21/11/2013 - 14:26

Transport sector goes intermodal

21/11/2013 - 14:26

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FEATURE: The trucking and logistics sector is investing in new growth projects around Perth’s two major freight hubs, despite the economic slowdown in WA.

Transport sector goes intermodal
UPLOAD: Toll Group is one of three trucking companies that will link directly to Asciano's intermodal freight terminal at Kewdale. Photo: Toll

 

EXPANSION PROJECTS

 

Toll Group Plans intermodal terminal at North Quay; follows $140m investment in WA facilities

 

CTI Logistics Completed 10,000sqm warehouse at Hazelmere, planning stage 2 expansion

 

Linfox Building intermodal terminal at Kewdale; follows $68m Hazelmere development

 

Centurion Expansion projects underway at Hazelmere and Gap Ridge

 

K&S Freighters Acquired $13m Bullsbrook site for Regal Transport

 

Rand Transport Completed 40,000sqm warehouse at Hazelmere

 

Ceva Logistics Completed 6,000sqm warehouse at High Wycombe

 

QUBE Logistics Plans North Quay facility

 

Fremantle Ports $31m North Quay rail terminal upgrade under way

A new development at Kewdale that integrates road and rail freight operations is being hailed as a model for the logistics sector.

Rail operator Asciano has teamed up with three of its biggest customers – K&S Freighters, Toll Group and Linfox – for the intermodal terminal.

Asciano managing director John Mullen believes the Cargo Link concept, combined with upgrades to its freight terminal, will deliver big efficiency gains.

“Every bit is just a few per cent gain but you add it up and it becomes a lot more productive,” Mr Mullen said.

“If we’re not getting 20 to 25 per cent efficiency gains, I’d be very disappointed.”

Toll is aiming to apply a similar concept at Fremantle harbour, where five new logistics projects are planned.

Toll managing director Brian Kruger was in Perth last week to update the Freight and Logistics Council of WA on his plans.

While the details have not been finalised, Toll plans to develop its own intermodal freight hub at Rous Head linking port, rail, and road services.

Toll is one of four logistics businesses planning new developments at Rous Head, where the port authority has used dredging spoil to reclaim 27 hectares of land.

Qube Logistics, Rous Head Cargo Services (a joint venture between Stevenson Logistics and Container Cargo Specialists), and ACFS Tyne have also secured long-term leases at Rous Head, where the new developments offer potential to lift the efficiency of the historically cramped port operations.

The four new developments at Rous Head are adjacent to the North Quay rail terminal, which is set for a $31 million expansion.

The expansion is also aimed at bolstering efficiency, with the goal to increase the amount of freight that leaves Fremantle harbour on rail rather than road.

The major contract for the extension was awarded last month to engineering and construction contractor York Civil.

One of the winners from the extension will be Perth company Intermodal Link Services, which operates the North Quay rail terminal and its own intermodal terminal at Forrestfield.

Intermodal has linked with rail freight operator Aurizon to run a rail shuttle service between Fremantle and Forrestfield.

About 14 per cent of container movements to and from Fremantle are currently carried by rail, which the state government estimates reduces truck movements by 72,000 trips annually.

The government’s goal is to lift that proportion to 30 per cent.

To help achieve this end, the state evaluated development of a new intermodal terminal in the Kewdale/Forrestfield area, but decided earlier this year not to proceed.

Transport Minister Troy Buswell told Business News the government was not planning to build a new terminal as the industry had indicated its preference to use its own private facilities.

One of the sites that had been under consideration was the T2 site, next to Asciano’s rail freight terminal.

Intermodal Link Services told Business News it had evaluated this site.

“Intermodal looked at the proposed T2 terminal but passed on commercial grounds and concerns over the layout and design,” the company said.

“Had we proceeded we would have moved from our existing site and there would have been only marginal net benefit. Forrestfield is well placed to capture future growth.”

Connections

The linkage between rail and road freight means the suburbs around Kewdale and Forrestfield will continue to be a focal point for trucking operators.

Mr Mullen believes the long-term lease Asciano holds over its 70ha freight terminal in Kewdale gives it a strategic advantage.

“Landholdings of this size give us better efficiency, it gives us a huge competitive advantage,” Mr Mullen said.

“It’s very strategically significant for us.”

Asciano, through its subsidiary Pacific National Rail, is the major player on the east-west route, with a throughput of 48 freight trains per week at Kewdale.

Mr Mullen said Asciano partnered with K&S, Toll and Linfox because they were the big players and so could justify the investment.

“In terms of size, they are the dominant customers,” he said.

K&S was the first to open at Kewdale, in late 2011.

It was followed earlier this year by Toll, which invested $47 million in its rail freight-forwarding terminal.

This was part of a $140 million investment in Western Australian facilities, including a road freight terminal at Hazelmere, and new depots at Karratha and Kununurra.

Linfox is currently building its new facility at Kewdale, at a cost of more than $40 million.

Like Toll, this is the latest in a series of major investments in WA, costing about $200 million.

The core advantage of the intermodal concept is that containers can be taken directly between the rail and trucking yards.

Previously they had to be loaded onto trucks and driven between depots, adding an estimated 1.5 hours to the task.

Pacific National Rail managing director Angus McKay said the company always planned to do something different on the Kewdale site.

“How do we end up with a direct customer involvement on the site rather than just trains arriving and boxes being picked up and trucked around?” he asked.

Mr McKay said while each customer site looked similar, they had been customised to suit specific needs.

