Session coverage by guest blogger Liam Stanley
- Presented by Russell Smith
- Location: Room Four
- Time: Session #1 (11:40am - 12:15pm)
- Number of Attendees: 14
- Format: Presentation and discussion
Russell is Freight Consultant working in Melbourne.
Key session points:
1 Supply Chain Definitions
A supply chain is composed of the freight, systems and infrastructure from producer to end user. The 5 modes of freight transportation - sea, air, rail, pipeline & road – require efficient intermodal transfers for a supply chain to be competitive.
Key issues of Victorian supply chains by world standards are high line-haul costs, low vehicle and terminal utilisations, and intermodal terminal delays. Intermodal terminals are often privately owned with limited access to all potential users. About 85% of all on-land freight tonne-kilometres is on road, which does not have the economies of scale of rail. One freight train carries 200 containers and replaces 100 trucks on road. Truck drivers have high wage costs and trucks lack of two-way loading.
Government regulations have failed to provide a network of rail-road intermodal terminals or to stop transport companies vertically intergrating i.e. buying terminals and refusing to give efficient service competitors trains and trucks at those terminals. Governments have allowed property speculators have bought up land around Essendon Airport, Avalon Airport, Hastings Port and Tullamarine Airport limiting access by others which is not in the public interest.
Lack of open supply chain competitiveness means that you and I as consumers are paying more for the transport component of costs of foods or products we purchase. Monopoly pricing is commonplace in supply chains.
2 Economic Evaluation of Policies/Projects
Cost Benefit Analysis is the main appraisal technique in which forecast costs and benefits of a project/policy in future years are discounted using discounted cash flow techniques to provide a benefit-cost ratio or net present value criterion for decision making. Negative impacts such as loss of residential amenity and health impacts are included as negative benefits.
Wider economic impacts such as positive agglomeration benefits may apply to an underground passenger train system but not freeways and have been incorrectly included in the East West Link business case by the Napthine Government desperate to justify a PPP tollway project that simply has no net social benefit. Wrong assumptions such as this demonstrate how economic evaluation can be corrupted for political purposes.
Broad community consultation is normal to assist governments to identify and mitigate any negative impacts thereby making a project/policy of net community benefit; however, when the appraisal has been politically corrupted, the Government cannot afford to consult the affected communities. Sound familiar? Victorian industry has not come out and said we accept the East West Link as a necessary priority as they want many more deserving projects.
Economic evaluation aims to help match supply to demand for transport and to prevent over building or building second best projects. However, the dominance of the road lobby in Victoria and the lack of a freight rail planning agency to complement VicRoads (the road planner) have meant that Governments for decades have over-invested in costly road and bridge projects. ‘Build it and they will come’ has been VicRoads’ philosophy whilst rail, stevedores, ports, airport land links, pipelines and freight e-commerce systems have not received Government investment. Road and the rest is not a level playing field.
The road lobby is the winner. The community is the loser. The future like this is unsustainable.
3 Port of Melbourne Land Transport Case Study
Over the last 100 years, rail’s share of the Port’s land transport has fallen from 95% to 9%. Road trucks have grown from 5% to 91%. This neglects pipelines which have always carried a minor share of freight - bulk liquids between ships and Coode Island storage and the Altona petrochemical Rail industries.
As Ports Minister in the Baillieu Government, Mr Napthine oversaw the West Swanson Dock stevedore’s closure of its rail terminal which handled about 50% of the Port’s international freight. That meant 100% of that terminal’s trade went directly on to Melbourne’s roads using the old truck fleet and some 300 trucking companies that are poorly coordinated.
The other 50% of international cargoes are handled at East Swanson Dock which has an obsolete rail terminal that operates at less than 50% efficiency with only about 6 trains a day. Port of Melbourne Corporation has discouraged rail for at least 25 years. It and the Napthine Government have planned the new Webb Dock development to be 100% road.
