Aurizon selling intermodal business to PN/Linfox

 
  1771D Junior Train Controller

Sorry if I seem to be commenting in a negative fashion, but since privatisation, there hasn't been much, if anything to celebrate regarding rail freight transport in QLD, and especially in regional areas.  With ex-mining exec's in charge of Aurizon, the focus was always going to be on bulk mineral freight at the expense of all others.  I have absolutely no sympathy for this smeg company, except for its long suffering workers of course.

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  james.au Chief Commissioner

Location: Sydney, NSW
Sorry if I seem to be commenting in a negative fashion, but since privatisation, there hasn't been much, if anything to celebrate regarding rail freight transport in QLD, and especially in regional areas.  With ex-mining exec's in charge of Aurizon, the focus was always going to be on bulk mineral freight at the expense of all others.  I have absolutely no sympathy for this smeg company, except for its long suffering workers of course.
1771D

Except if those long suffering workers are part of the problem - i.e. they are being provided with jobs where the jobs are not supported by revenue....


There is a bit of AZ bashing around the boards, but I bet that PN went through a similar sort of exercise post privatisation.  Getting rid of LCL (which saw SCT come to the fore) was probably one of these actions.  Too many people and too much cost to make it work, easier thing is to get rid of it entirely and start again later...
  1771D Junior Train Controller

Apples and oranges........
  james.au Chief Commissioner

Location: Sydney, NSW
Please elaborate.
  1771D Junior Train Controller

Aurizon is also a below rail operator.  Maintenance of assets including infrastructure.  You need extra people to do this.  To simply blame "excess" people for the shedding of intermodal freight is simplistic and quite frankly disgraceful.  I'm sure you'd understand if your job was under threat.
  james.au Chief Commissioner

Location: Sydney, NSW
Aurizon is also a below rail operator.  Maintenance of assets including infrastructure.  You need extra people to do this.  To simply blame "excess" people for the shedding of intermodal freight is simplistic and quite frankly disgraceful.  I'm sure you'd understand if your job was under threat.
1771D
Id think that the intermodal operation is quite distinct from the below rail operation, indeed the vast majority of it would run on non Aurizon track (i.e. ARTC, QR, metro networks etc).  So I'm not sure what point youre making.

I refer to comments up thread - where industry talk is that where a competitor had one, Aurizon had 5.  Im sure that is an exaggeration but when i have seen similar comments about efficiency (e.g. having a brand new Landcrusier to move train crew from Junee station to their accomodation not 500m away, i do have to question the efficiency of the operation overall...

And absolutely, I feel for anyone who has lost their job or is looking at that prospect, but feel more broadly for the company and community in general that are being weighed down when unsustainable jobs are not cut for the good of the whole.
  1771D Junior Train Controller

Company and community.....BS.
  BrentonGolding Chief Commissioner

Location: Maldon Junction
I would refer you to Fatty's post near the top of this thread quoting the Aurizon boss part of which reads

"Unfortunately, over the years we have continued to see significant financial losses in this part of the business.The reality is that in a market serviced by a number of well-established transport providers, we have been unsuccessful in establishing a significant scale and customer base to make it profitable"

So losing money and unable to win new business to try to stem the losses which ties in with things like too high a cost base (unable to offer competitive rates) and the mention of empty slots on services where the competitor seems to be running fully loaded trains.


Sounds like simple business economics to me.

Interesting to know what the reasoning behind shedding the SCT load was, whether that was losing money as well or if it was just spite or even clearing the decks for this very announcement

BG
  james.au Chief Commissioner

Location: Sydney, NSW
Company and community.....BS.
1771D

We are going to just have to agree to disagree on this one @1771D.

I for one would prefer to see Aurizon still competing against PN for coal and other bulk traffic than the whole company gone and a PN monopoly which would guarantee poorer service to customers.
  x31 Chief Commissioner

Location: gallifrey
Some feedback on the sale

https://www.railpage.com.au/news/s/rail-freight-system-going-backwards
  bingley hall Minister for Railways

Location: Last train to Skaville
I would refer you to Fatty's post near the top of this thread quoting the Aurizon boss part of which reads

"Unfortunately, over the years we have continued to see significant financial losses in this part of the business.The reality is that in a market serviced by a number of well-established transport providers, we have been unsuccessful in establishing a significant scale and customer base to make it profitable"

So losing money and unable to win new business to try to stem the losses which ties in with things like too high a cost base (unable to offer competitive rates) and the mention of empty slots on services where the competitor seems to be running fully loaded trains.


