Aurizon expands Darwin business

Rail giant Aurizon plans to invest up to $300m in heavy haul locomotives, container wagons and harbour cranes as part of its expansion of a northern freight link through Darwin.

Aurizon plans to invest up to $300m in heavy haul locomotives, container wagons and harbour cranes. Picture: Floss Adams

Aurizon plans to invest up to $300m in heavy haul locomotives, container wagons and harbour cranes as part of the expansion of its freight business through Port of Darwin.

Aurizon managing director Andrew Harding told the company’s annual general meeting in Brisbane that the $1.4bn acquisition of the 2200km Tarcoola to Darwin railway in 2021 would allow it to tap into the closest port to Australia’s largest trading partners in Asia. Aurizon said the “landbridge” strategy outlined this year would allow the company to diversify away from its mainstay coal haulage business.

“Aurizon will leverage these new assets as we look to develop land bridging solutions for customers,” Mr Harding said. “The cranes we are installing at Darwin Port represent a significant milestone in realising land bridging solutions for customers.”

Aurizon is banking on new ways to carry cargo, including investments in the freight “landbridge” to offset reliance on transporting coal wagons to east-coast ports.

Brisbane-based Aurizon reported a 37 per cent drop in profit to $324m in the year to June 30 as its coal business was hit by wet weather.

The investment in rolling stock includes more than 30 new heavy-haul locomotives, more than 500 container wagons as well as mobile harbour cranes and reach stackers for the movement of stackers. Aurizon has a long-term lease through to 2054 at the Port of Darwin and is now able to offer stevedoring services. Aurizon shares rose 0.5 per cent to $3.69 on Thursday.

“Our initial target is 100,000 TEUs – 20-foot equivalent containers – per year,” Mr Harding said. “That’s within a market of some eight million TEUs of throughputs at Australian ports annually.”

He said the landbridge route would be up to 40 per cent quicker compared to key shipping routes into Australia.

“We are taking a staged approach to land-bridging to effectively manage business and investment risk,” he said. “Limited additional rolling stock is required for stage one and it is the exact same rolling stock that we currently use across our other freight lines.”

Aurizon has already signed its largest ever non-coal contract – an 11-year agreement with Team Global Express (TGE) for national linehaul services.

Aurizon chairman Tim Poole said the move into bulk and containerised freight created greater growth opportunities for Aurizon that its traditional haulage commodities, where growth could be more muted.

“We are seeing increasing demand for high-quality Australian food and agricultural products for export such as grains and phosphates,” Mr Poole said.

Aurizon says it can deliver a container from Shanghai to Melbourne quicker via the Darwin rail link than traditional shipping to metropolitan ports. Aurizon’s landbridge strategy could more than double the company’s shipping container business by the end of the decade, reducing Aurizon’s reliance on coal haulage in Queensland and NSW.

Mr Poole said that although he was confident the new business would perform well, in the eventuality that things do not go to plan, the new rolling stock and other equipment could be used elsewhere across the company’s network.