PN's Mt Isa Glencore contract goes to road?

 
  Fatty Deputy Commissioner

Location: Melbourne
Is 100,000 one way or out and back?
james.au
Return.

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  Trainplanner Chief Commissioner

Location: Along the Line
For me this is the madness that seems to be pervading in many places these days.   QR are investing millions to upgrade the track that of course was originally justified on the basis of growing tonnage at the time.   The funding for this would at least initially come from Government on the basis in the case of The Mt Isa Line that increased toneage and hence increased track access revenue would subsequently flow.  Perfectly logical (but I haven't commented on the rate yet)!!

Concurrent with this the Government relaxes load limits etc to enable monster road trains to run adjacent to the railway, road gets stuffed which it WILL DO, and taxpayer, the same taxpayer that's funded the rail upgrade now starts having to fund increased road maintenance ogh and by the way improvements to the road to cope for increased volume such as passing lanes etc, etc.

Now to user charges.  Clearly investment in road infrastructure is essential.  There will always be flows of freight traffic that are better suited to road because of volume, timeliness, ultimate destination etc.   What irks me is the road user charge for ultra heavy road movements like these triple road units.   Just like rail pricing these type of units should be paying and added surcharge to reflect the impact they cause on the road condition.

Rail Access Fees.  If the rates that are being quote are correct then quite frankly its not only dumb but it should be being challenged by rail operating companies or other companies who are impacted as a result of those charges.   It has been challenged in other jurisdictions and it should be happening here.   ARTC have a model that attempts to incentivize increased business on the basis that having a lower yield for a given train movement will be offset by the increased business that flows.

But what is real dumb here is Queensland Transport AGAIN missing in action.   It has oversight over road and rail funding.   It must know (but perhaps can't recall)!!!!, how much investment is going into both road and rail corridors to Mt Isa, what the present and future forecasts are, what is the modal split, what is in the best interests of the state, communities, and customers use a range of policy levers to achieve the best outcome.

In this regard, Queensland Transport are showing themselves based on a number instances now as really dragging the chain when just across the border other states that have been down this path are much more pro-active such as the renaissance being seen in NSW and now Victoria.   Sulla1 and other Queensland Railpagers speak of the enormous potential for rail.   We've seen recent developments like the Oakey siding reinstatement/upgrade and subsequent increase in business notwithstanding that there had to be intense lobbying to get there.

At 1,000km the Mt Isa Corridor should be viable for rail if commonsense prevailed.
  x31 Chief Commissioner

Location: gallifrey
In the USA and Europe a 25km branch line is viable.
  james.au Minister for Railways

Location: Sydney, NSW
Does QR apply a DORC style framework when setting its access charges?

@Fatty, when im at home tonight ill do a few more calcs to see if we can work out the access charges.
  Sulla1 Chief Commissioner

While not for the Mt Isa Line, this should give an idea for QR's charging practices on the much smaller West Moreton (Western Line) network that carries a similar gross tonnage. I've seen QR's Network Access revenue for the Mt Isa on-line somewhere, but haven't found it yet.

http://www.synergies.com.au/wp-content/uploads/2016/06/Client-brief-QCA-Final-Decision-on-QR-DAU.pdf


http://www.qca.org.au/getattachment/ec810964-3617-4d1d-ac61-367a0aa61059/Aurizon-Submission-on-QR-2015-DAU-draft-decision.aspx
  1771D Junior Train Controller

It's taken a while, but we should have seen the shift to road coming after the road bypass to Townsville port was built some years back.  Again, a massive waste of money, and all in favour of the dangerous and destructive road transport industry and their slimy corporate clients.  Why do we blindly follow the stupid mistakes of other countries in this regard?  Obviously governments of all persuasions don't care that taxpayers will foot the road repair costs, and the travelling public and other road users will become collateral damage in the resulting crashes involving heavy vehicles.
  Sulla1 Chief Commissioner

I think these are the figures we were looking for...they were in the 2015/2016 QR Financial Report that Fatty previously shared.


Freight movements In 2015-16, Queensland Rail had total railings of approximately 20 billion gross tonne kilometres (GTKs) of freight by operators Pacific National and Aurizon (inclusive of Brisbane Service Area movements). The regional system and commodity details of these freight movements are:

• Mount Isa line (Stuart to Mt Isa and Phosphate Hill) - 5.7 billion GTKs of mineral concentrates, intermodal and general freight, sulphuric acid, fertiliser and cattle generating $91.06 million access revenue. This also includes access revenue from maintenance services, light engine/shunts and project repayments. Around 50-60 trains per week, track capacity of 88 trains per week.
Track maintenance expenditure - $50-million plus $25-million to replace 41km of rail and sleepers.

