Logistics News

Logistics coalition urges NSW container port rail incentives

NSW advised to learn from WA success and change its Port Botany strategy


With industries seeking more heft on issues in common, a new alliance is pushing for container port rail modal share in New South Wales.

Some of Australia’s largest freight and logistics industry groups are calling for a customer incentive scheme for exporters and importers to help meet the state government’s 2021 rail mode-share target.

The new grouping comprises Freight on Rail Group (FORG) of Australia, Australian Logistics Council (ALC), Freight and Trade Alliance (FTA), the  Australasian Railway Association (ARA) and individual port rail freight operators.

ALC board member and Qube Holdings MD Maurice James views Port Botany rail mode share as stagnant, largely as a result of government issuing more permits for high productivity vehicles (HPVs) to access the Sydney metropolitan road network, including operating on WestConnex.

“By incentivising HPVs, government is perversely derailing their own policy to grow rail’s mode share target – at a time when Sydneysiders want safer roads and less traffic congestion and vehicle emissions,” James says.

James sees government policies making it harder for rail to compete in the metro import container market, which is primarily within a 40km-50km radius of Port Botany.

“All this is doing is adding more and more trucks to Sydney’s road network at a time when the NSW Government rail mode share target continues to stagnate – now at 17.6 per cent – versus an official target of 28 per cent by next year,” he says.

Now the NSW government had let the “HPV genie out of the bottle”, it will be very difficult to get back on track without a container rail incentive scheme in place.

“The NSW government’s approach to HPVs is now undermining its own policy target on rail mode share, not to mention limiting the effectiveness of the $1.5 billion investment the Australian government and industry is making to enhance rail freight infrastructure and operations at Port Botany and within the Sydney metro region,” James says.

Qube joint venture Patrick Terminals forecasts more than 50,000 HPV movements through its Port Botany container terminal in 2020 against 220 in 2016 and 30,000 in 2019 – a 23,000 per cent jump in HPV movements in only four years.

FORG chair and Pacific National CEO Dean Dalla Valle points to the success of the Western Australian government’s Port of Fremantle container incentive scheme, which has delivered the highest rail mode share in the country at above 20 per cent.

“Prior to introduction of the incentive scheme at the Port of Fremantle in 2006-07, rail mode share was a meagre two per cent,” Dalla Valle says.

“The scheme underpinned growth of rail’s mode share which is now above 20 per cent – the highest in the country.”

The scheme allows a $50 per TEU incentive to flow directly to the importer and exporter, with the WA Department of Transport conducting audits to ensure savings are passed on to rail freight clients.

Last year, the WA government hailed that states performance, saying the overall average in 2018-19 was 20.2 per cent, up from 15.5 per cent just before the subsidy was introduced.

The performance comes as New South Wales saw Port Botany’s rail freight percentage fall from 19.4 per cent two years ago to 17.7 per cent.

Read about the comparison of rail performance at Fremantle, here

Dalla Valle points out that any rail incentive scheme could be gradually phased out once the government container volume target at Port Botany was exceeded; but there first needed to be a catalyst to help drive modal shift – to generate a flow of containerised freight back onto rail.

“At a time when the Covid-19 crisis has put into sharp focus the criticality of efficient rail freight supply lines, it is imperative for the NSW government to demonstrate a commitment to achieve its own transport mode share target for container volumes in and out of Port Botany,” he says.

Dalla Valle says that, in the past, trucks would complete the ‘first and last mile’ between intermodal terminals and distribution centres and warehouses – both freight transport modes would complement each other.

“Today, however, many HPVs are doing ‘every mile’ of the freight task in Sydney, placing heightened pressure on traffic congestion, road safety and vehicle emissions,” he adds.

ARA CEO Caroline Wilkie said NSW’s growing freight needs means this was an increasingly critical issue.

“The balance has tipped so far we run the risk of Sydney’s roads being over-run with trucks unless there is urgent action to use more rail. There must be a level playing field for rail if we are to meet growing freight demand and streamline Australia’s supply chains,” Wilkie says.

FTA director and secretariat to the Australian Peak Shippers Association (APSA) Paul Zalai says exporters, importers and freight forwarders are looking to long-term strategies to effectively manage supply chains and to remain internationally competitive.

“Governments must maximise port assets and manage our trade gateways through incentivisation of rail usage for imports to metropolitan sites and importantly, streamlined connectivity to regional areas to cost effectively reach export markets,” Zalai notes.

For the ALC, striking the right balance in modal share is an essential step towards developing the world-class supply chains Australia needs to take best advantage of global opportunities.

“In this brave new COVID world, the economies which fine-tune and enhance their transport supply chains are the economies which will emerge stronger,” CEO Kirk Coningham says.


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