Pacific National has begun scrapping railway assets in NSW says the Rail Revival Alliance

 

News article: Pacific National has begun scrapping railway assets in NSW says the Rail Revival Alliance

In Werris Creek, NSW they are at again, not satisfied with the reports of Pacific National (@Asciano) rumoured report of the grain wagons at Murtoa being scrapped, so competitors can't use them.

  MetroFemme Chief Train Controller

Asciano are now scrapping a lot more wagons in VictoriA this time from the north of the state. No shame.

Pacific National has begun scrapping railway assets in NSW says the Rail Revival Alliance

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  ARodH Chief Train Controller

Location: East Oakleigh, Vic
Do they actually own what they're scrapping or are just the operator?
  bevans Site Admin

Location: Melbourne, Australia
Do they actually own what they're scrapping or are just the operator?
ARodH

The is a great question.  PN would have received a lot of wagons from their purchase of Freight Australia (FA) which would originally been Victoria taxpayer owned.

After the takeover from Rail America the business under PN suffered and deteriorated to what it is today, a shadow of its former business.

I suppose the wagons would be on the asset register of a subsidiary owned by Asciano.
  nswtrains Chief Commissioner

Do they actually own what they're scrapping or are just the operator?

The is a great question.  PN would have received a lot of wagons from their purchase of Freight Australia (FA) which would originally been Victoria taxpayer owned.

After the takeover from Rail America the business under PN suffered and deteriorated to what it is today, a shadow of its former business.

I suppose the wagons would be on the asset register of a subsidiary owned by Asciano.
bevans
The various governments received their 30 pierces of silver for the sale of these assets and now PN can do what they like with them. These assets are probably near to life expired so I do not see why Bevans is getting so emotional about some scrap. It is not logical for a competitor to help out another competitor. Capitalism does not work like that.

If the business was there why did Rail America exit the market? Smart enough to see what transpired with PN?
  bevans Site Admin

Location: Melbourne, Australia
The various governments received their 30 pierces of silver for the sale of these assets and now PN can do what they like with them. These assets are probably near to life expired so I do not see why @bevans is getting so emotional about some scrap. It is not logical for a competitor to help out another competitor. Capitalism does not work like that.

If the business was there why did Rail America exit the market? Smart enough to see what transpired with PN?
nswtrains

Capitalism in Australia is very different to the way capitalism works in the USA the birthplace of such.  The question was why the assets are being scrapped and who owns them.  These reasons could be related to impairment, or it could be due to PN management wanting to complete disolve itself from the BG business which is what I have heard.  This is what happened in Tasmania.

PN's performance (IMHO) has been substandard in many markets both vertical and geographic. When coal does wind down there will be further impacts.  Just look at Aurizon and their write downs.

Rail America exited the marketplace because they had cash issues in the USA. FA was growing their business after they broke away from Vline.  They had new traffic and also extended traffic.  They had branched into NSW on oil contracts and had developed the log traffic.  They had a profitable LCL All of that traffic under PN has gone.

I don't think it is fair to infer they were not doing a good job, they were.  In fact I would argue they did a much better job than PN has in the same markets.
  seb2351 Chief Commissioner

Location: Sydney
The various governments received their 30 pierces of silver for the sale of these assets and now PN can do what they like with them. These assets are probably near to life expired so I do not see why @bevans is getting so emotional about some scrap. It is not logical for a competitor to help out another competitor. Capitalism does not work like that.

If the business was there why did Rail America exit the market? Smart enough to see what transpired with PN?



PN's performance (IMHO) has been substandard in many markets both vertical and geographic. When coal does wind down there will be further impacts.  Just look at Aurizon and their write downs.
bevans
Oh really? lets see what the figures are telling us...

For year ending 12/2015
* Dividend per share is $0.13 (Increase of 57% from previous year)
* Statutory NPAT is $199.8m (Increase of 6%)
* Earnings per share is $0.205 (Increase of 5.7%)

These results, achieved during an economic tumultuous time where exposure to a softening commodity market are nothing to be sneezed at.
Business across the world base their operations on risk. It is a wise strategy during a time of uncertainty to reduce risk exposure by focusing on long term contracts with a more solid margin.

Perhaps if people spent more of their time understanding basic economic and financial principles, and less time stuck in the past entertaining a deluded fantasy that freight rail is still owned by the public and answerable to the public, we might actually see some intelligent discussion.

Oh wait, this is Railpage. By all means, continue to spread misinformation and a flawed understanding of free market principles. I will just continue to enjoy the returns that my shares in a privately owned and operated business continue to deliver to me.
As a shareholder, I don't give a rats about small towns and their survivability. I care about my dividend, I care about return on investment, I care about the business justifying their business model with my money.

