1. The changing face of the terminal operator business Discussion – David Greig July 2007 ACCC regulatory conference

2. Slide 2 European and Australian geography EUROPE AUSTRALIA Ports import and export Ports import or export Inland economic activity Coastal economic activity Population >300m Population 21m Adjacent ports Separated ports Alternative ports equidistant A particular port is closest

3. Slide 3 The main trades Exports (minerals, grain…) from inland by rail to nearest port Usually a unique port, sometimes two (Vic/SA grain, Qld coal) Imports shipped direct to each main (coastal) market Coastal shipping limited to bulk commodities (petroleum, alumina, cement…) and Tasmania Not much land bridging

4. Slide 4 Land bridging Adelaide-Melbourne for shipping frequency Melbourne-Darwin didn’t happen A blip of rail land bridging during a temporary shipping shortage Some by transfer between ships Generally uneconomic because of Australia’s geography

5. Slide 5 Transport barriers to entry Trucking close to perfect competition No real barriers to coastal shipping Ports physical barriers low – land available or reclaimable commercial barriers significant – need to enter 2 or 3 ports (Melbourne experience) Logistics skills replicable Rail entry barriers declining

6. Slide 6 Rail entry barriers Entry constrained by infrastructure capacity – train paths Best paths taken – train length, time of day However a major Auslink/ARTC upgrade is under way Many more long passing loops – and can keep adding – and improved signalling Much more capacity, for growth and new entrants Contrast with Europe

7. Slide 7

8. Slide 8 Mode choice

9. Slide 9 Mode performance 2004 – M to B RoadSea Rail linehaul Rail door to door Relative price 0-20% above d-d rail 20-40% below d-d rail 30-45% below road 0-20% below road Reliability95%90%35-45% Availability99%10%40-45% Transit time21-27 hrs3-3.5 days36 hrs42 hrs

10. Slide 10 Road and rail availability

11. Slide 11 Rail market share

12. Slide 12 Conclusions Far less port choice than Europe Far more port operator market share than Europe However: ACCC => Toll/Asciano split Stevedoring somewhat contestable Rest of the chain is becoming contestable.