An inland rail freight line makes economic sense

By Leith van Onselen

A new Inland Rail delivery plan has recommended that the Federal Government begin work on a 1,700 kilometre inland rail freight line connecting Melbourne to Brisbane, which it argues would cost around $10 billion. From The ABC:

The project, which the Nationals have long dreamed would revitalise country towns, would run through Moree, Narromine, Parkes, Wagga Wagga and Albury, ensuring freight trains do not have to travel through the congested Sydney rail network.

The report was written by former deputy prime minister John Anderson and warns if construction does not start soon, eastern Australia will become far more reliant on “heavy” multi-carriage trucks.

It estimates one 3.6km interstate train could carry the equivalent of 110 B-double trucks.

…the economic analysis indicates the track could provide a $16 billion boost to NSW, Queensland and Victoria over the next 60 years it cautions “the expected operating revenue over 50 years will not cover the initial capital investment”, meaning governments will have build it.

Deputy Prime Minister Warren Truss, who has already promised to fast track the project said it “will create up to 16,000 direct jobs during a 10-year construction period and a regular 600 jobs once operating”.

On the face of it, I see few more worthy projects than building an inland rail freight network from Melbourne and Brisbane (including connections to Sydney), with world class intermodal connections at key locations along the way so transfers between rail and truck are fast and efficient.

Rail is particularly well suited to two types of freight:

  1. Bulk Freight: rail is suited to the provision of high volume bulk freight services to export facilities because it generally requires well defined point-to-point transport only (such as directly from silo/mine to port) with no requirement for trucking at any intermediate points. Rail can also transport larger volumes in shorter periods to meet shipping requirements and minimise on-port storage.
  2. Long-haul General (Containerised) Freight: Road has inherent competitive advantages in the transportation of short-haul general freight because of its ability to offer a flexible door to door service without modal transfer (i.e. transfer to/from rail) and its capacity to handle small shipment sizes. However, rail tends to be more price competitive over longer distances where pick-up-and-delivery costs are reduced in unit cost per kilometre terms.

Despite the long distance between Melbourne and Brisbane, rail’s share of general freight was just 28% in 2006, whereas it was 80% between the East Coast and Perth (see below).

ScreenHunter_9416 Sep. 11 09.12

A key reason why rail’s share is so low is because it shares the track with the passenger rail network in Sydney, which has priority. This makes rail freight far slower and less reliable than road transport, despite what should be a strong natural advantage (i.e. the very long distance travelled).

The end result is that thousands of truck trips are taken between Melbourne and Brisbane when, given decent infrastructure, rail could easily be fulfilling the role instead.

Accordingly, road trauma is higher than would otherwise be the case, as are greenhouse gas emissions, given one long freight train could replace around 100 B-Double trucks.

In short, the construction of an inland rail freight line makes prima facie economic sense. Hopefully, it can rise above Tony Abbott’s overwhelming bias towards roads-based investment.

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Comments

  1. It will turnout exactly as the NBN has, where every vested interest and group who think they may be able to rent seek on the back of the project will swamp the project with self interest.
    This is pre election pork barreling.WW

    • Yup. While it is an excellent idea, I worked in rail for awhile and I’ve seen a number of good men get their careers ruined by pushing this idea. Executives and politicians just aren’t interested in it. It’s not ‘sexy’ enough for the politicians who like high-speed rail (which is a seriously bad idea). There is so little vision in this country it’s crazy.

  2. Great idea. Caveat: diesel locomotives will must eventually be replaced with electric locos. Build in the option to electrify the network, using the copious wind and solar available in inland Australia. Building it in during construction is cheaper than retrofitting…

    One plus is that inland rail will not be threatened by sea level rise (which could accelerate dramatically, according to Hansen and others (podcast mp3)).

    Hansen’s very important newly published paper : Ice Melt, Sea Level Rise and Superstorms: Evidence from Paleoclimate Data, Climate Modeling, and Modern Observations that 2o C Global Warming is Highly Dangerous

    • Electrifying inland rail line would be an economic disaster. It would double the initial cost, quadruple ongoing costs and make transport prohibitively expensive and not used.

