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1
Regional Development Australia - Murraylands & Riverland Inc.
Freight study and rail operations investigation
Prepared for:
Brenton Lewis, Chief Executive Officer
Date:
17 November 2014
Prepared by:
Scott McKay of Flywheel Advisory – Supply Chain Solutions
ABN 47 214 415 190
PO Box 6039
Linden Park 5065
0411 042 130
scott@flywheeladvisory.com.au
www.flywheeladvisory.com.au
0
1 TABLE OF CONTENTS
2 INTRODUCTION
2
3 BACKGROUND
2
4 SCOPE
2
5 SUMMARY
2
6 APPROACH
4
6.1 INTERVIEWS
4
6.2 TOUR OF STUDY AREA
5
7 FREIGHT INFRASTRUCTURE
5
7.1 RAIL
5
7.1.1 INFRASTRUCTURE
5
7.1.2 OWNERSHIP
5
7.1.3 CAPACITY AND CONDITION
6
7.1.4 VIABILITY
7
7.1.5 ACCESS
8
7.1.6 DISCONTINUATION
8
7.2 ROADS
8
7.2.1 INFRASTRUCTURE
8
7.2.2 CAPACITY AND CONDITION
8
7.2.3 UPGRADES
9
7.2.4 SAFETY
9
7.2.5 ADELAIDE HILLS
9
7.2.6 RESTRICTIONS
9
7.2.7 UNSEALED ROADS
10
8 BULK FREIGHT
10
8.1 DEMANDS
10
8.1.1 GRAIN
10
8.1.2 MINERAL SANDS
11
8.1.3 PRODUCE
11
0
8.2 BULK SUPPLY CHAINS
11
8.2.1 GRAIN
11
8.2.2 MINERAL SANDS
12
8.3 CONTAINER FREIGHT
12
8.3.1 DEMANDS
12
8.3.2 INTERMODALS
13
8.3.3 TRAIN SERVICES
14
8.3.4 PROPOSED DEVELOPMENTS
14
9 RAIL CORRIDORS
16
9.1 EAST WEST CORRIDOR
16
9.2 MURRAY BASIN
16
9.3 MILDURA TO PORTS
17
9.4 EASTERN RAIL LINKS
17
9.5 TRANSCONTINENTAL LINK
18
9.6 CONCLUSION
18
10 CURRENT STATE STRATEGIC PLANS
18
11 APPENDIX
21
1. DEFINED AREA
21
2. VITERRA GRAIN MAP
22
3. DPTLI STUDY MAP
23
4. RAV NETWORK
24
5. IMPACT OF RAIL CLOSURE ON ROAD
25
6. TAILEM BEND RAIL INFRASTRUCTURE
26
7. TRACK CONDITION
26
8. MURRAY ZIRCON LOADOUT
26
9. SHOULDER WIDENING
26
10. REFERENCES
27
1
2 INTRODUCTION
Regional Development Australia, Murraylands and Riverland commissioned a study in October
2014 into the regions bulk and container freight consistent with the scope below.
3 BACKGROUND
Recent speculation regarding the future of the two Mallee grain lines and an announcement by
Genesee & Wyoming Australia (GWA) and Viterra for the lines to remain open until July 2015
has focused attention on what can be done to prevent the lines closures and in the event the
lines are closed, what the impact will be on the regions roads from increased traffic in and
beyond the region.
In June 2014 the Victorian governments Department Planning Local Transport Infrastructure
(DPLTI) commissioned a study into the Murray Basin freight including reconnecting the rail from
Victoria into the South Australian Mallee region.
Developing an understanding of the demands for bulk and container freight in the region and the
connections to rail and ports and how lower cost export supply chains can be developed, will
have a significant impact on the prosperity of the region.
4 SCOPE
The report investigated for the districts of Southern Mallee, Loxton/Waikerie (southern part)
Southern Mallee, Karoonda – East Murray, Rural City of Murray Bridge and Coorong Districts
(see Appendix 1) the status of rail freight and its connectivity to the broader export supply chains.
The areas of investigation included the:
1. Likely future freight demands for the region
2. Connectivity to broader export port link rail networks such as the rail corridors between
Mildura and Melbourne and Adelaide and Melbourne and specifically the DPLTI study
and its impacts and opportunities for the region
3. Constraints to rail operations and infrastructure and in that context, the future of the GWA
rail operations and Viterra arrangements and alternatives
4. Impact the closure of rail would have, particularly from grain road freight on the regions
road network
5 SUMMARY
The report considered freight moved in the Mallee in bulk and by containers and the future of the
two railway lines, the road network and the broader interconnections to global supply chains.
The two Mallee railway lines are bulk single commodity lines that were not constructed to the
standards required for the bulk commodity task and are too old and costly to maintain and justify
upgrading. A benchmark estimate is that an investment of around $700Mil would be required to
replace the lines to the standard required.
2
The current grain volumes are too small and declining and the grain seasons too variable,
combined with the fact that the lines are single product dependent lines and costly to maintain
means that these lines can only remain open and competitive against road if GWA and Viterra
subsidise the loss.
The road freight alternatives using larger truck configurations are becoming increasingly
economic and operate throughout the year. It is unclear if the rail lines close, what the impacts
will be on the grower’s freight costs to Tailem Bend. Viterra has invested in the Tailem Bend
facility and GWA has invested capacity in the rail service between Tailem Bend and Inner and
Outer Harbour.
The Department of Transport, Planning and Infrastructure (DPTI) and Viterra have modelled the
impact of the increase in B Double traffic should the Mallee railway lines close which indicates a
daily increase of 30 B Doubles on three highways in the region.
There is currently some investment in shoulder repairs and widening underway and the suitability
and safety of the roads to manage the volume and type of traffic will continually be evaluated.
Road transport of bulk, general and container freight to Adelaide and to Outer Harbour is an
issue for exporters from the Mallee as the Southern Freeway is unlikely to see larger truck
configurations permitted given the Adelaide Hills restrictions.
There is an increasing volume of container imports and particularly exports from the region
originating at Monarto, Murray Bridge and from Tailem Bend.
If an intermodal and container rail was developed in the region it would still be a lower cost to
exporters and importers to road the freight to and from Adelaide than to rail, given the close
proximity to Adelaide and the costs of a pick up and delivery road leg and the terminal
development costs.
The export freight differential through Port of Melbourne could justify the transfer by train to
Melbourne from an intermodal in the region, but for the rail operation and intermodal to be
economic would require at least 15,000 containers for a dedicated service to Melbourne.
Work is currently being done by Australian Portable Camps to investigate an intermodal at
Monarto South with support from ARTC as an opportunity to increase the length of interstate
trains to Melbourne.
To start moving containers on rail while an intermodal is being developed, exporters should
investigate negotiating with GWA to add the containers to the existing Tailem Bend to Outer
Harbour bulk grain twice-daily service, as a way of transferring containers to the port. This would
require some minor terminal development on an existing spur line as part of the disused spur
lines at Tailem Bend. This short-term option could build the demand and justification for an
intermodal development in the region.
The cross boarder rail options into the Murray Basin network from Mildura to Melbourne and
Geelong require the Victorian government standardising the rail line 127km from Pinnaroo
(Panitya) to Ouyen and Mildura line south between Dunolly and Mildura. The benchmark cost
estimate to convert the 127 km broad gauge line from Pinnaroo (Panitya) to standard gauge to
would be in the order of $8Mil to $10Mil but would be dependent on the Mildura line south also
being converted from broad gauge to standard gauge.
Even if these lines were upgraded to standard gauge, the supply chains from the Mallee region
to the ports of Geelong and Melbourne are three times the distance to the Outer Harbour from
the Mallee and the comparative freight costs are likely to be that order of magnitude greater.
3
This report does inform the four State and Regional Infrastructure plans referred to in this report
specifically in respect of the Mallee bulk rail and road bulk freight and the intermodal options and
road upgrades in the geographic area of the Mallee region covered in the scope of this study and
reference can be made to this study for any subsequent actions arising from those plans.
6 APPROACH
6.1 INTERVIEWS
Interviews were conducted during October. The people interviewed mostly face to face, were
considered to be those best qualified to discuss the topic and while some matters were
confidential most topics were freely discussed and provided incites and detail sufficient to inform
this report and we thank them for their time.
Organisation
GWA
Person
Wayne Jensche
Role
National Account Manager (South)
Viterra
Greg McKay
Manager Compliance, Process
and Resource Performance
Murray Zircon
Ltd
Larry Lui
Logistics Manager
DPTI
Mike Wilde
Rail Policy Manager
Mark Elford
Executive Director Strategic
Transport &Infrastructure Planning
South
Australian
Freight Council
Neil Murphy
CEO
DPTLI
Bernie Cahir
Senior Policy Manager
Thomas Foods
International
David McKay
Chief Operating Officer
Australian
Portable
Camps
Greg Toop
Developer Consultant
Parilla Potatoes
Sonja Harmer
Logistics Manager
Lithgow Hay
Guy Lithgow
Logistics Manager
Richard Angel
Transport
Richard Angel
Transport and a Grower
4
Kevin O’Driscoll of Tailem Bend Boutique Grain has not been able to be contacted.
6.2 TOUR OF STUDY AREA
A tour of the area occurred on Monday 13 October.
7 FREIGHT INFRASTRUCTURE
7.1 RAIL
7.1.1
Infrastructure
The railway branches from south of Tailem Bend, and tracks northeast. The Karoonda highway
from Murray Bridge joins the railway after 24km at Kulde. The road and rail continue 100km
northeast though Karoonda to Alawoona and then both turn north for the final 35km to Loxton.
The railway into Loxton is no longer used and there is a bulk grain facility at Tookayerta a few
kilometres south of Loxton that is the end of the main line.
The second line from Tailem Bend branches east to Pinnaroo and the Pinnaroo line continues,
but currently remains broad gauge into Victoria to Ouyen where the railway joins the Mildura to
Melbourne broad gauge line.
The Mallee rail lines are light rail and ballast with very low speed limits and are only used for the
collection of bulk grain. The speed limits are low and not practical to transport time-sensitive
freight.
In 1998 the two branch lines from Tailem Bend on the South Australian side of the state boarder
were converted from broad gauge to standard gauge to retain connection to the main line from
Adelaide to Melbourne when that was converted. The Ouyen to Pinnaroo line stopped at
Pinnaroo GrainFlow due to the gauge conversion at the state border.
This conversion created a break of gauge at Pinnaroo (Paitya) and there are unfunded and yet to
be developed proposals by the Victorian government to convert the Victorian part of the Pinnaroo
line as part of the Mildura line from Geelong to Mildura.
There are large grain storage silos and bunkers, where the branch lines join the main line. The
lines from Pinnaroo and Loxton to Tailem Bend are used to transport large quantities of grain
from Viterra sites at Tookayerta, Karoonda, Lameroo and Peake that service the rail lines
.
7.1.2
Ownership
In August 1997, the federal government owned Australian National Railways sold their South
Australian freight operations to Genesee & Wyoming Inc. and commenced operations branded
through Australian Southern Railroad (ASR).
ASR signed a 50-year lease with the South Australian Government until 2047. Genesee &
Wyoming Australia (as a fully owned subsidiary of Genesee & Wyoming Inc.) was formed in
2006 to run the South Australian operations.
5
The two railway lines are owned by GWA on land leased from the state government until 2047.
The Railways (Operations and Access) Act 1997 establishes the South Australian Rail Access
Regime and covers the GWA lines in the Mallee.
