Cloud hangs over Aurizon's intermodal business
The future is in doubt for one of Aurizon's small businesses that specialises in shifting container freight and employs several hundred people across the country.
The company, formerly known as QR National, is expected to review the future of its intermodal business next financial year, and analysts believe it will eventually be closed.
The intermodal business of Australia's largest listed rail company has struggled to turn a profit since it was established in 2007.
Merrill Lynch analysts said it was "hard to see any outcome other than closing it down".
"Aurizon has competed very aggressively on price but has found it hard to make material inroads. As the marginal pricer, Aurizon has impacted industry returns," the analysts said.
Asciano's Pacific National rail business has about two-thirds of the intermodal market, while Melbourne's Specialised Container Transport has 30 per cent and Aurizon about 8 per cent.
Aurizon declined to comment on speculation about whether it was set to review the business or shut it down.
But it said in a statement that it remained committed to growing the intermodal business, which had achieved its target of breaking even in pre-tax profits by next financial year. It would not put a figure on the number of staff employed but it is believed to total several hundred.
Another analyst, who wanted to remain anonymous, said Aurizon would be better off selling the business. It operated in a highly competitive market, and made skinny margins. "There is a school of thought that there is only room for two in that market," he said.
Aurizon's intermodal business offers container-rail freight and road haulage services along the east coast and to Perth. It includes a network of freight terminals and distribution centres located near major transport hubs, and warehouses and storage facilities in five states, including New South Wales, Victoria, Queensland and Western Australia. Other assets include trains and trucks.
Since it was floated by the Queensland government in November 2010, Aurizon has cut its workforce by about 1800 to 8000.