John Fullerton from the ARTC delivered a presentation at our Rail Directions workshop in March 2012.

1. Rail Challenges
Rail Research Directions
March 2012
EnterFullerton
John name
Enter Executive Officer
Chief job title
ARTC, A STRONG, EFFICIENT, SUSTAINABLE RAIL LINK IN THE NATIONAL LOGISTICS CHAIN

2. This Presentation
1. ARTC Background
2. ARTC Business Strategy
3. Key Challenges
4. Imperatives for Success
5. Summary
20/08/2012 ARTC, A STRONG, EFFICIENT, SUSTAINABLE RAIL LINK IN THE NATIONAL LOGISTICS CHAIN 2

3. Business Snapshot
• ARTC established in 1998 as a rail track infrastructure business owning and operating the
interstate rail network in SA
• Over past 10 years has progressively expanded network to include the majority of the
interstate network under long term lease arrangements. This includes the Hunter Valley
coal network
• Owns or leases over 8,500 route km of track
• Corporations Law Company with 100% of shares owned by the Australian Government
• Charges access fees to train operators and other customers for use of the rail Brisbane
network
Perth
ARTC Network Sydney
Adelaide
Melbourne
ARTC, A STRONG, EFFICIENT, SUSTAINABLE RAIL LINK IN THE NATIONAL LOGISTICS CHAIN 3

4. ARTC Business Network
Primarily supports
coal transport
Hunter Valley:
Brisbane
Increase capacity to meet port
allocations & domestic coal
requirements
Perth Interstate Network – East West:
Increase rail volume above Sydney
economic growth Adelaide
Melbourne
Primarily supports
general freight Interstate Network – North South:
transport Increase rail volumes through
significant growth in rail’s share of
freight transport market
ARTC, A STRONG, EFFICIENT, SUSTAINABLE RAIL LINK IN THE NATIONAL LOGISTICS CHAIN

5. Business Structure
Total staff : 830 employees
Total FY11 revenue : $652 million ARTC
HUNTER VALLEY INTERSTATE
Provision of network Provision of network
services to support coal services to support
delivery and other general freight delivery
commodities on the and other commodities on
Hunter Valley rail the interstate rail
network network
1336 route kilometres 6175 route kilometres
Access revenue $280m Access revenue $254m
ARTC, A STRONG, EFFICIENT, SUSTAINABLE RAIL LINK IN THE NATIONAL LOGISTICS CHAIN

6. Interstate Network:
East West Corridor
• East-West corridor is a vital logistics connection to and from WA
• Mature market characterised by high rail share
• Rail largely meets market requirements on this corridor
• More than competitive with road
• Transit times are oriented around a late evening cut off in Melbourne for an early morning
arrival in Perth
B ris
ban
• Total Major Works - $1.3 Billion e
19%
(S-B)
Perth
81%
(E-W) Sydney
Adelaide
ARTC Network
(With rail share of the land transport market) Melbourne 11%
(M-S)
ARTC, A STRONG, EFFICIENT, SUSTAINABLE RAIL LINK IN THE NATIONAL LOGISTICS CHAIN

7. Interstate Network:
North South Corridor
• Significant market opportunity but corridor has seen a steady erosion of rail’s market share
since 1960’s
• ARTC initiated an improvement strategy in 2004 following 30 years of under-investment
along this corridor
• Objective in taking up the NSW and standard gauge Qld network was to create opportunity to
turn around rail’s competitiveness by focusing on transit time, reliability and capacity
improvement
(Rail share of
• Total Major Works - $2.8 Billion land transport
Brisbane market)
<10%
(S-B)
Perth Parkes
Sydney
Adelaide 24%
(M-B)
Melbourne <10%
(M-S) 1
ARTC, A STRONG, EFFICIENT, SUSTAINABLE RAIL LINK IN THE NATIONAL LOGISTICS CHAIN

