Pacific National statement on capacity and future growth in containerised freight

Changing a long-term business relationship is never an easy or comfortable decision, but as CEO of Pacific National I’m obligated to act in the best interests of our company.

Our approach is very simple, we strive for commercial discipline and mutually beneficial outcomes for us and our customers. Our purpose is to deliver what matters for our people, customers, and shareholders.

Despite yesterday’s announcement by Team Global Express and Aurizon, Pacific National continues to grow in the containerised freight market, holding a strong position in both interstate and regional intermodal operations and services. Our freight customer base is both large and diverse, including daily rail haulage services for more than 300 freight businesses.

As containerised volumes in the nation’s freight and logistics sector continue to rapidly expand, many of our customers are on strong growth trajectories and desire more freight to be transported by rail to achieve a range of ESG performance targets.

As such, I’d like to address some misconceptions in the announcement about access to rail freight capacity and future growth options.

Pacific National’s operational footprint (some 90 terminals and depots across the mainland) and extensive rollingstock assets (including >180 main line locomotives and almost 2,000 wagons dedicated to servicing our containerised business) means we can provide the most comprehensive intermodal rail service offering in the country.

Furthermore, our essential frontline train crews, terminal operators and maintenance staff are unmatched in terms of both expertise and experience. This depth of capacity and experience was on show for all to see during the coronavirus pandemic – Pacific National hardly missed a beat. These unique attributes also came to the fore during major network disruptions in 2022 and earlier this year due to inclement weather and associated widespread flooding.

Critically, the safety record of Pacific National is world class. People often underestimate the years of smart and hard graft it takes to develop and cultivate not just a culture, but also deeply ingrained systems and procedures to achieve such a safety record in this sector. It’s an area of customer service which doesn’t happen overnight.

As part of our staged transition to balance what has been in the past a heavy reliance on coal earnings, we have and are making significant investments in the people, assets, and systems of our containerised (intermodal) business; including:

• $330 million purchase of 50 new UGL locally designed and manufactured environmentally friendly freight locomotives. Due to be delivered in 2024, these new 94 Class locomotives will add greater capacity to interstate intermodal operations, including on the future Melbourne-Brisbane Inland Rail. These new locomotives will help enhance the ESG credentials of Pacific National customers.
• $160 million to overhaul Pacific National’s NR Class locomotives (the ‘work horses’ of interstate operations), plus purchase of 110 new tandem well wagons to further lift service capacity. These wagons are equivalent to 4.7 kilometres of new rollingstock.
• $200 million acquisition of Acacia Ridge Terminal (Brisbane), plus further investments to optimise existing operations at the terminal.
• $40 million to construct and optimise the first phase of the Parkes Logistics Terminal (Central West, New South Wales) – regional Australia’s largest intermodal terminal. The terminal is a key launchpad for double-stacked freight train services between Parkes and Perth.
• $5 million to upgrade locomotive provisioning facilities at Sydney Freight Terminal (Chullora), one of the busiest containerised terminals by volume on the eastern seaboard.
• Detailed planning underway in relation to proposed future intermodal terminals at Little River (Victoria) and Wellcamp (Toowoomba), the latter in partnership with the Wagner Corporation.
• Continued investment in a series of driver training schools, including approximately 70 trainees in the intermodal business to proactively counter an aging frontline workforce in the national rail supply chain. School locations have been established in Melbourne, Adelaide, Brisbane, Sydney, Perth, and multiple schools in Kalgoorlie and Port Augusta to specifically support future operations along key interstate intermodal freight corridors.
• Extensive expertise and experience in nationwide operational planning, including provision and scheduling of hundreds of freight train paths each week across interstate and regional rail networks. This critical in-house function determines performance of daily rail freight services on congested or constrained rail networks, operations in and out of coastal and inland ports, not to mention access to intermodal and IMEX facilities.

These investments have allowed Pacific National in the past year to add 12 percent more capacity (or seven additional weekly interstate services) to its interstate intermodal business. Additionally, Pacific National has committed to an investment program to increase capacity for intermodal customers by an extra five percent annually in the foreseeable future.

Understandably, pricing discipline must be a crucial part of the overall equation, since we are focused on ensuring returns generated provide future investment certainty to maintain ongoing safe and reliable daily services. Our strategy is to build long term value for our people, customers, and shareholders.

As the nation’s largest private rail freight company, our people, customers, footprints and assets, and operational excellence will allow Pacific National to become Australia’s most trusted and respected logistics partner.

Paul Scurrah

Pacific National CEO