• West Moreton system (Ipswich to Miles) - 2.1 billion GTKs of coal, wheat and sorghum generating $46.39 million access revenue. This also includes access revenue from maintenance services, light engine/shunts and Access Facilitation Deeds ($8.52M). It does not include the South East Queensland portion of coal services. Track capacity of 113 trains per week
Track maintenance - $13-million, plus $2.5-million for additional upgrades for industry (Oakey meatworks)

• North Coast line (Caboolture to Cairns) - 6.8 billion GTKs railing containerised and general freight, industrial products, sugar and molasses generating $44.89 million access revenue. This also includes revenue from maintenance services, light engine/shunts, on track vehicles, and project repayments. It also includes the NCL portion of revenue from Mount Isa services. Gympie North to Rockhampton 149 trains per week, Rockhampton to Mackay 121 trains per week, Erakala to Proserpine 122, trains per week, Home Hill to Ayr 140 trains per week, Ayr to Pioneer 172 trains per week, Pioneer to Giru 200 trains per week, Giru to Nome 243 trains per week, Townsville to Cairns 42 trains per week.
Track maintenance expenditure - $86.91-million, plus $100-million to begin work for increased train lengths.

• Central West line (Emerald to Winton) - 85 million GTKs of livestock and Gypsum generating $170,000 access revenue. This also includes revenue from maintenance services and ASSCO (Australian Society of Section Car Operators).
$17-million to replace 22 bridges

• Regional West line (Emerald to Clermont) - 30.7 million GTKs of livestock generating $43,000 access revenue. This also includes revenue from maintenance services.

• South Western line (Toowoomba to Wallangara and Thallon, plus Miles to Quilpie) - 139.5 million GTKs of agri-business freight generating $957,000 access revenue. This also includes revenue from maintenance services, Southern Downs Steam railway and ASSCO.
$3.7-million for bridge and sleeper replacements
  james.au Minister for Railways

Location: Sydney, NSW
So based on that, assuming that there is no flagfall charge, $/gtk of access revenue is $15.96.  This is much higher than Vic, NSW and the Interstate.

But might this much higher access charge actually better recover the costs?  I suspect that the VLine and NSW CRN do not recover costs.  The ARTC interstate generally does.

Based only on the above data from Sulla (thanks by the way), the Mt Isa line is profitable in that year (though im not sure if those figures contain a depreciation amount or not) and therefore perhaps access charge reductions could be validly considered?
  Sulla1 Chief Commissioner

From what I can work out, a loaded 4700-tonne fertiliser train from Phosphate Hill to Townsville Jetty costs Aurizon $75,000 in access fees in the loaded direction, or nearly $1300 per wagon. The empty train heading west would cost $17,000 or nearly $300 per wagon. Hauling empty unit trains 1000km is a cost factor most operators don't experience elsewhere in Australia, another issue for the Mt Isa line.
  x31 Chief Commissioner

Location: gallifrey
So based on that, assuming that there is no flagfall charge, $/gtk of access revenue is $15.96.  This is much higher than Vic, NSW and the Interstate.

But might this much higher access charge actually better recover the costs?  I suspect that the VLine and NSW CRN do not recover costs.  The ARTC interstate generally does.

Based only on the above data from Sulla (thanks by the way), the Mt Isa line is profitable in that year (though im not sure if those figures contain a depreciation amount or not) and therefore perhaps access charge reductions could be validly considered?
james.au

I like your approach @James.au is the Mount Isa line a money making venture or a service to the operator?  Looks like the Queensland Government want to penalise rail by adding profit margins which perhaps do not exist on road?
  james.au Minister for Railways

Location: Sydney, NSW
So based on that, assuming that there is no flagfall charge, $/gtk of access revenue is $15.96.  This is much higher than Vic, NSW and the Interstate.

But might this much higher access charge actually better recover the costs?  I suspect that the VLine and NSW CRN do not recover costs.  The ARTC interstate generally does.

Based only on the above data from Sulla (thanks by the way), the Mt Isa line is profitable in that year (though im not sure if those figures contain a depreciation amount or not) and therefore perhaps access charge reductions could be validly considered?

