US players eye Asciano freight rail business

 
Topic moved from News by bevans on 16 Dec 2014 11:44
  nswtrains Chief Commissioner

This is the same old tired argument we have been listening to for years and one the road transport lobby loves.

Because you can't think or know of a way to do it I obviously cannot be done.

How much more freight is on rail in the USA compared to Australia ?

The Americans would not have a clue right ?  What would rail companies in the USA know about running trains. Hard to believe.

Until peoples perceptions on what can be achieved and in many respects has already been achieved in this country rail will struggle.

SCT is a great example of how privatised government rail enterprises rising out of the ashes could not achieve or did not know how to achieve what SCT has already made a great success.

The difference being SCT do not have management who cannot think outside the coal
Box.
freightgate

US companies like UP, BNSF, NS & CSX to name the main one run the best freight services in the world bar none. Yes the USA does have many more population centres than Australia but a great deal of the intermodal services run West to East with South to North ramping up on the East Coast with mainly NS & CSX.

I would suggest that their safety record is not bad compared to the amount of freight they haul. Some of the bad accidents occurred with smaller operators taking short cuts.

We are not doing anywhere near as well.

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  Typhon Assistant Commissioner

Location: I'm that freight train tearing through the sky in the clouds.
SCT is a great example of how privatised government rail enterprises rising out of the ashes could not achieve or did not know how to achieve what SCT has already made a great success.

The difference being SCT do not have management who cannot think outside the coal
Box.
freightgate

SCT have a unique business model that allows them to be flexible and pick up a bit of work. PN are not in a position to run that sort of service, and AFAIK have no desire to given their relationship and contracts with their major customers.
  YM-Mundrabilla Minister for Railways

Location: Mundrabilla but I'd rather be in Narvik
SCT have a unique business model that allows them to be flexible and pick up a bit of work. PN are not in a position to run that sort of service, and AFAIK have no desire to given their relationship and contracts with their major customers.
Typhon
I thought when Toll/Patrick took over from National Rail that, given the diversity of their empire and their obvious success in running a major transport/logistics business, that they would integrate rail linehaul of suitable traffics into their overall operation to achieve even greater success. I also thought that with their political clout that rail could only improve its overall position in the scheme of things.

Is there any evidence of the foregoing having taken place or was I totally wrong in my thoughts in 2001. (I have been wrong before so there is ample precedent for that being the case !! Smile
  nswtrains Chief Commissioner

US companies like UP, BNSF, NS & CSX to name the main one run the best freight services in the world bar none. Yes the USA does have many more population centres than Australia but a great deal of the intermodal services run West to East with South to North ramping up on the East Coast with mainly NS & CSX.

I would suggest that their safety record is not bad compared to the amount of freight they haul. Some of the bad accidents occurred with smaller operators taking short cuts.

We are not doing anywhere near as well.
nswtrains
Asciano receive $9 billion takeover bid from Brookfield Rail Canada. Noted on late morning ABC news. No further details at this stage.
  nscaler69 Deputy Commissioner

Location: There are no stupid questions, but there are a lot of inquisitive idiots.
ABC.net.au story Asciano receives $9b takeover bid from Canada's Brookfield

This was in the Reuters story about it (http://www.reuters.com/article/2015/07/01/us-asciano-m-a-brookfield-infr-idUSKCN0PB36720150701)

Brookfield's June 26 proposal was made through its listed fund Brookfield Infrastructure Partners (BIP.N)........

Brookfield has a 5,500 kilometer (3,420 miles) rail network in the state of Western Australia.
Reuters
The fact Brookfield has the W.A. rail network, could that be a conflict of interest or what ever it's called and could that mean Brookfield getting a Pac Nat foothold in narrow gauge W.A. (a speculative long shot guess by me).
  Sulla1 Chief Commissioner

The ACCC didn't oppose Aurizon retaining ownership of its 2700km Central Quernsland coal network so I'd be surprised if Brookfield's Western Australian rail lease would receive much scrutiny in this deal. Common ownership of PN and the Western Australian network might see increased PN activity in Western Australia, particularly on standard gauge, but I suspect the biggest potential change for a Brookfield owned PN will be in Queensland. This is where Brookfield may encourage PN to further consolidate coal hauls to the 85-million tonne Brookfield owned Dalrymple Bay Coal terminal rather than using the Abbot Point and Gladstone Ports. With export growth down, the various Queensland coal ports are likely to start a bidding war to win more volumes from competitors and PN could be the leverage Brookfield will need for that upcoming battle.
  seb2351 Chief Commissioner

Location: Sydney
ABC.net.au story Asciano receives $9b takeover bid from Canada's Brookfield

