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Overview

Unlocking Australia’s Export Supply Chain Bottlenecks Stephen Cantwell Group Executive General Manager, QR Freight. Overview . G lobal Outlook M aster Planning I nvesting in Growth B uilding Relationships Challenges for the Future. GLOBAL OUTLOOK.

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Overview

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  1. Unlocking Australia’s Export Supply Chain BottlenecksStephen CantwellGroup Executive General Manager, QR Freight

  2. Overview • Global Outlook • Master Planning • Investing in Growth • Building Relationships • Challenges for the Future

  3. GLOBAL OUTLOOK

  4. The world is becoming smaller and transportation routes are longer, more complicated and the quality requirements are stronger.

  5. Global demand continues to grow

  6. So too are coal and mineral volumes in Qld, NSW and WA Source: QR Coal and ARG 7

  7. The Australian freight task is increasing at an exponential rate

  8. OPTIMISING EXPORT SUPPLY CHAINS

  9. Supply chains are highly complex and interdependent

  10. Opportunity for discontinunity Supply chains are highly complex and interdependent

  11. Efficient supply chains are influenced by many factors • Type, scale and geography of infrastructure • Whole greater than sum of the parts • Mode of servicing infrastructure • Service level requirements of users • Consistency of operating methodology • Information flows

  12. Supply chain complexities • Technical • Institutional • Commercial • Regulatory

  13. Technical

  14. Institutional • Does structure and ownership affect performance? • Pilbara has vertical integration under dedicated ownership. • East Coast coal has separation under mixed ownership • Potential price to pay for improved performance from NCP reforms • Interfaces must cope with different incentives • Relationship driven

  15. Commercial • Overarching responsibility to deliver shareholder value • Penalties / incentives to optimise chain capacity • Regular, independent and transparent analysis and forecasting • Timing of investment • Investing too late: loss of opportunity to exploit excess demand • Investing too early: loss of competitiveness due to higher capital recovery costs

  16. Container Stuffing Regulatory Intermodal Truck Transit Orign Terminals Ocean Transit Container Delivery Intermodal Truck Transit Intermodal Rail Transit Destination Terminals

  17. QR’S ROLE IN EXPORT SUPPLY CHAINS

  18. National network

  19. MASTER PLANNING

  20. Master Plans - Queensland • 2006 Master Plan • First ever rail infrastructure plan • Outcome from consultation with industry • Followed by endorsement of $700m worth of projects • Second Edition (2007-08) • Longer term focus (20 – 30 years) • Possible coal system expansions • Alternative capacity solutions • Impediments to growth

  21. Master Plans - Queensland • Mt Isa Master Plan • One of Australia’s vital export and supply chains • Approx $1.6 billion of base metal projects planned for next 10 yeas • Performance challenges on the Mt Isa Line • Master Plan consultation with industry

  22. Commercial arrangements • Master Plans provide forums that • allow parties to better understand the implications of decisions as they affect the supply chain • identify optimum solutions that could be achieved • allow consideration of mechanisms that might best support optimum outcomes

  23. INVESTING IN GROWTH

  24. Investing in growth

  25. Investing in growth Over the next 5 years, QR will invest more than $8 billion

  26. BUILDING RELATIONSHIPS

  27. Our strategic approach • Agility • Short term strategies • Relationships • Adaptability • Apply our learning across the entire business • Capitalise on engineering culture by blending with commercial • Alignment • Understand the root cause of constraints • Dedicated project team for improving commercial framework • Improved communications and transparency

  28. CHALLENGES FOR THE FUTURE

  29. Aligning interests is the key • East coast coal systems have trade-offs • Benefits of diversity and competition • Also potential costs • Can existing industry structure achieve Pilbara-like efficiency? • All parties committed to align interests • Supporting contractual framework • Industry co-ordinator can facilitate framework resolution • QR committed to improvement • Little point in acting alone • Parties can’t be compelled

  30. Supply chain accountability • Supply chain accountability does not mean rigid mechanistic interfaces • QR accepts need to improve transparency and accountability • Acceptance of contingency more important as system become more complex

  31. In closing • Global Outlook • Master Planning • Investing in Growth • Building Relationships • Challenges for the Future

  32. Like to know more? About QR: www.qr.com.au About QR Freight www.freight.qr.com.au About COALRail:www.qr.com.au/coalrail About Coal Master Plan: www.qr.com.au/coalrail/masterplan

  33. Thank you

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