“Where it gets really interesting is how we connect our system with their systems and that’s where the intricacies of the operation come in,” he said.

Pacific National allows its customers to follow freight through its proprietary ‘freight web’ tool.

“We allow customers to see into that system and it allows them to follow freight while it’s moving around the country,” Mr MacKay said.

“It’s also the way they book containers.

“For these three customers (K&S, Toll and Linfox), not only do they those normal things, they can identify boxes on our site that they want to move; they can facilitate that move on our system.”

He said the “seamless” physical interface and systems interface was key to the Cargo Link concept working.

“That’s why we think this gives us such a competitive advantage,” said Mr McKay, who is upbeat about the benefits the intermodal development has delivered already

“There is no doubt that Toll and K&S have exceeded our expectations in terms of efficiency.”

Fifty per cent of the container volumes that Toll brings into WA by rail are transferred directly to its new Kewdale terminal, eliminating more than 400 truck journeys each week.

Linfox spokesman Gary Max said rail freight was a very important part of its business, and included specialised containers for moving food products.

“That’s why co-location with the rail terminal at Kewdale is so important,” he said.

Upon completion in 2014, when Linfox is operating, Kewdale will be the first co-located intermodal terminal customer precinct in Australia, providing a model for Asciano’s future terminal developments around the country.

Mr Mullen has a broader goal to lift the rail freight industry’s efficiency.

“This industry has traditionally run at 50 to 60 per cent on time efficiency and everyone is vaguely happy because it’s always been like that,” he said.

Asciano’s goal is to achieve freight delivery on time and in full 95 per cent of the time.

“This has traditionally been a very old fashioned grubby low technology industry; we’re really trying to turn that on its head,” Mr Mullen said.

Investments

Another location capturing new investment is Hazelmere, where Centurion, CTI Logistics and Rand Transport have built new warehouses.

Centurion is currently adding a 30,000 square metre warehouse at its Hazelmere depot, expanding the facility’s total size to 150,000sqm.

It is also building a 105,000sqm supply base at the Gap Ridge industrial estate at Karratha, and has recently invested $15 million in a fleet of 130 new vehicles.

The new investments follow the awarding of long-term contracts with Rio Tinto and Woodside.

Executive general manager Mark Doig said Centurion now had a 1,000-strong fleet to support its logistics services.

K&S Corporation is looking further afield for its long-term growth, spending $13 million in August to buy a 14.6ha site at Bullsbrook north of Perth.

The land will be used to support subsidiary Regal Transport’s general haulage and heavy haulage operations.

Regal executive general manager Giles Everest said construction of a workshop and hardstand area was due to start early next year.

Growth prospects

Trucking and logistics operators are cautious about their growth prospects.

Where opportunities do arise, such as big resources developments such as the Wheatstone LNG project, competitive tendering reduces the upside.

ASX-listed K&S Corporation said its WA subsidiary, Regal Transport, had enjoyed solid growth in the 2012-13 financial year but was affected by a slowdown in the second half.

One of the positives for Regal was winning a new contract for Argyle Diamonds.

K&S said that, as the largest provider of heavy haulage services in WA, Regal was well placed to take advantage of new developments in the mining and petroleum sectors.

Another ASX-listed provider is CTI Logistics, which is building on its courier and general freight services.

CTI recorded its fourth consecutive year of double-digit growth in profit and revenue in 2012-13, but joint managing director Bruce Saxild is only cautiously optimistic about the outlook.

Contracts servicing the Gorgon and Wheatstone gas projects, as well as a lift in parcel deliveries thanks to booming online sales, contributed to last year’s 31 per cent growth in revenue.

However, Mr Saxild said the success of the transport industry was tied up with the performance of many sectors of the economy.

“At the moment we’re not seeing any real movement and we’ve seen some major companies putting out profit warnings and downgrades; that tells you that it is still quiet out there,” he said.

“We’re a service provider to industry and if industry is down, that impacts on us.”

CTI’s links with a range of industries is so keenly felt that Mr Saxild said its courier and parcel operations provided it with an advance screening of WA’s unfolding economy.

“For the last 30 years that’s been a really good guide so we know when it’s tracking down and we’ve been able to watch it as it tracks back up again,” he said.

Mr Saxild said courier services were currently down and CTI Logistics had also noticed an immediate downturn in activity across its operations after the federal election was announced earlier this year, which had not yet returned to form.

“Since the election we have seen activity stabilise and we are hopeful that we will see improvement in early 2014,” he said.

Mr Saxild said CTI Logistics was focused on continuing to target opportunities in the oil and gas sector and growing its regional transport network.

It is planning for further growth in its warehousing and distribution operations and has committed to a second stage of development at its new Hazelmere facility, where it is adding 4,000sqm.

EXPANSION PROJECTS

Toll Group Plans intermodal terminal at North Quay; follows $140m investment in WA facilities

CTI Logistics Completed 10,000sqm warehouse at Hazelmere, planning stage 2 expansion

Linfox Building intermodal terminal at Kewdale; follows $68m Hazelmere development

Centurion Expansion projects underway at Hazelmere and Gap Ridge

K&S Corporation Acquired $13m Bullsbrook site for Regal Transport

Rand Transport Completed 40,000sqm warehouse at Hazelmere

Ceva Logistics Completed 6,000sqm warehouse at High Wycombe

QUBE Logistics Plans North Quay facility

Fremantle Ports $31m North Quay rail terminal upgrade under way

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