Australia’s largest rail-freight operator, Aurizon, has announced it is exploring plans to begin a land-bridge service out of Darwin to each capital city “at key industrial nodes”.
Aurizon sees the benefit of the service as potentially saving time versus standard shipping routes, it cites a potential seven day saving on Shanghai-Melbourne route. The company envisages that the time saving could translate into revenues.
“When we talk about a seven day saving in time, that’s relative to 17 days to get into Melbourne. And so when we talk about cost parity, think about how much you’d be prepared to pay as an end consumer for an extra seven days because that’s where the margin is,” commented George Lippiatt, Aurizon’s Chief Financial Officer, in an Aurizon investor day briefing held in mid-July.
Andrew Harding, Managing Director and CEO of Aurizon, argues that such a development would benefit shipping lines.
“So we’ve got an example of Shanghai land-bridging through Darwin, but the ship could come from Singapore, right? It’s about the benefit that actually accrues here. And the benefit that accrues here is technically seven days at the same cost, that’s technically accruable at this moment in time. That will be, that is, attractive to the shipping businesses. I can’t even imagine why they would want to actually pay the same amount of money or more, to keep their ship busy going around the coast. And a point I’d make is our utilisation will be the same from, or their ship utilisation will be the same from whatever port they’re leaving to Darwin. And if they go around the coast, it starts off being very high utilisation and then they get to Brisbane and they throw a few containers off and the utilisation falls and then they chug down to Sydney and the utilisation falls again. And then they chug down to Melbourne and they util. And if they’re really silly, they go to Adelaide. Well, actually most people miss Adelaide, and then go around to Perth and then back up. So the utilisation is much worse for the ship in that circumstance,” he explained.
Aurizon says the market has positively received its exploration of the topic, adding that it has had enquiries from forwarders, trucking companies, shipping liners, stevedores, importers, and exporters. It says there is a desire to gain greater optionality, greater resilience over supply chains, to mitigate congestion, and to differentiate offerings.
Other key drivers include port congestion at ports around Australia and high infrastructure charges.
Gareth Long, group executive containerised freight at Aurizon, said that, “whilst it is very much early days, based on this level of interest, we believe there is demand to grow our domestic interstate business in a way that will also enable us to support alternate land-bridge supply chains and import and export volumes. This in turn will allow us to enhance the scale and uniqueness of our domestic interstate containerised freight business.”.
Aurizon hopes for initial capacity of up to 450,000 TEU by 2025, followed by over time with total capacity of anywhere between 550,000 to 750,000 TEU by 2030.
Underpinning matters
A variety of factors are underpinning Aurizon’s thinking.
Firstly, and somewhat obviously, Darwin is very close to Asia when compared to the rest of Australia. It’s long been said that Darwin is in the right place for connection to Asia and in the wrong place for connection to the rest of Australia.
Extensive rights to own / manage / operate landside logistics would resolve that issue. Aurizon’s recent business purchase history shows how.
Back in February this year it won the Team Global Express contract to provide intermodal linehaul services across Australia for eleven years, thereby connecting Perth, Adelaide, Melbourne, Sydney and Brisbane.
Aurizon also acquired One Rail Australia in August 2022 which brought with it a variety of bulk and general freight assets. Aurizon also variously owns, manages, and operates the 2,200km or so of Tarcoola-to-Darwin Rail line. That line connects at Tarcoola (South Australia) to the Trans-Australian Railway Line.
Aurizon has been awarded a stevedoring licence at the Port of Darwin with two mobile harbour cranes due to be delivered later this calendar year. Those cranes can do 15 lifts per hour,
Add in a variety of other business purchases, stevedore licences, and assets, such as terminal operations at Berrimah, and Aurizon believes it can double stack trains out of Darwin at 100 km / hr “all the way to Perth or all the way to Parkes”.
Depths at Darwin differ by berth, but, currently, the East Arm Wharf, berth three, can take containers and has a declared depth of 13.7m and a length of 200m. Aurizon adds that Port of Darwin can take vessels of up to about 4,000 TEU. Vessels that currently typically call in Australia are generally around the 2,500 TEU mark.
“We are particularly excited by Darwin,” said Aurizon’s Gareth Long, adding, “…we believe Darwin’s proximity to Asia combined with Aurizon ‘s core capabilities and assets make it a logical location to explore a land-bridge solution. With minimal incremental CapEx requirements to achieve stage one of our ambitions for Darwin is a very attractive and exciting option”.
