Chullora v Moorebank: the battle lines are drawn

By: Rob McKay

Asciano puts Qube and Aurizon on notice over intermodal hub competition

Chullora v Moorebank: the battle lines are drawn
Moorebank is under competitive pressure before it even opens

It may not become the biggest intermodal stoush in Australian transport and logistics since private trucking took on state-owned rail in the 1950s but developments will be fascinating nonetheless.

It pits incumbent leader and Pacific National-owner Asciano and upstart operation Qube, which has Aurizon in its corner.

Unless peace breaks out, which seems unlikely, the forces facing eachother will line up at Chullora and Moorebank and the battle ground will be container freight through Port Botany.

The spark was the May decision by the Federal Government’s Moorebank Intermodal Company (MICL) to choose Qube/Aurizon joint venture Sydney Intermodal Terminal Alliance (SIMTA) as its negotiating partner on Moorebank’s development.

The first inkling that competitive hostilities would result came in Asciano CEO John Mullen’s part of a June 16 investor briefing presentation but this has since been amplified in the Fairfax press and to ATN.

"As a result of the decision, Asciano will now be investing heavily to create an alternative to Moorebank at Chullora and other sites," a spokesman tells ATN.

"We believe that we can provide 800,000 TEU capacity two years ahead of Moorebank and for materially less investment.

"In other words, this decision has created the potential of a strong competitor for Moorebank being created ahead of Moorebank being opened and which will be able to almost match the total capacity planned for Moorebank.

"We are spending over $110m on upgrading rail terminals in Sydney and Melbourne and intend to be a very vigorous competitor in the space in which we are today the strongest player."

In the presentation, Mullen made the following points:

  • Asciano’s view of these projects is that while continual evaluation is critical, the economics in the near term (5-10 years) may be challenging. The long term potential is more prospective but will require innovative solutions and a whole of industry and Government approach
  • Asciano was surprised that MICL did not continue with a competitive tender process for Moorebank
  • Asciano nonetheless is extremely well equipped to compete with Moorebank with very comparable assets
  • Largest on wharf TEU storage now in Sydney (1.8m TEU)
  • PN has 70% intermodal market share in rail
  • PN capacity at Chullora will be upgraded to handle 600kTEU by 2015 and Enfield has capacity for further 200k.
  • Gives 800k TEU capacity 2 years ahead of Moorebank
  • Very strong competitive position for at least next 10 years with minimal capex requirement.

In the subsequent Fairfax report, Mullen is paraphrased as saying Asciano would have closed Chullora and moved into Moorebank had Moorebank been an industry-wide operation.

He also raises the possibility that Moorebank might need government financial assistance early on, given competition from Chullora.

Intriguing is that part of the presentation that notes Asciano has capacity to handle 10 years of projected demand and would then "always have access to IMEX [import-export] terminals such as Moorebank, as these will be open access with some form of regulated pricing".

Also thrown into the mix is Asciano’s belief that "continued investment in road infrastructure means that road will remain a compelling option for time-sensitive freight owners for some time to come".


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