      That doesn’t mean trains have to be diesel. expensive long freight lines in the middle of nowhere with plenty of sunshine are perfectly suitable for new technological advancements. Electric locomotives supplied by battery cars seem to be an obvious choice. With the existing technology, a 50 x 100t car train could go few hundred km on two or three fully charged 100t battery cars. Exchange of battery cars could be made in few minutes while battery cars could be charged using solar/wind in remote areas.

      • ResearchtimeMEMBER

        R2M – respectively, you have no idea what your talking about!!! Diesel electric systems are the most efficient form of transport over 200km… bar none.

        To electrify that system would be massively expensive, rail running on coal fired most probably, and there would be enormous transmission losses.

        If you want to write about a topic, read up on it just a little. 20 minutes research above will prove what I am saying. Just slow down a bit – you have all day to comment. Bernard Russell is writing equally silly things… and ruins what he is trying to say.

      • ResearchtimeMEMBER

        Good luck drawing goods with that! Your better off arguing a main transport net work that is fully electric. Then we could have a discussion.

        just read a bit, thats all… you will be amazed what you may find!

      • Many freight rail networks are electrified, even a double-stack network. India is building some freight-only corridors with the overhead wiring at 7.45 m above rail, which is high enough for double-stacked containers. In India (passenger), Pakistan (passenger), Finland, Russia, and Kazakhstan, 25 kV AC overhead wiring is at 6.5 m above rail.

      • problem with electrification of this line is lack of electric transmission network in the areas where line is mean to be build. Cost of building and maintaining the transmission network and losses associated with it’s long distances would be enormous.

        That doesn’t mean we have to do nothing to reduce emissions. Investment in R&D of new energy storage for trains could not only turn out to be cheaper but also bring huge potential profit.

      • I think the concept of remote charging stations would be the way to go. Have the battery cars and big remote solar farms attached to little waysides. Drop in pick up a car, plug in the empty one and by the time the next train comes along it is filled up. Depending on the traffic load you wouldn’t even need a huge solar farm to power it since it just a constant trickle charge coming in all day.

      • HVDC would make it more efficient but the cost would be prohibitively expensive because of the need for additional redundancy (multiple HVDC lines would need to be build to every supply point) due to low reliability and need for converter station every 50 or 100 km.

      • Simpler answer to to carry the power source with the train.
        All that roof space could be loaded with solar panels with a simple plug and play system between sections.
        Add a diesel backup system and your done.

      • You could never generate enough from panels on the train itself as you could only have them on the drive units not the carriages (as you need to crane the containers on and off.

      • Mad ideas here guys…

        At least some people are prepared to face the reality. We HAVE TO stop burning fossil fuels. The only reason you keep banging on about diesel is that you cannot see this. 🙄

      • I think Diesel Electric trains is the least of the worries. I mean for a start we could mandate that they use at least Tier 4 engines, with more efficient turbos, re-gen (not good for maintenance), particulate filters, Urea, etc. Rather then the below Tier 3 that is currently used off road, which is basically a straight exhaust, no filters, basic turbos, etc.

        On top of that do you have any idea the shit ships burn to get stuff to Australia. It is real bad stuff, makes diesel look clean, bunker fuel is only slightly thinner then crude oil, yet no one cries foul of that.

        This pie in the sky electric renewable stuff is great for the pipe dream that it is, but if we have a PM who wants to shutdown windmills cause they look ugly what chance do we have?

      • @itiswhatitis,

        wrt shipping emissions (far lower in terms of GHG than freight trains as they are, on per tonne per km basis, although possibly not if you start to think about the extra freight miles) –

        Given that as a nation we have elected to stop making our own stuff, what alternative is there? Freight by air isn’t much of an improvement…

        We are only talking about a truck vs train comparison because there are routes where the alternative could plausibly exist, and some where it already does.

    • Sorry R2M. I am definitely on board with climate change, but electrifying that network now would be ridiculous. Diesel Locos are already vastly more efficient than the equivalent trucks, isn’t that enough? The far smarter option would be using diesel now and waiting for more efficient electrically-powered locos without overhead wires.

      Also putting wires above the locomotives will also make it much more difficult to expand in the future, in the form of double-stacking containers. I can easily see battery cars with automated battery exchange every couple of hundred k’s.

