Aurizon prepares to sell its Intermodal Division

 
  james.au Minister for Railways

Location: Sydney, NSW
I suspect the ACCC's contention that Qube was "interested" may be an exageration, Qube has had plenty of opportunities to establish itself in the Queensland rail market, but has chosen to buy trucks instead of locomotives. And, as Watco demonstrates, you don't have to sit around waiting for Aurizon hand-me-down rollingstock to enter the Queensland market, just get a contract and buy what you need. In the end, my take is that the PN/Aurizon deal would have preserved the existing traffic task on rail, and if anyone else wanted to enter the market they could spend money (like PN has) to do so - there's still forty trains worth of trucks per day on the Bruce Highway.
Sulla1
Re QUBE, are their volumes yet sufficient and is their route structure appropriate to warrant purchasing a fleet of locos/wagons?  Or were the incumbents (Aurizon and PN) able to capture the tonnages (either naturally through cost advantage, or through hard pricing) and make it hard for QUBE to enter?

Re Watco, they probably have a risk free take or pay contract from GrainCorp which significantly changes the investment decision making process.  If they dont have to fight for the volumes, they can invest with far more certainty.

Sponsored advertisement

  ParkesHub Chief Commissioner

We spoke too soon about Toll. Linfox have just purchased the entire Aurizon business in Qld including rail assets.
  james.au Minister for Railways

Location: Sydney, NSW
Interesting development.

Who carries Linfox on the SG intermodal network?
  emerald-a Locomotive Driver

Aurizon will move the wagons by rail for Linfox with railcrew and others transferring to Bulk from Intermodal to accomodate this.
  james.au Minister for Railways

Location: Sydney, NSW
Aurizon will move the wagons by rail for Linfox with railcrew and others transferring to Bulk from Intermodal to accomodate this.
emerald-a
Hang on so Aurizon will keep locos and run hook and pull?

I think ill wait for the press release......
  BrentonGolding Chief Commissioner

Location: Maldon Junction
Aurizon will move the wagons by rail for Linfox with railcrew and others transferring to Bulk from Intermodal to accomodate this.
Hang on so Aurizon will keep locos and run hook and pull?

I think ill wait for the press release......
james.au
https://www.afr.com/business/aurizon-strikes-new-deal-to-sell-queensland-intermodal-business-to-linfox-for-73m-20181011-h16jz4

10 year Take or Pay deal by the looks of it

BG
  emerald-a Locomotive Driver

There is an opt out of the hook and pull deal after 5 years, and Aurizon will maintain the wagons for Linfox.
  ParkesHub Chief Commissioner

Currently, Linfox have a long term deal with PN for the Satandard gauge. I can't see that changing too soon as Linfox built the Kewdale intermodal site on PN land with a direct access into the PN Kewdale yard.
  james.au Minister for Railways

Location: Sydney, NSW
Satandard gauge
ParkesHub
@Dangersdan707 will love you for that one.
  james.au Minister for Railways

Location: Sydney, NSW
Aurizon will move the wagons by rail for Linfox with railcrew and others transferring to Bulk from Intermodal to accomodate this.
Hang on so Aurizon will keep locos and run hook and pull?

I think ill wait for the press release......
https://www.afr.com/business/aurizon-strikes-new-deal-to-sell-queensland-intermodal-business-to-linfox-for-73m-20181011-h16jz4

10 year Take or Pay deal by the looks of it

BG
BrentonGolding
Thanks BG
So incentive on Linfox to fill the trains however not sure what level of take or pay this involves.
Also interestingly, this suggests that Aurizon sees that it doesnt have a cost issue with loco management but intermodal interface management (ie securing containers to move) was/is its issue.
Ill be interested to hear @Sulla1's views.
  Sulla1 Chief Commissioner

Linfox gets the Aurizon intermodal contracts, road haulage staff and access to terminals. Aurizon's Bulk Division will provide a ten year line haulage contract, with the Intermodal rail haul staff transferring to the Bulk Division.

Seems to be a potentially better deal for the future of rail freight with Aurizon keeping its toes, staff and assets in the Queenslsnd intermodal business. There may also be beneficial flow on effects for the freight business on the Central and Mt Isa lines with the Bulk Division/Linfox able to offer haulage contracts within the one Division - rather than between the Intermodal and Bulk Divisions - where shared contracts have fallen by the wayside.

