Domestic freight task in Australia - Data and Analysis (1975-2034)

IBISWorld forecasts Australia's domestic freight task to grow 1.5% in 2026-27 to reach 800.2 billion tonne kilometres. While growth was previously projected to be almost double this, elevated fuel costs owing to the US war on Iran has subdued demand and encouraged inventory rationalisation and load consolidation among freight companies. High fuel costs and expectations of dry conditions are expected to subdue agricultural activity through 2026-27, further curbing freight volume growth. However, mining activity is projected to propel freight volumes, with the Office of the Chief Economist anticipating a modest rise in iron ore export volumes during 2026-27, as new sites like Fortescue's Iron Bridge and Rio Tinto's Western Range ramp up production, offsetting mine closures and depleting stocks at other sites.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.Coastal shipping freight task has exhibited a downwards trend in recent years, as demand for bulk cargo transport has contracted. Australia's declining domestic refining capacity has contributed to this trend, while limited growth in bauxite and alumina production, a key driver of bulk cargo transport demand, has constrained growth and discouraged operators from investing in capacity upgrades. A feedback loop has emerged whereby lower demand has driven down shipping companies' incentive to modernise and expand Australia's shrinking, ageing coastal shipping fleet, resulting in diminished service availability and, in turn, lower demand for coastal freight services.Road freight's share of the domestic freight task is growing, reflecting a shift in Australia's freight mix towards non-bulk freight. Non-bulk transport is growing faster than bulk transport owing to population growth, urbanisation and the rise of online shopping. Road freight is more flexible and quicker over short- to medium-distances, and offers high service frequency, making it well-suited to non-bulk freight, which is typically part of fragmented, time-sensitive, door-to-door supply chains.Rail freight contributed just under 57% of Australia's domestic freight task in 2024-25 according to BITRE. 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 866.9 million tonnes in 2020-21 to 936.47 million tonnes in 2026-27. Rising export volumes have lifted demand for rail freight activity, particularly in the Pilbara region in Western Australia. However, sliding Alumina 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 2026-27.