Efficient Rail Way Freight Rates: Australian Coal

Abstract

Coal transport in Australia is a non-contestable market: rail authorities have an effective, legislatively-based monopoly over the transport of coal in the major producing states of Queensland and New South Wales. Pricing policies and practices are critical to efficient resource allocation in non-contestable markets. The objectives of this paper are to explore pricing options for the rail freight of bulk minerals, and to illustrate their application to the export coal industry. Pricing options for both dedicated and multi-user lines are discussed and existing export coal rail freight contracts scrutinised. The paper concludes by highlighting desirable changes in pricing practices.