Intermodal Opportunities in South Australia Simon Ormsby Executive

Intermodal Opportunities in South Australia Simon Ormsby Executive General Manager, Strategy & Corporate Development 1

AUSTRALIA’S LARGEST RAIL FREIGHT NETWORK • Controlling, operating and maintaining 8, 500 kilometres of standard gauge rail infrastructure under freehold and longterm leasehold arrangements. • Integrated manager of critical Australian infrastructure with the scale to deliver strong financial growth comprising of: – The Hunter Valley “heavy-haul” coal network and – The interstate mainline network (intermodal and general freight). • The company employs around 1, 150 staff located at 30 regional and city based locations across Australia (operating in all mainland states). 2

A HISTORY OF ARTC Company Establishment Phase Infrastructure Investment Phase Hunter Valley 80 Mtpa Interstate 32 Billion GTK 1998 2000 2002 • Commenced • Agreement • Initial access with interstate track in SA • 15 year lease of the Interstate network in Victoria covering Kalgoorlie. Perth Interstate Network • Dedicated Dual gauge connection to Port of Melbourne undertaking with ACCC 2004 • 60 year lease of the NSW interstate and Hunter Valley networks Interstate 50 Billion GTK 2006 2008 Hunter Valley 100 Mtpa Business Building Phase Interstate 60 Billion GTK 2010 • Dedicated Freight • NSW lease connection from Interstate to Outer Harbour (Adelaide) • 45 year extension of Victorian Lease • Lease extended to include 2 nd track Seymour to Albury and Interstate to Portland connection • 60 year lease from NSW/QLD border to Brisbane (Acacia Ridge) extended to include Port Botany Rail Terminal and network from Werris Creek to Narrabri/North Star • Government announcement of initial works for Melbourne to Brisbane Inland Route Hunter Valley 150 Mtpa 2012 • Renegotiated new terms • • for Kalgoorlie—Perth network for a 15 year term Completion of Southern Sydney Freight Line and lease of dedicated freight corridor to Port Botany Woolworths commenced its return to rail on the North South corridor SCT commenced moving freight between Melbourne and Brisbane Commencement of Norther Sydney Freight Corridor 2014 2016 • Commenced ARTC Transformation Program • Commenced Inland Rail • Commenced deployment of ATMS • NTCS fully commissioned 3

OUTLOOK FOR RAIL IN AUSTRALIA Positive Outlook for Rail in Australia Continued growth in freight transport market Modal shift towards rail due to increase in urban and nonurban congestion Focus on environmentally friendly modes of transport Customer preference for rail as rail-based supply chains develop and improve 4

STRONG FORECAST GROWTH FOR RAIL • Based on BITRE data, Australian rail networks have sustained domestic freight growth over several decades Total Freight Estimates and Forecast • Since 2000 the rate of growth in rail volume has increased strongly in large part due to minerals growth and this is forecast to continue strongly over the next two decades. • It is estimated that approximately one-fifth of freight rail volumes are hauled on the ARTC network • Diversified range of commodities transported on the Interstate network including: – Intermodal (58%) – Steel (11%) – Minerals (9%) Source: BITRE Note: Above data includes the Pilbara Network. – Passenger (8%) – Coal (6%) – General Freight & Other (5%) – Grain (4%). 5

INTERMODAL: OPPORTUNITIES TO INCREASE MARKET SHARE Industry Opportunities Fundamentals • Intermodal market consists primarily of domestic freight transported between capital cities Rail market share in Australia • ARTC’s revenue projections are driven by the combination of – Market growth – Modal shift • Historical growth is typically above GDP Opportunities • Market growth is expected to be aligned to GDP growth and at least in line with population growth • Rail’s share of freight traffic depends on the ability of rail to compete with alternative modes such as road on major inter-capital corridors Threats • There are typically three dominant factors that influence mode for freight: – Reliability – Price – Availability Source: BITRE and ARTC estimates 6

INTERMODAL: MELBOURNE TO ADELAIDE CORRIDOR UPGRADE • Rail’s linehaul costs are lower than road on all intercapital corridors Short Haul Corridors • Rail’s overall cost structure is significantly lower than road over long distance hauls • Rail has strong market position in East to West corridors and ARTC’s strategic position is to hold market share in these corridors • The combination of improved reliability and productivity positions rail to increase market share on shorter rail corridors Project Grade separation project at Torrens Junction Description • Final measure to enable 1, 800 m services to operate in both directions Extending Melbourne to Adelaide • Extension of ten additional passing loops increases number of 1, 800 m services - five complete and five in progress passing loops Grade separation project at Goodwood Junction • Completion of project in September 2013 enabled trains to operate at 1, 800 m from Melbourne New 1, 800 m crossing loops • Construction of nine new crossing loops provided for commencement of 1, 800 m services 7

INTERMODAL – IMPROVING PRODUCTIVITY THROUGH A STATE OF THE ART TRAIN CONTROL SYSTEM Advanced Train Management System (ATMS) is a modern communications based train control system which features real-time monitoring of train locations and speed and the ability to intervene and stop or slow the train. It improves safety, increases capacity (trains run closer together) and eliminates wayside signaling by displaying instructions in the cabin of the locomotive. Similar systems are being developed in the USA and Europe and ATMS is at least as advanced. The Federal Government has funded the project as part of their commitment to modernising and improving the efficiency and safety of the Australian Rail Industry. 8

INTERMODAL – IMPROVING PRODUCTIVITY THROUGH A STATE OF THE ART TRAIN CONTROL SYSTEM ATMS Progress ARTC partnered with Lockheed Martin to develop the system with the Proof of Concept completed in 2014. ATMS Implementation Stage 1 commenced in March 2014. As part of this roll out program, ARTC is undertaking extended trials between Port Augusta and Whyalla to improve reliability, increase user acceptance and minimise potential risks in preparation for future deployment. Trials will take place throughout 2015 prior to revenue service operations commencing mid 2016. The 2014 Federal Budget committed $50 m of grant funding for ARTC to continue these trials and to prepare for deployment. 9

INTERMODAL: INLAND RAIL – LINKING BRISBANE TO ADELAIDE A new 1700 km freight rail connection from Melbourne to Brisbane via regional NSW and QLD Inland Rail is part of an integrated solution. It allows for complete interoperability through the existing national rail freight network. It connects 5 major capital cities and 7 major exports. It works in partnership with the logistics industry. Substantially reduces the transit time and rail operating performance between Queensland Adelaide 10

INTERMODAL: INLAND RAIL - LINKING BRISBANE TO ADELAIDE Inland Rail Progress In November 2013 the Deputy Prime Minister The Hon. Warren Truss MP charged ARTC with developing a 10 year delivery plan for Inland Rail has been progressed under the oversight of the Inland Rail Implementation Group (IR-IG), chaired by former Deputy PM, the Hon. John Anderson AO, with senior representatives from Australian, Victorian, NSW and Queensland Government Departments and the ARTC CEO ARTC has developed the Inland Rail Programme Business Case, including 10 -year construction schedule, associated costing, demand estimation, and economic /financial evaluation. Economic Benefit Cost Ratio of 2. 62 at a 4% discount rate. IR-IG Report and the Programme Business Case recently delivered to the Australian Government. Programme Business Case currently being considered by Infrastructure Australia. 11

Thankyou Questions? 12