Time will tell I suppose.
  jmt Deputy Commissioner
  james.au Minister for Railways

Location: Sydney, NSW
Linfox gets the Aurizon intermodal contracts, road haulage staff and access to terminals. Aurizon's Bulk Division will provide a ten year line haulage contract, with the Intermodal rail haul staff transferring to the Bulk Division.

Seems to be a potentially better deal for the future of rail freight with Aurizon keeping its toes, staff and assets in the Queenslsnd intermodal business. There may also be beneficial flow on effects for the freight business on the Central and Mt Isa lines with the Bulk Division/Linfox able to offer haulage contracts within the one Division - rather than between the Intermodal and Bulk Divisions - where shared contracts have fallen by the wayside.

Time will tell I suppose.
Sulla1
What contracts does Aurizon currently have and where are those contracts held on the SG network (for the same customer if applicable)?
  Sulla1 Chief Commissioner

Aurizon's largest intermodal customer in Queensland would be Coles. Some of the major liquor chains also use Aurizon. Not sure who hauls that freight south of Brisbane.
  Big J Deputy Commissioner

Location: In Paradise
I think that this is a great outcome considering the alternatives (closure or near monopoly).

Would this have happened without ACCC action? Probably not.

While the ACCC are from perfect, at least they are effective. Watching the Banking Royal commission, ASIC and other financial regulators, they need to lead and be an effective regulator. They do need to use the BIG stick sometimes. ACCC are not afraid to take on the big end of town and their silks to create change.

While the deal with Linfox could have some negative effects too, but at least it gives transport customers choice. A great outcome.
  fzr560 Chief Train Controller

I think that this is a great outcome considering the alternatives (closure or near monopoly).

Would this have happened without ACCC action? Probably not.

While the ACCC are from perfect, at least they are effective. Watching the Banking Royal commission, ASIC and other financial regulators, they need to lead and be an effective regulator. They do need to use the BIG stick sometimes. ACCC are not afraid to take on the big end of town and their silks to create change.

While the deal with Linfox could have some negative effects too, but at least it gives transport customers choice. A great outcome.
Big J
Transport customers would have had plenty of choice under the previous arrangement. We are talking about a small percentage of the total intermodal freight task. We are not talking about the Nullabor.
  Sulla1 Chief Commissioner

QR's North Coast Line carries the largest intrastate intermodal task in the country, over 3-million tonnes between PN and Aurizon. That's about a third of the Nullabor, so not entirely small bickies. And also very significant to the Bruce Highway users who were staring down the barrel of 1.5-million tonnes of containers moving to road in January - roughly 750 to 1000 extra B-Doubles per week.
  bevans Site Admin

Location: Melbourne, Australia
I think that this is a great outcome considering the alternatives (closure or near monopoly).

Would this have happened without ACCC action? Probably not.

While the ACCC are from perfect, at least they are effective. Watching the Banking Royal commission, ASIC and other financial regulators, they need to lead and be an effective regulator. They do need to use the BIG stick sometimes. ACCC are not afraid to take on the big end of town and their silks to create change.

While the deal with Linfox could have some negative effects too, but at least it gives transport customers choice. A great outcome.
Big J

My concern would be the propensity of Linfox Management to move the rail based carriage to truck in line with their current business practices?
  BrentonGolding Chief Commissioner

Location: Maldon Junction
Having signed a 5 + 5 year hook and pull deal with Aurizon? I don't think so.

BG
  Big J Deputy Commissioner

Location: In Paradise
I think that this is a great outcome considering the alternatives (closure or near monopoly).

Would this have happened without ACCC action? Probably not.

While the ACCC are from perfect, at least they are effective. Watching the Banking Royal commission, ASIC and other financial regulators, they need to lead and be an effective regulator. They do need to use the BIG stick sometimes. ACCC are not afraid to take on the big end of town and their silks to create change.

While the deal with Linfox could have some negative effects too, but at least it gives transport customers choice. A great outcome.

My concern would be the propensity of Linfox Management to move the rail based carriage to truck in line with their current business practices?
bevans
I agree, but as others have said this is a financial commitment to rail. How it pans out with the cessation of rail, a continuation of this arrangement or an increase of rail.

At the very least the outcome has given a 5 year delay of total cessation.
  ParkesHub Chief Commissioner

I think that this is a great outcome considering the alternatives (closure or near monopoly).

Would this have happened without ACCC action? Probably not.