Sounds like simple business economics to me.

Interesting to know what the reasoning behind shedding the SCT load was, whether that was losing money as well or if it was just spite or even clearing the decks for this very announcement

BG
BrentonGolding
Plenty of empty slots on PN services as well. Let's not fool ourselves.
  bingley hall Minister for Railways

Location: Last train to Skaville
Some feedback on the sale

https://www.railpage.com.au/news/s/rail-freight-system-going-backwards
x31

Article refers to issues that were prominent prior to the sale and already discussed on RP.
  x31 Chief Commissioner

Location: gallifrey
I would say clearing the decks so this decision was thought up months and months ago.

Add to that customer shedding over the period between now and the handover as some customers would have gone to Aurizon to avoid PN and don't want to go back.
  DalyWaters Chief Commissioner

Sorry if I seem to be commenting in a negative fashion, but since privatisation, there hasn't been much, if anything to celebrate regarding rail freight transport in QLD, and especially in regional areas.  With ex-mining exec's in charge of Aurizon, the focus was always going to be on bulk mineral freight at the expense of all others.  I have absolutely no sympathy for this smeg company, except for its long suffering workers of course.

Except if those long suffering workers are part of the problem - i.e. they are being provided with jobs where the jobs are not supported by revenue....


There is a bit of AZ bashing around the boards, but I bet that PN went through a similar sort of exercise post privatisation.  Getting rid of LCL (which saw SCT come to the fore) was probably one of these actions.  Too many people and too much cost to make it work, easier thing is to get rid of it entirely and start again later...
james.au
The Aurizon interstate intermodal business was a greenfields business.  It had no legacy overmanning problems to contend with.  Its competitor, PN, was the one with the legacy manning (albeit only as far back as National Rail).  However, it is the interstate intermodal business which loses the most and is unviable to the point of not being able to sell to anyone and having to shut down.  Can't blame the workers there, only the management.
  DalyWaters Chief Commissioner

From the North West Star:

Queensland Labor Senators Anthony Chisholm and Murray Watt said that Aurizon needed to confirm its long term commitment to Queensland following the company announcement.
The announcement was concerning for workers and the broader freight network.
“The company have also indicated that they intend to hand back the Regional Freight Transport Services contract at the end of the year,” the two Senators said in a joint statement.


That last sentence probably means the end of all freight trains in Queensland apart from bulk and North Coast mainline.
  Typhon Assistant Commissioner

Location: I'm that freight train tearing through the sky in the clouds.
Plenty of empty slots on PN services as well. Let's not fool ourselves.
bingley hall


I just think there isn't room for three rail operators, especially on the East West.

Hopefully the freight gets shared between the other operators and that the drivers who want to can find work with either of those companies.
  james.au Chief Commissioner

Location: Sydney, NSW
Sorry if I seem to be commenting in a negative fashion, but since privatisation, there hasn't been much, if anything to celebrate regarding rail freight transport in QLD, and especially in regional areas.  With ex-mining exec's in charge of Aurizon, the focus was always going to be on bulk mineral freight at the expense of all others.  I have absolutely no sympathy for this smeg company, except for its long suffering workers of course.

Except if those long suffering workers are part of the problem - i.e. they are being provided with jobs where the jobs are not supported by revenue....


There is a bit of AZ bashing around the boards, but I bet that PN went through a similar sort of exercise post privatisation.  Getting rid of LCL (which saw SCT come to the fore) was probably one of these actions.  Too many people and too much cost to make it work, easier thing is to get rid of it entirely and start again later...
The Aurizon interstate intermodal business was a greenfields business.  It had no legacy overmanning problems to contend with.  Its competitor, PN, was the one with the legacy manning (albeit only as far back as National Rail).  However, it is the interstate intermodal business which loses the most and is unviable to the point of not being able to sell to anyone and having to shut down.  Can't blame the workers there, only the management.
DalyWaters

Fair point on the first, however it might have been that the same operational policies were applied to the new interstate business, lumbering it down with costs.

Re the actual business, i took a look at the MTP.  There isn't going to be a lot of lost service on the East West, with 5 timetabled services per week (MP/PM).  On the North South, it looks like its a daily service.  IM sure there are some ad-hoc services there too.