8. Hunter Valley
• Latest ARTC strategy the 2011 – 2020 Hunter Valley Corridor
Capacity Strategy has been released and is the fifth edition
• Coal volumes expected to double over the next 5 years from
100 mtpa to >200 mtpa. Beyond that Terminal 4
• Strategy is designed to ensure capacity is kept ahead of
contractual demand
• Future network infrastructure investment value in excess of
$800 million (excluding T4)
• HV Coal Chain Coordinating (HVCCC) group represents all
participants in the coal supply chain to ensure optimal
performance
• New ACCC Access Undertaking effective from July 2011
ARTC, A STRONG, EFFICIENT, SUSTAINABLE RAIL LINK IN THE NATIONAL LOGISTICS CHAIN 8

9. ARTC Business Strategy
• Provide safe, seamless and efficient access to users of the rail
network
• Pursue a growth strategy for interstate rail through improved
efficiency, reliability and competitiveness
• Seek to keep network capacity ahead of demand
• Improve the rail network through better asset management, capital
investment and technological improvement
• Develop a customer service culture and work in partnership with
industry participants including end users, freight logistics companies,
train operators and other stakeholders to position rail as a vital and
valued component of the transport supply chain
ARTC, A STRONG, EFFICIENT, SUSTAINABLE RAIL LINK IN THE NATIONAL LOGISTICS CHAIN

10. Commodity Mix
Revenue (% )
100.0% 4.9%
5.5%
7.2% 7.7%
7.3% 7.1%
80.0%
60.0%
45.6% 47.5%
40.0%
20.0%
34.5% 32.8%
0.0%
2009/10 2010/11
Intermodal Coal Steel Bulk Passenger
ARTC, A STRONG, EFFICIENT, SUSTAINABLE RAIL LINK IN THE NATIONAL LOGISTICS CHAIN 10

11. Interstate Network:
Corridor Intermodal Freight Users
The table below illustrates current rail corridor users -
North South East West
Pacific National x x
Rail Operator
QR National x x
SCT Logistics x
Freightliner x
Toll Group ^ x
Linfox ^ x
Sadliers Transport ^ x
Freight Forwarder
K&S Corporation ^ x
Simon National Carriers x
Rand Refrigerated x
Ron Finemore Transport ^
TNT ^ x
Woolworths ^ x
AMCOR x
Lion Nathan x
Coles ^ x
Fonterra ^ x
Colgate Palmolive x
End User
Coca-Cola Amatil x
Murray Goulburn ^
Fosters ^ x
BlueScope X x
Bunnings ^ x
Toyota ^ x
Holden ^ x
^ - Part TimeARTC, A
Rail Users
Opportunity
STRONG, EFFICIENT, SUSTAINABLE RAIL LINK IN THE NATIONAL LOGISTICS CHAIN
X – Regular Rail Users

12. Interstate Network:
The North South Problem
• Road infrastructure on North South corridor has been vastly superior to rail reflecting the
disparity in the levels of past investment and corridor alignment between the modes
• Transit time and reliability has heavily favoured road in a market where reliability seems to
be the dominant factor of choice
• Sydney metropolitan bottleneck severely impacts rail’s ability to deliver
• Rail has had insufficient network capacity at market preferred times
• Road is considered more convenient to use and is perceived to be more flexible, innovative
and customer friendly
• Access to rail infrastructure and terminal facilities is considered a major constraint in using
rail
• Price differentials between road and rail not well understood
ARTC, A STRONG, EFFICIENT, SUSTAINABLE RAIL LINK IN THE NATIONAL LOGISTICS CHAIN 12

13. Interstate Network:
Overview of Rail Challenges
• Rail is not considered the land transport mode of first choice for high volume
intermodal freight in many parts of Australia on many corridors despite rail’s
inherent advantages – policy failure
• Rail needs to play a bigger role in an expanding transport market to drive
national productivity improvement, increase our international competitiveness
and drive growth in our economy
The fact is the 21st century will deliver increasing population, environmentally
conscious governments, communities and business, and a desire and need to raise
living standards through increased national productivity, competiveness and efficiency
• Investment in intermodal infrastructure, introduction of new technology,
productivity improvement, ongoing regulatory and policy reform must
continue to allow the most efficient and least polluting means of transport to
continue its development.
ARTC, A STRONG, EFFICIENT, SUSTAINABLE RAIL LINK IN THE NATIONAL LOGISTICS CHAIN 13