I like your approach @James.au is the Mount Isa line a money making venture or a service to the operator?  Looks like the Queensland Government want to penalise rail by adding profit margins which perhaps do not exist on road?
x31

No I think that things should aim to recover their cost of provision, including rail, AND also including road.  Road should be run more on a profit and loss basis too.  The fact that it is not, and currently is provided and provides subsidies to all who use it, is poor policy IMO.
  james.au Minister for Railways

Location: Sydney, NSW
Referring back to the reference train of 7000t loaded (lets assume 1500t unloaded), and 1000km to travel, and using the costs of the Mt Isa line I calculated above:

Outbound - $23,940
Inbound - $11,720
TOTAL - $135,660

So, pretty big.  @Fatty, upthread where I was surprised at your statement that access fees were a high cost per train (compared to southern trains where they are not), I understand your point better now.
  james.au Minister for Railways

Location: Sydney, NSW
All - here are the ARTC interstate pricing charges for comparison.

http://www.artc.com.au/uploads/Pricing-Schedule-Effective-01072016-for-access-seeker-website.pdf

Highest is $7, for Heavy Freight from Tarcoola to Alice Springs.  Interesting part there is that is GWA operated track (owned by ARTC).
  neillfarmer Chief Train Controller

The rego on a truck and trailer costs around $20,000, or $55 a day. The access fee for a rail wagon on the Mt Isa line is around $800 a day averaged?  The massive subsidy for road transport is pretty clear.
  Fatty Deputy Commissioner

Location: Melbourne
The rego on a truck and trailer costs around $20,000, or $55 a day. The access fee for a rail wagon on the Mt Isa line is around $800 a day averaged?  The massive subsidy for road transport is pretty clear.
neillfarmer

This is the major problem. What it ends up doing is giving the large industrial users of transport a massive subsidy when they move their freight to road. The roads get ripped up, travel becomes more dangerous and the taxpayer is further out of pocket. The multi-national mining company becomes a larger drain on the taxpayer.

I just got back from a trip to Hughenden. On the way out we only crossed one train and it was a very short 9255 with six fuel wagons. On the way back by road I saw at least 6 empty triples on their way out to pick up copper anodes that used to come by train. There were too many other trucks to count. The only train I saw was the PN "mixed" with 10 wagons of cement tanktainers and 45 ROAF.
  Fatty Deputy Commissioner

Location: Melbourne
Referring back to the reference train of 7000t loaded (lets assume 1500t unloaded), and 1000km to travel, and using the costs of the Mt Isa line I calculated above:

Outbound - $23,940
Inbound - $11,720
TOTAL - $135,660

So, pretty big.  @Fatty, upthread where I was surprised at your statement that access fees were a high cost per train (compared to southern trains where they are not), I understand your point better now.
james.au
Not sure what happened to your numbers above but, yes, people are usually surprised when they find out how much access fees are. Road transport receives a very large subsidy when in comes to "access".
  x31 Chief Commissioner

Location: gallifrey
Referring back to the reference train of 7000t loaded (lets assume 1500t unloaded), and 1000km to travel, and using the costs of the Mt Isa line I calculated above:

Outbound - $23,940
Inbound - $11,720
TOTAL - $135,660

So, pretty big.  @Fatty, upthread where I was surprised at your statement that access fees were a high cost per train (compared to southern trains where they are not), I understand your point better now.
Not sure what happened to your numbers above but, yes, people are usually surprised when they find out how much access fees are. Road transport receives are very large subsidy when in comes to "access".
Fatty

It sure does, which is really paid for by all of us.
  Trainplanner Chief Commissioner

Location: Along the Line
Indeed my point as outlined in the post above.    I thought the era we are in today is about being smart and innovative.    Not much of that going on between Mt Isa and Townsville except by the road industry of course!!!

None of this was new business that was being contracted here.   Rail had this business and it wasn't smart enough or innovative enough to understand that its client would be seeking a better deal.   Being smart and innovative is an element of continuous improvement.   The grain sector all working in collaboration with growers, grain handlers and train operating companies are demonstrating that now more than ever.   Rail is enjoying a bit of a comeback and they are doing it on far shorter hauls and over certain parts of the network that are at a lower standard than the Mt Isa Line.

Its a 1,000 km long corridor, the business has been in place for a long time and relatively speaking Aurizon has just simply taken it for granted.  (I can hear the cries and rush of indignation now)!!!    Apart from that we have QR and Queensland Transport all relatively asleep at the wheel.   Especially Queensland Transport who should have stepped in as I said before and said it would not entertain operations of triple road trains until it had independently assessed what the best option should be in the interests of all given both the rail and road corridor are state assets.

If it was that rail could then still not make the grade perhaps then you allow road permits but the way this is infolding is just unfathomable.

Of course we'll all move on as the saying goes but don't be surprised if an articles appears in a year or two relating to addressing road damage and the need to desperately inject massive funding to upgrade the road.   In the meantime the upgraded railway will simply lay underutilized running virtually alongside!!!
  x31 Chief Commissioner

Location: gallifrey
Is it possible for an operator to run triple road trains on any Queensland road without first obtaining a permit to operate?
  james.au Minister for Railways

Location: Sydney, NSW
The grain sector all working in collaboration with growers, grain handlers and train operating companies are demonstrating that now more than ever.   Rail is enjoying a bit of a comeback and they are doing it on far shorter hauls and over certain parts of the network that are at a lower standard than the Mt Isa Line.

