Domestic freight task

IBISWorld forecasts Australia's domestic freight task to grow by 4.5% in 2023-24 to reach 813.4 billion tonne kilometres. Road and rail movements are expected to climb as the economy continues to recover from the effects of the COVID-19 pandemic and surging population growth. According to data from the Office of the Chief Economist, iron ore exports are anticipated to rise in 2023-24, which will likely lead to higher volumes of both coastal shipping and rail freight. However, diplomatic tensions with China are anticipated to weaken domestic shipping freight growth over the year.

Australia's coastal shipping freight task is historically the most volatile domestic freight segment. Bulk goods like petroleum, iron ore and aluminium account for the vast majority of local coastal shipping volumes. Bauxite is the major input for Rio Tinto's alumina refinery in Gladstone. Shipping iron ore from Pilbara, WA to Port Kembla, NSW also contributes to a large proportion of domestic shipping activity. BlueScope Steel is Australia's largest steel manufacturer, using iron ore as a key input at its Port Kembla Steelworks. Volatility in steel and iron ore prices, along with other commodities, can cause year-on-year fluctuations in domestic shipping freight movements.

Rail freight is expected to contribute to just under 58% of Australia's domestic freight task in 2023-24. Rail freight has become increasingly prominent over the past couple of decades due to a ramp up in mineral production and export volumes following Australia's mining boom. Most of Australia's domestic rail freight task is dedicated to moving bulk materials including iron ore, coal, grains, fertiliser and sugar. According to data from the Office of the Chief Economist, iron ore exports are expected to rise from 818.0 million tonnes in 2018-19 to 910.5 million tonnes in 2023-24. Rising export volumes have lifted demand for rail freight activity, particularly in the Pilbara region in Western Australia. However, sliding thermal coal exports over the same period have limited growth. Overall, IBISWorld forecasts Australia's domestic freight task to rise by a compound annual rate of 0.8% over the five years through 2023-24.