GWA are responsibility for maintaining and capital replacements required to keep the track in
working order to be fit for purpose within 24 hours of a movement request.
They are currently the sole operator of trains on the two lines and provide a take or pay service
to Viterra for the freight of grain.
7.1.3
Capacity and Condition
The two lines were originally constructed in 1906. The original construction and various upgrades
have not been undertaken using the design and construction standards required to provide
longevity for heavy haul rail of ideally 25t axel loading, the standard for bulk grain and suitable for
minerals.
The Loxton line service calls at Karoonda to Tookayerta (not to Loxton) silos, and the Pinnaroo
line service stops at Lameroo, Pinnaroo (Viterra) and Pinnaroo (GrainFlow).
GWA currently operate “point to point” block trains on the Loxton and Pinnaroo lines with the
train typically filling at one grain terminal and returning to Tailem Bend
GWA can drop and split collections at both Karoonda and Lameroo as required.
GWA currently dedicate one train set to the Mallee to operate the two branch lines for about six
months each year depending on the size of the harvest.
The lower axel mass limit load of19 tonnes mean that lower weight wagons and locomotives are
required that are less common than the other GWA grain freight fleet and more complex to
maintain.
The capacity of the two lines is to run one train per day on either line typically between
November and July so the capacity of the two lines are two train services per day running seven
days per week, up to 18 trains per week.
The cycle times of the lines are limited by the track speed, which is determined by the axel loads
(19 tonnes per wagon axel or 76 gross tonnes per four axel wagon) and track condition defined
by the poor state of the aged rail, ballast and sleepers. The trains run slowly at between 30kph
loaded and 40kph empty but as low as 20kph in some sections. GWA commission a track
condition inspection before each service.
GWA calculate that each line has at least 150,000tpa capacity. The volumes moved (see
volumes below) are currently lower, so significant excess capacity exists on the two rail lines.
The volumes moved are dependent on both the grain harvest and the ability for the rail supply
chain to be competitive with road.
Currently there are 40 wagons on each service for each line, with each wagon capable of
carrying 54 tonnes of payload but typically only loaded to 52 tonnes because of the track axel
loading constraint. This provides a capacity of 2,500 tonnes per train. This 2,500 tonnes carrying
capacity compares to GWA trains on the other grain railway lines in the state capable of higher
axel loads that carry 3,400 tonnes.
The Loxton train is loaded in 2 to 2.5hrs and delivers into Tailem Bend at 22:00.
6
On the other Mallee railway line, at Pinnaroo and Lameroo the train loads at night, with GWA
leaving wagons and drivers resting while Viterra load the train. At the GrainFlow facility at
Pinnaroo the train is loaded in 2 to 2.5hours and returns to Tailem Bend.
The services operated in summer time are subject to heat restrictions whereby trains travel and
load at night with departures from Tailem Bend after 8pm subject to ambient temperatures in
each case.
Australian Rail Track Corporation (ARTC) the owner of the Melbourne Adelaide main line,
determine that the bulk grain from the branch line is classified as ‘general freight’ and so has a
lower priority than passenger and standard freight on the interstate network. ARTC admit the
grain trains onto the Adelaide Melbourne mainline to load and unload at Viterra at Tailem Bend
using ad hoc paths. This inability for the Mallee trains to access the ARTC mainline during the
busier daytime hours contributes to the Loxton line (Tookayerta to Tailem Bend) service duration
taking between 10 and12hrs each way. This compares to a B Double tipper by road that for the
same loading and travel would take 3 hours from Loxton to Adelaide on the Sturt Highway or less
from Karoonda via Murray Bridge.
The grain transfers from Viterra at Tailem Bend to Outer harbour (Viterra) and Inner Harbour
have ad hoc paths from 7pm to 7am daily during which time ARTC allow GWA to run the Tailem
Bend grain trains on the interstate main line. Each service consists of 50 wagons transferring
3,250 tonnes and can take five hours travelling at a maximum of 80kph and often will stop up to
several times in sidings, to allow higher priority trains to pass.
7.1.4
Viability
The two Mallee lines contract extension between GWA and Viterra remain open until 31 July
2015 at this stage.
These lines are single product dependent lines with bulk grain declining in volumes and highly
seasonal for up to six or seven months between December and July depending on the season.
The two lines of 300km are carrying an average of less than 200,000tpa.
The two key attributes for bulk freight infrastructure are volume and consistency and these two
railway lines currently lack both.
The costs to maintain this under invested and aged infrastructure are increasing as the
conditions of the track progressively decline. The only way of justifying increasing investment in
the declining rail infrastructure is for grain volumes to sustainably increase to at least 250,000 tpa
and or for new commodities to be found in the region suited to bulk rail.
Any increase in access fees with the railway lines being underutilised and the grain volumes is
likely to make rail uneconomic compared to road.
To deliver efficient and economic freight, new tracks with higher-grade rail infrastructure capable
of at least 23 tonne axel loads are required. However with new rail in an existing rail corridor
benchmark costing at least $ 2Mil per km there is insufficient volume to justify the $ 600 to 700
Mil cost of replacing the bulk rail lines.
The volume of grain on these railway lines in a good year used to be bolstered by Victoria
Mallee Grain Corp growers contributing up to 60,000tpa from Murrayville and Walpeup along and
north of the Mallee Highway who would freight grain by road to Pinnaroo and Loxton. This would
increase the total catchment in the region to 250,000tpa but with recent poor crops in the broader
Mallee region, the grain available to freight on rail has declined. And with plans to upgrade the
investments in the Mildura to Melbourne, Geelong railway lines that could also feed through to
Portland, the western Mallee is more likely to freight grains south than west.
7
7.1.5
Access
The two Mallee branch lines are open access lines and rail operators wishing to apply for access
to operate services on these lines seek access from GWA who will charge the operator an
access fee.
