Aurizon selling intermodal business to PN/Linfox

 
  Graham4405 Minister for Railways

Location: Dalby Qld
those who are saying that there are no need for "shiny cars in Junee" are wrong.
Fatty
Oh, I don't know. Wouldn't a rusty, faded old Kingswood do the job? LaughingRazz

Sponsored advertisement

  Fatty Assistant Commissioner

Location: Melbourne
those who are saying that there are no need for "shiny cars in Junee" are wrong.
Oh, I don't know. Wouldn't a rusty, faded old Kingswood do the job? LaughingRazz
Graham4405
By the sounds of it most of the "interested third parties" reckon that would do. Wink
  fzr560 Chief Train Controller

those who are saying that there are no need for "shiny cars in Junee" are wrong.
Oh, I don't know. Wouldn't a rusty, faded old Kingswood do the job? LaughingRazz
By the sounds of it most of the "interested third parties" reckon that would do. Wink
Fatty
As much as I love the Kingswood, a couple of questions for the Kingswood side of the debate. Let's say MB7 is running 4 hours late. Crew are instructed to drive to Henty for relief. Rusty Kingswood doesn't start. What now? Or Rusty Kingswood does start and Skippy decides to end it all, half way to Henty. Driver swerves and parks Kingswood in tree triggering Kingswood's huge arsenal of active and passive safety features to be deployed(NOT). Duty of Care, anyone?

       Best case scenario is crew calls cab, but even that may have consequences. That additional half hour may result in the train missing the curfew in Sydney. The box that was going to be 4 hours late into Brisbane is now 7 hours late. That additional half hour also means the crew have exceeded their hours. Everyone involved is now breaking the law. Any volunteers to explain it to the regulator?
        In the end, Kingswood V Kluger isn't the reason that Aurizon tossed in the towel.
  Trainplanner Chief Commissioner

Location: Along the Line
Whether shiny cars in Junee maybe wrong, the point of the example is not.   The point is Aurizon IN RELATIVE TERMS is a 2 bit player in Junee compared to the other two (PN and QUBE).   If QUBE on a rare occassion needed to exchange crews out of town because of a service disruption they could always use a taxi.   The vast majority of trains change crews at Junee platform and they walk to the Crossing Motel over the road.   So if its cars that's worrying people then what's the Aurizon Office in town for!!!   The market and promote additional business.  Certainly not!!!!  

The example was just a small example that if Aurizon has the same approach of having additional resources and infrastructure to support something as straight forward as changing crews at an intermediate point on the system then multiply that thinking system wide and then do the math.  If Aurizon use more staff to run intermodal terminals compared to its competitors then the same applies yet again.  

My principal concern is around rail not being able to achieve greater potential in the transport market pure and simple.  Losing a reasonably significant operator whatever the reason makes the case for advancing rail all the more harder.   I don't have an axe to grind re Aurizon.  Not in the slightest.
  james.au Chief Commissioner

Location: Sydney, NSW
Whether shiny cars in Junee maybe wrong, the point of the example is not.   The point is Aurizon IN RELATIVE TERMS is a 2 bit player in Junee compared to the other two (PN and QUBE).   If QUBE on a rare occassion needed to exchange crews out of town because of a service disruption they could always use a taxi.   The vast majority of trains change crews at Junee platform and they walk to the Crossing Motel over the road.   So if its cars that's worrying people then what's the Aurizon Office in town for!!!   The market and promote additional business.  Certainly not!!!!  

The example was just a small example that if Aurizon has the same approach of having additional resources and infrastructure to support something as straight forward as changing crews at an intermediate point on the system then multiply that thinking system wide and then do the math.  If Aurizon use more staff to run intermodal terminals compared to its competitors then the same applies yet again.  

