Work has begun on building an interstate rail connection at the Moorebank Intermodal Terminal in Sydney’s west, a key piece of infrastructure that will drive the estate’s transformation into a $4.2 billion logistics hub, the nation’s largest.

The hub, linking road and rail transport, will be one of four such facilities nationally, and significantly improve the efficiency of freight movement along the east coast.

The 240-hectate intermodal facility can accommodate as much as 850,000 square metres of industrial space. 

The federally funded infrastructure at Moorebank, linking to interstate rail, is the crucial complement to another rail terminal there, known as IMEX, which connects to shipping at Port Botany.

Operating the terminal through a joint platform is the government-owned National Intermodal Corporation, ASX-listed logistics operator Qube, and Logos, a local industrial powerhouse now controlled by Kong Kong’s ESR.

But it is the property development potential at Moorebank, spurred by the transport infrastructure – the facility is well served also by the M5 and M7 – that won Logos’s involvement. Backed by AustralianSuper and AXA IM Alts, along with Canada’s Ivanhoé Cambridge and TCorp, Logos acquired the real estate at the terminal last year from Qube in a $1.67 million deal.

About 250,000 sq m of industrial space is built or under construction at the estate, which will ultimately expand into a 850,000 sq m logistics facility when fully developed. A big feature of Moorebank will be the high level of automation in managing container movements.

A big driver in demand for that space, according to Logos’ Australian head, Darren Searle, is the increasing importance throughout the supply chain, from third logistics providers to customers, of a reduction in carbon footprints.

Hence the appeal of the so-called “modal shift”, moving more freight by rail rather road, resulting in a greener and more cost-efficient process, Mr Searle told The Australian Financial Review on Wednesday.

“The interstate [intermodal] will give the likes of Woolworths and the other tenants the ability to move freight from their national distribution centres to the other capital cities. That’s the work starting today,” he said.