Transurban confident work from home won’t derail shift to cities

Transurban believes dire predictions of a work-from-home hit to business have been exaggerated as traffic levels return to pre-pandemic levels across its toll-road network.

CEO Scott Charlton of toll road company Transurban. Picture: Jane Dempster/The Australian.

Transurban believes dire predictions of a work from home hit to business have been exaggerated as traffic levels return to pre-pandemic levels across its toll road network.

The toll road operator said movements to and from central business districts had strongly rebounded, despite sharp lockdowns, in some cases exceeding pre-pandemic levels, but noted not all recoveries were proving equal.

Traffic levels across North America remain down, while recoveries in the long lockdown hit Melbourne remains muted.

Transurban made the forecast in its market update, noting continued fears over the potential for infection spread on public transport would drive many into cars and onto roads.

Transurban reported traffic across its Sydney networks was 22 per cent above what it was pre-pandemic, in part pushed higher by the opening in July last year of the M8 Tunnel, including the St Peters interchange.

The company’s Queensland operations have also seen traffic in the last quarter 3.3 per cent above pre-pandemic levels.

However, the Queensland recovery still sees traffic across the financial year to date 2.9 per cent below its pre-pandemic levels.

Transurban’s Logan route was the strongest performer of the Queensland assets, tracking above pre-COVID levels for much of the last year on the back of continued strong traffic by commercial and construction vehicles.

But Melbourne traffic volumes remain depressed, with the last quarter tracking at 20 per cent below pre-pandemic levels.

 

Transurban CEO Scott Charlton said the business was planning to continue to grow its tollway footprint and traffic on the back of intensifying urbanisation.

“What you have to plan for is not where you are today but where you want to be,” he said.

“Those long-term trends are going to continue.”

Commercial traffic has proven most resilient across the pandemic period.

On the back of the online shopping boom freight and logistics traffic has surged 5-7 per cent in some cities.

In western Sydney and Brisbane freight is up as much as eight per cent.

Fleet traffic, which captures tourist travel and corporate cars are down as much as three per cent, something Mr Charlton noted was likely far worse in other markets.

“Those businesses would be hit much harder in northeast Queensland,” he said.

“Those assets that lead to the airport are still suffering. To get back to full capacity around the network you’re still waiting for a vaccine and more travel through the airports.”

Mr Charlton said longer term the business was confident it would weather any potential borrowing cost rises on the back of a forecast rise in inflation as economies resurface from lockdowns.

“We know interest rates have to raise and inflation has to increase,” he said.

“We always assume in the long term that things are going to go back to long-term averages. We have that buffer built in.”

But the company’s senior leadership noted Australia’s slow vaccine rollout risked recovery on some of its key tourism and travel-exposed road networks.

Group executive Victoria and strategy, Henry Byrne, said the vaccine was “one element that could potentially spur a recovery” across Transurban’s road networks.

“Once we get the travel happening that’s obviously going to lead to an uplift across all of our networks,” he said.

This was echoed by group executive Queensland Sue Johnson, who said the business’s travel and airport traffic links were impacted by current restrictions.

“Vaccination is obviously something we’d all like both for a Transurban and the economy as well,” she said.

This came as the company flagged the strong rollout of the COVID-19 vaccine in its Canada and US markets was set to propel a traffic recovery on its Virginia, Maryland, and Montreal assets.

Sydney’s WestConnex M4 east entrance. Picture: Christian Gilles

Transurban, which operates of 21 assets across five markets in North America and Australia, is confident its continued fast-paced growth trajectory can continue.

With seven projects currently under way, Transurban said it was looking to further grow its American operations on the back of strong support from both sides of politics.

Transurban president North America Pierce Coffee said continued expansion of toll roads in and around the Greater Washington DC area would prove a boon for the business.

“We have seen toll roads and P3s be supported by both sides of the aisle in the United States,” she said.

Transurban has also launched a bid to acquire the remaining share of NSW’s WestConnex project, which is to be sold in two 24.5 per cent tranches by the state government.

The toll road operator currently has the contract to run the network.

But NSW group executive Michele Huey revealed Transurban had been given the OK by the Australian Competition & Consumer Commission for its bid for the project.

“The good thing about Transurban is we’ve got a portfolio of assets that are quite cash generative and a number that are ramping up and coming on,” she said.