Re: BHP nailed down to National tracks - "The Age" Article

[mauried@commslab.gov.au (Maurie Daly)]

In article <36d3f69b.17856641@news.ocean.com.au> pcc@ocean.com.au (Les Brown) writes:
>From: pcc@ocean.com.au (Les Brown)
>Subject: Re: BHP nailed down to National tracks  - "The Age" Article
>Date: Wed, 24 Feb 1999 13:10:10 GMT

>mauried@commslab.gov.au (Maurie Daly) wrote in aus.rail:

>>This is a good article and it brings up a couple of interesting points.
>>National Rail are yet to make a profit and are experiancing increased annual 
>>losses.
>>This is despite having a fleet of the most modern and fuel efficient locos in 
>>the country.
>>Also National Rail is now operating in accordance with worlds best practice 
>>and achieving freight rates of 2.5 c per ntk , generally accepted as good as 
>>you can get.
>>Under these sorts of conditions NRC should be making respectable  profits,so 
>>whats wrong.?
>>One has to ask what would any private owner of NRC do differantly to change 
>>things around.?
>>
>Easy, carry more freight.

>Competition is really beginning to hot up between the various rail
>operators. A better question might be asked as to how come Freightcorp
>can haul Leigh Creek coal for, what? 1.0c ntk or thereabouts? Are they
>are making a loss on each train load? They must be, yet they still
>consider it worth their while and Freightcorp, I believe, do make a
>profit on their operations.

They do , but we need to know why.
The vast majority of Freight Corps tonnage is coal which up until very 
recently it has been totally protected from any other competitor.
Its no secret that the coal companies in the Hunter Valley have long wished to 
run their own coal trains due to the very high charges which Freightcorp 
impose .
Its easy to subsidise a line in another state and run it at a loss when you 
have no competition in your own state.
Opening up the Hunter valley to competition wont solve the problem either
because of the secretive nature of RACS track access regime .
Its quite likely that Freightcorp being a Govt owned assett could be charged
a lot less than a competitor for the same access rights,so we will never know 
whether the playing fields flat or not.
 

>Whilst carving up the total railway pie might mean that some carry
>less and others carry more, what is really needed is a larger pie.
>National Rail is now seriously competing against recently permitted
>heavier axle-load road freight. Every tonne added to the road freight
>axle-load takes freight away from rail and NatRail is more exposed to
>road-freight competition than any other rail operator in the country.
>Making a loss might actually be needed in the short term in order to
>gain market share and political clout (crying foul can help) and force
>governments to rethink their road transportation policies

Its fairly obvious that increasing the size of the total pie is the answer
but surely this is exactly what organizations like Freightcorp and ASR and the 
new owners of VLF must also be thinking, ie we will soon have even more 
competition for the total pie from more rail companies.
Australia is a country with a relativaly small population , and one needs to 
wonder just how many interstate rail companies are really needed or 
justifiable.

NRC are currently achieving freight rates of 2.5 c per ntk , which is 
acnowledged as worlds best practice,but even with this rate , they are not 
attracting more freight from road to rail.
To get below this number means running trains of the tonnage and weight of 
Pilbara Iron Ore trains , which is simply not viable of the Govt rail network 
anywhere.

I am concerned that NRC will not survive , simply as you have pointed out , 
they are heavily exposed to the road freight industry more than any other Rail 
operators are , and more competition between rail operators will simply result 
in more of whats been happening already, ie freight being taken away from NRC 
goes to the other rail freight companies.

I doubt very much that Governments , of any persuasion will do anything to 
directly antagonise the road freight industry, which means that the playing 
field wont be levelled by Govt action ,and that many more dollars of taxpayers 
money will be spent on more unnecessary freeways and highways.

This doesnt mean however, that Govt is totally to blame .
It was interesting reading about the signalling thread that has been going on 
in this news group , and it brings up another important point, in that a lot 
of the additional costs imposed on the rail industry are self imposed, ie its 
not the fault of any Govt that we have such a plethora of odd ball signalling 
systems etc.
There currently seems to be zero progress to address any of these sorts of 
issues.

MD




>I think that NatRail will eventually make a profit, but they will only
>do so by attracting more freight to rail and that may be only when
>they are privatised and totally divorced from the ministerial masters.
>You can't bite the hand that feeds you.

>Les Brown