Don't like how the business is being run? Become a shareholder and invest your money where your mouth is.

The sound of scrappers is music to my ears as a shareholder.
  bevans Site Admin

Location: Melbourne, Australia
That is purely a shareholders view point in time.  This tells me bugger wall about how well the assets are being utilised for how PN are performing in their markets or how happy their customers might be.  As a CPA I understand how there numbers re created and communicated to shareholders.

How have PN performed in terms of total grain carried over the past 10 years and intermodal volumes over the same period?  Not intending to argue just look at the performance of PN in relation to its investments to which it committed shareholder provided capital.

Would you care to look at the performance (which I speak of) in terms of a return on investment for the acquisition of Tasrail and FA?
  RTT_Rules Dr Beeching

Location: Dubai UAE
That is purely a shareholders view point in time.  This tells me bugger wall about how well the assets are being utilised for how PN are performing in their markets or how happy their customers might be.  As a CPA I understand how there numbers re created and communicated to shareholders.

How have PN performed in terms of total grain carried over the past 10 years and intermodal volumes over the same period?  Not intending to argue just look at the performance of PN in relation to its investments to which it committed shareholder provided capital.

Would you care to look at the performance (which I speak of) in terms of a return on investment for the acquisition of Tasrail and FA?
bevans

What we don't know (you/others may do) is that while FA was expanding and getting traffic, how was its bottom line? Why did PN buy it out? Surely they didn't buy an asset of value $X and then deliberately run it into the ground to burn that money?

Tasrail is far from a shinning example of commercial rail freight business. The state and feds basically through more money at the track in last few years than they will ever get back in track fees. Most of the traffic it lost since AN Tasrail days is gone for good from the state. The southern line is a medium-high risk venture as the loss of its primary customer will make this marginal operation a challenge to say the least. However under state ownership it is doing well and getting some extra freight (thanks to $100m's cash injection) and should continue to do so.
  speedemon08 Mary

Location: I think by now you should have figured it out
Complaning about scrapping 50 year old wagons while there are whole new rakes of wagons running around.

If Qube wanted to run a grain train, they'd buy a whole new BG/SG grain train. They done that with the Maryvale.
  Newcastle Express Chief Commissioner

And why has Bevans brought up an article that is almost a year old?

I'd like to ask Bevans another question, but doubt I'd get a answer, but here it goes anyway.

What would have been in this thread, IF it was a federal Labor government?
  bevans Site Admin

Location: Melbourne, Australia
And why has Bevans brought up an article that is almost a year old?

I'd like to ask Bevans another question, but doubt I'd get a answer, but here it goes anyway.

What would have been in this thread, IF it was a federal Labor government?
Newcastle Express

Ok OK Ok. Calm your farm.

The thread was started on 24/7/16 so not a year old.

To answer your question, I do not see the relevance.  This does not have much to do about politics and more about business and asset impairment.
  Trainplanner Chief Commissioner

Location: Along the Line
Interesting dilemma.   We know PN owns those assets outright and so can choose to do whatever it likes with them.   There is no doubt that in the case of grain wagons, there are some significant numbers of new grain wagons across the country with much improved load to tare ratios etc.    Interesting though that SSR recently purchased a number of these wagons from PN, thoroughly overhauled them and now they are on SSR services doing very nicely thank you very much.   PN has also sold locos to SCT and to Regional Express the emerging freight operator based out of Ettamogah.   So it seems to me that if you have the right business proposal PN maybe receptive.   I'm no fan of PN's performance in "regional" freight and its performance in Victoria in particular, but we need to be balanced.

Even so we have a looming grain harvest, and I don't see PN who is a pretty major player still in grain doing some much needed maintenance on its grain fleets yet the grain wagons it sells to SSR get a overhaul and help strengthen that operators increasingly good entry into regional freight and grain.

What it says to me is there continues to be significant potential to increase the role of rail in freight you just need to get the right operators who are pro-active.   Role on the Murray Basin Project in Victoria and put out the Welcome Mat to the likes of QUBE and SSR who will then have an opportunity to see what can be done there.

We also have another interesting curiosity with Aurizon.   They cut up a very large proportion of both the narrow and standard gauge grain fleet in WA.   WA had been a leader in grain hopper wagon design for decades with Aluminium hopper cars appearing in the early 70's.   After decimating all of that they recently gauge converted a narrow gauge fleet of the last generation of aluminium hoppers and have brought them to the East Coast.  What madness to have scrapped dozens of very high quality SG hoppers only 18 months ago and now go to the cost of gauge converting a narrow gauge fleet.

