BMI's Executive Summary

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The Australian freight industry continues to face strategic re-positioning. Most of 2006 was dominated by Toll Holdings' long battle to acquire its rival Patrick Corporation. In 2007, the takeover victors are now restructuring around two main units, Toll and the newly-created Asciano, which groups rail and port holdings. In August Toll reported a strong rise in profits and indicated it was interested in a possible takeover bid for Brambles, a pallet and container supplier. It reported a four-fold increase in net profits in the 2006/07 financial year, to AUD1.28bn (US$1.02bn). Managing director Paul Little said that Brambles was a very attractive target for Toll, particularly because of its operations outside Australia. Toll had already spent around AUD83mn to acquire a 0.5% shareholding in Brambles; separately, Asciano had a 3.79% stake in Brambles.

BMI's newly-released Australia Freight Transport Report concludes that these developments will be positive for the domestic industry in the long term. Toll's new economies of scale and international ambition will be a plus factor. BMI believes that this new alignment, together with a new round of competition in airfreight, will support our forecast that freight carried, measured by million tonne-km (mntkm), across all modes will grow by an annual average of 4.8% between 2007 and 2012. With jet fuel prices now at more reasonable levels, we expect airfreight traffic growth of 6.8% per annum over the next five years. Rail freight will grow vigorously, rising by 5.3% per annum, on the back of strong mining exports and infrastructure development. Road haulage freight will achieve average annual growth of 4.2%, with strong demand held back by capacity limits. New motorway investment will not be enough to keep ahead of demand. Our shipping-freight forecast, boosted by commodity exports, is now set for average annual growth of 4.7% in the forecast period.

These rates of growth are impressive for an OECD economy. It is important to underline that freight growth will outstrip GDP expansion, a relatively unusual state of affairs for more developed economies. Part of Australia's attraction as a transport market is this combination of significant growth potential with a strong and stable operating environment. BMI gives the Australian freight industry operating environment a score of 49 out of a theoretical maximum of 70. This is significantly above the Asia Pacific average of 44.5.

Our conclusion is that Australia can look forward to a particularly vibrant freight industry over the next decade, with diversified growth across all modes, and with the overall value of transport and communications growing to US$51.65bn by 2012, representing 5.7% of total GDP.

Contents

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Chapter 1 - Executive Summary

Chapter 2 - SWOT Analysis

Australian Rail Freight Industry SWOT

Australia Economic SWOT

Chapter 3 - Business Environment Overview

Asia Pacific Freight Business Environment Ranking

Economics – Long-Term Risk

Politics – Long-Term Risk

Freight Transport Growth

Transport Infrastructure Growth

Regulatory Environment

Competitive Environment

Transport Intensity Index

Business Environment Risk Summary

Legal Code/Corruption

Red Tape

Labour Force

Chapter 4 - Industry Trends And Developments

Road

Rail

Air

Sea

Chapter 5 - Industry Forecast Scenario

Macroeconomic Environment

Table: Economic Activity – Historical Data And Forecasts

Chapter 6 - Transport Outlook

Table: Australia Transport And Communications Sector Forecasts

Freight Carried (domestic and international)

Chapter 7 - Trade Environment

Foreign Trade Regime

Overview

Trade Agreements

Tariffs

Table: Value Of Imports By Category (US$mn)

Table: Value Of Exports By Category (US$mn)

Table: Top Export Destinations, US$mn

Table: Export Trade, % Y-o-Y

Table: Top Import Sources, US$mn

Table: Import Trade, % Y-o-Y

Chapter 8 - Market Overview

Multimodal

Infrastructure

Competitive Landscape: Multimodal

Company Profiles

Road

Competitive Landscape: Road

Rail

Competitive Landscape: Rail

Air

Competitive Landscape: Aviation

Company Profiles

Water

Competitive Landscape: Maritime

Pipelines

Competitive Landscape: Pipelines

Chapter 9 - BMI Forecast Modelling

How we generate our industry forecasts

Transport Industry

Sources

Competitive Landscape for Asia Freight Transport Reports: Sample of Companies Ranked

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Analysis of latest projects across the freight transport sector – road, rail, air, sea, logistics – including market overview which provides an outline of the key elements driving development. SWOT analysis of the state’s business environment, transport sector, politics and economics, which carefully evaluates the short- and medium-term issues facing the industry.

Network of Asian Freight Transport Sources

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BMI's Asian Freight Transport Reports are based on an extensive network of multilateral organisations, government departments, freight transport industry associations, chambers of commerce and company reports. Information sources include: