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1.1 Background

An inefficient freight network increases the cost of living for all Australian households. Through the National Freight and Supply Chain Strategy (2019), Australian governments articulated their shared vision for nationally coordinated and well-planned freight systems supporting a strong and prosperous Australia. A key measure of the Strategy’s success will be improved efficiency and international competitiveness. The Strategy aligns with the intent of 15 years’ worth of Commonwealth and State investment in freight rail.

Although rail handles just over half of the national freight task measured by tonne-kilometre (tkm), more than 80 per cent of this volume is bulk commodities such as iron ore, coal and grain. Rail’s share of the non-bulk (generally containerised) market is much smaller, and smaller still on the East Coast (Melbourne–Sydney–Brisbane).

The NSW Government has set a target for 28 per cent of containers moved between Port Botany and locations within Sydney to be carried by rail by 2021, up from around 17 per cent today.

Table 1. 2019-20 at a glance

Aim

Metric/ Milestone

Result

Enhance the container freight market

Open the first new warehouse within the precinct

July 2019

Open Access in place at IMEX Terminal

Achieved

Deliver the freight precinct

Rail connection from Southern Sydney Freight Line complete

July 2019

IMEX Terminal operational

November 2019

Support the success of the Logistics Park

Moorebank Avenue realignment planning approval

In progress

Grow our people

Staff turnover

3

Lost time injuries

1

Staff satisfaction – ‘engagement’ score

73%

Manage our business

Expenditure within budget

Achieved

Address ANAO and 2018 Integrity Review recommendations

Achieved

Moorebank Intermodal Company

In 2004, the Australian Government determined that an intermodal terminal for non-bulk freight would be built on a strategically-located Defence site at Moorebank in Western Sydney. In 2012, the Government offered a 99-year lease on the site and funding for enabling works via a new government business enterprise, Moorebank Intermodal Company Limited (MIC). At MIC, purpose is channel Commonwealth funding to attract complementary private investment, thus supporting the development of a more resilient, better integrated multi-modal supply chain.
MIC’s objectives are to:

  • facilitate the development of an intermodal freight terminal at Moorebank, including an IMEX facility, an interstate freight terminal capable of catering for 1.8-kilometre trains and ancillary facilities, by optimising private sector investment and innovation in the development, construction and operation of the intermodal terminal;
  • facilitate the operation of a flexible and commercially viable common user facility, which shall be available on reasonably comparable terms to all rail operators and other terminal users;
  • ensure the intermodal terminals operate with the aim of improving national productivity through an efficient supply chain, increased freight capacity and better rail utilisation;
  • operate on commercially sound principles, having regard to the Australian Government’s long-term intention to sell its interest in the Company;
  • upon notification by the Commonwealth Shareholder, provide assistance as required to facilitate a sale of the Commonwealth’s interest in the Company; and
  • do all things necessary, convenient or incidental to carrying out or attaining of these objectives.

In achieving these objectives, MIC is to deliver a value for money solution to the Australian Government and act in an environmentally and socially responsible manner with due regard to the views of local communities. This means that the terminal development will consider the benefits that can be provided to the local community as well as minimise the adverse impacts on nearby residents and businesses.

MIC is wholly owned by the Australian Government through the shareholdings of the Minister for Population, Cities and Urban Infrastructure and the Minister for Finance. MIC has two wholly owned subsidiary trusts:

  • MIC Land Trust, which holds the Commonwealth-owned land and will receive MIC’s share of distributions of ground rent;
  • MIC Rail Trust, which is funding the rail access works and will receive rail access charges over the term of the lease.

The subsidiaries were created to facilitate eventual divestment by the Commonwealth of its financial interest in the development.

Moorebank site

Prior to Moorebank, Sydney had intermodal capacity to handle around 1.4 million TEU per year, shared between IMEX and interstate trains. Many of the older terminals suffer from constraints including:

  • lack of surrounding land for warehouses and ancillary services;
  • lack of scope to grow capacity over time;
  • short terminal roads (sidings) that require 1,800-metre interstate trains to divide before loading and unloading;
  • distance from motorways;
  • distance from major Western Sydney industrial precincts.

Two existing terminals (as well as Pacific National’s planned St Marys terminal) are located on the shared metropolitan network, so restrictions apply to when and how often freight trains can access them.

While other terminals will continue to be indispensable in managing Sydney’s freight task, there is clear need for additional capacity: both to maintain rail’s mode share within a growing freight task, and to build mode share over time.

The Moorebank site combines the scale and strategic location to efficiently meet customer needs and accommodate growth.

Precinct Developer Co.

The Moorebank facility, now known as Moorebank Logistics Park, will include two rail terminals, new high-specification warehouse space, and connecting road and rail links. The Logistics Park is being built, operated and maintained by a Precinct Developer Co. (PDC) established for the purpose.

Following a tender process, we selected the Sydney Intermodal Terminal Alliance (SIMTA), now wholly owned by Qube Holdings, to form and operate the PDC. SIMTA was selected in part because it was able to present a strongly differentiated proposal: its large adjacent landholding presented the opportunity to considerably increase the scale and efficiency of the intermodal precinct (see Figure 1. Moorebank Logistics Park below).

The strength of our relationship with Qube is vital to the success of the project. This relationship is governed by the Development and Operations Deed, a comprehensive agreement signed in 2015. This grants Qube rights to develop and operate the IMEX and Interstate terminals, precinct infrastructure and warehousing for 99 years, subject to certain conditions.

The Deed sets out MIC’s funding obligations and Qube’s commitment to operate the terminals on a non-discriminatory basis with Open Access available to third parties.

Figure 1. Moorebank Logistics Park Aerial photograph of Moorebank Logistics Park in June 2020, with M5 Motorway, Moorebank Avenue, railway lines, and terminal and Woolworths sites highlighted.
Image: Nearmap, June 2020.

Open Access framework

Moorebank is different from other intermodals for three reasons:

  • Scale. When complete, Moorebank Logistics Park will be home to the largest intermodal terminal in the country.
  • Strategic location. Moorebank occupies a strategic position close to the M5, M7 and M31 motorways and enjoys direct access to Port Botany via ARTC’s Metropolitan Freight Network (see Figure 2. Location of Moorebank Logistics Park below). Few sites – existing or proposed – enjoy such unfettered access to the port, the interstate rail network and freight customers in Western Sydney.
  • Vertically-integrated operator. The terminal operator, Qube, is a train operator and logistics firm in its own right. Access seekers will, by definition, be competitors of the operator’s associated businesses.

Moorebank’s Interstate and IMEX terminals therefore require a robust approach to competition. It falls to MIC to ensure that the interests of other market participants (and thus consumers) are protected.

MIC has sought to balance these considerations against the need for the operator to exercise its judgement to promote safety, efficiency, productivity and volume through the facility.

The Development and Operations Deed between MIC and Qube provides for a contractual open access framework at both terminals. MIC will monitor compliance with the contractual obligations to ensure that access seekers, freight customers and the broader community are protected over the course of the Qube lease.

MIC and Qube agreed to develop the framework in this way to foster a collaborative, rather than adversarial, culture. The focus is, first and foremost, on continuous improvement.

Figure 2. Location of Moorebank Logistics Park Map showing location of Moorebank Logistics Park in relation to Port Botany, motorways and freight railways