With SCT entering the BM market, providing an alternative to PN, and already having its own significant services on the PM, I can see only upwards movement for them here.  Oh to be an SCT shareholder right now.
  DalyWaters Chief Commissioner



Fair point on the first, however it might have been that the same operational policies were applied to the new interstate business, lumbering it down with costs.
james.au
Come on.  Don't let management off like that.

It was Interrail.  A separate entity which had its own enterprise agreement.  Nothing to do with Queensland conditions.
  DalyWaters Chief Commissioner

Oh to be an SCT shareholder right now.
james.au
If your name is Smith.

SCT is still privately owned by the Smith family.
  james.au Chief Commissioner

Location: Sydney, NSW


Fair point on the first, however it might have been that the same operational policies were applied to the new interstate business, lumbering it down with costs.Come on.  Don't let management off like that.

It was Interrail.  A separate entity which had its own enterprise agreement.  Nothing to do with Queensland conditions.
DalyWaters
Im not. If it happened it wouldnt have been without management approval.

Im not pro or anti either group (i.e. management or employee).  Just talking through the potential options as I see them.

Re Interrail, if it did, and the Landcrusier example is true and representative, then regardless of the separate EBA it may not have been any better off....
  james.au Chief Commissioner

Location: Sydney, NSW
BTW, No-one has put up any decent evidence of why management has made a mess of this but it has been documented in different spaces that there are cost issues to consider.

For example, how and why did they lose the SCT work??  Lets look at that and see what it says about management.

Conversely, lets look at the K&S Freighters deal and see how management won that contract.  

Happy to condemn management (I used to be a company auditor so have plenty of experience in doing it) but i don't see anything to condemn them with just yet.
  LancedDendrite Chief Commissioner

Location: North Haverbrook; where the monorail is king!
Interesting to know what the reasoning behind shedding the SCT load was, whether that was losing money as well or if it was just spite or even clearing the decks for this very announcement
BrentonGolding
SCT has said publicly that they withdrew their loading on the BM/MB Aurizon service because Aurizon couldn't guarantee them a long-term service contract. Now, you could infer that Aurizon management was looking at winding down their interstate intermodal service for at least a year or two based on that, but on the other hand Aurizon also managed to poach the substantial K&S Freighters intermodal contract off Pacific National earlier this year as well. I get the feeling that maybe Aurizon management was trying to hold onto the SCT loading after all, but also wanted to get a more lucrative deal out of them by using a short-term contract as a bargaining tool. I can understand that move, given that the Interstate unit was incurring those losses. Obviously it was a poor gamble in hindsight and now they're cutting their losses on the whole thing.

It'll be interesting to see where the K&S Freighters loading goes now - to PacNat or SCT?

Oh to be an SCT shareholder right now.
james.au
I'd argue that precisely because you or I can't be SCT shareholders is one of the reasons why they're still in the game. The sharemarket can be pretty ruthless - just look at Aurizon's performance yesterday on the ASX. We'll see how they fared on the day after in a couple hour's time.
  james.au Chief Commissioner

Location: Sydney, NSW

Oh to be an SCT shareholder right now.
I'd argue that precisely because you or I can't be SCT shareholders is one of the reasons why they're still in the game. The sharemarket can be pretty ruthless - just look at Aurizon's performance yesterday on the ASX. We'll see how they fared on the day after in a couple hour's time.
LancedDendrite

Agreed totally.  There are generally 3 types of firms in terms of returns.  Large corporates with on average reasonably stable yields around 10%ish.  Small businesses that only cover wages of their owner and don't return the cost of capital. And medium ones in the middle that generate huge returns.  These are often privately owned and brilliantly managed, though private equity owned firms can sometimes fit into this group.  SCT fits into this third group.  If SCT went public, it could move to the first group.
  Fatty Assistant Commissioner

Location: Melbourne
From the North West Star:

Queensland Labor Senators Anthony Chisholm and Murray Watt said that Aurizon needed to confirm its long term commitment to Queensland following the company announcement.
The announcement was concerning for workers and the broader freight network.
“The company have also indicated that they intend to hand back the Regional Freight Transport Services contract at the end of the year,” the two Senators said in a joint statement.


That last sentence probably means the end of all freight trains in Queensland apart from bulk and North Coast mainline.
DalyWaters

Local sources point towards QR operating the RFTS contracts themselves. I've heard that they'll start looking for drivers in Townsville next month.

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