My principal concern is around rail not being able to achieve greater potential in the transport market pure and simple.  Losing a reasonably significant operator whatever the reason makes the case for advancing rail all the more harder.   I don't have an axe to grind re Aurizon.  Not in the slightest.
Trainplanner

Just adding a second and third agree to this statement from @Trainplanner because the forum functionality won't let me add more than one.
  Fatty Assistant Commissioner

Location: Melbourne
Whether shiny cars in Junee maybe wrong, the point of the example is not.   The point is Aurizon IN RELATIVE TERMS is a 2 bit player in Junee compared to the other two (PN and QUBE).   If QUBE on a rare occassion needed to exchange crews out of town because of a service disruption they could always use a taxi.   The vast majority of trains change crews at Junee platform and they walk to the Crossing Motel over the road.   So if its cars that's worrying people then what's the Aurizon Office in town for!!!   The market and promote additional business.  Certainly not!!!!  

The example was just a small example that if Aurizon has the same approach of having additional resources and infrastructure to support something as straight forward as changing crews at an intermediate point on the system then multiply that thinking system wide and then do the math.  If Aurizon use more staff to run intermodal terminals compared to its competitors then the same applies yet again.  

My principal concern is around rail not being able to achieve greater potential in the transport market pure and simple.  Losing a reasonably significant operator whatever the reason makes the case for advancing rail all the more harder.   I don't have an axe to grind re Aurizon.  Not in the slightest.
Trainplanner

Often when an organisation employs staff in an area they have some sort of office where the administration can happen. It's not that unusual and in the grand scheme of things, like the "shiny SUVs", it's not what saw the downfall of the interstate intermodal business. What did it was that they undercut the major competitor by such a margin that their services were not sustainable.

QUBE are an excellent example to use. They use (relatively) low paid casual and contract drivers, own little rolling stock, skimp on maintenance, have no office space and often make drivers use their personal vehicles for relief jobs. They also have a reputation for being cowboys with questionable training and safety. They are also cheap for customers to use.

Aurizon failed because they attempted to run a professional business while charging QUBE level prices.
  james.au Chief Commissioner

Location: Sydney, NSW
Aurizon failed because they attempted to run a professional business while charging QUBE level prices.
Fatty

If thats the case, then I'm tempted to say more fool them.  In the face of such competition, they needed to respond differently if they wanted to stay in business.
  Mufreight Train Controller

Location: North Ipswich
Whether shiny cars in Junee maybe wrong, the point of the example is not.   The point is Aurizon IN RELATIVE TERMS is a 2 bit player in Junee compared to the other two (PN and QUBE).   If QUBE on a rare occassion needed to exchange crews out of town because of a service disruption they could always use a taxi.   The vast majority of trains change crews at Junee platform and they walk to the Crossing Motel over the road.   So if its cars that's worrying people then what's the Aurizon Office in town for!!!   The market and promote additional business.  Certainly not!!!!  

The example was just a small example that if Aurizon has the same approach of having additional resources and infrastructure to support something as straight forward as changing crews at an intermediate point on the system then multiply that thinking system wide and then do the math.  If Aurizon use more staff to run intermodal terminals compared to its competitors then the same applies yet again.  

My principal concern is around rail not being able to achieve greater potential in the transport market pure and simple.  Losing a reasonably significant operator whatever the reason makes the case for advancing rail all the more harder.   I don't have an axe to grind re Aurizon.  Not in the slightest.
One of the most probable outcomes of Aurizon getting out of the intermodal business is that STC is a contender for some of that business as they are already established running trains on the Perth, Adelaide, Melbourne, Sydney and Brisbane routes and their only impediments are locomotives and rollingstock, for Qube to grab any of this traffic they would have to establish themselves in a lot of new areas and find locos and rollingstock, a far more costly process than for STC who initially could just add extra wagons to existing services in a start up phase.
Queensland is a whole new ball game but again STC is starting ahead of any other operators with its terminal at Bromelton with the yet to be commissioned dual gauge between there and Acacia Rudge.

Often when an organisation employs staff in an area they have some sort of office where the administration can happen. It's not that unusual and in the grand scheme of things, like the "shiny SUVs", it's not what saw the downfall of the interstate intermodal business. What did it was that they undercut the major competitor by such a margin that their services were not sustainable.

QUBE are an excellent example to use. They use (relatively) low paid casual and contract drivers, own little rolling stock, skimp on maintenance, have no office space and often make drivers use their personal vehicles for relief jobs. They also have a reputation for being cowboys with questionable training and safety. They are also cheap for customers to use.