If the rail operator does not agree with the access charge proposed by GWA they can refer their
access application to the regulator, the Essential Services Commission of South Australia
(ESCOSA).
7.1.6
Discontinuation
In the event demand for services discontinues on the Mallee lines as was recently the case with
the Penrice mine at Angaston to Adelaide service, the rail track is classified as discontinued and
put into a dormant state on care and maintenance for a period of five years if no new demand
eventuates.
During this period GWA are responsible for ongoing care, security and maintenance that
includes maintaining the working order of all equipment i.e. level crossings, signals, controls and
switches so a train can operate within 24 hours notice and will reinstate, at its own cost if an
access seeker negotiates to return a train to operation.
At the end of the five year moratorium, GWA transfer the discontinued track back to the South
Australian Government.
7.2 ROADS
7.2.1
Infrastructure
The Karoonda Highway (Route B55) is a 172 kilometre state controlled highway linking Murray
Bridge and Loxton. The Mallee Highway (Route B12) runs east of Tailem Bend 145 km to
Pinnaroo and then to Ouyen in Victoria. The Browns Well Highway (Route B57) is the road from
Loxton 105 km southeast to Pinnaroo.
Department Planning Transport and Infrastructure (DPTI) maintain the Karoonda, Browns Well
and Mallee highways with other roads within the region maintained by District Councils.
7.2.2
Capacity and Condition
Freight users and carriers generally describe the sealed roads and highways in the region to be
in good condition and fit for purpose particularly with the shoulder widening that is underway on
sections of the Karoonda Highway.
Road investments have occurred on the Sturt Highway and now the Karoonda Highway to
improve safety and efficiencies.
Recently DPTI, Viterra and GrainFlow have modelled the impacts on the road network of the
facility transfer movements if the grain lines are to close in the Mallee. In that event the northern
Mallee grain is planned to be transferred to Roseworthy and Adelaide and the southern region to
Tailem Bend.
The impact on the network (in Appendix 5) shows that an additional:
8



14 B Doubles per day would travel from Loxton to Adelaide and Roseworthy along the
Sturt Highway and
4 B Doubles per day from Karoonda to Tailem Bend (avoiding the northern section of the
Karoonda Highway) and an additional
12 B Doubles from Lameroo and Pinnaroo to Tailem Bend.
The average daily volumes could exceed these marginally at peak transfer times however DPTI
consider the low volume traffic highways have the capacity to manage these increases. Viterra
would also re-profile the domestic and export mix that their facilities carry to help optimise larger
transfers to Roseworthy, Murray Bridge, Adelaide and Tailem Bend.
7.2.3
Upgrades
In preparation for the likelihood that the Mallee railway lines will close at the end of July 2015,
$2.3 million is being invested primarily to upgrade to the Karoonda Highway between Karoonda
and Kulde, over two years.
The works involve 20 kilometres of shoulder sealing along the worst sections of the road, as well
as other improvements to improve the road’s condition. Works are well underway (Appendix 7) to
avoid the busy harvest season, and could finish before the scheduled date of early in 2016.
In fact in some ways these upgrades of the Karoonda and Sturt Highway to improve efficiencies
and safety work against rail and provides a good alternative for these larger trucks to be used.
The Sturt Highway particularly with its connection to the Northern Expressway could ultimately
accommodate PBS Level 3A B Triples and Double Road Trains west of Truro.
7.2.4
Safety
Safety on the roads will continue to improve by continuing to address the shoulder widening.
There are some sections of the Karoonda Highway through the hills where overtaking is difficult.
In the event the rail lines close, DPTI will monitor the increases in traffic and continually assess
the need for shoulder widening.
7.2.5
Adelaide Hills
There are currently limitations on the size of freight passing along the South Eastern Freeway
through the Adelaide hills part of the national highway is a General Mass Limit (GML) and Higher
Mass Limit (HML) Route which largely limits (see Appendix 4) to 26 m B Double of 67t Gross
Mass Limit so exporters are restricted to only a 40ft and 20ft containers in each movement, with
32m Road Trains capable of carrying two 40ft containers are not permitted. This limits the scale
benefits of large exporters.
It is unlikely while these issues prevail on the freeway that A Doubles will be permitted.
7.2.6
Restrictions
Larger trucks including Higher Mass Limit compliant 26m and 68.5t B Double Gross Mass Limits
are used more and more by larger growers and carriers and are hauling more with less. These
trucks are increasingly being used to transfer grain into silos and from road silos to Tailem Bend
9
and during the year when trains are not used to transfer grain from the grain rail facilities to
Tailem Bend and other silos in the domestic chain such as Inner Harbour.
The maximum mass limits for the highways are rated by DPTI (see Appendix 4) as GML 26m B
Doubles and can accommodate 26m B Doubles that depending on the truck and trailer tare
design, can carry up to 44 tonnes of net payload. 26m B Doubles with a Gross Combination
Mass of 68.5t (Higher Mass Limit) are generally used for freight such as grain. There are
restrictions on some sections of the roads.
Last mile restrictions exist on the section of road servicing the Peake silos so that only 19m
single vehicles of mass limit 44 tonnes can service the silos. However B Doubles up to 65 tonne
can if they are in possession of a National Heavy Vehicle Regulator permit. The roads supporting
the Parilla silo can accommodate 65 tonne B Doubles.
Restrictions currently are in place on 49km section from Karoonda to Tailem Bend including the
20km of road between Kulde and Tailem Bend, which is undergoing shoulder widening.
DPTI’s priorities and timeframes for roads in the region are set out in the South Australia
Integrated Transport and Land Use Plan on pages 18 and 19.