Grain obviously is a highly seasonal operation but increasingly with far improved supply chain practices grain now moves almost year round.   In the US no one would scrap hoppers of the quality of the WA fleet.   They would be stored ready for the sort of opportunities that will no doubt unfold this year.   Madness
  Nightfire Minister for Railways

Location: Gippsland
Interesting dilemma.   We know PN owns those assets outright and so can choose to do whatever it likes with them.   There is no doubt that in the case of grain wagons, there are some significant numbers of new grain wagons across the country with much improved load to tare ratios etc.    Interesting though that SSR recently purchased a number of these wagons from PN, thoroughly overhauled them and now they are on SSR services doing very nicely thank you very much.   PN has also sold locos to SCT and to Regional Express the emerging freight operator based out of Ettamogah.   So it seems to me that if you have the right business proposal PN maybe receptive.   I'm no fan of PN's performance in "regional" freight and its performance in Victoria in particular, but we need to be balanced.

Even so we have a looming grain harvest, and I don't see PN who is a pretty major player still in grain doing some much needed maintenance on its grain fleets yet the grain wagons it sells to SSR get a overhaul and help strengthen that operators increasingly good entry into regional freight and grain.

What it says to me is there continues to be significant potential to increase the role of rail in freight you just need to get the right operators who are pro-active.   Role on the Murray Basin Project in Victoria and put out the Welcome Mat to the likes of QUBE and SSR who will then have an opportunity to see what can be done there.

We also have another interesting curiosity with Aurizon.   They cut up a very large proportion of both the narrow and standard gauge grain fleet in WA.   WA had been a leader in grain hopper wagon design for decades with Aluminium hopper cars appearing in the early 70's.   After decimating all of that they recently gauge converted a narrow gauge fleet of the last generation of aluminium hoppers and have brought them to the East Coast.  What madness to have scrapped dozens of very high quality SG hoppers only 18 months ago and now go to the cost of gauge converting a narrow gauge fleet.

Grain obviously is a highly seasonal operation but increasingly with far improved supply chain practices grain now moves almost year round.   In the US no one would scrap hoppers of the quality of the WA fleet.   They would be stored ready for the sort of opportunities that will no doubt unfold this year.   Madness
Trainplanner


The Western Australian SG grain hoppers were to large for the VIC & NSW loading gauge !
  Gman_86 Chief Commissioner

Location: Melton, where the sparks dare not roam!
I don't understand how a new thread in the NEWS section of the forum starts this week, almost a year after the news article in question was published, but anyway...

... PN do own the rollingstock in question, much of which is past the majority of its useful life. If they deem scrapping is the best outcome for this stock, then they have every right to do that.

As others have said, PN have sold off locomotives recently, and if another operator is planning to take up any new work, they aren't likely to want to that with dilapidated 40 year old freight wagons.
  Graham4405 Minister for Railways

Location: Dalby Qld
As a shareholder, I don't give a rats about small towns and their survivability. I care about my dividend, I care about return on investment, I care about the business justifying their business model with my money.
seb2351


Oh, that's right, the world runs on greed... Sad isn't it.
  mikesyd Chief Commissioner

Location: Lurking
This is old news, that original link is to a page dated 31 July 2015.
  Beta4Me Locomotive Driver

PN has also sold locos to SCT and to Regional Express the emerging freight operator based out of Ettamogah. So it seems to me that if you have the right business proposal PN maybe receptive.
Trainplanner
PN didn't sell locos to SCT. They traded 2 x X Class locos for a G Class engine and parts. They sold a bunch of clapped out low-hp locos that need major overhauls (if not complete rebuilds) to Regional Connect. And, I understand that RC was going to have PN pick-up and drop-off loading from Ettamogah Rail Hub which would have come from Regional Connect, so it would be a feeder service. Thus, its a pretty niche 'business proposal' and the SCT one was a pretty unique situation. PN still doesn't want to do business with its competitors in terms of rolling stock sales (or anything else really).
  Nightfire Minister for Railways

Location: Gippsland
PN didn't sell locos to SCT. They traded 2 x X Class locos for a G Class engine and parts.
Beta4Me
In the eyes of the ATO trading IS selling ! I don't think they would get away with bartering ?
  james.au Chief Commissioner

Location: Sydney, NSW
PN didn't sell locos to SCT. They traded 2 x X Class locos for a G Class engine and parts.
In the eyes of the ATO trading IS selling ! I don't think they would get away with bartering ?
Nightfire
Agreed - there would be tax impacts to think about, though conceivably they could end up at a zero taxable profit outcome given the age of the locos.
  Beta4Me Locomotive Driver

PN didn't sell locos to SCT. They traded 2 x X Class locos for a G Class engine and parts.
In the eyes of the ATO trading IS selling ! I don't think they would get away with bartering ?
Nightfire
Yes, but the tax impact is a secondary issue to the commercial imperative of the deal itself which definitely was not to "sell locos" but rather to "get an engine".

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