Aurizon failed because they attempted to run a professional business while charging QUBE level prices.
Fatty
  Fatty Assistant Commissioner

Location: Melbourne
Aurizon failed because they attempted to run a professional business while charging QUBE level prices.

If thats the case, then I'm tempted to say more fool them.  In the face of such competition, they needed to respond differently if they wanted to stay in business.
james.au
No arguments there. It was a terribly mismanaged project and the results speak for themselves.
  Graham4405 Minister for Railways

Location: Dalby Qld
they needed to respond differently if they wanted to stay in business.
james.au
But it appears that they don't want to stay in the intermodal business...
  fzr560 Chief Train Controller

they needed to respond differently if they wanted to stay in business.
But it appears that they don't want to stay in the intermodal business...
Graham4405
To be fair, they're probably not really sure but they are fully committed to Rainbow Day, the Newcastle Knights and lots of other things that don't involve running trains or adding value for shareholders. Welcome to Australia, 2017.
  james.au Chief Commissioner

Location: Sydney, NSW
they needed to respond differently if they wanted to stay in business.
But it appears that they don't want to stay in the intermodal business...
Graham4405
Maybe they were, but internal and external forces working together mean that they couldn't make a go of it?
  Sulla1 Chief Commissioner

Aurizon's problem is its senior management has decided on an arbitrary profit margin each contract or division must achieve, to in turn achieve the arbitrary operating ratio that American investors in particular like to use to establish share value. And it's not working - Aurizon's share value and market capitalisation has remained stubbornly static for the last few years, while the likes of Qantas (once faced with many of the same traditional operating practices) has quadrupled in value over the same period. For Aurizon, going down this path creates risk aversion to growth outside of core markets and more dangerously - an inability to react to changing markets. Historically, many North American railroads (particularly those once reliant on coal) have ended in corporate collapse in these circumstances, and in Australia we only have to look at the current ructions in commercial media with the slow motion wrecks of Fairfax and the Ten Network resulting from an inability to react to market change. At a time when Aurizon has the cash to get "new and innovative" to succeed, it's getting "old and stodgy".
  nswtrains Chief Commissioner

Aurizon's problem is its senior management has decided on an arbitrary profit margin each contract or division must achieve, to in turn achieve the arbitrary operating ratio that American investors in particular like to use to establish share value. And it's not working - Aurizon's share value and market capitalisation has remained stubbornly static for the last few years, while the likes of Qantas (once faced with many of the same traditional operating practices) has quadrupled in value over the same period. For Aurizon, going down this path creates risk aversion to growth outside of core markets and more dangerously - an inability to react to changing markets. Historically, many North American railroads (particularly those once reliant on coal) have ended in corporate collapse in these circumstances, and in Australia we only have to look at the current ructions in commercial media with the slow motion wrecks of Fairfax and the Ten Network resulting from an inability to react to market change. At a time when Aurizon has the cash to get "new and innovative" to succeed, it's getting "old and stodgy".
Sulla1
There have not really been any major rail corporate collapses in the USA since the days of Conrail. You may be generalizing too much as the Eastern rail collapses that led to Conrail were not generally related to a reliance on one commodity but a number of factors, mainly the over regulation of rail in the states. Since deregulation through the Staggers Act, there may have been mergers but not collapses.
  Trainplanner Chief Commissioner

Location: Along the Line
Right on the money there Sulla1.
  Fatty Assistant Commissioner

Location: Melbourne
Aurizon's problem is its senior management has decided on an arbitrary profit margin each contract or division must achieve, to in turn achieve the arbitrary operating ratio that American investors in particular like to use to establish share value. And it's not working - Aurizon's share value and market capitalisation has remained stubbornly static for the last few years, while the likes of Qantas (once faced with many of the same traditional operating practices) has quadrupled in value over the same period. For Aurizon, going down this path creates risk aversion to growth outside of core markets and more dangerously - an inability to react to changing markets. Historically, many North American railroads (particularly those once reliant on coal) have ended in corporate collapse in these circumstances, and in Australia we only have to look at the current ructions in commercial media with the slow motion wrecks of Fairfax and the Ten Network resulting from an inability to react to market change. At a time when Aurizon has the cash to get "new and innovative" to succeed, it's getting "old and stodgy".
Sulla1
Yes, the "drive to 75" and the minimum margin policy is/was an idiotic way to run a company. I'll be surprised if we see Aurizon operating outside of coal areas in the not too distant future.
  Fatty Assistant Commissioner

