WESTERN AUSTRALIAN
RAIL FREIGHT
MISSED OPPORTUNITIES
AND
BROKEN PROMISES
The 6,700 kilometre Western Australian (WA) rail network in the South
West corner of the State, is a Government owned system (known as
Westrail), constructed initially to serve the extensive agricultural,
timber and in the last 30 years, mining regions. Over the past
twenty years the system has undergone a massive transformation and by
any measure has become the most efficient State owned rail network in
Australia.
It is worth highlighting that the market size in terms of freight in
which Westrail operates is very thin. Unlike the USA, Europe or even
the East Coast of Australia, where there is by comparison extensive
heavy industry and a large population base to generate significant
demand for a range of transport services, rail services in WA are
almost totally geared to transporting primary products to ports for
processing and/or export. It is true to say that Westrail management
recognizes that the price and quality of the rail services it provides
are a factor in determining the international competitiveness of a
number of commodities on world markets, and its rail services and the
way they have developed carefully reflect this.
Even taking into account the thinness of the total freight market and
the fact that the overwhelming proportion of rail routes exist
principally for the carriage of grain, Westrail’s traffic task has
steadily grown from roughly 20 million tonnes per annum 20 years ago
to almost 31 million tonnes. In the same period, staff numbers have
reduced from roughly 14,000 to around 3,000 exemplifying the enormous
productivity and efficiency gains made over that time. By Australian
standards, Westrail has been innovative in introducing a number of
productivity improvements such as two-person crewed freight trains and
unit trains comprised of purpose built wagons for bulk commodities
that have helped it remain competitive as freight transport has been
progressively deregulated.
Having painted a picture of a railroad that is the nation’s most
efficient, and indeed which for the first time in it’s history made a
commercial profit last financial year, how then can the heading for
this paper have any substance?
The reality is that under the guise of deregulation, improved
efficiency and productivity, Westrail has selectively, either
withdrawn completely or by way of pricing and service changes,
virtually rid itself of less than trainload traffics. In making that
statement crystal clear, we are not talking of L.C.L. (less than
carload i.e. parcels and small goods) traffic, we are, with the
exception of two corridors, talking of any freight that constitutes
less than a full trainload!!! In other words it is simply not
possible in WA to have consigned by rail either directly with Westrail
or through a major freight forwarding company, container or wagon
loads of consolidated cargo or fuel, fertiliser or any other commodity
you wish to name, to major regional centres, including a number
situated on “main trunk routes”.
In developing this point by highlighting specific examples, it is not
possible to rail ten 20 foot containers of say 200 to 300 tonnes of
building products from Perth (Forrestfield) to Albany. A grain
grower in say Coorow on the Perth to Geraldton mainline cannot elect
to have 300 tonnes of containerized fertilizer railed from the metro
area. You cannot rail 300 tonnes per week of say crushed stone
product from Wagin to Albany or 300 tonnes of petroleum products from
Perth to Wongan Hills.
In essence Westrail has over the last decade and the past two to three
years in particular, developed an almost total unit train culture to
the point that other than between Perth and Bunbury and Perth and
Kalgoorlie, all train services are virtually single commodity trains.
The economics of unit trains utilizing specialized rollingstock and
operating to schedules totally geared to the needs of a single client
are understood and this commentary doesn’t for one moment suggest a
return to the days of inefficient single carload type railroading.
Westrail’s efforts in aggressively protecting and developing its bulk
haul (read unit train) business is most noteworthy and to be
commended. In the face of total deregulation of all freight
transport, Westrail has secured long term contracts with its bulk haul
clients and offered them significant reductions in freight costs
through on going productivity improvements in return for existing or
indeed higher tonnage’s. As an example in the case of grain
transport, farmers receive rebates in grain freight rates if Westrail
achieves a market share of 90% of all grain transported from that
area.
Westrail will argue very defensively, that the length of haul or
traffic density available to it does not allow it to be able to
provide services for a range of consolidated cargo on even its trunk
routes. In debating that point Westrail conveniently forgets that
other than between Perth and Bunbury or Kalgoorlie, the basic
technology of trains is such that it is possible on a single train to
have quite diverse cargoes destined to multiple clients. The advent
of containerization (which Westrail embraced very early) and other
intermodel freight handling systems has enabled dramatic cost
reductions and improved efficiency in handling on one train, diverse
commodities to a number of locations along a particular corridor.