While the ACCC are from perfect, at least they are effective. Watching the Banking Royal commission, ASIC and other financial regulators, they need to lead and be an effective regulator. They do need to use the BIG stick sometimes. ACCC are not afraid to take on the big end of town and their silks to create change.

While the deal with Linfox could have some negative effects too, but at least it gives transport customers choice. A great outcome.

My concern would be the propensity of Linfox Management to move the rail based carriage to truck in line with their current business practices?
bevans
I wouldn't worry too much about that. Linfox Intermodal is the old FCL Transport. It provides a carriage service to other Linfox divisions and sends as much by rail as it can. Divisions such as FMCG (Fast Moving Consumer Goods) still send B-Dubs interstate. Arnotts in Huntingwood NSW is a good example of this. It's really up to each division President to maximise his/her division's profitability. Intermodal is run by Ian Strachan and he's a good operator, I've worked with him. Can't say the same about the insipid CEO Mark Mazurek though. If Ian get's the support from the Board, you should see a fair bit of rail action.

Edit: The Linfox Board has also mandated significant and on-going reductions in carbon emissions. Rail is part of that strategy.
  ParkesHub Chief Commissioner

Satandard gauge
@Dangersdan707 will love you for that one.
james.au
Actually, I was posting up on Railb@stard a while ago and made that typo. I was going to correct it but...well...it seemed apt!
  BrentonGolding Chief Commissioner

Location: Maldon Junction
My concern would be the propensity of Linfox Management to move the rail based carriage to truck in line with their current business practices?
I wouldn't worry too much about that. Linfox Intermodal is the old FCL Transport. It provides a carriage service to other Linfox divisions and sends as much by rail as it can. Divisions such as FMCG (Fast Moving Consumer Goods) still send B-Dubs interstate. Arnotts in Huntingwood NSW is a good example of this. It's really up to each division President to maximise his/her division's profitability. Intermodal is run by Ian Strachan and he's a good operator, I've worked with him. Can't say the same about the insipid CEO Mark Mazurek though. If Ian get's the support from the Board, you should see a fair bit of rail action.

Edit: The Linfox Board has also mandated significant and on-going reductions in carbon emissions. Rail is part of that strategy.
ParkesHub
Indeed and to quote the AFR article "Linfox said the acquisition would increase the scale and scope of its services throughout Queensland and "strategically position" it for the future growth of the proposed inland rail line"

Doesn't sound like a move from Rail to road to me, sounds more like re-positioning for the future.

BG
  a6et Minister for Railways

I think that this is a great outcome considering the alternatives (closure or near monopoly).

Would this have happened without ACCC action? Probably not.

While the ACCC are from perfect, at least they are effective. Watching the Banking Royal commission, ASIC and other financial regulators, they need to lead and be an effective regulator. They do need to use the BIG stick sometimes. ACCC are not afraid to take on the big end of town and their silks to create change.

While the deal with Linfox could have some negative effects too, but at least it gives transport customers choice. A great outcome.

My concern would be the propensity of Linfox Management to move the rail based carriage to truck in line with their current business practices?
I wouldn't worry too much about that. Linfox Intermodal is the old FCL Transport. It provides a carriage service to other Linfox divisions and sends as much by rail as it can. Divisions such as FMCG (Fast Moving Consumer Goods) still send B-Dubs interstate. Arnotts in Huntingwood NSW is a good example of this. It's really up to each division President to maximise his/her division's profitability. Intermodal is run by Ian Strachan and he's a good operator, I've worked with him. Can't say the same about the insipid CEO Mark Mazurek though. If Ian get's the support from the Board, you should see a fair bit of rail action.

Edit: The Linfox Board has also mandated significant and on-going reductions in carbon emissions. Rail is part of that strategy.
ParkesHub
Its a sad memory I know when you mention the Arnott's factory at Huntingwood, a move they had to make out of Nth Strathfield, I can remember the amount of vans, and not just the 4 wheelers that were sent out of there 5 days a week to various country areas, a joining up again with rail would be good, there is a proposal but a while away yet for a new bulk goods terminal in the Erskine Park area when the new line from St Mary's goes ahead, few years away but if Linfox are eager to capture a lot back to rail who knows what can happen.

But, I wont hold my breath on that aspect of recapturing traffic though.

Sponsored advertisement

Display from:   

Quick Reply

We've disabled Quick Reply for this thread as it was last updated more than six months ago.