have good information, whereas a lot of them are just going on ad hoc, gut feelings, and wouldn’t have a clue whether they’re actually making money or losing money.

"It’s your smaller operators that just shoot from the hip."

Weight of Chain

Still on the truck side of things, Stevenson Logistics says WA’s new chain of responsibility (COR) regulations on weights and load restraint are having an impact.

Close to home, the company has put all its drivers through load restraint courses.

On a wider level, the company says the new legislation has prompted those exporters who were previously doing the wrong thing — and often leaving drivers to wear the rap — to declare their weights correctly.

"If the driver gets pulled up overweight, and it’s not declared correctly, they [Department of Main Roads officers] will go back to the person who declared it and they’re in trouble," Smith says.

"Import is a different kettle of fish because, if it’s coming from China, they’re not too restrictive on what they put down, so shipping lines just give you what they get, and we’ve just got to double-check it."

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Big decisions

At the time of writing there are several balls in the air with possible implications for not only Fremantle rail cartage, but WA freight transport in general.

One is the battle for control of logistics giant Asciano between Qube and Brookfield.

Asciano owns the Patrick stevedoring and Pacific National rail businesses.

Meanwhile Brookfield owns the rail line that Intermodal runs on, and pays access fees for.

On a national level, the Australian Competition and Consumer Commission is concerned about the prospect of Brookfield controlling rail lines as well as the trains that run on them, and is announcing a decision on the Asciano takeover attempt in December.

Also there’s a lot of political controversy over Perth’s ‘Freight Link’ freeway plan between Forrestfield and Fremantle, which we won’t go into here.

Suffice to say, the most recent development is that WA premier Colin Barnett announced in November that the government is postponing the final link between the end of the Roe and the port.

Then there’s the related possibility of the state government allowing higher productivity 36m ‘40-40’ trucks between Fremantle and Forrestfield.

That’s two trailers carrying two 40-foot (12m) containers, or four 20-footers (6.9m).

Under the current 27.5m length restriction, trucks can only carry one 40 footer and one 20 footer — or three 20 footers — on what are called ‘pocket’ road trains.

These are interesting combination that you don’t see often in the east, like a B-double in reverse but with a dolly between the trailers, which allows for extra weight.

Finally, the government has flagged the privatisation of Fremantle port; and there is a long-term plan for a second, outer harbour at Cockburn Sound south of Perth.

 

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