New research has found that shifting future freight growth from road to rail could save Australia billions of dollars a year in fuel costs, while sharply reducing the country’s exposure to global energy shocks.

The briefing paper, In it for the long haul: The role of rail freight in an era of energy uncertainty, by Phillip Toner and Jim Stanford, was prompted by the recent conflict in the Persian Gulf, which closed the Strait of Hormuz and sent wholesale diesel prices in Australia past $3 per litre, exposing the extent of the country’s reliance on imported fuel.

The paper finds that rail freight is roughly 10 times more energy-efficient than road freight per tonne-kilometre moved, yet non-bulk interstate rail freight has stagnated for 2 decades as road freight has grown rapidly. The authors argue that directing future freight growth toward rail, rather than road, would ease Australia’s exposure to fuel shocks while delivering cost, safety and environmental benefits, and are critical of the federal government’s recent decision to suspend the northern leg of the Inland Rail project.

Key findings:

• Rail freight consumes just 0.12 PJ of energy per billion tonne-kilometres moved, compared with 1.25 PJ for road freight.

• Directing the next 10% of growth in Australia’s freight task to rail rather than road would save an estimated 2.1 billion litres of diesel per year, worth around $4.3 billion at wholesale prices.

• That saving is equivalent to 23 additional days of national diesel supply – a 70% increase on Australia’s current 33-day inventory buffer.

• Road freight benefits from extensive public subsidy of highway infrastructure, while rail freight operators must cover most of their own infrastructure costs.

Read more

Research page: In it for the long haul: the role of rail freight in an era of energy uncertainty

Download: In it for the long haul: The role of rail freight in an era of energy uncertainty [PDF 169 KB]