Port Botany

Freight coalition unite in calling for rail container incentive scheme

Freight and logistics groups have called out the NSW government’s undermining of its own mode share target for containers carried by rail into Port Botany.

The Australian Logistics Council (ALC), Freight on Rail Group of Australia (FORG), Freight and Trade Alliance (FTA), and the Australasian Railway Association (ARA) along with individual port rail freight operators are questioning the wisdom of allowing more high productivity vehicles on Sydney’s roads.

“By incentivising HPVs, government is perversely derailing their own policy to grow rail’s mode share target – at a time when Sydneysiders want safer roads and less traffic congestion and vehicle emissions,” said ALC board member and Qube managing director Maurice James.

The NSW government has been issuing permits for high productivity vehicles to access the Sydney road network and major motorways such as WestConnex. By allowing trucks which can carry two containers to travel within Sydney, this reduces the competitiveness of rail for the metro import container market.

The NSW government has set itself the goal of having 28 per cent of the container trade through Port Botany being handled by rail by 2021, however just 17.6 per cent is currently hauled by rail.

Instead of having each mode compliment each other, with rail for longer distances and trucks for the first and last mile, road transport was monopolising container traffic, with impacts on the local community, said FORG chair and Pacific National CEO Dean Dalla Valle

“Today, many HPVs are doing ‘every mile’ of the freight task in Sydney, placing heightened pressure on traffic congestion, road safety and vehicle emissions,” he said.

Dalla Valle advocated for a measure such as the Western Australian government’s Port of Fremantle container incentive scheme was needed in NSW.

“Prior to introduction of the incentive scheme at the Port of Fremantle in 2006-07, rail mode share was a meagre two per cent. The scheme underpinned growth of rail’s mode share which is now above 20 per cent – the highest in the country,” said Dalla Valle.

Director of the FTA and secretariat to the Australian Peak Shippers Association Paul Zalai said that governments should encourage importers to use rail services.

“Governments must maximise port assets and manage our trade gateways through incentivisation of rail usage for imports to metropolitan sites and importantly, streamlined connectivity to regional areas to cost effectively reach export markets.”

ARA CEO Caroline Wilkie said communities would be feeling the brunt of the lack of rail transport.

“The balance has tipped so far we run the risk of Sydney’s roads being over-run with trucks unless there is urgent action to use more rail.”

infrastructure

National Infrastructure Summit speakers and agenda announced

As Australia looks to invest in infrastructure as a way to build the country’s economy out of the COVID-19 crisis, the National Infrastructure Summit has arrayed some of the most significant leaders in this space to discuss the opportunities ahead.

Opening the virtual conference on day one, October 14, will be NSW Premier Gladys Berejiklian, who is looking at an expanding rail infrastructure pipeline in the state, with new Sydney Metro lines recently funded and moving ahead in the contract process.

For a federal view, day two will be opened by Deputy Prime Minister, Minister for Infrastructure, Transport and Regional Development Michael McCormack. With the conference taking place days after the delivery of what the federal budget, which is widely expecte to include more infrastructure spending, McCormack will highlight these commitments as well as other projects such as Inland Rail that are always underway.

The program also includes discussions between Romilly Madew, CEO of Infrastructure Australia, Marion Terrill, Transport and Cities Program Director, Grattan Institute, and Cathal O’Rouke, who will pick over what impact COVID-19 has had on the infrastructure sector.

With logistics impacted by new trends during COVID and the acceleration of others, Dean Dalla Valle, CEO of Pacific National, and Maurice James, managing director of Qube will be joined by Marika Calfas, CEO of NSW Ports and Brendan Bourke, CEO of the Port of Melbourne to analyses these changes.

Alan Tudge Minister for Cities, Urban Infrastructure and Population and NSW Minister for Water, Property and Housing Melinda Pavey will give ministerial addresses, followed by a Q&A.

Other panels include a focus on infrastructure funding and post-pandemic transport.

This year, the conference will be delivered virtually via online events platform Brella. The platform will provide an opportunity for networking and viewing speaker and sponsor information.

For more information, click here: https://www.nationalpolicyseries.com.au/afr-national-infrastructure-summit/.

Patrick and Port of Melbourne sign agreement for rail terminal at East Swanson Dock

Patrick Terminals and the Port of Melbourne have agreed to construct a new rail terminal to enable more freight to be delivered by rail to East Swanson Dock.

The new rail terminal, expected to be completed by mid 2023, will handle up to 200,000 TEUs annually, and provide a direct rail connection between the Port of Melbourne and suburban intermodal terminals, enabling more freight to be transported to and from the port via rail.

“The new facility will provide a direct interface with Patrick’s East Swanson Dock Container Terminal, reducing cost of last mile between the rail terminal and quayside for rail based container movements,” said Patrick CEO Michael Jovicic.

The announcement of the rail terminal is part of a wider push to get more freight onto rail at the Port of Melbourne. The Port of Melbourne is investing $125 million in on-dock rail as part of the Port Rail Transformation Project (PRTP) and this project is a significant part of that, said Brendan Bourke, CEO of the Port of Melbourne.