  3. This should be a much better investment than some other major infrastructure projects, e.g. the billions wasted on road tunnels like the CLEM 7 tunnel, which cost $3.2 billion to build and was later sold to Queensland Motorways for $618 million. It was all based on very dodgy traffic projections.

    • That statement reflects how difficult it is in Australia to get big infrastructure projects off the ground. Six years in government, no project: now this announcement: and guessing six years ahead, my money is on still no project.

      Unless we get the Chinese to build it – ahead of time and under budget. Those guys are brilliant at BigRail.

      • yeah it won’t happen.
        Also, this is a report with a recommendation, not even an announcement by the govt yet.
        Abbott won’t back this anyway – as the article mentions he appears to have a clear preference for road over rail.
        Driverless trucks operating en masse will be here most likely before something like this happens.

      • 3d, and when the gfc hit, had the previous government progressed any project to the point of being “shovel ready”? Knowing that there are economic cycles, a prudent government would have major projects in the back pocket, ready to go.

        Otherwise when a crisis hits all one can do is cash handouts and third tier projects like school halls and pink batts.

        Whose fault was it that in 2008 there were very few major projects shovel ready when the gfc hit?

      • The RGR shovel ready project was NBN. Mmmmm. Railroaded thru 😉

        Howard and Costello were brilliant, no need for shovel ready anything, the economy was humming along nicely. There’s no ‘shovel ready’ now – infrastructure has become a battleground, political partisanship, NIMBYs, faulty CBAs combination thereof kill it every time.

      • The NBN was not the ‘shovel ready project’ under taken by Rudd. It was the school halls and “pink batts” insulation.

      • So 3d, you admit that the Howard government had no concept of the economic cycle, and therefore had no contingency in place for when it ended.

        Leaving the ALP no choice but to go for low value projects.

        Glad to have that much acknowledged at least.

  4. trains are not slow and unreliable (only) because of passenger traffic in Sydney but because the existing rail infrastructure is crap. Speed of trains running between Melbourne and Brisbane is at 19th century levels even in the middle of nowhere with no passenger traffic. What needs do be done before making any decisions is comparative cost benefit analysis of the upgrading the existing rail line that goes through Sydney. Benefits are obvious because much more freight goes between three cities than two only, while cost is going to be significantly lower due to the existing route and infrastructure.

    So the real question is not whether we need to build the inland line between Melbourne and Brisbane but whether that option is better or not than to upgrade the existing Melbourne to Brisbane via Sydney for higher speeds (e.g. up to 150km/h).

      • building 100km of rail around Sydney to avoid passenger trains seems to be less expensive option. But even if it’s not study should be done to confirm or deny that.

      • OOh yes, let’s buy up the prime near-Sydney real estate (cheap!) to build a stinking great railway line through every NIMBY’s backyard. Are you for real? 🙄

      • three points:
        1. line would not go through Sydney but around through the least expensive parts of Sydney metro area
        2. large parts of land needed to build line is already owned by state
        3. by the time it gets build land in Sydney will cost one third of current prices

    • RE, I have been down the double deck (stacked container) path
      There is a major issue here(Aust) with the waterside workers and others about stacked containers.
      Hell, next thing we will be wanting to unload container ships, 2, 3 or 4 containers per lift, [that would be outrageous] But that is the future of dockside container handling., 2,3 or 4 times the productivity WW

      • If we can replace mining FIFOs with robots, I’m sure we can replace stevedores with them to.

        If you organise things so that largely unskilled workers get paid more than brain surgeons, you make yourself an especially juicy target for automation.

        No safety problems if they are no human beings anywhere on the docks – and robots are probably unlikely to help bikie gangs smuggle drugs.

      • SS. I have never been brave enough to say this” No safety problems if they are no human beings anywhere on the docks – and robots are probably unlikely to help bikie gangs smuggle drugs.”
        But next submission I will. That will open some eyes Thanks.

      • @EP,

        Neurosurgeons get paid $500k/year?
        Crap!
        Genuinely thought it was closer to $200k.

        (though I do note you have to include ‘bonuses’ to get to $500k – $370k is closer to standard. What, in this context, are bonuses? Tips from delighted patients? Kickbacks from pharma or something? )

        @WW,

        wrt safety – the Bloomberg piece about the mining robots cites safety improvement due to removal of humans from mine sites several times as part justification of automation program. Also, safety has the been used in the past by the MUA to justify rejection of some kinds of productivity improvements. Hence, it’s important to be able to cite a safety improvement to justify fewer human workers.

