The freight industry is seeking a container rail incentive scheme for exporters and importers from the NSW Government, to help meet the Government’s 2021 rail mode share target.
Freight on Rail Group (FORG) of Australia, Australian Logistics Council (ALC), Freight and Trade Alliance (FTA), Australasian Railway Association (ARA) and individual port rail freight operators, have called for the scheme.
ALC board member and Qube Holdings Managing Director, Maurice James, said Port Botany rail mode share is stagnant largely as a result of the 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,” Mr James said.
Of the current 2.5 million container trade through Port Botany, close to 75 per cent are 40-foot boxes. A high productivity vehicle (e.g. A-double truck) can carry two 40-foot containers which delivers a 100 per cent productivity increase in the typical import carrying capacity of road.
Mr James said government policies are making it harder for rail to compete in the metro import container market, which is primarily within a 40 to 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,” Mr James said.
Mr James said 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,” Mr James said.
In 2020, Patrick Terminals is forecasting more than 50,000 HPV truck movements through its Port Botany container terminal versus only 220 in 2016 and 30,000 in 2019 – or a massive 23,000 per cent jump in HPV movements in only four years.
FORG chair and Pacific National CEO, Dean Dalla Valle, pointed 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 2006-7, rail mode share was a meagre two per cent,” Mr Dalla Valle.
“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 customers (rail freight clients).
Mr Dalla Valle said 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,” Mr Dalla Valle said.
Mr Dalla Valle said 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,” Mr Dalla Valle said.
Australasian Railway Association CEO, Caroline Wilkie, said NSW’s growing freight needs meant 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,” Ms Wilkie said.
“There must be a level playing field for rail if we are to meet growing freight demand and streamline Australia’s supply chains.”
Director of Freight and Trade Alliance (FTA) and Secretariat to the Australian Peak Shippers Association (APSA), Paul Zalai, said 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,” Mr Zalai said.
Australian Logistics Council CEO, Kirk Coningham, said 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,” Mr Coningham said.