US-built box crane - WorldCargo News Online

INLAND/INTERMODAL NEWS
A bitter battle waged down under...
The bid by Australia’s largest transport
and logistics group, Toll Holdings, for the
country’s number two, Patrick Corporation
(see WorldCargo News August 2005,
p1), has quickly turned nasty with the
two parties in furious disagreement on a
number of fronts.
Ironically, and most conspicuously, the
battle has been joined at the only existing
joint venture between the two, rail
company Pacific National (PN), where
Patrick has accused Toll of setting up contracts
that advantage Toll but deny PN
and Patrick revenue and business opportunities.
The dispute centres on PN’s activities
in Queensland, where earlier this year
it began above-track narrow-gauge operations
under the Queensland Competition
Authority’s rail access regime in
competition with state governmentowned
Queensland Rail (QR). Underpinning
the initiative was Toll’s shift of
...ACCC no
to Patrick’s
FCL deal
In a decision seen as portentous for Toll’s
unfriendly takeover bid for Patrick, the
Australian Competition and Consumer
Commission (ACCC) has ruled against
Patrick’s friendly takeover of leading
intermodal and terminal operator FCL
Interstate Transport Services (see
WorldCargo News March 2005, p12).
In originally accepting the deal with
Patrick, FCL founder Bill Gibbins had
made it clear he was facing the commercial
and financial reality of trying to compete
for capital, infrastructure and custom
against two giants - Toll and Patrick
- that were inexorably growing in
strength and influence.
He was selling out to Patrick because
it did not have a domestic freight forwarding
arm and was not, in his view,
capitalising on its own 50 per cent share
of Pacific National as a result.
The ACCC has had the FCL deal
under consideration for five months and
took a very thorough and concerned interest
in the possible implications.
At least two and possibly three rounds
of consultation with industry and affected
parties took place and the Commission
issued a very detailed discussion
paper, which was treated at the time
somewhat dismissively by Patrick.
Rumours subsequently circulated
that the ACCC had decided to clear the
FCL takeover, albeit with some strict
conditions. But that was before the Toll
bid for Patrick was announced and the
Commission has now firmly ruled out
the Patrick/FCL buyout.
In doing so, the ACCC appears to
have nailed its colours firmly to the mast
on the question of the anti-competitive
impact of vertical integration and the
modus operandi of leading consolidators
Toll and Patrick.
Analysts appear divided about the
implications of the ACCC’s decision.
Some have suggested that the ruling will
improve Toll’s chances of taking over
Patrick, since Patrick without FCL will
have significantly less overlap with Toll
in a crucial sector.
However, the majority believe that
the larger deal is in big trouble, at least
from the regulatory point of view.
Yet, others see the proposed takeover
as strictly a business transaction and thus
subject to complex negotiation with
various parties but destined nevertheless
for eventual completion.
“Toll just hasn’t found Patrick’s price
yet,” one senior industry executive commented
privately. “And if it has to unload
various bits and pieces to keep [the
ACCC] happy, it will do that in the interests
of the bigger picture. It could even
decide to just go ahead regardless and
thumb its nose at the ACCC, which is
not without precedent in the corporate
sector.”
its NQX and QRX freight forwarding
volumes from QR to PN in a 20-year
“take-or-pay agreement,” However,
Patrick claims that Toll has, in effect,
locked up all of PN’s Queensland capacity
at preferential rates, costing PN some
A$510 mill in lost revenue and denying
Patrick the means to enter the market in
its own right. It also claims PN substantially
overspent the agreed capital budget.
While Toll says the deal was signed
off without question by Patrick members
of the PN board, Patrick has claimed
that not all the facts were presented to it
and, significantly, two key PN executives,
who have now stood down, continued
in the indirect employment of Toll in a
manner that offered incentives for pro-
Toll outcomes.
Toll in its turn claims that the material
value of the disputed transactions
amounts to approximately A$20 mill and
says the dispute has been “manufactured”
by Patrick to frustrate its takeover bid.
The PN board has refused to countenance
any independent inquiry into the
situation, which has led to Patrick seeking
formal activation of dispute resolution
procedures through the Victorian
Supreme Court.
Patrick CEO Chris Corrigan has
warned that the probable end point of
The Port Management System suite comprises:
• Container Terminal Management System
• Automation and Position Determination System
• Ship Planning System
• Warehouse and General Cargo Management System
• Resource Management System
WorldCargo
news
the disagreement is the complete breakup
of PN, with assets divided between
the partners.
Well-placed sources say this is not the
first major falling-out between the partners,
although this one has led to Corrigan
publicly saying that he can no longer
trust Toll managing director Paul Little
or other Toll management. In mid-2004,
PN announced that it was unilaterally
and at short notice withdrawing from all
port and regional intermodal services in
New South Wales and redeploying
equipment elsewhere. This effectively
decimated Patrick’s shipping line-related
business in the state and forced the company
to take over the services in its own
right, using leased equipment and operating
contractors.
“There was blood on the boardroom
floor over that one,” an insider asserted,
and the experience prompted Patrick to
reactivate development of its own rail
businesses that had earlier been rolled
into PN. Part of this expansion was to
be the acquisition of FCL (see below),
which would have given Patrick greater
ability to compete with Toll in rail forwarding
and via FCL’s terminals.
Analysts say the possible break-up of
PN would be an enormously complex
task given not only the spread of assets
involved, but also obligations and undertakings
to government embedded in the
2003 sales of National Rail and
FreightCorp that spawned PN.
Port Management System
Autostore is a suite of products developed by Central Systems & Automation Ltd. specifically for the port and
intermodal industries. Installed separately or fully integrated, the suite of products can greatly enhance your
productivity, efficiency and profitability.
As a modular product you can build Autostore into a port-wide solution at a rate that suits you. It’s easy-touse
– from dockside operators to senior management – and integrates comfortably with existing ERP, transport
management and business systems.
Sample Features & Benefits:
• Powerful, real-time graphical user interface
providing best in class ‘standard product’ look
and feel.
• Allocates and coordinates container and cargo
move instructions in real-time increasing
productivity and service to transport.
• Full compatibility with major industry
technology providers assuring you that your
RDT, GPS and other technologies integrate
seamlessly with Autostore.
• Web enabled and full support for EDI formats.
Central Systems & Automation Ltd
Enterprise House, Ashby Road, Coalville, Leicestershire, LE67 3LA, England.
Telephone: +44 (0)1530 510410 Fax: +44 (0)1530 511500
email: autostore@central-systems.co.uk www.autostorepms.com
September 2005 19