Re: Alice Springs-Darwin loses financier

[mauried@tpg.com.au (Maurie Daly)]

On Sun, 28 Jan 2001 17:04:35 +1100, "Andrew Honan"
<ahonan@zipworld.com.au> wrote:

>
>"Maurie Daly" <mauried@tpg.com.au> wrote in message
>3a7260ae.30136397@can-news.tpg.com.au">news:3a7260ae.30136397@can-news.tpg.com.au...
>> On Sat, 27 Jan 2001 00:27:54 GMT, "Peter Berrett"
>> <pberrett@optushome.com.au> wrote:
>>
>> >
>> >Dear Paul
>> >
>> >I hasten to disagree with this statement for a number of reasons.
>> >
>> >Fistly, there are costs associated with accessing the ocean namely port
>> >handling charges, fuel, ship staff wages etc
>> >
>> >There is also a question of timelyness.
>> >
>> >Secondly, the advantage that rail has over sea travel is that it the more
>> >direct route to get from south east Australia to south east Asia. That
>must
>> >equate to savings in fuel.
>> >
>> >Finally I disagree with your statement that goods will cost more as a
>result
>> >of landing in Darwin.
>> >
>> >If it is cheaper to carry goods by sea, exporters will still use sea
>travel
>> >to ferry their wares. They will choose the cheaper option. Given that the
>> >company(s) railing freight from Darwin to south east Austarlia and vice
>> >versa will be competing against sea freight they will have to drop their
>> >freight charges lower.
>> >
>> >cheers Peter
>> >
>> Sorry Peter.
>> Paul is spot on.
>> Rail cannot ever compete with shipping when the cost of building the
>> railway in the first place has to be factored into the track access
>> charges.
>> Ships dont have to pay track access charges, nor do they have to pull
>> their loads up and down hills.
>> If rail was as efficient as shipping then we would be railing all the
>> wheat and grain grown in NSW and Victoria to Brisbane and then loading
>> it into ships as Brisbane is closer to the final destination than
>> places like Melbourne, Geelong or Portland.
>> As for reducing rails charges to compete with shipping , in the case
>> of AP to darwin it simply isnt possible.
>> You have a $700 million debt plus annual interest bills to pay which
>> you can only derive from track access charges.
>> As for timrlyness, rail can only compete with shipping when the
>> function of train control is in the hands of the rail operator.
>> In an environment where a 3rd party provides the train control ,rail
>> operators have no certainty that their trains will arrive on time.
>> Its in most cases in the hands of 3rd party train controllers.
>> And there is also the road freight industry.
>> People seem to beleive that once AP to Darwin is built then all of the
>> existing freight that goes by road will magically switch over to rail.
>> Why??
>
>I thought long distance non-bulk freight was up for grabs (for rail). I
>thought rail was competitive on the east coast to west coast leg, and would
>have thought the Adelaide to Darwin leg would be comparable.
>It is just a question of volume of traffic (both ways).

It is up for grabs.
The only leg where rail beats road is Adelaide to Perth and its not
hard to see why.
The loading is highly assymetric , ie 3 times more freight moves East
- West than comes back.
The trucking industry hates this sort of work ,as it means that a
truckie will quite easily get a load going East -West, he will find it
much harder to get a load back, so the trucking industry leaves the
route to rail.
NRC , who are the major operator on the route , in being competetive
are also slowly going broke ,so competetiveness in itself isnt the
only factor.

I agree that if the capital cost of AP to darwin was ignored
completely,and the track access charges were based solely on the
direct attributable costs of operating and maintaining the line ,then
the line would make a very small profit.

The other major factors which dont help the situation is that most
freight on the AP to darwin line will have to go somewhere once it
gets to Tarcoola.
Whilst I expect that AP to darwin will support double stacking and
will also support long heavy trains due to the light grades , once we
get to Adelaide the train will have to be re marshalled (if its going
to Melbourne ,or re marshalled at Parkes if its going to Sydney. 
Extra costs in both cases.

None of the feasability studies into this line have been able to
identify any major users of the line ,and the consortium themselves
admit that the line will see only 1 train per day in each direction.
Hardly a super incentive for anyone to invest $700 M.

Also given the financial failure of the Sydney Airport line , which
did have financial projections which indicated that the line was
economically viable , you would have to wonder if any financiers are
willing to take more risks in Australian Rail projects.

MD

>
>It is true that $750M may have to be paid back, but if we ignore this and
>say it is a sunk cost, then rail should compete with road (its just that I
>do not think it will ever pay back the debt).
>Maybe the pricing of access fees should only be on the basis of short run
>marginal costs (i.e. maintenance costs only rather than provisioning for the
>network)
>
>> It hasnt anywhere else.
>>
>> MD
>>
>
>AH
>
>