“The PRTP is a key project of our Port Development Strategy and Our Plan for Rail and is vital to successfully accommodating future growth at the port.”

In August, the Victorian and federal governments announced funding for a new freight rail connection in Melbourne’s South East.

The Victorian government is also providing funding for the Port Rail Shuttle network, which aims to reduce truck movements in metropolitan Melbourne by linking the port with intermodal facilities on the urban fringe.

“This new on dock rail terminal supports the introduction of the government’s Port Rail Shuttle Network, which will reduce truck trips on the Melbourne road network,” said Bourke.

The Patrick rail terminal will be constructed at the Coode Road site and is co-funded with the Port of Melbourne. Patrick is contributing $15m to the project.

Construction is expected to begin in early 2021 and the Port of Melbourne is currently undertaking a request for tender profess for the infrastructure works associated with the Port Rail Transformation Project.

Once complete, the terminal will include two dual gauge 23 tonne axle load sidings of 600 metres and interface with the Patrick international container terminal options.

The agreement is part of the extension of Patrick’s tenure at the Port of Melbourne to 2066. Maurice James, managing director of Qube which owns 50 per cent of Patrick, said in a statement to the ASX the project will enable more freight to be moved via rail.

“The development supports Patrick’s landside efficiency focus and is expected to facilitate the development of metro-based rail shuttle services over the medium term.”

Once complete, the Swanson Dock Rail Terminal will be an open access facility, in line with the Port of Melbourne rail access protocol, allowing Qube and other rail operators to use the facility.

Jovicic said that the terminal will be a key node in the Melbourne freight rail network once new intermodal facilities are completed.

“Over time, it is expected that rail modal share for will increase, with metro rail being a major driver of growth alongside the development of metropolitan inland terminals. Rail modal share and volumes on rail will be dependent on the take up of rail, particularly for metro container movements – which today are dominated by trucks.”

Qube

Qube invests in rail despite COVID hit to profits in 2020

Qube has reported a net profit drop of over 50 per cent due to the impact of COVID-19, bushfires, and floods during the 2020 financial year.

These impacts were offset by growths in Qube’s revenue and the commencement of new rail contracts.

During the past financial year, Qube began rail operations from the IMEX terminal at the Moorebank Logistics Park as companies including Woolworths committed to significant distribution centres at the site.

Qube also signed new contracts with Shell and BlueScope Steel. For BlueScope, Qube will provide interstate rail haulage services as part of a 10-year contract and intermodal operations at Qube’s North Dynon facility in Melbourne. To deliver the contract Qube will invest $73 million in new rollingstock and infrastructure, as well as leased equipment.

Qube managing director Maurice James said that the company’s overall performance was sound.

“The events of 2020 tested the strength and resilience of the company in ways which no-one could have predicted. This result once again demonstrates the success of our diversification strategy which protected the company as markets were hit by the COVID-19 pandemic,” he said.

“We were also able to adapt rapidly as an organisation to protect the health and safety of our people, deliver on customer requirements and minimise the economic damage to the Group. We are also well positioned for growth post pandemic with conservative gearing, and a strong balance sheet with substantial funding capacity.”

Rail will continue to play a major part in Qube’s operations during the next financial year as the company constructs the interstate rail terminal at Moorebank Precinct West along with further warehousing space. Further capital expenditure is planned in the 2021 financial year on rail terminals, precinct infrastructure and locomotives and wagons for the BlueScope contract.

Operations at Qube’s intermodal terminals will also become more automated as the company shifts from manual to automated mode at the IMEX rail terminal.

Woolworths

Woolworths commits to Moorebank distribution centre

Woolworths has agreed to be a new, major tenant at the Moorebank Logistics Park in south west Sydney.

The supermarket giant has partnered with Qube, which is the manager of the Moorebank Logistics Park, to build a national and regional distribution centre across over 75,000sqm.

Qube managing director Maurice James said that a key advantage of the site was its rail connection.

“We’re delighted Woolworths has recognised the significant competitive advantages available to tenants at the Moorebank Logistics Park,” he said.

“The benefits of railing containers direct from Port Botany to a terminal co-located with warehousing across a site the size of the Sydney CBD will deliver Woolworths time and cost efficiencies.”

The recently developed Moorebank Logistics Park has a direct rail link to Port Botany and there are plans to develop an interstate rail terminal in the future. When complete, 1.5 million TEUs will be able to be transported between Port Botany, Moorebank, and the national rail freight network.

Moving more freight via rail will reduce heavy truck movement on Sydney roads, with Woolworth’s estimating that rail access will remove least 26,000 truck movements in NSW per year.

Australian Logistics Council CEO Kirk Coningham said the agreement between Qube and Woolworths showed the benefits of investing in rail.

“ALC has been a long-time advocate for the development of the Moorebank Logistics Park and its direct rail connection to Port Botany. This allows more freight to be moved via rail, helping to alleviate road congestion, which in turn delivers environmental benefits through reduced emissions.”

According to Qube, rail from Botany to Sydney’s south west enables containers to be delivered to the warehouse, unpacked and dispatched on the same day as the container is unloaded at the port.

Woolworths Group CEO Brad Banducci said that locating at Moorebank would improve the company’s operations.

