East-coast regional network for enhanced access to Inland Rail

The iMOVE project, Impact of Inland Rail on regional road and rail networks, has been completed and offers an evidence base to help shift more goods from road onto rail on Australia’s east coast, with a focus on exporting bulk grain.

Transport for NSW, Queensland’s Department of Transport and Main Roads, Department of Transport and Planning (Victoria), and Swinburne University of Technology collaborated on the project.

Background

Inland Rail is significant in its potential to shift goods from road to rail. It will lead to faster and more reliable journeys, which should increase the commercial appeal of rail for long-haul tasks to ports and exports markets, and lead to a reduction in social costs. One export market where the impact of Inland Rail is of particular interest to policy makers is the bulk export grain market.

Heavy vehicles are sometimes cheaper for bulk grain transport than trains but almost inevitably generate higher economic costs to the wider community. Those costs, which are not recoverable, include increased air pollution, road crashes, noise, greenhouse gas emissions, unrecovered road damage, and trucks’ impact on amenity.

However, some aspects remain poorly understood such as how bulk grain moves and the impact of these movements on regional road and rail networks. Hence the purpose of this research is to update the evidence base for making regional road/rail investment decisions, considering the changing policy emphasis on transport emissions reduction.

Economic assessment and cost-benefit analysis

Key to the project was conducting an economic assessment to strengthen the evidence base for Victorian, NSW, and Queensland governments. This analysis was needed to inform future public policy decisions and potential investments to optimise bulk-grain export movements across regional rail and road networks.

The study asked whether governments should prioritise upgrading grain rail or road infrastructure and how the use of high-productivity road vehicles changes the economic case for future rail investment. The project analysed 12 grain lines across the three east-coast states.

A cost-benefit analysis investigated four scenarios:

1. Closing the grain lines.
2. Upgrading grain lines to class 3 tracks so they could travel at 70 km/h maximum speed instead of 30 km/h.
3. Upgrading grain lines to class 2 tracks, which would increase the tonne axle load (TAL) from 19 TAL to 21 TAL, and increase the maximum speed to 80 km/h.
4. Upgrading grain lines to class 1, which would increase the tonne axle load (TAL) from 19 TAL to 23 TAL and allowing a maximum speed of 80 km/h.

Each scenario incorporated operating, infrastructure, and crash-related costs, along with the value of freight travel-time savings by rail or road.

Baseline results

The economic case for closing the existing grain lines is not compelling. In most cases, the additional negative economic impacts exceed the gains from switching from rail to road. The analysis used a ten per cent rule of thumb mode shift for each rail class upgrade.

But the case for rail line upgrade is also not strong in most cases when using a seven per cent discount rate (SDRC). The analysis shows that incremental changes in the volume of grain shifted from road to rail, while producing appreciable societal benefits, is insufficient to match the estimated cost of providing the upgrade works.

However, rail’s competitive advantage declines when the analysis is conducted based on B-doubles and road trains. The dependency of the economic assessment of grain line retention and/or upgrading on the separate, or coordinated, actions of other actors in the grain export supply chain (rail operators, receival and storage sites, on-farm storage) suggests that alignment of incentives and coordination (long term contracting, quasi-reintegration), of bulk grain supply chain operations, can potentially achieve similar or superior outcomes to below-rail investment.

Policy options beyond grain line upgrades

The project also looked at how risk-sharing models and governance reforms in NSW, Victoria, and Queensland could better align incentives and reduce operating and transaction costs in rail-based grain freight.

Risk sharing models can better align above and below rail operations, maintenance, investment incentives; distribute risk between public and private actors; and reduce combined costs; thus, facilitating greater utilisation or competitiveness with road transport. Governance reforms can reduce transaction costs associated with coordinating grain transport across jurisdictions/regulatory environments, across different network providers; thus, facilitating greater utilisation or competitiveness with road transport.

The analysis shows a continuing economic case for public investment, as grain line closures in these states would lead to significant negative social outcomes. However, rail’s competitiveness ultimately depends on how its costs compare with road freight, not just on reducing its own costs.

Risk and the transaction costs of rail-based grain freight are shared differently across operators and governments, depending on the organisational model. Three alternatives illustrate how incentives shift

• Integrated/franchised model: operators control above and below rail functions and take on more maintenance and volume risk. This can lower coordination costs, but may limit utilisation where commercial potential is low.
• Service delivery model: also gives operators operational control, but government retains revenue and service specifications, creating clarity while limiting incentives for network-wide synergies
• Regional infrastructure model: coordinates rail and road investment across public and industry actors, treats grain transport as a single system, and balances incentives so trucks remain efficient for short-haul tasks while supporting better asset use, labour flexibility, and local jobs.

Each model can improve coordination of grain line operations, maintenance, and investment, but they do not resolve wider system-level coordination costs from farm to port. Public sector institutional reforms or policy options could address these issues, such as through an East Coast Grain Transport coordination framework.

Conclusions

The analysis shows that although shifting some grain from road to rail delivers real social benefits, the gains are not large enough for a compelling case for rail line upgrades in most cases.

The project also identified the need for further research into the impacts of high‑productivity vehicles – such as B‑doubles and road trains – on rail’s competitiveness. While HPVs lower the cost and externalities per tonne of freight already moved on road, they also strengthen road’s commercial advantage over rail, which may widen the gap between commercially chosen and socially optimal freight pathways.

Public-sector reforms or policy changes could help resolve key risk-sharing issues. For instance, the team recommended an East Coast Grain Transport coordination framework to:

• Share data transparently
• Streamline decision-making processes
• Clarify responsibilities
• Standardise regulatory frameworks and operating processes
• Facilitate joint infrastructure investments.

Subsidies, contracts, investment guarantees, performance incentives and asset-sharing models can distribute risks more accurately.

Download the final report

Click the button beelow to download a copy of Strategic East-Coast Regional Grain Network: Investigating possible road/rail policy and investment options across QLD, NSW & Victoria, to respond to the operation of Inland Rail.