7.2.7
Unsealed roads
Some of the unsealed roads in the region are in poor condition following rains and particularly
around Parilla where the use of tippers on roads linking centre pivot areas to packing plants are
used extensively by B Doubles. Parilla Potatoes noted that a 12km section of dirt road between
Parilla Well Road and the Mallee Highway is problematic.
8 BULK FREIGHT
8.1 DEMANDS
The predominant commodities produced in the region are grain, largely wheat and barley and
mineral sands.
8.1.1
Grain
The grain captured through the Viterra bulk system and that moved on rail was:
Year
Total (t)
120,000
On rail (t)
76,000
2009 – 13 (ave)
234,000
203,000
2006 – 2013 (ave)
195,000
176,000
2013
Comments
22,000t road to port and
16,000t domestic through
Roseworthy
Includes by road from
western Victoria into
Pinnaroo
10
The volumes for the 2014 harvest are likely to be lower than 2013 with PIRSA advising in their
September 2014 update that “The Northern Mallee appears to be the worst affected by frost and
lower rainfall with estimated losses of 30% to 40% and the Southern Mallee losses are estimated
at 5% to 10%”.
8.1.2
Mineral Sands
Mindarie Mineral Sands Project 150km east of Adelaide at Halidon on the Karoonda Highway is
producing around 120,000tpa with an estimated resource life of 15 years
8.1.3
Produce
Some potatoes are moved in B Double and singles tippers (capable of 40t and 30t payload)
between the paddocks and the Parilla processing plant and the plant and Adelaide. The tippers
then backload fertiliser from the Inner Harbour to Parilla.
8.2 BULK SUPPLY CHAINS
8.2.1
Grain
Viterra are working to make the grain network more efficient for growers by focussing on fewer
silos and investing in the receival, storage and handling processes and infrastructure to increase
throughput and reduce operating costs.
Viterra charge grower’s storage and handling fees at upcountry receival facilities and these vary
by grain classification, so its efficiency in receiving, storing and handling and the location and
efficiency of the facility in respect of the port. For example this season the published receival cost
of wheat at a tier 1 facility is $12.10 per tonne and $ 12.85 at a tier 2 facility. This compares to $
15.30 at the Port of Adelaide. Lameroo, Loxton, Karoonda, Pinnaroo and Tailem Bend that are
all tier 1 facilities with Alawoona, Peake and Parilla being tier 2 facilities. (see Appendix 2)
Viterra also charge growers to transport grain from the silo facility to port. The objective in
establishing the transport charges and port in loading fees at Outer and Inner Harbour at less
than it would cost a grower to incentivise the grower to use the Viterra supply chain. Depending
on a growers location in the Mallee, the growers option in the Viterra’s grain delivery chain could
be road to Tailem Bend and rail to Outer Harbour or rail to Tailem bend and rail to Outer
Harbour.
If the sell price for wheat to a grower is A$ 250 per tonne, the grower would net $235 per tonne
after these logistics costs and must decide if they can freight the grain at a lower cost to the port
than Viterra can. The Grain Trade Australia location differential publishes the index values that
are used to adjust a port-based price for delivery of grain to a range of up-country locations, with
the differential providing the freight cost that the grower incurs.
Viterra incentives growers in their terminal and freight pricing for growers to freight to larger
terminals, with growers with smaller volumes and truck using tier 2 facilities.
It is currently Viterra’s intention to charge the rail chain at a lower cost than the road chain to
incentivise the grower to utilise the Viterra chain. The Viterra road chain, while more expensive
than the rail chain is also priced lower than it costs most growers to manage their own deliveries.
The Viterra Tailem Bend facility handles all types of grain and has a 400,000 tonne capacity and
two trains are loaded in four hours each day and carry a total of 7,500tpd to Outer Harbour.
11
Viterra also blend grains at Tailem Bend then rail to the port and load 60,000t vessels.Tailem
Bend is one of Viterra’s major upcountry rail facilities and has recently had upgrades to the
connecting road works and conveyors to improve efficiencies for Viterra and grower deliveries.
Domestic grain is all moved from the Mallee by road and this includes movements from around
Loxton along the Sturt Highway to silos at Roseworthy and for growers in the southern Mallee by
road into Murray Bridge and into Adelaide to Cargill (formerly Joe White Maltings)
Viterra and GWA are committing to an increase in the rail capacity and capability from Tailem
Bend to Inner and Outer Harbour in Adelaide so rail is retained as part of the Mallee supply
chain.
8.2.2
Mineral Sands
Mindarie is located on the rail line near Halidon. The mines stockpile is designed to load two
trains weekly of between 40 and 50 containers per train (Appendix 8) directly onto the mainline
onto trains operated by GWA. This was occurring until 2011 before the mine went into
administration.
The new owners Murray Zircon, determined that the GWA rail freight was not viable compared to
the lower capital cost road alternative and use Qube Logistics to road freight seven to ten B
Double tippers each day (Appendix 8) the three hours and 200km to Inner Harbour at Port
Adelaide. Qube Logistics designed a tipper truck and trailer capable of carrying 44t net payload
and operate a terminal on the eastern side of Murray Bridge to service Mindarie. Qube Logistics
have secured 68t gross mass permits to travel to Adelaide on the South Eastern freeway.
Murray Zircon maintains that the road option provides a lower cost, safer and faster solution
compared to the rail that took ten hours from Halidon to Tailem Bend and another day to
Adelaide.
8.3 CONTAINER FREIGHT
Currently all containers must travel to the port at Outer Harbour in Adelaide or interstate rail
terminal in Adelaide by road for transfer to Port of Melbourne as there are no terminals or
intermodals to unload or load containers on and off rail in the region.
8.3.1
Demands
The volume of exports and import containers originating or destined for the region consists of
meat, hay and some vegetables. While there are insignificant domestic containers originating or
destined for the region, Australian Portable Camps are assessing the transporting of
accommodation modules (that are the dimension of a 40ft shipping container) to travel east and
west on rail if the proposed Monarto intermodal was established.