The new facilities will help us improve on-shelf product availability with faster restocking, reducing congestion in stores, and enabling a safer work environment for our teams with less manual handling.”

The move to Moorebank is a consolidation of Woolworth’s distribution sites at Yennore, Mulgrave, and parts of Minchinbury.

Both the national and regional distribution centres are subject to NSW government planning approval and are expected to open in 2023 and 2024, respectively.

Qube remains in a strong financial position

Despite the continued uncertainty and impact of Covid-19, Qube is in a strong financial position.

Maurice James, Qube’s managing director said in a business update on Monday April 6 that Qube is well positioned to work with all its key stakeholders to address the current challenging environment.

“Qube is in a strong financial position with significant liquidity (cash and available undrawn facilities) of over $450 million after the payment of the interim dividend which will occur on the 7th April 2020. Qube has no near term debt maturities and material headroom to its covenants,” James said.

“Qube is pursuing several initiatives to further increase its liquidity.”

The board of directors of Qube Holdings Limited said in the business update that it is not presently able to forecast underlying earnings for FY20 and is withdrawing previous guidance.

“Qube continues to benefit from its diversified operations and variability in its cost base which has enabled it to continue to generate positive earnings and cash flow despite declining volumes in parts of its business,” the board of directors said.

The board of directors gave an update on the potential major tenant for Moorebank Precinct West, stating that formal agreements have now been finalised and an agreement has been made.

“The agreement is currently expected to be considered by the counterparty’s Board for approval in late April/early May although the current environment may delay this,” they said.

“Qube is continuing to progress the partnering / monetisation process focussed on Moorebank and certain other property assets.

“Qube has received significant interest from a high quality group of prospective partners who are keen to participate in the next stage of the process.”

Qube is continuing to operate as an essential service for transporting goods, however the company expects a decrease in volumes in several of its markets due to the impact of tighter restrictions, demand, and operations.

The board of directors said the effect from the pandemic to March 31 this year has impacted Qube productivity, but noted that bulk activities continue to experience normal volumes with minimal disruptions or slowdowns.

Container volumes across Qube’s operations have been weaker reflecting the general slowdown in economic activity in domestic and international markets, as well as other products including vehicles, bulk and general cargo.

Qube revenue up as Moorebank tenant is finalised

Qube Holdings was able to deliver earnings growth despite challenges in some parts of the business.

According to half-year financial results, underlying revenue for Qube was up 12.9 per cent to $970.1 million – with underlying Net Profit After Tax and Amortisation (NPATA) up 5.1 per cent to $76.3m.

Qube is Australia’s largest integrated provider of import and export logistics services and admitted that the company had reasonable earnings growth despite economic headwinds.

Major contracts signed with Shell Australia and Bluescope Steel helped support medium term growth, as did the completion of the Target warehouse, Import/Export (IMEX) terminal, and commencement of rail operations at Moorebank Logistics Park (MLP) in November last year. 

Commercial and legal negotiations are progressing with a potential major tenant for a material part of Moorebank Precinct West (MPW) and binding agreements are being finalised. It is now expected that the counter party’s board will consider approval of the finalised agreements in the near future.

The unnamed counter party had previously signed the reservation agreement with Qube to secure an area at MLP on MPW. 

Qube board of directors stated that based on the current commercial terms, the area to be leased by this party will be considerably larger and in a different location to that originally contemplated by the reservation agreement and the warehouse construction is likely to commence in calendar 2021, which is earlier than previously expected. 

Based on the extensive negotiations that have taken place, Qube expects that negotiations of the binding agreements will be concluded successfully but are subject to the counter party’s Board approval. 

“The development and lease would represent a key milestone for the MLP project and confirms the significant logistics benefits that the site can offer tenants,” Qube board of directors said in a statement.

Statutory earnings (NPAT) for the period were $51.7m, which was lower than the prior corresponding period’s statutory earnings and Qube’s underlying earnings for the current period.

Qube stated the impact of the new lease accounting standard (AASB 16) that was applied to Qube from 1 July 2019 reduced Qube’s statutory after-tax earnings in the period by around $10.3m, but had no impact on Qube’s underlying earnings or cash flow.

Maurice James, Qube managing director said there has been a steady performance across the Qube group demonstrating again the resilience of our earnings base across our chosen markets. 

“Qube was able to deliver earnings growth despite challenges in some parts of the business including declining motor vehicle and container volumes and the continued effect of the drought,” James said.

Qube has been assessing the potential impact on its FY20 full year results from recent events including the bushfires, adverse weather events across the country in early calendar 2020, as well as the coronavirus. 

“Although these events have not had a material impact on Qube’s first half results, Qube currently expects some weakness in its second half underlying earnings as a result of the above factors that is likely to result in the level of underlying earnings growth in FY20 being lower than previously forecast,” the Qube board of directors said in a statement.

“The uncertainty of these events, in terms of the quantum of their impact on Qube’s earnings and their likely duration, makes forecasting near term earnings inherently uncertain.”

Qube’s board of directors said they believe the company is placed to continue to deliver sustainable, long-term earnings growth from its strategic assets and strong market positions.