This was in the Reuters story about it (http://www.reuters.com/article/2015/07/01/us-asciano-m-a-brookfield-infr-idUSKCN0PB36720150701)

The fact Brookfield has the W.A. rail network, could that be a conflict of interest or what ever it's called and could that mean Brookfield getting a Pac Nat foothold in narrow gauge W.A. (a speculative long shot guess by me).
nscaler69
Would that be the same conflict of interest that allows track owner GWA to also run trains?
  donttellmywife Chief Commissioner

Location: Antofagasta
The ACCC didn't oppose Aurizon retaining ownership of its 2700km Central Quernsland coal network so I'd be surprised if Brookfield's Western Australian rail lease would receive much scrutiny in this deal. Common ownership of PN and the Western Australian network might see increased PN activity in Western Australia, particularly on standard gauge, but I suspect the biggest potential change for a Brookfield owned PN will be in Queensland. This is where Brookfield may encourage PN to further consolidate coal hauls to the 85-million tonne Brookfield owned Dalrymple Bay Coal terminal rather than using the Abbot Point and Gladstone Ports. With export growth down, the various Queensland coal ports are likely to start a bidding war to win more volumes from competitors and PN could be the leverage Brookfield will need for that upcoming battle.
Sulla1
To a reasonable first approximation, a seller of coal (~a mine, given the current industry structure - that is - if you are an overseas consumer of coal and you want to buy some coal - you first talk to the marketing department of a mining company - the rail, port and shipping mobs are just contractors that help deliver the coal) is going to arrange for its coal to go the closest port that has available capacity - in the current climate (which is the usual climate) cents per tonne matter, and rail is more expensive that bulk shipping.  

Such arrangements can include the seller of coal taking equity in terminal owners or operators or signing up for long term take-or-pay contracts.  Given the current industry structure I don't see owning an above rail provider giving much leverage.

Also - PN is an operator, Brookfield is just the lease holder (not operator) of DBCT.

In some other major basins, the industry is structured differently - the coal seller (from the point of view of the overseas consumer that ultimately uses the coal) is the logistics provider, not the mine that supplies the logistics provider.  Several players are clearly keen for this model to apply to the Bowen Basin as well, and perhaps owning a rail operator makes sense with that different structure (or perhaps it is irrelevant - not sure).  But the idea/attempts to change the structure are hardly new, and there are some reasonably sound technical reasons why the current structure is the way that it is.
  LancedDendrite Chief Commissioner

Location: Gheringhap Loop Autonomous Zone
Interesting tidbit in this article in the 'Fin:
The theory is to combine Brookfield's 5100 kilometres of rail tracks in Western Australian with the government's Australian Rail Track Corporation, which has another 8500km network, and Asciano's Pacific National to create Australia's biggest rail company and a top-level company which would potentially attract North American investors by the bucketload.

The deal would see Brookfield expand its Australian rail presence, which it has shown it is keen to do, and solve the government's headache at ARTC.
Australian Financial Review
The ARTC/Brookfield/PacNat combine (I'm going to call it Voltron for the moment) might look like a US Class I railroad at first glance, but quite a lot of its below-rail assets are long-term leases, not outright ownership. That's a hell of a lot of market power for one privately-owned company to wield.
  Beta4Me Locomotive Driver

The Brookfield 'bid', not to mention the share price generally, seems huge for a company with $4B debt on its books not to mention an accounting-creation of goodwill of almost $3B and 'reserves' of negative ~$4.5B from the Toll demerger. Even at the 25 P/E ratio all the ASX-listed rail-related businesses seem to be tracking at, Asciano looks to be some $6B overvalued. Curious indeed.
  Sulla1 Chief Commissioner
  bevans Site Admin

Location: Melbourne, Australia
The plot thickens...


http://www.afr.com/street-talk/qube-is-trying-to-buy-20pc-of-asciano-20151029-gkm289
Sulla1

Brilliant!
  seb2351 Chief Commissioner

Location: Sydney
Given that Corrigan is in control of Qube, I would not be surprised if this move is more than just a blocking play...
  james.au Minister for Railways

Location: Sydney, NSW
Interesting indeed.  The ACCC will have a whole lot of other competition concerns though with this deal!!
  james.au Minister for Railways

Location: Sydney, NSW
An article from the Canberra Times (and not behind a firewall)

http://www.canberratimes.com.au/business/qube-muscles-in-on-brookfield-with-asciano-stealth-raid-20151029-gkm5ou.html

QUBE would take the ports business, PN would be held by other Canadian investment firms.

