DECEMBER’S announcement that TNT and Toll Holdings were forming a consortium to exploit Australia’s nascent open access regime by operating freight trains between major cities means that National Rail Corporation could follow Australian National into what amounts to liquidation (RG 1.97 p8). Conceivably, the joint TNT-Toll operation could become so dominant that it will effectively negate the policy of competition on the rails, as English Welsh & Scottish Railway has done in Britain.

TNT, which is controlled by Royal PTT Nederland NV, became the second open access operator on Australia’s interstate trunk routes in July 1996 when it launched a thrice-weekly Melbourne - Adelaide - Perth service. Chief Executive David Mortimer said this service had ’exceeded expectations’ and would be expanded before other routes were opened up. ’If we can get the efficiencies and cost savings I predict, then rail will be in a position to recapture much of the freight that has moved over to road in recent years.’

Toll was NRC’s second largest customer after steel producer BHP, and the most important for unitised freight. A contract signed last year looked set to bring NRC up to A$80m in annual revenues, but Toll Managing Director Paul Little was predicting in December that ’a significant percentage of our volume could be on TNT’s trains by March’ - Toll’s Melbourne - Perth rail traffic is worth A$60m a year.

This decision virtually eliminates any chance that NRC will meet mandatory profitability criteria when transitional subsidies end a year hence. The federal government, which owns 72·8% of NRC shares, has already decided to sell; as minority shareholders, the NSW and Victorian governments are expected to go along with this. TNT-Toll will want to acquire rolling stock and other assets, but may balk at bidding for NRC as a complete entity. Picking up useful assets at fire-sale prices without the liabilities, as AN purchasers will be able to do this year, may prove more appealing come 1998. o