The volume of export containers and camp modules in the region could be in the range of 12,000
and 15,000 which has the potential to increase as exports from the region increase.
Thomas Foods International currently generate largely 40ft refrigerated containers at their
abattoirs at Lobethal and on the northern side of Murray Bridge that are road freighted to Outer
Harbour in Adelaide and the Adelaide Freight Terminal for transfer to Port of Melbourne for
export markets.
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Lithgow Hay at Tailem Bend produce Hay for export and road freight 40ft containers to Outer
Harbour in Adelaide.
Both Thomas Foods International and Lithgow Hay export throughout the year.
Parilla Potatoes export a small quantity of vegetables in 20ft refrigerated containers in the first
half of the year. These are currently road freighted from Parilla to Outer Harbour.
A grain packing operation is proposed to be established on Karoonda Road on the eastern side
of Tailem Bend by Tailem Bend Boutique Grain. The scale and timing of this project is unknown
and the site is undeveloped and is not connected to the railway line.
Hillgrove transfer ore in half height transfer containers 75 km from the Kanmantoo mine to Inner
Harbour at Port Adelaide to be unloaded into a bulk terminal for storage and shipping. Unless the
rail line was adjacent to the mine avoiding a pick up and delivery to connect with the train, it is
more likely that Hillgrove would find it a lower cost to road freight the ore the short distance to the
Inner Harbour.
Big W has a distribution centre at Monarto. The Monarto centre supplies stores in Victoria South
Australia, Western Australia and Northern Territory. Import containers for the Monarto centre are
currently unpacked in Adelaide at SCT and freighted by SCT in trucks to Monarto. SCT currently
have their own intermodal terminal at Penfield north east of Adelaide where the Big W freight is
unpacked and redistributed by road and rail interstate, so SCT are unlikely to stop their interstate
trains at Monarto.
8.3.2
Intermodals
Some of the factors that define the viability of an intermodal operation and connecting rail service
include the:
1. Volume of containers
2. Rail distances that connect the intermodal to other terminals relative to road freight
3. Cost of the pick up and delivery in and out of the intermodal for the road leg to collect
and deliver containers
4. Scale and cost of the development
The majority of container freight in the region is export, so ideally the intermodal is linked to a
shipping port by rail.
Assuming that exporters and importers transfer containers to the intermodal by road, the ideal
rail distance to the sending and receiving terminal would exceed 500km for the intermodal to be
viable and to cost less to the exporter or importer than road. This would make the logical port for
the region, the Port of Melbourne.
Adelaide would be too close to make an intermodal in the region viable. The 100km distance to
Tailem Bend from Adelaide is likely to cost at least $ 400 for a semitrailer to make a round trip
carrying a container in both directions between Tailem Bend and Outer Harbour.
For the intermodal to provide a lower cost alternative to road for a 40ft container, the local pick
up and delivery from the exporter or importer by truck and delivery to the intermodal might be
$150 and the lift on and off in the intermodal another $60 and the rail and lifts at Outer Harbour
another $300, meaning that the intermodal and rail can not compete with road only freight, to and
from Adelaide.
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This difference between the road and rail cost between the intermodal and Adelaide is more
acute for intermodal locations at Murray Bridge and Monarto. So Melbourne is the logical rail leg
to consider an economic intermodal and rail service in the region.
The differences between the costs of shipping from Adelaide and Melbourne also favours
sending exports to the Port of Melbourne with its significant volumes shipped relative to Outer
Harbour with exporters quoting between eight and ten dollars a tonne lower rates to overseas
markets through Port of Melbourne.
8.3.3
Train services
Another key factor for the intermodals success is the availability of trains between the intermodal
and the port. The two options for a train servicing the intermodal are a dedicated train that
operates between the intermodal and the port and adding freight eg a series of wagons with
containers onto an existing interstate train travelling the corridor between Melbourne and
Adelaide. Currently there are at least 65 services weekly, 30 in each direction between Adelaide
and Melbourne.
The interstate services typically stop in Adelaide or Penfield 35km north east of Adelaide in the
case of SCT, to load and unload freight. Much of the freight carried on these trains is time
sensitive and the time from origin to destination is a critical element in customers selecting rail
compared to road to transport their freight. Therefore it is very unlikely that a train operator
carrying time sensitive freight will stop between capital cities to load and or unload wagons or
containers. These processes will increase the journey time by two to three hours and risk the
interstate train missing customer’s delivery windows in Melbourne and the customers and
operator incurring significant penalties and ARTC breaching performance requirements.
The more likely option to service the intermodal is a dedicated rail service between the
intermodal and the port. For a dedicated rail operator to provide a viable service over the 670 km
from Monarto (or 630 km from Tailem Bend) to Melbourne, would require an annual volume of at
least 12,000 to 15,000 containers, and consistent volume to ensure a number of services per
week so a train could be dedicated to the service.
Another imperative for these container volumes and the frequency of train services, is that export
customers must meet shipping departure dates and infrequent services make that difficult for
exporters compared to road freight that can depart when the container is ready.
Also containers released by shipping companies from the port incur additional hire charges
(demurrage) to the importer or exporter after a certain number of days, so frequent services and
the ability to return containers before demurrage charges are incurred is very important to the
costs of importers and exporters using the intermodal.
8.3.4
Proposed Developments
8.3.4.1 Monarto South
The Adelaide Rail Freight Movements Study conducted by GHD in 2010 looked at a number of
northern bypass alignments via Truro to Two Wells as had previous studies including those
developed by Australian National and ARTC. These studies considered as part of their options
for a northern rail bypass, take off points from the main interstate line between Monarto South
and Sedan with Monarto South as part of these new alignments, also considered a possible
location for an intermodal site.
