This will be in 'The Oz' on Monday 13 December 2021:

Pacific National challenges Qube with plans for Melbourne container terminal

Pacific National CEO Paul Scurrah: ‘Road freight produces 16 times more pollution than rail freight.’ Picture: NCA NewsWire/Daniel Pockett

• 
  

  Ben Wilmot

  Commercial Property Editor

  

Pacific National has thrown down the gauntlet to logistics rival Qube by kicking off plans to develop a massive new intermodal container terminal in Melbourne’s west, in a bid to connect the Victorian capital’s major freight zone to the planned Inland Rail.

Pacific National, the nation’s largest rail freight business, will look to heavyweight transport players Linfox and Toll as customers at the facility.

It is building momentum for the project, which it bills as superior to Qube’s scheme in Beveridge, north of Melbourne.

The battle for supremacy between the projects could have a significant influence in national transport flows. Once completed the precincts could be worth hundreds of millions of dollars as industrial property values soar.

Sydney’s transport system was transformed when ASX-listed Qube trumped a federal government scheme to get its massive Moorebank Intermodal off the ground.

The precincts take years to fully develop but are have become increasingly lucrative as supply chains are shaken up and e-commerce continues to expand.

Qube this year offloaded the warehouses at its Moorebank development in Sydney to a consortium led by Singaporean funds management house LOGOS for $1.67bn.

Pacific National chief executive Paul Scurrah told The Australian that the company had secured an option over a 540ha site in Little River to build a terminal and develop a logistics precinct on the existing interstate rail corridor west of Melbourne’s CBD and port.

“(The new site) is in a prime position on the main interstate rail line and close to the Princes Freeway, delivering efficient freight transport connectivity to nearby logistics companies, distribution centres, warehouses, shippers and manufacturers,” he said.

The company is billing the site as central for Melbourne freight. It argues it will help shift freight from roads to railways, and complement a proposed interstate freight terminal in Truganina.

Pacific National, formerly known as Asciano, is now owned by Global Infrastructure Partners, Canada’s CPP Investment Board and British Columbia Investment Management Corporation, and Asian groups China Investment Corporation and GIC.

Qube has identified a rival opportunity to develop about 1100ha of land east of Beveridge, 40km north of the Melbourne CBD. It also wants to develop an intermodal freight terminal and associated infrastructure.

The projects are effectively competing for $2bn allocated in the 2021 federal budget for a Melbourne intermodal terminal to facilitate the Inland Rail.

Both proposals are angling to benefit from the $15bn rail project – a 1700km freight network connecting Melbourne and Brisbane – which is set to transform the national transport system when completed in 2027.

The federal government is expected to favour a plan to build the Beveridge site, while the Victorian government is understood to prefer Truganina.

Mr Scurrah is pitching the future of rail as more companies emphasise sustainability and reducing carbon emissions.

Industry players favour sites in Melbourne’s west or the industrial heartland of Truginina. Critics have argued that the Beveridge site is too far north and trucks will not use it. Mr Scurrah is enthusiastic about the prospects of the Inland Rail as a form of 24-hour transit that is environmentally sustainable. “We are seeing already incredibly strong demand for rail freight because of the environmental benefits,” he told The Australian.

The new facility would see Pacific National “doubling down” on Inland Rail.

Pacific National is counting on the backing of Lindsay Fox’s Linfox and Toll, which would be become major users of the facility.

Pacific National would turn about 80 hectares into a facility and would have it up and running by 2026, with the remaining 460 hectares to be developed to accommodate transport companies.

Pacific National, the nation’s largest rail freight business, will look to heavyweight transport players Linfox and Toll as customers at the Melbourne facility.

Mr Scurrah told The Australian there had been “incredibly strong” demand for rail through the coronavirus pandemic.

“The long-term impact on the supply chain and a lot of the restrictions that were effects of Covid will continue to be felt for some time,” he said, adding the pandemic had a greater impact on import and export markets than the domestic market.

“We’re seeing incredibly strong demand for rail through that period,” he said, citing the ongoing lift in online shopping.

“We haven’t seen any volume reduction or softness.”

Pacific National has poured $20m into securing land options at Little River and has kicked off detailed planning and design works.

Its facility is tipped to be a major economic driver for the region.

“In the future, the broader logistics precinct – serviced by the rail terminal – will feature extensive warehousing, cold storage and refuelling facilities, generating more than 4000 skilled jobs,” Mr Scurrah said.

The Little River site sits near Melbourne’s major freight catchment zone to the west of the CBD, where more than 70 per cent of containerised rail volumes are concentrated, and is 39km by rail to the Port of Melbourne.

Mr Scurrah said a Little River terminal would best service the major east-west market – a critical corridor in the national supply chain – where about three million tonnes of containerised freight are hauled annually by rail from Melbourne, to Adelaide, and then across the Nullarbor to Perth.

Pacific National is backing a national terminal strategy as customer demand for containerised interstate rail freight services surges on the back rising e-commerce demand. “The coronavirus pandemic accelerated the trend towards online shopping and created disruptions and delays in road and shipping operations, creating greater demand for rail freight services,” Mr Scurrah said.

Pacific National has been securing key sites along the Inland Rail alignment to unlock benefits of the project and haul more containerised volumes by rail, not only between Melbourne and Brisbane but also from the eastern states to Western Australia.

Mr Scurrah said that better rail freight infrastructure would help reduce traffic congestion, road accidents and emissions in the overall national supply chain.

Pacific National has already invested $35m in delivering a major intermodal terminal at Parkes in regional NSW and secured Acacia Ridge Terminal in southeast Queensland for $205m.

Mr Scurrah said government-sponsored studies confirmed the best location for an interstate rail terminal was west of Melbourne’s CBD and port, in Truganina, rather than to the north – the location of Qube’s proposed complex.

“Unfortunately delays and funding blocks in progressing the (Western Intermodal Freight Terminal) option, including the proposed enabling infrastructure called the Outer Melbourne Ring transport corridor, mean a terminal cannot be delivered in time to meet industry needs and ahead of completion of the Inland Rail in 2027,” he said.

Mr Scurrah warned that undertaking a proposed terminal at Beveridge, 55km north of Melbourne’s CBD and port, would derail plans to shift more freight from trucks to trains.

“Containers picked up by trucks and hauled from the port or a warehouse in Melbourne’s western freight zone will simply travel up the Hume Freeway,” he said. “It will always be cheaper for those large trucks loaded with freight to keep going, drive past the gates of a terminal in Beveridge and deliver their goods by road across the state border into NSW.”

Mr Scurrah said an intermodal container terminal in Little River would complement a future site in Truganina – both helping to service Melbourne’s growing western freight zone.

“The $15bn Inland Rail project is forecast to accelerate growth of container freight volumes on the interstate rail network to more than one million TEUs (20-foot equivalent units) by 2035, making it critical for the Australian and Victorian governments to work closely together to deliver a future (Western Intermodal Freight Terminal),” he said.

Pacific National estimates that if a terminal was located north of Melbourne in Beveridge instead of west of the CBD and port it would mean an additional 250,000 unnecessary truck trips on Melbourne’s road network a year by 2031, growing to more than 400,000 by 2050.

It could also prompt an extra 900,000 additional truck kilometres on the nation’s interstate road network each day by 2031, growing to more than 1.5 million by 2050. Such a facility could generate an additional 470,000 tonnes of emissions by 2031, increasing to nearly 800,000 tonnes by 2050 due to extra trucks and loss of rail mode share.

“Road freight produces 14 times greater accident costs than rail freight per tonne kilometre and up to 16 times more carbon pollution as rail freight per tonne-kilometre,” Mr Scurrah said.