The logistics firm previously often known as Toll has signed an 11-year, $1.8 billion contract with Australia’s largest rail operator, Aurizon.
Team Global Express and Aurizon introduced the contract on Monday, with Aurizon describing it as its biggest-ever non-coal contract.
Under the deal Aurizon will use seven weekly prepare providers for TGE’s providers: 5 east-west (Sydney-Melbourne-Adelaide-Perth) and two north-south (Brisbane-Sydney-Melbourne). TGE cargo is predicted to account for 70 per cent of capability of those trains, primarily based on historic volumes.
“The contract delivers to Aurizon a high-volume contract with a tier one customer, closely matched to our national footprint and our network of assets,” mentioned Aurzion managing director and CEO Andrew Harding.
The firm purchased the 2200km Tarcoola to Darwin railway final July and has ambitions to double the earnings of its bulk business over the last decade in a bid to shift its fortunes away from coal.
RBC Capital Markets analyst Owen Birrell mentioned in a analysis be aware that whereas this motivation was comprehensible, diversifying from coal into bulk cargo would “undoubtedly come at the expense of group margins and portfolio return”. RBC reaffirmed its underperform ranking on Aurizon.
But traders on Monday appeared initially enthusiastic, with Aurizon shares up 0.9 per cent to three.45 at 2.22pm AEDT.
TGE is at present with a unique rail operator and can shift to Aurizon starting this April, with a ramp-up to full service by April 2024.
“Our partnership with Aurizon is game-changing for Team Global Express customers, securing them important extra capacity and more choice, in what to date has been a very limited rail market, with restricted capacity and rising tariffs,” mentioned TGE CEO Christine Holgate.
“The weather events of recent years have demonstrated how important both choice and capacity on major routes are, to ensure important freight, including food, can still be delivered at times of great need.”
Source: www.perthnow.com.au