In 2008 the Monarto Common Purpose Group commissioned the Monarto South Intermodal and
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Land Use Study, which was undertaken by Jensen Planning and Design.
Australian Portable Camps (APC) is currently investigating the development of an intermodal at
Monarto South and is in discussions with the state government through the Department of State
Development.
APC advise that this development proposal has the support of ARTC as a potential opportunity
to increase the length of Melbourne bound interstate trains up to the maximum length of 1800m
and ultimately if constraints are addressed in western Melbourne, double stacking of trains to
and from Melbourne. The APC proposal includes:





Lengthening the rail spur to accommodate 1800m trains by applying to secure a section
of crown land to support 1800m trains and
Extending a 1800m spur line on the northern side of the mainline into APC
Rezoning the land around the line to Industry to enable an intermodal operations
Preparing the track concept with ARTC providing inputs to track requirements
Developing the intermodal as a multiuser facility with a third party operating the terminal
This development is in its infancy and apart from a portion of APC’s own accommodation module
units for accommodation developments in capital cities that they propose to transfer on interstate
trains instead of by road, APC have had high level discussions with other freight generators in
the region that export containers but have not yet developed a business case and operating
model. APC currently estimate having the terminal operating in two years.
8.3.4.2 Murray Bridge and Tailem Bend
Other potential sites for intermodals in the region on the interstate rail line are Tailem Bend and
Murray Bridge. It does not seem that any recent investigations for intermodals in these locations
has occurred.
However from a cursory observation, there is no obvious area in Murray Bridge along the rail line
to develop an intermodal.
In respect of Tailem Bend there are a number of unused rail spurs connecting to the mainline in
the Tailem Bend rail yard south of the Viterra grain terminal that could be investigated for loading
and unloading. The rail access and terminal development options using existing rail infrastructure
and road interconnections at Tailem Bend seem to present more options than at Murray Bridge.
See the image in Appendix 6.
Any exporter not immediately located in an intermodal will require a pick up and delivery (PUD)
so for exporters to connect to an intermodal at either Tailem Bend and Murray Bridge will incur a
PUD cost.
8.3.4.3 A small start
Starting small at a low cost and capitalising on the existing infrastructure is critical to the viability
for the developer, operator and users of intermodals.
There is an existing twice-daily service operated by GWA carrying bulk grain for Viterra between
Tailem Bend and Outer Harbour that if arrangements could be reached with GWA and Viterra
could present an opportunity for export containers on a rake of wagons to be added onto the bulk
train providing there was an efficient way to load and unload containers at Tailem Bend. Or
alternatively at Monarto if it was economic for GWA to stop and drop a rake of empty containers
and collect a rake of full containers.
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This small start-up option addresses a number of the barriers to developing an intermodal as
there is an existing terminal and service and should be investigated as a way to ascertain the
demand and viability for an intermodal in the region.
9 RAIL CORRIDORS
9.1 EAST WEST CORRIDOR
Grain is currently being railed along a section of this corridor between Tailem Bend and
Adelaide. The proposed small start for intermodal and containers from the region could occur as
part of the same service.
More broadly there are a number of factors that are influencing the Adelaide to Melbourne freight
corridor including the facts that the:




Train traffic on the corridor has not increased in the last ten years and there is a push by
operators for longer trains that provide a lower freight cost per container. There is a
strategy by ARCT to hold numbers and increase length of trains.
Decline in transhipping services transferring export containers from Adelaide to
Melbourne as more services leave Adelaide and tranship vessels through Singapore for
Asia trade
Double stacking on the line is difficult at both the Adelaide and Melbourne ends and
unless the proposed Western Interstate Freight Terminal is constructed in Western
Melbourne the Melbourne infrastructure impediments and direct linkages to the port are
unlikely to be addressed.
ARTC investment in rail and systems is driven by returns and this means faster transit
times faster to enable freight operators to more effectively compete with road. This
includes avoiding interstate services stopping between capital cities.
9.2 MURRAY BASIN
The scope of the Murray Basin Freight Infrastructure Study undertaken by Department of
Planning Transport and Local Infrastructure (DPTLI) in June 2014 is an examination of the
current and future needs for transport infrastructure in the Murray Basin region of north west
Victoria, including into eastern South Australia. The study region extended from Horsham in the
west of Victoria, to Broken Hill in the north, Balranald to the east and across the Victorian South
Australian border to the west.
The basis of the study was to assess demand for the development of infrastructure, which was
sourced through extensive consultation with a wide range of government and industry groups
including Viterra, GWA, SA Freight Council, Flinders Ports and DPTI, with no one from the
Regional Development Authorities interviewed.
The findings relevant to the Mallee were that currently the investment in standardising cross
boarder rail is not justified given the low grain volumes likely to flow from the Mallee region into
the Mildura to Geelong corridor in particularly that:
1. In respect of the Pinnaroo line the study found that the Ouyen to Murrayville (Pinnaroo)
line carries very low tonnages at the present time. The five-year rail average on this line
is approximately 30,000 tonnes per annum and the road mode share is 66% of the freight
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task. A business case to justify gauge standardisation would need to be developed by
the Grain Industry since it is considered that the capital expenditure and ongoing
maintenance costs cannot be justified at this time.
2. A similar situation exists in South Australia with uncertainty over the future of the
Pinnaroo to Tailem Bend line without an increase in freight being transported. The
section of line between Pinnaroo in South Australia and Panitya in Victoria would need to
be gauge standardised by the South Australian government to link Ouyen to Tailem
Bend.
In May 2014 the Victorian state government announced that the Melbourne-Mildura railway line
be upgraded and converted to standard gauge. A business case for the project will be finalised
by the end of the year. Construction on the project is planned to complete by 2018.
