Historic change with NRC /FreightCorp sale

The successful bidder, Pacific National, is owned by Lang Corporation, mainly a stevedoring company, and Toll Holdings, an interstate road freight company. Both are majority Australian owned. Lang holds about 50 per cent of national stevedoring business, and Toll Holdings is the major player in road freight logistics.

NRC and FreightCorp between them held 70 per cent of the rail container business.

Shares in both companies shot up on news of the sale, suggesting that the price was too low by about $500 million.

The sale creates an historic change for land transport in Australia, by creating a dominant private operator that integrates rail, road and sea freight services, something that Australian governments have refused to do while rail freight was in public ownership. The resulting merger will put powerful private sector pressure on the Australian government to modernise the poor quality interstate mainline infrastructure, especially Melbourne - Brisbane.

Now that Lang Corp has bought 50 per cent of the Virginblue airline, Chris Corrigan has emerged as the transport titan to surpass the ambitions of the late Sir Peter Abeles of TNT.
In itself, the privatisation will not create any new public investment in the government-owned interstate rail network, which has been the major restraint on the efficiency of rail freight services until now.

However, the corporate focus of the Howard Government, combined with the joint political clout at the Toll and Lang groups, will ratchet up demands for overdue infrastructure investment.
The new private owners have promised to invest the relatively small amount of A$50 million (US$25 million) into the interstate track in NSW if that track is leased to the national track manager, ARTC. The aim is to have double-stacked container trains going from Melbourne to Perth via Parkes.

Pacific National will focus on the interstate mainline, and this is likely to jeopardise any further government commitment to secondary lines.

Lang Corporation has a strong anti-union record, established in its notorious effort to bust the Maritime Union of Australia in 1998. The ITF played a major role in the 1998 Maritime Dispute, helping to defeat the attempt to bust the MUA.

The RTBU has secured job security guarantees for all workers for three years, and all workers are covered by existing collective agreements. However, the first of these agreements, covering FreightCorp, expires in June this year.

Pacific National has told the RTBU that separate operations will continue for a few months while an integration plan is worked out, and the Toll and Patrick interstate trains will be integrated into the Pacific Rail system. The transfer of a significant share of Toll container freight from road to rail for long-haul inter-capital corridors will have positive economic, social and environmental effects, and the RTBU welcomes this prospect.

Interviewed on the ABC TV 7.30 Report, Corrigan said, "I don't think there is a necessity of major restructuring or reduction in numbers. That will depend of course on how quickly we can increase rail's share of the market ... There will clearly be changes in staff functions ... But overall we wouldn't see job reductions as a major element of this acquisition".

The national rail freight market now faces a shakeout in a competitive struggle between Pacific National, by far the biggest player, QR, largely confined to Queensland, Australian Railroad Group mainly operating in South Australia and Western Australia, and Freight Australia, based in Victoria.