RATES charged by Australia’s rail freight operators are being forced down by open access competition. Last month, FreightCorp was awarded a two-year ’interim’ contract by Flinders Energy to carry 5 million tonnes of coal to Leigh Creek power station near Port Augusta; a 10 year deal is in prospect. Only 15 months earlier, Australian Southern Railroad - a private consortium led by US short line group Genesee & Wyoming - acquired this 250 km haul during the break-up of Australian National. It was easily the most profitable element of ASR’s collection of medium distance freight operations on three gauges in South Australia (RG 10.97 p703).
As FreightCorp is wholly owned by the New South Wales government, the Leigh Creek operation has reverted to the public sector. Indeed, this is the first time that a state-owned railway has secured a freight haul entirely outside its former borders. ASR’s Chief Executive Officer, Chuck Cabot, said it was ’difficult for us to compete against a government-owned railway.’ It seems that AN had charged A$9/tonne to carry Leigh Creek coal, ASR was getting A$5, and FreightCorp’s bid was A$3/tonne - which may give would-be purchasers of Westrail and V/Line Freight pause for thought.
National Rail Corp, also in line for privatisation, quotes an independent study by consultants Ernst & Young in support of its claim that staff productivity is now two-thirds higher than Canada’s best operator, and within 3% of the largest US railroads. Despite the ending of transitional subsidies in February 1998, and rates that fell by 13%, NRC cut 1997-98 losses on interstate freight to only 6% of what they had been back in 1990-91.
On December 2, just as the Leigh Creek deal was announced, NRC struck at the heart of FreightCorp’s home territory, winning a long-term contract to carry Hunter Valley coal to Macquarie Generation’s Bayswater and Liddell power stations. NRC’s Managing Director, Vince Graham, said the contract ’allowed Macquarie to buy coal from any mine in the Hunter Valley with a rail loading facility.’