Looks neat enough to me.  PN would have to fight for more business though if they don't have the ports business and the guaranteed flow.
  RTT_Rules Oliver Bullied, CME

Location: Dubai UAE
Will things change much if the yanks buy PN? Doubt it. We have and I think still have US players come to Oz before. At any time they could have brought over rollingstock and bought more and do an Aurizon, but no!
  Raichase Captain Rant!

Location: Sydney, NSW
Will things change much if the yanks buy PN? Doubt it. We have and I think still have US players come to Oz before. At any time they could have brought over rollingstock and bought more and do an Aurizon, but no!
RTT_Rules
I don't think the emphasis on the nationality of the new owners is important - by that I mean "under new management" has the potential to be a good thing. The new bosses might continue with the status quo, but they also might shake things up, by going after more business... North America move a lot of freight by rail, so I suggest that a change in ownership may bring a change in attitude. God knows there's enough bleating and whinging about PN on these forums repeated ad-nauseam that they don't chase enough business to please the dribblers.
  RTT_Rules Oliver Bullied, CME

Location: Dubai UAE
Will things change much if the yanks buy PN? Doubt it. We have and I think still have US players come to Oz before. At any time they could have brought over rollingstock and bought more and do an Aurizon, but no!
I don't think the emphasis on the nationality of the new owners is important - by that I mean "under new management" has the potential to be a good thing. The new bosses might continue with the status quo, but they also might shake things up, by going after more business... North America move a lot of freight by rail, so I suggest that a change in ownership may bring a change in attitude. God knows there's enough bleating and whinging about PN on these forums repeated ad-nauseam that they don't chase enough business to please the dribblers.
Raichase
Agree, but don't ignore a few basics for USA that's make rail freight so much more viable
- Density of freight
- Volume of freight
- Limitation of coastal shipping
- Inland cities, numerous well over 1m each
- Mexico and Canada have huge E-W borders that make rail more viable over shipping
- Population of both neighbouring countries

I've read in past that when Australia was going down the privatisation route, a number of USA railways looking into buying the local govt operators and raised a few eyebrows when they heard some lines count trains per week on one hand. Where as a number of operators run twin tracks for rail freight only and those tracks are very very busy and their longhaul trains are typically heavier than ours!
  Raichase Captain Rant!

Location: Sydney, NSW
Oh yes, there's no denying that you can't just copy/paste American style operations over here owing to the differing circumstances. That being said though, I believe my point remains valid. You stated that you doubt there will be any benefit from American owners, and I stand by my statement that their nationality is irrelevant, perhaps a new management team will be more innovative. Perhaps coming from a country in which rail plays a stronger role would lead said new management team to be more aggressive in getting more freight on rail.
  james.au Minister for Railways

Location: Sydney, NSW
We kind of do have American players through CFCLA and G&W no?  And British through Freightliner?
  Raichase Captain Rant!

Location: Sydney, NSW
We kind of do have American players through CFCLA and G&W no?  And British through Freightliner?
jamesbushell.au
G&W are indeed a North American company:

https://en.wikipedia.org/wiki/Genesee_%26_Wyoming

This North American influence can be seen in the way they overhaul and rebuild older locomotives (much like Freight Australia did with the X Class in Victoria) rather than purchasing new. The G&WA CLF/P, (4)22 and ALF Classes have been through major overhauls to extend their life, compared to QRNational/Aurizon who have stored or disposed of theirs.

Freightliner is now owned by G&W, indeed the Freightliner locomotives in Australia have had the "0 injuries" decals applied over the Freightliner livery, as well as "A G&W company" under the logo.
  YM-Mundrabilla Minister for Railways

Location: Mundrabilla but I'd rather be in Narvik
Were the CL - CLP/CLF and AL - ALF rebuilds not done by AN?
What, apart from routine maintenance, has been done to them since, please?
  Raichase Captain Rant!

Location: Sydney, NSW
Were the CL - CLP/CLF and AL - ALF rebuilds not done by AN?
What, apart from routine maintenance, has been done to them since, please?
YM-Mundrabilla

I never said the rebuilds were done by G&W. If you re-read my post, you'll see what I did say. For the simple minded, I'll repeat it here: "have been through major overhauls to extend their life".
  YM-Mundrabilla Minister for Railways

Location: Mundrabilla but I'd rather be in Narvik
Were the CL - CLP/CLF and AL - ALF rebuilds not done by AN?
What, apart from routine maintenance, has been done to them since, please?

I never said the rebuilds were done by G&W. If you re-read my post, you'll see what I did say. For the simple minded, I'll repeat it here: "have been through major overhauls to extend their life".
Raichase
Everything goes through major overhaul at some stage as part of normal maintenance.

One would be hard put to say that the 'rebuilt' CLs, ALs, Gs, XRs and XRBs have been significant improvements over what they used to be.

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