But even if you were prepared in WA to pay the rate for a full
trainload in order to say shift 300 tonnes of a containerized
commodity from Perth to Albany on a regular basis, say three times per
month, Westrail would not only have no locomotive available to perform
the task but also no wagons to carry the containers for you.
Locomotive crews except on a possible one off basis may not be
available.
The reason for this is that in its total preoccupation to develop a
system based entirely on unit trains, Westrail has geared its entire
asset base and operation to service roughly 20 or so major clients and
it virtually no longer has the means or capability to do anything
else. The concept of aggressively marketing consolidated general
cargo services on trunk routes to major centres is almost alien to
Westrail’s single commodity unit train culture.
Perhaps the very best demonstration of Westrail’s preoccupation and
love affair with the unit train has to be the work it has been doing
over the past year or so in bidding for the rail transport of coal in
the Hunter Valley of New South Wales. That effort has been
considerable both in terms of cost and effort, which one could argue
very strongly, should have been devoted to building rail business in
WA.
Westrail has, which can be confirmed from the most impeccable sources,
mislead successive governments over a number of years in stating that
by being allowed to implement a range of reforms that improve
efficiency and lower costs the result will be a growth in business.
Because Westrail’s tonnage’s (read unit train traffic) have indeed
grown, Transport Ministers have assumed their actions have been proper
as a result. The real story is that Westrail has only pursued what
one could describe as traffic that almost has no option other than to
be carried by rail. Faced with such criticism, it will demonstrate
with vigor a number of hauls that could have gone to road, but overall
it is relatively easy business to have won. Not for one moment is it
suggested that any of the reforms it implemented should have not gone
ahead. It is simply that Westrail has not gone out into the wider
market and attempted to win traffics it had previously lost, or
new business that it promised Government it would be better placed to
compete for if it were allowed the freedoms that it has been given.
How is it then that railways, such at Tranz Rail in New Zealand, are
highly successful commercial enterprises thriving on consolidated
general cargo traffic, with little or no heavy haul traffics to use as
a base? Not only does Tranz Rail compete for its business in a
totally deregulated environment, but the nature of the terrain the
railway negotiates in requiring extensive bridges and tunneling means
that the cost of maintaining its infrastructure is by comparison
considerably more expensive than Westrail. Almost all traffic flows
are over relatively short distances (less than 300 km’s) and in the
case of inter-island traffic flows there is the added time, cost and
resource effort of transporting wagons by ferry.
In singing the praises of Tranz Rail New Zealand, it is acknowledged
that the playing field in terms of road user charges and access fees
is more equitable than it is in Australia, but only marginally so.
Not only has Tranz Rail won back business lost to rail by the former
State run system during the early years of deregulation, but the
Company has aggressively sort and been successful in winning over new
business, once the exclusive province of the trucking companies and
coastal shipping services.
The same Company (Wisconsin Central) which has its origins in the USA
where it has established a reputation for transforming unprofitable
low density rail operations into a thriving profitable enterprise, has
also recently commenced a major transformation of rail freight in the
UK. Here the rail freight business had been dying for decades.
English, Welsh and Scottish Railways in its first 12 months of
operations has already won back traffics lost to rail for over 20
years. The Company has experienced such a boom in business that It
is suffering wagon shortages which it is addressing by rapidly
overhauling existing wagons, and also by placing orders for 5,000 new
vehicles!!! The growth in business is almost exclusively
consolidated general cargo in containers and a range of mini
bulk commodities such as timber, fuel, cement and steel.
Returning to the Australian experience, the recently announced sale of
Australian National’s South Australian and Tasmanian freight
businesses to two rail companies of US and New Zealand origin that
have a proven track record in rejuvenating low density rail operations
into flourishing profitable enterprises, will without doubt see a
renaissance of rail freight transport in those States. In recent
media releases, both Companies stated that it was their aim to achieve
a significant growth in traffic, which would include the reopening of
rail lines in South Australia which have lain dormant for a number of
years.
