(RailAmerica issued the following news release on May 5.)
BOCA RATON, Fla. — RailAmerica, Inc. today announced that its Australian railroad, Freight Australia, has recently commenced service on two new, three-year transportation agreements valued at more than US$13 million, with the potential to add approximately US$10 million of ancillary incremental revenue. These new agreements continue Freight Australia’s expansion of rail service outside the state of Victoria into New South Wales and other regions. They also further diversify the railroad’s grain-dominated commodity base.
First, Freight Australia has signed a contract with a major intermodal operator for a new daily freight service between Melbourne and Sydney that is expected to generate revenue of approximately US$10.5 million over the next three years. In addition, Freight Australia expects that ancillary business from other freight forwarders will augment this service and has the potential to add approximately US$10 million of additional revenue over the term of the contract. Intermodal service is the shipment of containers on rail cars.
The new intermodal service, which departs Melbourne and Sydney each weekday afternoon for arrival the following morning, will also provide service to intermediate centers en-route. The introduction of the regular service follows consultation with a wide range of clients and testing of the market by running trains between Freight Australia’s Melbourne Terminal at Dynon and the Cooks River Rail Terminal in Sydney. It also builds on Freight Australia’s regional services already provided on the rail corridor. Sydney, located in the state of New South Wales, is approximately 500 miles northeast of Melbourne.
The second contract is a three-year, US$2.8 million transportation agreement with BP Amoco to haul petroleum products from Sydney to regional distribution centers in northern and central New South Wales. This service is in addition to Freight Australia’s current business with Shell Oil that was initiated this past fall.
Over the past nine months, Freight Australia has successfully expanded into New South Wales and into new commodity groups through several previously announced transportation agreements totaling more than US$65 million, including the contracts outlined above.
“The new intermodal service will give the marketplace a significant rail alternative between Australia’s two largest cities,” said Freight Australia’s CEO, Marinus van Onselen. “The potential to grow this service beyond its original contract base is substantial as there are a number of shippers along the route that we expect will see our service as a viable, cost-effective alternative to trucks or other transportation medium. In addition, these agreements allow Freight Australia, which has long-term contracts in place to transport the vast majority of Victoria-produced grain for export and domestic use, to diversify its commodity base and service region as we contend with the severe drought that occurred across the continent during 2002. However, based upon current Australian agricultural industry forecasts for the 2003/2004 grain harvest, we anticipate grain shipments will return to normal levels in 2004.”
RailAmerica purchased Freight Australia, a 3,150-mile railroad based in Melbourne, Australia, from the Victorian State government in April 1999. The Class I-type railroad had revenues of US$95 million and moved approximately 200,000 carloads of freight in 2002.
RailAmerica, Inc. (NYSE:RRA) is the world’s largest short line and regional railroad operator with 49 railroads operating approximately 12,900 miles in the United States, Canada, Australia and Chile. In Australia and Argentina, an additional 4,300 miles are operated under track access arrangements. The Company is a member of the Russell 2000(R) Index. http://www.railamerica.com