The changing face of the terminal operator business

Discussion – David Greig ACCC regulatory conference July 2007

European and Australian geography EUROPE

Ports import and export

AUSTRALIA

Ports import or export Inland economic activity Population >300m Adjacent ports Coastal economic activity Population 21m Separated ports Alternative ports equidistant A particular port is closest Slide 2

The main trades

 Exports (minerals, grain…) from inland by rail to nearest port • Usually a unique port, sometimes two (Vic/SA grain, Qld coal)  Imports shipped direct to each main (coastal) market  Coastal shipping limited to bulk commodities (petroleum, alumina, cement…) and Tasmania  Not much land bridging Slide 3

Land bridging

 Adelaide-Melbourne for shipping frequency  Melbourne-Darwin didn’t happen  A blip of rail land bridging during a temporary shipping shortage  Some by transfer between ships  Generally uneconomic because of Australia’s geography Slide 4

Transport barriers to entry

 Trucking close to perfect competition  No real barriers to coastal shipping  Ports • • physical barriers low – land available or reclaimable commercial barriers significant – need to enter 2 or 3 ports (Melbourne experience)  Logistics skills replicable  Rail entry barriers declining Slide 5

Rail entry barriers

 Entry constrained by infrastructure capacity – train paths  Best paths taken – train length, time of day  However a major Auslink/ARTC upgrade is under way • • • Many more long passing loops – and can keep adding – and improved signalling Much more capacity, for growth and new entrants Contrast with Europe Slide 6

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Mode choice

23% 26%

Price Reliability Availability

51%

Slide 8

Mode performance 2004 – M to B

price Reliability Availability Road 0-20% rail 95% Sea 20-40% below d-d rail Rail linehaul 30-45% below road 90% 35-45% Rail door to door 0-20% below road 35-45% 99% 10% 40-45% 40-45% Transit time 21-27 hrs 3-3.5 days 36 hrs 42 hrs Slide 9

Road and rail availability

8% 7% 6% 5% 4% 3% Current departure time from customer 2009 departure time from customer 2% 1% 0% 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Time of day

24 hour distribution of truck departures Slide 10

Rail market share

M-B inland M-B coastal S-B M-S Slide 11

Conclusions

 Far less port choice than Europe  Far more port operator market share than Europe  However: • • ACCC => Toll/Asciano split Stevedoring somewhat contestable  Rest of the chain is becoming contestable.

Slide 12