Intermodal Terminals: The Policy Issues

Intermodal Terminals:The Policy Issues Presentation to BTRE Colloquium Canberra June 14-15, 2006

Overview of the paper • The intermodal system • structure • current task • future challenges • Thinking about intermodal policy • Putting a coherent package together

Role of the IMT

System or Systems? In Australia, there are two – or possibly three – intermodal systems that interact to some extent but are largely, and I think increasingly, distinct systems • The inter-state system • The import/export system • The intra-state regional system

Domestic System

Source: Derived from BTRE WP66; ARTC 2005; Report 112 Rail volumes and share by origin/destination

Volumes by Freight Corridor Source: Derived from BTRE, ARTC Data Scale 10 5 4 3 2 1 Million tonnes per year

Future long-distance non-bulk rail freight Not a given……. Based on ARA Future of Freight, 2005

Camellia Yennora Villawood Cooks Rivers (St Peters) MIST SYDNEY URBAN NETWORK Import/Export System Source: National Intermodal Terminal Study

International containers – major ports Source: Meyrick: National Intermodal Terminal Study

Meeting proclaimed targets Port-oriented rail volumes

Implications SPECIFIC • Total increase in required in terminal capacity between 100% and 300% over the next 15 years • Require redevelopment/extension of most major inter-State nodes • Extent of development of additional terminals for domestic market will depend on market structure • Need for additional import/export IMTs ,especially but not exclusively in Sydney • Pressure on terminal space will aggravate access issues GENERAL • IMTs will play a pivotal role, but can only be talked about sensibly as an element of the freight infrastructure network • Meeting future freight infrastructure demands will be a major challenge, especially in urban centres • Lots and lots of government money is going to be spent on meeting this challenge

Towards a comprehensive approach to IMT policy Policy clarity Infrastructure Access regulation Planning Skill development What is the role of government in a sector that is (largely) privately owned and operated? Information Land banking Technical regulation Funding Pricing Project facilitation Core role Contributing role Possible role

Policy – some definitions A line of argument rationalizing the course of action of a government wordnet.princeton.edu Rationalise: 1. To invent a rational, acceptable explanation for behaviour which has its origin in the unconscious8. To justify one’s behaviour by plausible reasons • Macquarie Dictionary A plan or course of action, as of a government, political party, or business, intended to influence and determine decisions, actions, and other matters. World Bank (youthink) A policy is a plan of action to guide decisions and actions.... Policies in short can be understood as political, management, financial, and administrative mechanisms arranged to reach explicit goals. Wikipedia

The public image of the freight transport system Intermodal policy is policy – and therefore it is going to be political

Modal shift objectives as policy An adequate intermodal policy will need to do (at least) three things: • Most governments have set mode share objectives for freight • Typically these apply only to import/exports movements • There does not appear to be much foundation for the specific targets • More than a pious hope than a policy: • a target without an objective • a goal without a strategy • Coherently articulate the objectives of the policy • Clearly present the specific outcomes that are expected • Define the steps that will be taken to deliver these outcomes

Planning THREE MAJOR CHALLENGES FOR INTERMODAL SYSTEMS PLANNING MOVING BEYOND PLATITUDES TO PLANS AND BEYOND CONCEPTS TO COMMITMENTS DEFINING THE APPROPRIATE SCOPE AND LIMITS OF PLANNING RECONCILING THE PLANNING OBJECTIVES OF DIFFERENT LEVELS OF GOVERNMENT

Industrial clustering in/around IMT IMTs and TDL clusters

Sydney Ports Enfield Plan (Cycle 2) Deconsolidation/ warehousing Associated light industry Container storage and repair

Information • Widespread acknowledgement of the need for coordination and integration • In reality, powerful players are reluctant to release information • Commercial confidentiality • Legal concerns • Just had enough • Costs • Lower quality of public decision making • Higher information search costs • Voluntary approach advocated in NTDF report appears doomed • Regulatory requirements to disclose information exist elsewhere

Technical Regulation • For most intermodal movements, a road leg will always be part of the journey • Pick up and set down costs are often a significant part of the total intermodal transport cost • Providing special mass or dimensions concessions on specific routes to/from intermodal terminals can help to reduce this burden In France, heavy vehicles travelling to intermodal facilities are permitted to carry heavier loads than under prescribed limits applicable to general movements.

Project facilitation • Some progress • ‘Exports and Infrastructure Taskforce’ advocated ‘one stop shop’ approach for major projects • COAG accepted this in principle at June 2005 meeting • Most jurisdictions are moving or have moved to set up something along these lines BUT • The old problem – moving from principle to practice • Yet to see how this works for an integrated system or network of projects

Infrastructure Integration

Pricing • Government has direct control only over pricing of access to the road network • Government influences pricing of rail infrastructure through regulatory regimes • Current pricing issues: • mass-distance charging • congestion pricing • pricing for externalities • levies to achieve specific outcomes All of these are economically unexceptionable A bit trickier

Increasing case for intervening to secure multi-party access Access regulation • Always a two-edged sword • risk of discouraging investment • need to preserve opportunities for innovation • Two access issues: • Access to the terminal • Access to the network • Lots of smoke – probably some fire Attractiveness of terminal as investment Feasibility of duplication

Land Banking • Government often holds the most attractive sites • Differences between public and private: • time preference rates • scope of benefits captured • Government has access to instruments that private sector does not

Skills development • Shortage of skilled and even semi-skilled labour an across-the-board issue for transport. • Labour needs of simple IMT are modest • Access to labour and skills in sufficient quantity can be key to the success of more complex IMTs: • especially the more ambitious ones on the Freight Village model • Regional areas • Management skills can also be a problem • Skills problems also in public sector • The retreat of government • Rapid staff turnover • Institutional instability

Funding When? • Commercially viable terminals • Hard to see justification • Marginally viable IMTs • Development assistance? • Non-commercial IMTs • Ongoing assistance (but you’d have to have a very good reason in terms of the rest of the network) How? • Subsidised loans • Land purchase and lease back • Operating Grant Schemes • Capital Grant Schemes

Concluding remarks • The title is wrong – the issue is intermodal policy, not intermodal TERMINAL policy • Governments are going to spend a heap of money on freight infrastructure, and are therefore going to have policies – the only choice is whether we have coherent or incoherent ones • The objectives of intermodal policy are not going to be purely economic – but we should be working hard to make that the strategies for achieving them are economically sensible • The less time we spend on road v rail spats, and the more we spend on thinking about how best to integrate the two, the better off we are all going to be

Intermodal Terminals: The Policy Issues