Both South Australia and Tasmania have a traffic task dramatically
lower than in WA, (Tasmania about 2 million tonnes per annum and South
Australia approximately 7.5 million tonnes per annum). Why is it
then with such a low traffic base that these two rail businesses
should attract keen interest from overseas rail operators who arguably
have greater challenges elsewhere? The simple answer is that they
have recognized the potential to regain lost traffics and secure new
business.
With a much larger rail network serving every major Centre in the
South West region, the question has to be seriously raised that if the
very small rail systems in Tasmania and South Australia which have
shorter hauls and a very much lower traffic base, are able to attract
new operators, then what potential is there for similar operations to
be developed in WA.
There is no doubt that there is scope to allow a second operator onto
the Westrail system whose primary focus would be to complete in the
intermodel, consolidated general cargo and mini bulk freight business
that is not serviced by Westrail.
There is a range of traffics that could form the basis for the
re-introduction of smartly run mixed cargo trains on trunk routes to
Albany and Geraldton, and the expansion of existing services to
Bunbury (extending to the Lower South West), and Kalgoorlie. The
commodities include petroleum products for which there is existing
business on the Albany mainline as far as Katanning and to Kalgoorlie.
Inter port petroleum products are a potential traffic base to
Geraldton which will shortly benefit with the construction of a new
steel processing plant. There is a range of mini bulk traffics such
as grain for milling (now on road) which is ideally suited for
transport in containers. Bulk fertilizer in containers to major
Centres on the Albany, Geraldton and Kalgoorlie mainlines including
inter-works movements to Albany, Wagin and Geraldton and possible
smaller distribution centres that could be established at several
intermediate Centres. Export movements of a range of containerized
commodities including mineral sands and produce from the South West
and Great Southern areas are other traffics. Trailer on flatcar
(piggyback) and containerized movements of a range of general cargoes
for onward road haulage to and from areas beyond these mainlines would
increase the traffic base considerably.
Whereas Westrail has come to a deadlock for the time being on single
manning of freight trains, an operator such as Tranz Rail which has
extensive experience with Driver Only Operation and other operating
initiatives would be able to run services at a far lower cost than
previous Westrail operated general cargo services. Other keys to low
cost, high productivity operation include running semi permanent fixed
formation trains of container flat top wagons, and undertaking a round
trip every twenty four hours instead of the 48 hours in the past.
This style of operation reduces rollingstock and motive power
requirements considerably.
As well as bringing about lower costs to make rail services a viable
option to clients the Tranz Rail type organization attribute their
success in the way they aggressively market their businesses, and
actively seek new traffic. They have a reputation for high standards
of customer service, which they provide in a highly personalized and
consistent manner. By being very active in the market place they are
more attune to changes in transport flows and have the ability to
respond quickly.
There is no doubt that the West Australian rail transport scene needs
to provide the opportunity for these type of operators to explore the
potential for the reintroduction of highly efficient general cargo
services. They would contribute to the Government and Community’s
desire to see rail systems achieving their maximum potential with
resultant benefits in respect to the environment, road damage and
trauma and equally importantly lower freight rates and improved
services to the rural sector and its communities.
Perhaps the best way to sum up this discussion paper is to look at the
performance of Tranz Rail New Zealand for the first 6 months of the
1996-97 financial year. Its net profit of $24 million, for the six
months ending December 31, 1996, was up 28% on the same period the
previous year. The railroad conveyed 5.6 million tonnes of freight,
up 12%, with the greatest gains being in manufactured goods, processed
agricultural products and fertilizer. Tranz Rail expected these
growth rates would be improved upon with the development of new
traffics, including the railing of bulk milk in containers. The
report said this business had originally been lost to road over twenty
years ago. Tranz Rail expects to carry a record 11 million tonnes
for all of 1996-97.
Tranz Rail and Genesee and Wyoming, come on over,
Western Australia needs you right now!!!
Douglas CLIFFORD +61 8 9390 7006 h
PO Box 119 +61 8 9324 6444 w
Kelmscott +61 8 9324 6400 fx
Western Australia <cliffd@opera.iinet.net.au>
6991