Impact of Inland Rail on regional road and rail networks

Inland Rail, Australia’s largest freight rail infrastructure initiative, is a transformative national project that is expected to change the way many commodities move on the East Coast.

In determining what the optimal decision-making by government(s) may be for their regional road and rail networks, the NSW, Queensland, and Victorian governments need an evidence base that reflects how the increasingly integrated east-coast markets work, and what cross-jurisdictional decision making is required.

This study aims to update and improve the current evidence base available to the NSW, QLD, and VIC governments in relation to bulk grain production and movements on the east coast. This will aid future public policy interventions that relate to the optimal use of the regional road and rail networks in each of the three states, considering the impact of Inland Rail.

Participants

• Transport for NSW
• Department of Transport and Main Roads (Queensland)
• Department of Transport and Planning (Victoria)
• Swinburne University of Technology

Project background

The significance and rationale of the Inland Rail project is in its potential to shift more goods from road onto rail. The project will seek to better understand the impacts of Inland Rail on the transport of grain. This will be by updating the current evidence base available to the NSW, QLD, and VIC governments for possible changes that may subsequently occur in the movement of export bulk grain on the east coast. The research will be delivered in partnership with Department of Transport and Main Roads (Queensland), Department of Transport and Planning (Victoria) and Swinburne University of Technology through the iMove CRC

Enhancing access to Inland Rail through a strategic East-Coast freight network

A key challenge for the three east-coast jurisdictions is the need to better understand how the benefits of the Inland Rail can be improved through a “Strategic East-Coast Regional Freight Network” (RFN) that can be used to enhance access to the Inland Rail infrastructure.

The three east-coast states produce over 20 million metric tonnes (mmt) of grain on average per annum. Over half of this produce (11-13mmt) p.a. goes to domestic consumption on a relatively stable basis. The remainder, approximately 7- 9mmt, is the ‘exportable surplus’ which can be highly variable ranging from virtually no export task in a drought year, to approximately 15 mmt of export grain in a bumper year.

The export grain surplus moves from the farms of the 10,000 grain growers across the east coast to the 8 export ports on the east coast, in a process of continual aggregation into greater volumes by participants in the grain storage and handling market.

Once the grain has been consolidated into larger volumes by the storage and

handling firms, the longer main-line haul task to port is dominated by rail. Historically, rail has sought ‘Take or Pay’ type arrangements with agricultural commodity owners due to the fluctuations in yields from year to year. This makes the commodity owners a little less confident in accessing rail as they may be liable for significant freight costs regardless of annual crop yield. For this part of the task, there is close alignment between the commercial interests of the supply chain participants and the public policy imperatives of the QLD, NSW, and VIC governments.

For this part of the journey, the least cost- commercial pathway aligns with the least cost economic pathway (inclusive of societal/external costs), where the use of rail instead of the road network generates positive external benefits for the wider community. In general terms, commodity dealers and freight forwarders will look at the whole supply chain and make decisions that provide the best outcomes on overall cost, efficiency, and reliability.

However, for the initial short haul task from the farms to consolidation points (roughly the first 150—200 km), the transport task follows the pathway of least financial cost and is increasingly contested between road and rail. This leg of the grain transport task has also seen a steady decline in the use of rail, and an increase in the use of trucks. For the transport task on the contested portion (150 —200 km), the commercial interests and the public interest are likely more diverged. In Queensland, there are few farms or consolidation points with dedicated rail facilities, making the first mile element of the freight task generally uncontestable as road is the only mode available.

The increasing use of heavy vehicles instead of rail for this task, while achieving reduced commercial costs to industry, is likely resulting in increased economic costs (negative externalities) for the wider community. These costs comprise increased air pollution, road crashes, noise, greenhouse gas emission, unrecovered road damage and loss of amenity from use of trucks, not trains, for transport of grain to port. These costs are not generally reflected in the ‘prices’ paid for road use.

This project aims to address this by undertaking transport and economic analysis tasks to update the evidence base and provide directions for future investment decisions. This study aims to maximise the benefits of Inland Rail and help determine what an agreed strategic investment plan could be for keeping an appropriate level of the grain transport task on rail.

Project objectives

Overall, this study will update and improve the current evidence base available to the VIC, NSW and QLD governments, for considering future public policy interventions or investments that relate to the optimal use of the regional road and rail networks in each of the three states, considering the impact of Inland Rail.

Specifically, this research will include the following objectives and key tasks:

1. Identify the current regional rail lines/road segments in NSW, QLD, and VIC that meet the key characteristics outlined above.
2. Undertake pre- and post-Benefit Cost analysis on these lines/road section, assuming an operational Inland Rail as the change/treatment factor.
3. Determine a range of cross-jurisdictional approaches (scaled interventions) by the NSW, QLD, and VIC governments that can be undertaken to enhance the benefits of Inland Rail.
4. Determine the extent to which these cross-jurisdictional approaches (scaled interventions) by the NSW, QLD, and VIC governments would enhance the public benefits from optimising the rail within the study area.
5. Identify what governance processes/reforms can be considered to ensure that such scaled interventions are matched by commitments to use improved infrastructure by key industry participants, including contractual commitments.

Please note …

This page will be a living record of this project. As it matures, hits milestones, etc., we’ll continue to add information, links, images, interviews and more. Watch this space!