Melbourne, Australia (PRWEB) September 26, 2013
Structural reform and investment prepared the way for industry prosperity as demand for bulk transport grew. Revenue for the Rail Freight Transport industry is expected to increase at a compound annual rate of 4.6% over the five years through 2013-14. This growth has come from downstream demand from the Mining division as Australia has exported increasing volumes of coal, iron ore and other resources. Over the period, industry performance slowed due to a drop-off in intermodal traffic in 2008-09 and floods affecting key markets in 2010-11. In 2013-14, revenue is forecast to grow by 1.7% to $7.3 billion.
Historically, rail has been run by the states, with a primary focus on getting exports to overseas markets, rather than domestic markets. IBISWorld industry analyst Caroline Finch states, “the industry's current operating environment is the result of successive deregulation, infrastructure spending and transport policy decisions.” Privatisation and commercialisation initiatives over the past 10 years have created an increasingly nationalised and competitive industry. Deregulation has separated the bodies responsible for building and maintaining rail infrastructure (below rail) from those that operate rail services (above rail), decreasing the capital required for entry. The industry is active in two different freight markets. It carries heavy commodities long distances, leveraging economies of scale to dominate this market. The industry also transports containerised or general cargo. Over the past five years, this market has lost ground to the Road Freight Transport industry. Investment to date has allowed the industry to expand bulk freight capacity where the industry is most competitive. According to Finch, “the challenge for the industry lies in increasing competitiveness in non-bulk markets currently dominated by road freight.” As the industry continues to focus on bulk markets, a rise in the mass of exports transported by sea is anticipated to underpin growth over the next five years.
The Rail Freight Transport industry has high level of market share concentration. Demand has increased significantly for bulk haulage of minerals, a market in which the two largest players are particularly active. By contrast, activity in intermodal freight markets has been subdued. Industry major players, Aurizon Holdings and Asciano, due to the focus of their activities, have outperformed the industry and increased their revenue share. Industry market share concentration is set to increase in the next five years as Aurizon Holdings Limited expands their operations to compete nationally. Considerable economies of scale exist in the industry, supporting concentration. Economies of scale are likely to strengthen further as infrastructure upgrades come on line allowing for more productive use of rail assets. For more information, visit IBISWorld’s Rail Freight Transport report in Australia industry page.
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IBISWorld industry Report Key Topics
Companies in this industry are primarily engaged in operating railways for the transportation of freight. The industry does not include private railroads operated in-house for the transportation of goods.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
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