Aurizon, Asciano and Qube Holdings want more rail in Moorebank

Port Botany freight growth needs increased rail transport.

a woman

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The Moorebank intermodal terminal, which would handle future growth in freight container handling between ship and rail in Port Botany, is slowly moving forward in its planning stage, but rail transport company Asciano (ASX: AIO) has brought up concerns that the cost of the development may make it hard to make an adequate profit if only privately backed investment is used to build it.

Different consortiums are interested in the terminal development, which is supposed to take a million freight containers off road transport and have them moved by train. Freight transport is a highly fragmented industry, and increasing direct rail-to-port accessibility would help consolidate the business towards the major service providers.

Rival Aurizon (ASX: AZJ) is already planning to be a part of a $1 billion project adjacent to the proposed site, where Qube Holdings (ASX: QUB) has its own plans for a terminal, which it says it can do cheaper and faster. The Moorebank site will be delayed until the Department of Defense leaves the site, which won't take place until 2015, whereas Qube estimates it can have its site operational by early 2014.

In early 2012, it bought out Stockland's (ASX: SGP) 55% stake of the Sydney Intermodal Terminal Alliance (SIMTA), and currently holds 85% control. When the terminal is complete, Qube estimates that it will raise its annual container traffic of over 250,000 to 500,000 by 2021 and to about 1,000,000 by 2031.

Currently, 86% of containers that arrive in Port Botany are transported out of the port by trucks, so companies like Toll Holdings (ASX: TOL) have a great interest on how the terminal development will affect its business. Toll has its own stevedoring segment after taking over Patrick in 2006.  Toll has connections with Asciano because the rail company was originally formed as a split-off from Toll.

Foolish takeaway

Australia's growth will continue, and the population of Sydney is expected to grow just as strongly, so with more people there is more need for transport. Shipping companies will gain from the infrastructure being put in now.

This gives investors a window of opportunity since it can't happen overnight, so follow the growth story. There is no rush to buy into the story, but reading up on Qube may have particular advantages because although it is a smaller company than the others involved, it may have more opportunity to expand.

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Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

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