      • They already take two TEU’s off at a time (2 x Twenty foot Equivalent Units), you can get cranes that will do 4 (Two spreaders joined together, one in front of the other so that you do two rows off a ship).

        Anyway Port Automation will happen here in a few decades its already the norm in most of the big Asian and European ports. Automated, trucks, cranes and gantries.

      • @EP,

        I should have read your link more carefully:

        “Salary of Neurosurgeons in Australia

        Australian neurosurgeons have an annual salary of about AU$51,000 to AU$210,000. They also have additional attractive bonuses which ramps up their salary significantly.”

  5. Did you miss the bit where there is no payback even over 50 years?
    Surely we have better ROI infrastructure projects than this pipe dream.
    It ranks right up there with piping water from Lake Argyle to Perth!
    If the problem is bypassing Sydney because of passenger train congestion, surely the answer is a bypass in close proximity eg through Bathurst, rather than building a rail line through Narromine.
    The whole project is a National Party rent seeking wet dream!

    • not only that is seem to be stupid not to use the existing infrastructure for most of the route but also missing so much traffic to and from Sydney clearly makes payback so long.

      Upgrading the existing tracks plus fixing Sydney by building new rail around the city to avoid Epping/Hornsby. It could be build from Picton to Emu Plains, Richmond and Maroota to a new bridge across Hawkesbury river for the fraction of the price. It would be well connected to the existing Sydney network allowing to carry much more freight.

  6. ResearchtimeMEMBER

    This is a great idea IMHO. And should be a priority. It would take enormous numbers of trucks of the road. Heck you could link to existing NSW routes so Sydney would not necessarily miss out.

    National Party should have pushed this years ago. its all too late now, Labour is about to get in…

    • No doubt the MUA would suggest replacing you with someone cheaper too? Lol!

      Dammit, everyone charges too much except me.

      • I have to compete for every dollar I make.

        The inefficient coastal shipping market reduces Australia’a ability to trade with itself. It is cheaper to ship goods from Asia than from its own ports. A great exporter of jobs. It is indefensible.

    • Geographical corner cases aside, sending stuff by ocean between two places connected by land is silly. Between two places connected by rail flat-out moronic.

      • 20% of Australia’s freight is moved via coastal shipping. Bulk commodities are very efficiently shipped via ocean.

        There is low hanging fruit but everyone is too excited about building solar panel powered railway systems in a fantasy world

      • 20% of Australia’s freight is moved via coastal shipping.

        That doesn’t mean it’s sensible !

        Bulk commodities are very efficiently shipped via ocean.

        More efficiently than electric train, all else being equal ? I struggle to believe it. What’s the speed and carrying capacity of a train vs a boat per unit of energy ?

      • Handysize bulkers suitable for intercoastal transport produce about 8 g CO2/t.km compared to about 30g/ t.km for diesel freight trains, which seems a reasonable guide to their relative efficiency in terms of energy.

        EDIT: Electric freight is about 15 gCO2/t.km

      • All things aren’t equal.

        In any case, I’m not arguing about rail vs sea per se. I am arguing that under the current situation there is a simple fix to improve Australia’s ability to trade with itself rather than importing goods and it is being held up.

        My original post was too absolute.

  7. You believe $10bn? Seriously?

    Mandurah rail line, 70km and $1bn in today’s dollars. Do the math.
    Then look at Effing, er Epping-Chatswood in Sydney. Less than one kilometer and one billion in today’s dollars. That $10bn might cover the urban sections of a line, OR, more upgrading of existing lines, but a new line? You would be dreaming.

    Further, have you ever come across a major project like this that has not exceeded the initial cost? NBN anyone? Opera house? Google “project optimism bias”. It should be compulsory knowledge in both Engineering 101 and Economics 101. It’s something that HM Treasury in the UK economists insist on…not here though.

    Maybe the estimate came from the Adelaide to Darwin construction costs…which included almost no urban components, no major mountains, no major nimby interests very little station or marshalling yard work.

    Garbage in, garbage out.

    • So, what then?

