This document is confidential and intended for the sole use of the client to whom it is addressed. Persons who have not been authorised to access this document should read no further. Marchment Hill Consulting, its partners, employees and agents neither owe nor accept any duty of care or responsibility to such persons, and shall not be liable in respect of any loss, damage or expense of any nature which is caused by any use they may choose to make of this report. The information outlined herein is proprietary and its expression in this document is copyrighted, with all rights reserved to Marchment Hill Consulting. Any form of reproduction, dissemination, copying, disclosure, modification, distribution and/or publication of this document without express written permission from Marchment Hill Consulting is strictly prohibited. Freight Implications of Rail Privatisation 23 October 2013 Queensland Transport Infrastructure 2013 Jonathan Myers, CEO and Transport Practice Leader
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Jonathan Myers, Marchment Hill Consulting: Freight implications of rail privatisation
Jonathan Myers, CEO, Marchment Hill Consulting delivered this presentation at the 2013 QLD Transport Infrastructure conference. Delivering "better infrastructure and planning" is key to the State Government’s plan of a four pillar economy to get "Queensland back on track". As transport takes a leading role in strengthening the Queensland economy, there has never been a better time to review the transport projects and policy promoting the State's future productivity and prosperity. For more information about the annual event, please visit the conference website: http://www.statetransportevents.com.au/qldtransport
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This document is confidential and intended for the sole use of the client to whom it is addressed. Persons who have not been authorised
to access this document should read no further. Marchment Hill Consulting, its partners, employees and agents neither owe nor accept
any duty of care or responsibility to such persons, and shall not be liable in respect of any loss, damage or expense of any nature which is
caused by any use they may choose to make of this report. The information outlined herein is proprietary and its expression in this
document is copyrighted, with all rights reserved to Marchment Hill Consulting. Any form of reproduction, dissemination, copying,
disclosure, modification, distribution and/or publication of this document without express written permission from Marchment Hill
Consulting is strictly prohibited.
Freight Implications of Rail Privatisation
23 October 2013
Queensland Transport Infrastructure 2013
Jonathan Myers, CEO and Transport Practice Leader
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Critical contextual issues…
• What do you want to achieve?
• Associated policies and chosen “Structure” are critical elements
• Long term vertically integrated concession (e.g. Latin America)
• Outright transfer of ownership (UK (vertically separated), NZ, Victoria (vertically integrated))
• Competing integrated long haul concessions, independent short-haul branchlines (Canada)
• Hybrid models (e.g. Queensland, Japan, Sweden)
• It’s not just freight [implications]…
3
The potential positive implications are significant…
UK – 1995-2012
Passenger volumes (millions of passenger km) +96%
Freight volumes (millions of ton kilometres) +53%
US – 1982-1996 Freight charges reduced 4-5% EACH YEAR
Brazil – 1997-2003
Freight volumes +20%
Freight rail market share +2%
Accidents -44%
Mexico – 1995-2003
Freight volume and traffic density +44%
Number of locomotives used -9%
Fatalities -95%
Central and Latin America
$1 billion saving / reduction in freight charges from privatisation to 1999 (purchasing power parity basis)
Japan
Total Factor Productivity gain of 2.5%
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Rail privatisation impacts in Latin America (freight concessions in 1990s)
Note: Commencement Date of Primary Concession indicated by +
Index of freight ton/kms 1985-2003
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Labour productivity impacts – freight concessions: Brazil, Mexico,
Argentina, Chile
Index – millions of ton/KM per employee
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BUT… not all impacts are positive…
UK
Significant complexity and transaction costs
Increasing labour and infrastructure costs?
UK, NZ, Victoria and Tasmania – networks “re-nationalised” to retain control of critical
economic infrastructure
Central / Latin America
Estimated 60% reduction in employment – associated social impacts
Significantly less investment completed (approx 40% of original commitments)
Decline / extinction of regional passenger services?
Sweden
Swedish government still retains 80% of infrastructure costs
Japan
Government retained 60% of accumulated losses (amounting to debts of ¥24 trillion)
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European rail reform…. a mixed story [of reform and of outcomes]
-150%
-100%
-50%
0%
50%
100%
150%
200%
Growth in Freight and Passenger Volumes (1995-2005)
Growth in Passenger KMs (millions) (1995-2005) Growth In Freight Ton-KMs (millions) (1995-2005)
+25%
-25%
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Is privatisation a necessary driver of change anyway…?