Privatisation and deregulation have led to an increasingly competitive industry.
Melbourne, Australia (PRWEB) July 07, 2014
Structural reform and infrastructure investment have fuelled the Rail Freight Transport industry as demand for bulk transport has grown. Industry revenue is expected to increase by an annualised 5.2% over the five years through 2013-14. Increased downstream demand from mining has driven this growth as exports of coal and iron ore rose. While revenue growth has been generally solid, a decrease in intermodal traffic over 2008-09 and flooding of coal mines in Queensland during 2010-11 affected the industry's performance during the period. In 2013-14, revenue is forecast to grow by 4.5% to $7.5 billion.
Historically, state governments have run the industry, with a primary focus on transporting resources to ports for export. The current industry operating environment is the result of successive deregulation, privatisation and infrastructure investment. IBISWorld industry analyst Ryan Kerin states, “Privatisation and commercialisation initiatives over the past 10 years have created an increasingly competitive industry.” Deregulation has separated the building and maintenance of rail infrastructure from the operation of rail services, decreasing the capital required for entry. At the same time, federal and state governments have invested in rail infrastructure designed to improve transit times and axle-loading capabilities. The industry is active in both bulk and non-bulk freight transport. According to Kerin, “Profitability is strongest when heavy commodities are carried over long distances, as this leverages the fuel efficiency of rail transport and economies of scale.” Over the past five years, the bulk freight segment has strengthened as mining output increased. This trend is expected to continue as foreign demand for resources continues. The industry also transports non-bulk containerised or general cargo, which has struggled against competitors in the Road Freight Transport industry. Despite this segment losing ground, infrastructure investment over the past five years and planned future investment should stabilise its revenue over the next five years.
The Rail Freight Transport industry has high level of market share concentration. Over the past five years, demand has increased significantly for bulk haulage of minerals, a market in which the two largest players – Aurizon Holdings and Asciano – are particularly active. By contrast, activity in intermodal freight markets has been subdued. The two major players, due to strong performance of bulk freight, have outperformed the industry and increased their revenue share. Industry concentration is set to increase in the next five years as Aurizon Holdings expands its operations, especially in New South Wales, to compete nationally. High cost barriers to entry ensure minimal new entrants to compete with the major players.
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 the industry primarily operate railways for freight transportation. The industry does not include operation of rail freight terminals or 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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