      Always assume every project will come in five times estimated costs, have substantial negative ROI, and therefore never build any new infrastructure of any kind anywhere?


      Further, have you ever come across a major project like this that has not exceeded the initial cost? NBN anyone? Opera house?

      Are you saying that they should never have built the opera house?

      • Don’t be silly or lazy statsailor. Were you to rouse yourself to google what I suggested, you’d find that there are ways to avoid project optimism bias and come up with realistic cost estimates.

        Once you have realistic cost estimates, THEN you can evaluate the projects and rank them.

        Otherwise, why bother with economics at all?

    • I was taught in university engineering: take most conservative of project cost, multiply by pi and seek that funding.

      • My experience of doing that in a commercial setting was that if a big boss had decided they wanted the project, your conservative cost estimate would be rejected, and you’d be told to do it again, ensuring that it met the pay-back criteria of the day. The first approach to doing that would be to assume that most ancillary costs would be absorbed by the business’s day to day expenses. For example, you might assume when purchasing and installing new production line equipment that all installation costs would simply be absorbed by the maintenance budget.

        The next stage would be to buy the line without any control systems, and assume that they would also be absorbed by the maintenance budget.

        EDIT: The best example was when a 2nd hand machine was bought for about $100k, compared to new at around $300k, but as it pre-dated several generations of electronic control systems, it cost about $250k (and six months of delays) to develop them from scratch. And the main reason for buying the 2nd hand machine was that if new machine had been purchased ROI was negative, and the project couldn’t proceed.

        Oddly, that factory no longer operates.

      • StatSailor is probably closer to being correct on how major projects are actually operated.

        Ones that are priced realistically would never get off the ground, so usually there’s a whole bunch of assumptions baked into the cake, which your project engineering team will get lumped with after they’ve already signed the contract.

        They’ll get squeezed from both sides (client and primary construction contractor), so the design will be delivered but only just barely with a lot of compromises and things left out. Then the construction guys will grab it, and bitch and moan about a design riddled with errors because of things either overlooked or left out because the project team was over budget, so they’ll build about 80-90% of the project. Then the commissioning team will come through and realise they’ve only got 80-90% of the plant they were supposed to get and the resulting fixes end up using a lot of their budget so they only commission 80-90% of the 80-90% plant because they don’t understand the design (and the design team is well off the job by now). So now you’ve only got 60-80% of the actual plant you originally set out to build.

        Then it all gets lumped on to operations, a plant that has only been 80-90% constructed, 80-90% of which has been commissioned with lots of weird design that nobody understands the history off, due to the project engineers being long gone and the total lack of communication between designers and operators in the design phase. So they have to re-invent the wheel to come up with a brand new operating plan/procedures/etc. from scratch since no one was thinking about how the plant would actually be run while they were designing, building and commissioning it.

        Oh, and the client, primary construction contractor and the principle engineering firm that did the design will all probably spend a few years in court trying to recover additional costs from each other until they all realise they’re just wasting even more money and write the whole fucking thing off.

        In the last 5 years I’ve been on 6 big $$$ projects like this and they were all exactly like this.

      • Ah Jason that is pretty close to the mark
        They are in commissioning phase on the GLNG at the moment.
        It will be a few YEARS before handover. Just as you say.

      • @jason,

        My supposition is that an element of the problem is that the ROI criteria are now set at a very high bar that is effectively impossible to reach without substantial manipulation of the inputs.

        Of course, politicos want to be able to announce projects with incredibly good outcomes – in part to get over cynicism born from projects which have serious cost overruns.

        Hence there is a strong culture working against correctly estimating costs (or, as we have seen wrt toll roads, revenues)

  8. “On the face of it, I see few more worthy projects than building an inland rail freight network”
    Trains dont run on roads. This little factoid will explain why the current infrastructure suppository wont build it.

  9. I worked for Australian National Railways in Adelaide for several years in the 90’s. They pioneered a RORO freight carriage for trucks (with the same idea). They built the rolling stock which was then left to rust at ANR HQ in Keswick. Reason, the Truckies’ unions killed the project…

    • You can see RORO truck trains in Central Eastern Europe, catering mostly to freight vehicles between Turkey and Germany, good idea, keeps the trucks off the road, helps maintenance/longevity of both, and probably faster.