Of the 6000 trucks a day to/from East and West Swanson docks, only (2000) one third of trucks load in both directions. Some 4000 trucks a day are empty in one or other direction. The truck booking system designed to obviate this problem has been misused despite it achieving high truck back-loading in Ports Botany, Brisbane and Freemantle. The so-called ‘premier port’ of Australia has been losing market share to these interstate ports. Port Botany boasts 6 suburban port shuttle trains a day to/from Botany minimising the unnecessary trucking traffic congestion problem and removing 600 trucks a day from Sydney roads!
Conversely, successive Victorian Governments have allowed Melbourne port’s rail feeder lines and rail terminals to become dilapidated and even to be closed, whilst trucks increasingly congest the inner suburbs. They think expanding roads like City Link will make supply chains more competitive but the interstate ports keep gaining market share at Melbourne’s expense. Melbourne is Australia’s most expensive port.
Entrepreneurs who have bought freight trains are prohibited from operating freely in Victora and competing with road freight. Regulations and red tape is excessive for rail-based supply chains. However, every year Governments have permitted larger combination vehicles on roads despite the road trauma consequences. Road based infrastructure is less regulated and easier to access.
Intermodal inefficiencies suit current truck operators so long as they can get away with passing on delay costs to customers and make higher profits without driving. Selling the port for the highest cost short term benefit could make matters worse unless conditional upon very stringent performance requirements.
4 New Transport Policy Change Ideas:
· Re-introduce the 30% rail freight mode share target by 2030 for Melbourne Port (i.e. less than 70% freight on road) and stipulate this as part of the Port Corporation sale tender, then support the new port owner, stevedores and private freight train operators to achieve this.
· Facilitate re-opening of closed freight train terminals in partnership with owners e.g. at West Swanson Dock, Webb Dock, Somerton, North Altona, Portland, Morwell, etc. Make all operating terminals efficient.
· Legislate for open freight train access at all rail-road intermodal terminals in Victoria and incentivise the private freight train operators to provide more competitive freight services, thereby attracting heavy line-haul freight off roads.
· Fix sub-standard links in Victoria’s standard and broad gauge rail networks and signalling systems to increase the private train operators’ efficiency and competitiveness with road and reduce road trauma.
· Start government-industry optimisation of supply chains where multi-company systems are needed e.g. to stop truck queues and achieve efficient two-way loading of trucks at ports, airports, freight hubs and rail-road intermodal terminals. Greater backloading of trucks could reduce one third (2000) trucks a day at Melbourne Port alone and reduce truck impacts on affected suburbs.
· Design a cheaper Westgate Distributor road between Westgate Freeway and Swanson Dock without tolls and without the unnecessary extra lanes on Westgate Freeway: exit and entry ramps to/from Hyde St only need to be one lane wide arterial road standard, not 2 lanes freeway standard.
· Introduce Melbourne CBD road pricing for heavy trucks over 4 tonnes to minimise unnecessary truck traffic and associated negative impacts.
· Scrap trucks and heavy vehicles over 30 years old to improve road safety and reduce heavy vehicle pollution and noise.
· Defer approval of B-Triples and larger combination road vehicles on highways running parallel with rail lines.
Discussion covered the following points:
· The Government’s Victorian Freight and Logistics Plan contains 10 times more projects than are affordable, none of which have been evaluated and prioritised, so expect to see only politicised decisions to fund the road projects that suit certain electorates.
· Most rail projects will remain as unfunded promises and/or second best designs. PPP tollways will sap available funds for years.
· Need for depoliticised multimodal planning agencies that properly evaluate and prioritise the optimal projects/policies.
· Victoria is missing the rail renaissance that is occurring overseas.
· The community wants environmentally sustainable forms of freight transport.
· Need for disruptive technologies, regulations and processes to change the status quo.
· Municipal councils find it difficult to promote rail freight transport and arrest/reverse the trend to heavy road vehicles