14. The Five Imperatives for Intermodal Rail
Imperative 1
Deliver Network Performance
• Safe  Investment
 Condition monitoring
• Reliable
HOW  Analysis
• Cost effective
 Optimisation
• Efficient  Continuous improvement
Imperative 2
Become an active and informed member of customer supply chains
• Focus on the customer and improve service
• Understand customer needs and rail’s impact on supply chains
• Present as a unified transport mode (freight forwarder, train operator, track owner)
• Strive for continuous improvement
 Analysing customer needs
 Supply chain costing across modes
HOW
 Performance standards
 Operational coordination
 Inventory control
ARTC, A STRONG, EFFICIENT, SUSTAINABLE RAIL LINK IN THE NATIONAL LOGISTICS CHAIN 14

15. The Five Imperatives for Intermodal Rail
Imperative 3
Become hard-wired to the supply chain through effective linkages and integration
• Develop intermodal terminal precincts characterised by efficient train loading and unloading
facilities, adjacent warehousing and distribution centres and nearby access to rail and freeway
corridors
• Deployment and integration of advanced technology
• Make rail more convenient and easier to use
• Sell the benefits
 Future land use planning and development
 Joint road and rail infrastructure planning
HOW  Common user intermodal terminals
 Integration of technology
 Freight consignment tracking
ARTC, A STRONG, EFFICIENT, SUSTAINABLE RAIL LINK IN THE NATIONAL LOGISTICS CHAIN 15

16. The Five Imperatives for Intermodal Rail
Imperative 4
Attract and retain the best people
• Make rail an employer of choice in the transport sector to drive performance improvement
Imperative 5
Regulatory and Policy Reform
• Strive to achieve competitive neutrality between road and rail infrastructure to foster optimal
investment programs across transport modes – value for transport investment dollar
• Reduce the regulatory burden
• Promote the environmental, social and productivity advantages of rail as economic advantages
and stimulants
 Single regulator models
 Common standards
 Incentives for using low carbon transport modes
HOW
 Recognition that road congestion and safety are economic
impediments and that alternatives should be actively
promoted through policy decisions
ARTC, A STRONG, EFFICIENT, SUSTAINABLE RAIL LINK IN THE NATIONAL LOGISTICS CHAIN 16

17. Intermodal Terminals
There is evidence of a strong need
for substantially increased
Darwin
intermodal terminal capacity in the
capital cities, especially Sydney &
Melbourne
There is a need for an effective
interface between road & rail at
Alice Springs
critical locations to ensure supply
chain efficiency
Brisbane
Brisbane
(Bromelton)
Tarcoola
Kalgoorlie
Broken Hill Werris Creek
Pt Augusta
Perth Whyalla
Crystal Brook
Kwinana
Parkes
Sydney Newcastle
Sydney
Adelaide Cootamundra (Moorebank)
Macarthur
Port Kembla
Albury
Wolseley
Melbourne
(Western
Geelong
Melbourne
Melbourne)
Whilst there are private intermodal terminals in
Australia, including some owned by the major rail
transport operators, governments need to develop a
position on the location, ownership & operation of the
future network of multi-user intermodal terminals
ARTC, A STRONG, EFFICIENT, SUSTAINABLE RAIL LINK IN THE NATIONAL LOGISTICS CHAIN 17
(National Land Freight Strategy, Feb 2011)

18. Summary
• There are significant growth prospects for rail with large potential on the North South
corridor
• ARTC North South investment program will deliver significant improvements
• Improving reliability is key
• New focus on growth, business development and industry cooperation
• In the Hunter Valley, challenge is to keep capacity ahead of rapidly growing demand
• Increased intermodal terminal capacity is vital to meet future growth demands
• Safety performance is a key challenge
• ARTC and the rest of the industry need to enhance and maintain a customer focus, and
work collaboratively to meet customer needs
ARTC, A STRONG, EFFICIENT, SUSTAINABLE RAIL LINK IN THE NATIONAL LOGISTICS CHAIN 18