ComfortDelGro, which operates Singapore’s Northeast and Downtown strains, is partnering with East Japan Railway Firm (JR East) and UGL to kind the Melbourne One Rail Consortium to bid for the Melbourne Metropolitan prepare community someday subsequent yr, when regulators open the tender.
“The bidding group marries world-class Japanese and Singaporean customer support and efficiencies with UGL’s native asset administration and operational experience,” the consortium mentioned in a press release.
The group is backed by the Japanese common buying and selling and funding conglomerate, Marubeni Company.
The road’s present operator is Hong Kong’s MTR, working with John Holland Group and UGL, in a contract that expires in 2027.
Melbourne’s metropolitan community has 17 strains protecting 402 kilometers and 222 stations and is Australia’s largest suburban rail community. It generates about 2 billion Singapore {dollars} ($1.54 billion) in annual income, ComfortDelGro CEO Cheng Siak Kian estimated in an interview with Fortune. ComfortDelGro’s share of that income will rely upon the three way partnership contract, however it might nonetheless be a major enhance to the corporate’s funds.
The corporate reported income of 1.17 billion Singapore {dollars} ($903 million) for the quarter ending March, with 52.6% of that income coming from exterior of Singapore. Australia income reached 203 million Singapore {dollars} ($156 million).
If ComfortDelGro’s bid is profitable, it’d be the second rail community taken from its Hong Kong competitor. Final yr, ComfortDelGro gained the bid to function Stockholm’s metro from MTR, which had run the Swedish metropolis’s trains since 2009. (MTR additionally lately misplaced a contract to function London’s Elizabeth Line to Tokyo Metro).
Cheng chalked up the corporate’s wins towards MTR to lucky timing. Rail contracts usually span a minimum of seven years, and Cheng mentioned ComfortDelGro now has sufficient rail expertise to make massive world bids proper as contracts are beginning to expire.
MTR has operated Melbourne’s line for over 10 years, and Stockholm’s for over 14 years by the point ComfortDelGro takes over on the finish of the yr.
“Ten to 14 years in the past we weren’t even within the place to bid for this contract,” Cheng mentioned. “It’s simply an evolution of time the place you acquire experience, and then you definately work with the best companions to have the ability to pay for these contracts.”
ComfortDelGro’s experience
ComfortDelGro’s experience is in reliably working driverless metro trains. The corporate’s two strains, the Northeast line and the Downtown line are the town’s most dependable, with the very best Imply Kilometers Between Failure (MBKF) among the many 5 strains the place knowledge exists. (Singapore’s most up-to-date line, the Thomson-East Coast line operated by SMRT, remains to be too new to have reliability knowledge)
Cheng credited excessive expectations by Singapore’s shoppers for forcing the corporate to always enhance its reliability.
ComfortDelGro doesn’t personal the true property in or round its stations, a major income for different rail operators like MTR or JR East. As a substitute, ComfortDelGro generates income from actions like passenger fares, that means the corporate should guarantee breakdowns are uncommon to protect its skinny margins.
“We’re very targeted on working the system properly, and that’s the place it offers us the benefit,” Cheng mentioned.
The worldwide play
The Melbourne bid is a part of ComfortDelGro’s technique to leverage its expertise in three completely different sorts of public transport.
Along with its Australian operations, ComfortDelGro additionally operates bus and taxi companies within the UK, in addition to taxis and private-hire vehicles in mainland China. It is going to additionally function rail companies in Paris later this yr.
Cheng hoped ComfortDelGro’s broad expertise will assist the corporate preserve bidding to develop its presence in its present markets.
“The benefit of rising in that method is lots of familiarity, each with regulators and the model identify, in order that’s what we are going to attempt to do,” he mentioned.
If ComfortDelGro’s Melbourne bid is profitable, the corporate will lastly function rail, bus, and taxi companies in Australia, permitting it to copy the multi-modal mannequin it has in Singapore.
Cheng needs to recreate this mannequin past Singapore and Australia. “The place it’s appropriate, the place it’s viable, we are going to achieve this,” he mentioned.
ComfortDelGro will doubtless look to develop its presence in present markets first, or in adjoining markets. “We’re fairly deliberate about the place we’re increasing to. We have to perceive the income mannequin, the regulatory setting, and what’s the rule of regulation,” Cheng mentioned.
However that gained’t cease the corporate from “going to cities the place we don’t have a presence but,” he provides.
This story was initially featured on Fortune.com