Its a 1,000 km long corridor, the business has been in place for a long time and relatively speaking Aurizon has just simply taken it for granted.  (I can hear the cries and rush of indignation now)!!!    Apart from that we have QR and Queensland Transport all relatively asleep at the wheel.   Especially Queensland Transport who should have stepped in as I said before and said it would not entertain operations of triple road trains until it had independently assessed what the best option should be in the interests of all given both the rail and road corridor are state assets.
Trainplanner

This is all happening on the SG though - not much is happening on any other network (and right now, anything on the Vic BG network I think is being done in anticipation of those lines going SG).  You've got the likes of SSR and SCT, and in a smaller way Crawfords and Fletchers, who are doing that innovation, picking up business that is not being looked at by the large block carriers (i.e. Aurizon and PN).  There are no operators on the NG that are doing anything like what SSR, SCT, Crawfords and Fletchers are doing.

The big carriers are not innovating, but the smaller ones are.  They just can't access the Queensland network yet.  If you look at the small operators, they have been able to take advantage of surplus SG (and convertible BG) rolling stock not held by the majors (e.g. the G and C classes, rebuilds of the 421 class etc).  Access to these assets is letting them compete.  I dont think the same is the case for the NG network where, by all accounts in this thread and others, the rolling stock was transferred to QRN/Aurizon and not made available to others.
  x31 Chief Commissioner

Location: gallifrey
The company who really rolled their sleeves up and went after business from road (other than SCT) was El Zorro.  Industries need the likes of El Zorro who are thinking businesses.  The larger companies are fat and lazy.
  james.au Minister for Railways

Location: Sydney, NSW
The company who really rolled their sleeves up and went after business from road (other than SCT) was El Zorro.  Industries need the likes of El Zorro who are thinking businesses.  The larger companies are fat and lazy.
x31
I wasnt going to include El Zorro (or Austrac) in my list as they were eventually unsuccessful.  Perhaps if they had better business practices behind the scenes they would have survived, but had they had the better practices, they would not perhaps have been as aggressive as they were (i.e. their pricing may have been different).

But these are definitely two more operators that benefited from surplus rolling stock that was available (e.g. 48cl) to give the opportunity.

BTW, Im sure there are other factors in play aside from rolling stock availability that have impacted smaller operators in the NSW/Vic market, rolling stock is just one example im using.
  x31 Chief Commissioner

Location: gallifrey
They were ultimately not successful financially anyhow but measuring with innovation and customer on-boarding they did a reasonable job.  They managed to get Mineral Sands traffic to rail which under a bigger operator would have been lost.

There is something to be said about USA shorthaul operators.  They play an important role in feeding the class 1 networks.  This has all but been killed off in Australia.  For some reason railways think they are the only option and the customer must come to them, well that's what Vince Graham thought anyhow.
  james.au Minister for Railways

Location: Sydney, NSW
They were ultimately not successful financially anyhow but measuring with innovation and customer on-boarding they did a reasonable job.  They managed to get Mineral Sands traffic to rail which under a bigger operator would have been lost.

There is something to be said about USA shorthaul operators.  They play an important role in feeding the class 1 networks.  This has all but been killed off in Australia.  For some reason railways think they are the only option and the customer must come to them, well that's what Vince Graham thought anyhow.
x31

I dont think we have the volumes to achieve the same short haul model that is present in the US.  Once its on rail, it may as well go straight to the port, or to the intermodal terminal.
  x31 Chief Commissioner

Location: gallifrey
They were ultimately not successful financially anyhow but measuring with innovation and customer on-boarding they did a reasonable job.  They managed to get Mineral Sands traffic to rail which under a bigger operator would have been lost.

There is something to be said about USA shorthaul operators.  They play an important role in feeding the class 1 networks.  This has all but been killed off in Australia.  For some reason railways think they are the only option and the customer must come to them, well that's what Vince Graham thought anyhow.

I dont think we have the volumes to achieve the same short haul model that is present in the US.  Once its on rail, it may as well go straight to the port, or to the intermodal terminal.
james.au

Disagree.  We have plenty of volume to make rail access very profitable.  Lower operating costs for a short haul operator.  Logs from SA to Portland, then moving around the state, Mildura packaged products around Australia, Processing plants in the north of Victroria which are not using rail, various industry in Gippsland and South Gippsland, Colac, Warnnambool, Hamilton, Portland, lots of opportunity.

This is especially so in the southern parts of NSW.

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