Location: Melbourne
they needed to respond differently if they wanted to stay in business.
But it appears that they don't want to stay in the intermodal business...
Maybe they were, but internal and external forces working together mean that they couldn't make a go of it?
james.au
Takes great deal of managerial skill to not make a go of it when you're starting out with a monopoly!
  nightjar Station Master

Location: Sunny Coast
This months Railway Digest is reporting that as part of the deal, PN is to acquire (from memory) 16 x 2800's (members not specified but one would assume would include 2802-2807 sugar locos), interestingly transferred across would also be 1 x 1720 (1730) & 1 x 2300 (2331).

Off topic, but worth purchasing Railway Digest as also includes great piece on last days of the Cairns-Forsayth mixed.
  bevans Site Admin

Location: Melbourne, Australia
Takes great deal of managerial skill to not make a go of it when you're starting out with a monopoly!
Fatty

Could not agree more!  Perhaps the management at Aurizon also attended the Warwick Fairfax School of Management?
  james.au Chief Commissioner

Location: Sydney, NSW
ACCC inquiry page so far.  The issues paper has not yet been released.

http://registers.accc.gov.au/content/index.phtml/itemId/1203319/fromItemId/750991
  james.au Chief Commissioner

Location: Sydney, NSW
This months Railway Digest is reporting that as part of the deal, PN is to acquire (from memory) 16 x 2800's (members not specified but one would assume would include 2802-2807 sugar locos),
nightjar

I wonder if any more of the 2800cl might be put on SG?
  nightjar Station Master

Location: Sunny Coast
This months Railway Digest is reporting that as part of the deal, PN is to acquire (from memory) 16 x 2800's (members not specified but one would assume would include 2802-2807 sugar locos),

I wonder if any more of the 2800cl might be put on SG?
james.au
It's possible, or would the bulk of the remaining 33 members be largely committed to the GNR?
  Sulla1 Chief Commissioner

Currently there's 46 2800s in Queensland, with a further three on standard gauge in NSW and one on narrow gauge in Western Australia. PN will be receiving 19 2800s as Aurizon's narrow gauge intermodal sale, and PN will need all of these to manage its new narrow gauge intermodal traffic. Aurizon's Bulk Division will be getting the rest of the class, which at the moment will be the four already interstate and the 27 left from the PN sale.

There are rumours the 20-ish Stuart 4000s (the allocation used to be 25, but a number have already been transferred to Pring and Callemondah) will be sent back to the diesel coal depots and replaced by 2800s, which in some cases may mean train size reductions or triple heading on the Mt Isa line. Long and short, if Bulk's 2800s return to the Mt Isa line en masse, then a large proportion of the "27" will be staying on narrow gauge indefinitely.
  Sulla1 Chief Commissioner

It will be interesting to see how the 2300 and 1720 will be used. I suspect they were included to make up the horsepower equivalent of a "twentieth" 2800. As two 645-engined orphans, each with unique traction equipment, they won't sit well in PN's modern fleet - although the PH and 88 classes show PN isn't afraid of buying small numbers of dissimilar minorities at the moment. I suspect 2331 and 1730 will find themselves on the Townsville Jetty cement shunts or doing potential transfers between Acacia Ridge and Moolabin.
  Trainplanner Chief Commissioner

Location: Along the Line
Sulla 1. What do you think will be the impact on rail's mode share.   The Linfox partnership is interesting in that Linfox uses rail to an extent on other corridors around the country so if in partnering with PN we finally get more seamsless integration of the supply chain then does that potentially increase rail market share.   It's a shame that QR following the report re freight on the North Main to Townsville hasn't been more aggressive in selectively lengthening crossing loops to operate longer "oversize" trains which I recall was one of the shorter term strategies to improve productivity on the basis the corridor could manage a small number of longer trains.

Sponsored advertisement

Display from: