Aurizon CEO Andrew Harding: ‘Rebuild rail for resilient economy’

Andrew Harding says rail infrastructure is critical to keep the economy moving when disaster hits. That’s why we need to put it back on the priority list.

Aurizon chief executive Andrew Harding says we need a period of stability in terms of regulation. Picture: Tara Croser.

CEO SURVEY 2025: FULL COVERAGE

Economy

How would you rate the momentum of the Australian economy as we head into 2025? Official forecasts have Australia trimming interest rates from the first half of calendar 2025, is that consistent with your view? What are you seeing around inflation in your own business?

The Australian economy remains resilient for the time being, underpinned by key export industries, as we head into the new year, notwithstanding the headwinds with lower growth, low productivity and persistent inflation, and a slowdown in business investment especially in the resources space.

We do need a period of stability in terms of policy, as regulatory overload continues to burden business and hold back much needed investment to lift growth and productivity.

I am not one to pull out a crystal ball on timing with interest rates, I will leave that to others. There is clearly no consensus given uncertainties in the domestic economy and the geopolitical environment.

In terms of inflation for our business, we are seeing continuing cost increases in a range of goods including train components and steel used for our track infrastructure. We do have the benefit of a number of inflation protection mechanisms and pass-through arrangements in a large percentage of our contracts which supports revenue for our business.

Outlook

What excites you heading into 2025? Are you likely to increase, hold steady, or trim your investment spend?

We are guiding to increased earnings and continued strong cash flow in FY2025.

That is a positive for the business and our shareholders, and demonstrates the resilience of our business even during periods of slower growth for the Australian economy.

In terms of investment, we will see a tapering of growth capital in 2025 after a sustained period of investing for new track infrastructure, rolling stock and port and terminal assets to support growth currently before us and for the longer term in our non-coal business.

This includes traditional products such as iron ore and grain, together with future-facing commodities such as phosphate, rare earths, magnetite and copper.

Another exciting development for 2025 will be the on-track trials of the battery-electric locomotive we are currently building with our technology partners Progress Rail. It is the first Australian-built battery powered locomotive designed for heavy haul freight and Australia’s harsh operating environment.

This prototype is scheduled for a mid-year introduction into revenue services with our valued customer South 32 for its alumina operations in WA. We see this locomotive as a platform for a future fleet of heavy haul locomotives that can run entirely on renewable energy sources. High-capacity freight trains already generate up to 16 times less carbon emissions than comparable road freight, so there’s a great opportunity to accelerate the decarbonisation of the Australian transport sector, further benefiting the economy, the environment and the community.

Reform

As we move into an election year, in your mind, what’s the single biggest lever that can/should be used to lift Australia’s competitiveness or productivity? This could be across any area from labour market, tax reform, training or other areas to encourage investment.

Targeted, strategic investment in government owned rail track to improve the efficiency and resilience of rail freight transport infrastructure needs to be prioritised, especially as we face climate change and more frequent extreme weather events.

Covid taught us the harsh lesson that our national supply chains, particularly intercity rail

freight routes have been neglected and chronically underfunded for decades. It’s disappointing that on the east coast, which houses our largest ports and 80 per cent of the Australian population, rail’s share of land freight on the Brisbane-Sydney-Melbourne corridor is only around 11 per cent.

Targeted investments to improve the capacity, as well as resilience and reliability of key interstate rail corridors, will unlock significant productivity benefits for the economy – for exports, imports and domestic freight for consumers. This is also a platform for innovation and creating new supply chains. Aurizon is, for example, trialling land-bridging through Darwin for Asian imports such as motor vehicles and consumer goods.

This provides a new supply chain for importers, a faster and reliable connection to southern markets. People have been sceptical if this can be achieved given previously fractured ownership and misalignment of interests, but now Aurizon has an integrated offering with port, trains and rail infrastructure, this is indeed possible.

Geopolitics

Will a Donald Trump presidency have a potential impact on your business or sector (tariffs or streamlined regulation)? Does geopolitics drive a bigger part of your decision-making?

Without underplaying its significance, it’s too early and not my style to loosely speculate on the economic influence of an upcoming change of government in the United States. What I would say is that Australia as a trading nation understands fully the value of free trade and a rules based international system that avoids unreasonable barriers for both exports and imports. Many of our customers are global leaders in the resource and agricultural sectors, producing high-quality, high-value exports. We would not want them to be burdened or disadvantaged by tariffs or other unilaterally imposed trade barriers.

People

Has your organisation’s approach to flexible working – including working from home – evolved during the year. Is this likely to change further into 2025?

Technology and tools to support employee productivity continue to evolve but our approach to flexible work is well-embedded in the Company and has not changed substantially in the past two years.

Technology

Where is your organisation along the AI journey – is it in the developmental stage, or are you now using the technology at scale across your business? If so, are benefits matching the promise?

Aurizon continues to explore and adopt Generative AI technology in a measured manner. Efficiency in transactional and low risk tasks continues to be an area of focus with qualifiable benefits easily identified but quantifiable benefits an ongoing area of scrutiny. As the technology matures we expect the benefits realisation to also evolve.

Data science, machine learning and optimisation technologies continue to improve our capital-intensive assets of rolling stock and track infrastructure and the effective utilisation of our asset portfolio.