9.3 MILDURA TO PORTS
Currently freight services operate on the 550 km Mildura to Melbourne line with around 1.5 mil
tonnes annually, principally grain but also cement to Geelong and 13,000 containers from
Merbein north of Mildura to Port of Melbourne.
$38.7 million was spent in 2009 to upgrade the majority of lines off the Mildura line with the
rehabilitation of the Ouyen to Murrayville line a key part of those works.
The proposal to standardise the line with gauge convertible sleepers from Geelong to Mildura
and the line between Ouyen and Pinnaroo remains however the justifications are on a case by
case basis.
9.4 EASTERN RAIL LINKS
The 137km of broad gauge east of GrainFlow Pinnaroo to Ouyen through Murrayville and the
Mildura to Melbourne line would require converting to standard gauge if the freight in the region
was to flow south east to Geelong or Melbourne. Currently services run on the Murrayville (27km
east of Pinnaroo) to Geelong and the Murrayville to Ouyen broad gauge line and this was
upgraded three years ago.
A rough estimate of cost to convert the section of broad to standard gauge between Pinnaroo to
Ouyen using the conversion costs of the 300km for the two Mallee lines in 1997 which were
converted at a cost $ 5 Mil each, so adopting the 70% uplift using ABS construction index 1997
to 2014, an estimated cost for the 137km from Pinnaroo to Ouyen could be in the order of $8 to
$10Mil excluding any upgrade that the section would require.
The distances from Pinnaroo to Port of Adelaide via Tailem Bend (270 km) or Port of Melbourne
(in case of a container option using the existing Adelaide to Melbourne corridor) compared to
Geelong and Melbourne via Ouyen (590 km) mean that exporters will find it more economic
using the existing Adelaide Melbourne corridor.
Currently the Portland port is not using rail and all freight is being moved by road after the rail
operator who was carrying mineral sands from Hamilton and Grain Corp grain ceased operating.
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9.5 TRANSCONTINENTAL LINK
The proposal to standardise the Mildura line provides links via standard gauge to the ports in
Melbourne and Geelong, and opens up the opportunity to link to the standard gauge line at
Broken Hill, which runs from Sydney to Perth via Mildura (as a tri-state hub) to every capital city
in mainland Australia.
This link is currently only a concept and not funded. However because of the distances to
markets for producers of bulk or containerised goods in the Mallee region the Transcontinental
link is unlikely to be more efficient and cost effective for moving freight than the existing national
rail network available through the Adelaide to Melbourne rail corridor.
9.6 CONCLUSION
The outcome is that cross boarder rail opportunities are not currently justified with grain flowing
to Tailem Bend and the short tenure of mineral sands. The Murrayville line is not in scope for
standardisation but will be considered in a subsidiary business cases.
10 CURRENT STATE STRATEGIC PLANS
The current relevant state and regional government transport infrastructure plans and the
specific mention of freight in the relevant Mallee region include the:
1. 2014/15 Strategic Infrastructure Plan
That plan did not specifically include any freight infrastructure priorities from within the
region except for noting the ongoing Sturt Highway upgrades and alignment
improvements.
2. Murray and Mallee Region section of the 2014/15 Strategic Infrastructure Plan
Specifically that plan defined as a priority to identify and upgrade local linking freight
routes, which will improve the efficiency of freight handling and transfer, the level of
service to the major highway links and road safety and that the proposed development of
a substantial mineral sands deposit near Mindarie, between Karoonda and Loxton, may
require an improved transport link to Tailem Bend.
3. South Australia Integrated Transport and Land Use Plan (Jan 2014) summarised below
but specifically relevant to this study are priorities 3, 6, 8 10 and 13:
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19
4. Murray Bridge Integrated Transport and Traffic Management Plan (March 2012) whose
recommendations included implementing an integrated Transport and Traffic Plan over
time to address Heavy Vehicle and Over Dimensional Freight in the region and the
Monarto South Intermodal project and identified specialist routes and current applications
pending to DPTI for Heavy Vehicle access for Super B Doubles, B Doubles and Heavy
Vehicles within the Murray Bridge region and greater access options to the South
Eastern Freeway for freight movement south of Murray Bridge.
This report does inform these four plans specifically in respect of the Mallee bulk rail and road
bulk freight and the intermodal options and road upgrades in the geographic area of the Mallee
region covered in the scope of this study and reference can be made to this study for any
subsequent actions arising from those plans.
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11 APPENDIX
1. DEFINED AREA
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2. VITERRA GRAIN MAP
Figure 1 Extract from Viterra South Australia Map
22
3. DPTLI STUDY MAP
23
4. RAV NETWORK
24
5. IMPACT OF RAIL CLOSURE ON ROAD
25
6. TAILEM BEND RAIL INFRASTRUCTURE
7. TRACK CONDITION
8. MURRAY ZIRCON LOADOUT
9. SHOULDER WIDENING
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10.REFERENCES
1. Viterra (2014) Harvest Information Booklet 2014/15 Season
2. GHD (2010) The Adelaide Rail Freight Movements Study
3. Australian National and ARTC (2003) Northern Alignment studies
4. Jensen Planning and Design (2008) Monarto South Intermodal and Land Use Study,
commissioned by the Monarto Common Purpose Group
5. Department of Planning Transport and Local Infrastructure (June 2014) The Murray
Basin Freight Infrastructure Study
6. E W Russell and Associates Pty Ltd (2011) Murray Mallee Transport Study for the North
West Transport Study Steering Committee
7. South Australian Government (2014) 2014/15 Strategic Infrastructure Plan
8. South Australian Government (2014) 2014/15 Strategic Infrastructure Plan, Murray and
Mallee Region section
9. Department of Transport Planning and Infrastructure (Jan 2014) South Australia
Integrated Transport and Land Use Plan
10. Rural City Council Murray Bridge (Mar 2012) Murray Bridge Integrated Transport and
Traffic Management Plan
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