NSW Freight Policy Research Program: Modules 1–3

Transport for NSW (TfNSW) is delivering a Research Program to improve the evidence base for freight policy reform in New South Wales. A key initiative that the improved evidence base will support is the Freight Policy Reform Program (FPRP), currently being undertaken by TfNSW.

To support this program, TfNSW have partnered with the Swinburne University of Technology and the iMOVE Cooperative Research Centre to deliver three modules of the Research Program.

Participants

• Transport for NSW
• Swinburne University of Technology

Project background

The NSW Government has had a long-standing goal of increasing rail mode share for the Port Botany IMEX freight task, and TfNSW is exploring possible improvements to the current policy settings to achieve that goal.

At present, rail faces cost and service quality deficiencies compared to road that challenge the goal of improving rail’s market share to secure public policy benefits.

The Research Program consists of several research modules. The following three are delivered through this project:

• Module 1: Intermodal terminals (IMT) Proximity Matters in metropolitan Sydney;
• Module 2: International Comparison of Market Structure of Port Rail Supply Chains and its impact on modal share; and
• Module 3: Possible changes to current Rail Access regulation

Project objectives

MODULE 1: IMT Proximity Matters in metropolitan Sydney

This module is testing the hypothesis that proximity matters – that is, that proximity of the final destination (import) or originating point (export) of a container to an IMT is a critical factor in determining if rail can offer a competitive transport service to direct road haulage to or from port. It will also test the sub hypothesis that there are three distance-based catchment zones for an IMT:

• A ‘natural rail market’ zone, where rail has a majority or significant market share compared to road.
• A ‘contestable’ market zone, where road and rail compete and there is an even market share.
• An ‘uncontested’ zone, where the distance from the IMT means rail is not a competitive option, and the task is road-dominated.

The purpose of Module 1 is to identify these catchment zones for IMTs in metropolitan Sydney and the rate of distance-based degradation – that is, the rate at which the rail mode share declines as distance to the IMT increases. Outputs will inform where mode-shift policy options could be targeted to maximise the use of rail.

MODULE 2: International Comparison of Market Structure of Port Rail Supply Chains and its impact on modal share.

This module is testing the hypothesis that the rail supply chain for Port Botany is overly disaggregated compared to other port rail systems that perform a similar task, and that this is a cause of coordination problems in the supply chain. It is also hypothesised that the international experience will reveal that the more integrated the supply chain is, the higher the rail mode share.

The purpose of Module 2 is to improve the evidence base for determining if there is a prevailing, or even best-practice, model for metropolitan port container rail supply chains, to analyse the extent to which the Port Botany supply chain may differ from this, and what impact of any difference may be on performance. Outputs will be used to inform possible public policy reforms to address coordination issues, if it is determined that the rail supply chain for Port Botany is an outlier internationally in terms of the degree of disaggregation, and if current policy settings are a cause of this level of disaggregation.

MODULE 3: Rail Access Arrangements

TfNSW is looking at policy options to improve the allocation and utilisation of train paths on the Metropolitan Rail Network.

IPART’s Review of the NSW Rail Access Undertaking (Final Report, May 2023) recommends that “access rights be transferable at the election of the access holder or end use customer, subject to the transferee meeting objective standards as assessed by IPART for access of the access provider” (Recommendation 16e).

Currently, the NSW Rail Access Undertaking does not allow for capacity trading or for end users (or operators) to hold access entitlements. TfNSW needs to respond to this recommendation and consider if there are benefits from amending the rail access framework to allow capacity trading and access entitlements for increased path utilisation.

This module is exploring three options to allow a more flexible approach to rail access arrangements:

1. allowing capacity transfer between current access agreement holders,
2.  extending access entitlements to end-user customers, not just rail operators, and
3. improved allocation mechanisms for train paths, to ensure the benefits from extending access rights would be achieved.

The purpose of Module 3 is to critically assess the feasibility of moving from the current arrangements, where access rights to a path are held by an operator and can only be relinquished back to a centralised capacity “pool”, to one where more flexible trading among supply chain participants can occur. The intent is to determine whether IPART’s recommendations can be met and define the benefits and risks of providing end users with access entitlements or allowing paths to be traded or sold by operators or end users.

Outputs will form part of TfNSW’s response to IPART’s recommendations, informing whether capacity transfer policy or access entitlements will be adopted. The research will also provide an assessment of opportunities and risks for alternative mechanisms for path allocation.

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!