Toll’s spend $140m and counting

LOGISTICS company Toll Group is ramping up investment in Western Australia in a bid to meet demand from mining companies and increase its share of the oil and gas market.

Toll, which is the centralised business encompassing 17 different subsidiaries, has spent $140 million on facilities in WA during the past 18 months.

Its property investments follow the opening of Linfox’s $70 million site, also in Hazelmere, last month.

Linfox’s investment in WA has reached $200 million over the past two years.

Toll’s latest project is the $47 million Kewdale rail freight-forwarding terminal, which is due to open in February 2013.

This follows the opening of a $54 million express road freight terminal at Hazelmere.

Business development manager Jason Holmes told WA Business News announcements of further investment in Perth metropolitan property would be made in the coming weeks, with agreements currently being negotiated.

Toll has also invested in a $12 million freight terminal upgrade for Kununurra, which opened this year, and a $30 million transport hub for a collection of Toll businesses in Karratha, set to open mid-2013.

The channelling of funds into WA has been a direct result of booming demand from the resources sector.

Despite what Mr Holmes described as an anticipated “levelling off” of that demand, Toll was still catching up, he said.

“The expansion in iron ore projects, for example, drove a massive increase in the demand for property, drivers and trucks,” Mr Holmes said.

He said the company had effectively been caught out by the boom in terms of facilities available and had spent the past two years establishing new facilities and upgrading existing ones to better cater to customers.

“Some of the properties we’ve got in the pipeline would have been really handy 12 months ago,” Mr Holmes said.

“If you go back to when the property plans were being put together around 2009, we thought we were going to be pretty comfortable with the properties coming online as they were planned.

“But they probably fell short by about a year or year and a half because of the boom and high iron ore prices, which drove the expansion of projects.” 

Toll has subsequently spent $100 million on new facilities in Perth in a bid to catch up – which included the $54 million spent on the 5.4-hectare Hazelmere road freight terminal.

The facility was built specifically for Toll’s express domestic parcel delivery service, IPEC.

“We built a purpose-built facility for (IPEC) about seven years ago at Abernathy Road and within five years (the business) had outgrown it,” Mr Holmes said.

The Hazelmere facility was then commissioned and involved a consolidation of the former Forrestfield site and the Courier Australia business, which Toll acquired in April 2011.

Mr Holmes said Toll was aiming to prepare itself for another ramp-up of demand anticipated from both mining and oil and gas sectors in 2014-15.

He said Toll was focused on organically growing through relationships already established, with the oil and gas sector expected to be an area of significant opportunity.

“We’ve got a lot of customers that only use one or two of our business units” Mr Holmes said.

‘‘Our focus is to get them using potentially five or six.”