Boost rail freight incentive: carrier

Incentives to shift freight to rail drop by a third in a decade, says WCL

UPDATED
Cropping
FREIGHT HUB: Containers at WCL's Dooen intermodal, near Horsham.

FREIGHT HUB: Containers at WCL's Dooen intermodal, near Horsham.

Aa

North-west operator calls for assurances on rail freight subsidies.

Aa

A leading north-west Victorian rail freight operator has called for assurances the state government will upgrade the Mode Shift Incentive Scheme from the new financial year.

The MSIS subsidises operators to move freight from road to rail, aiming to increase efficiency and the cost-effectiveness of rail.

Wimmera Container Line general manager, Tim Guidera, which operates out of Dooen, near Horsham, said the scheme didn't go far enough, towards achieving its desired outcomes.

"The incentive provided contributes to retaining our existing customer base but we do not have scheme funding available to offer to win any new work," Mr Guidera said.

"Incentive rates have declined by 33 per cent, in real terms, over the past decade."

WCL transports agricultural products, including pulses and grains, from Horsham to the Port of Melbourne.

The concerns come as the Victorian Auditor General's Office slammed the planning, and execution, of the troubled Murray Basin Rail Project.

Read more:

Auditor General releases damning report on Murray Basin Rail

Grain to go by road, due to poor Victorian rail network

The incentive rates started at $100 per twenty foot equivalent unit (TEU) and $200 per 40 TEU in 2010.

The MSIS was renewed for four years, from July, 2014, but the incentive rates were reduced by five per cent.

While the scheme was extended for another 12 months, in last year's state budget, rates remained unchanged since 2017, at $81.45 per 20 TEU and $162.90 per 40 TEU.

"The incentive provided contributes to retaining our existing customer base but we do not have scheme funding available to offer to win any new work," Mr Guidera said.

"Incentive rates have declined by 33 per cent, in real terms, over the past decade.

"Road capacities continue to improve, allowing for more efficient and heavier road trains that can carry more weight and more containers per trip."

By contrast, infrastructure for rail remained static.

"Our route has bridges and culverts that limit the maximum train speed and also limit the weight capacity per wagon.

"There is no provision for the double-stacking of containers and the travel distance to the Port by rail remains 25 per cent further than by road.

Mr Guidera said the train service provider paid an access fee to operate on the rail network, that equated to almost 400 per cent of the cost, per container, to access the road network.

"We are hamstrung with 150-year-old infrastructure, while the road service operators benefits from a constantly improved highway network that the truck operators only partially fund through fuel excise and registration charges."

A road permit could be adjusted for $75 but that caused a ripple effect in the broader community, with more trucks on the road and the loss of rail containers and rail community hubs.

"We are increasingly finding ourselves in an uneven playing field," Mr Guidera said.

Uncertainty about the future of the scheme also hampered investment decisions

"Our ability to tender for longer-term contracts is compromised by the current situation.," he said.

"Two major projects planned for land adjacent to our terminal have been placed on hold in recent years and the lack of clarity on future transport cost option has been a key consideration in deciding to defer.

"There will be future opportunities to transport new products from the area as other industries develop.

"But any decision on expanding terminal infrastructure or investing in more locomotives and rail wagons still hinges on being able to provide a viable rail service cost effectively for exporters."

The transport of containerised exports by rail, instead of by road where practical, benefited society in many ways.

"These benefits are not recognised when comparing the current cost to deliver the respective road and rail services, but the community can clearly see those benefits - less road wear and tear, lower road congestion, less road trauma, lower carbon emissions and the ability to flex the length and frequency of train services at short notice are benefits to society not available from road transpor," Mr Guidera said.

"Rail is environmentally friendly and all levels of government need to recognise this via a greener incentive scheme"

Mr Guidera said the United Kingdom Mode Shift Revenue Support Scheme (MSRS) also provided assistance to send freight, by rail.

The scheme started in 2010 and current provisions allowed for a term from 2020 to 2025.

An example of services and support available was a subsidy of £81.00 ($A conversions 1.94 = $160.00) subsidy for a 20' container between zones 11 and 18, a one-way distance of almost 400 Km.

By comparison the rail track one-way distance from Dooen to Melbourne is 374lm.

"The UK exporters have market certainty for the next 5 years with support levels that are almost double the prevailing local incentive levels that are only available to a portion of Victorian exporters," Mr Guidera said.

Freight switch

Horsham grain and hay exporters Johnson Asahi switched from rail to road, for the next three years, because it was cheaper.

It also operates out of the Doeen terminal.

Johnson Asahi operations manager Tony Huebner said the company delivered about 70 containers a week to Melbourne.

"We export hay and straw through Horsham, we were on rail and now we're not," Mr Huebner said.

He said the decision was purely financial.

"There is no certainty the MSIS is going to carry on from June, this year," Mr Huebner said.

QUBE Logistics was now carting the hay by road, as it did in South Australia.

But he said the company would look at rail, in the future.

"Rail hasn't been written off that's for sure," he said.

Lowan National Party MP Emma Kealy said the future of rail freight services in western Victoria were in limbo, partly due to the government's 20 per cent cut to the MSIS

"When Labor came to government the MSIS's budget was $5 million a year," Ms Kealy said.

"It is now just $4 million, with no funding allocated from 1 July 2020.

"I call on the minister to prioritise full rail freight and immediately fix our freight lines, fix our roads and reverse her decision to scrap the MSIS," she said.

The opposition's Ports and Freight spokeswoman Roman Britnell said the government needed to provide surety to freight operators and immediately extend the MSIS.

With the state budget now delayed until later in the year because of the coronavirus, businesses were facing a gap in funding, with no indication about the scheme's future.

"Labor is quick to talk up its credentials on freight rail but in reality its heart isn't in it," Ms Britnell said.

"The Port Rail Shuttle program is sitting idle, the Murray Basin project is a complete shambles and now there is no certainty for the future of the MSIS

"The government needs to provide long term certainty for this important program which is actually working to reduce trucks on our roads."

She said if the scheme wasn't continued, then there would be even more trucks on the crumbling regional road network, and already congested suburban streets around the Port of Melbourne.

Ports and Freight Minister Melissa Horne disputed the claims.

She said in the 2014-15 budget, the government allocated $20 million over four years to continue the MSIS.

A state government spokesperson said Victoria was supporting its regional exporters, by making rail freight more cost effective, through the MSIS.

"Over the past five years we've invested more than $20 million in the MSIS to give exporters and farmers more options and get trucks off local roads,' the spokesman said.

"We're working hard to build better rail freight connections that will reduce costs for exporters and get Victorian products to port sooner."

The minister said the MSIS had helped regional freight companies get 42,500 freight containers off the state's roads, the equivalent to 17,000 truck trips.

Victorian freight volumes were expected to nearly triple by 2051 and the governmented wanted to see rail take up a greater share of the growing freight task.

The MSIS encouraged industry to shift more containerised freight from road to rail.

The scheme aimed to increase efficiency and cost effectiveness in the freight sector and reduce congestion on roads in and around freight and port precincts.

Start the day with all the big news in agriculture! Click here to sign up to receive our daily Stock & Land.

Aa

From the front page

Sponsored by