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RailAmerica Inc.'s Freight Australia recently began serving two new customers under three-year transportation agreements valued at more than $13 million.


Freight Australia now operates a daily train between Melbourne and Sydney for a major intermodal operator. The railroad expects the contract to generate $10.5 million in revenue during the next three years, with an additional $10 million possible over the contract's term.


"The potential to grow this service beyond its original contract base is substantial, as there are a number of shippers along the route that we expect will see our service as a viable, cost-effective alternative to trucks or other transportation medium," said Freight Australia Chief Executive Officer Marinus van Onselen in a prepared statement.


Freight Australia also hauls petroleum products from Sydney to regional distribution centers in northern and central New South Wales under a $2.8 million contract with BP Amoco. The service adds to petroleum-product business Freight Australia began in fall with Shell Oil.


The contracts help extend the railroad's reach outside the state of Victoria into New South Wales and other regions, and diversify its grain-dominated commodity base, which has been affected by a long drought, said van Onselen.


During the past nine months, Freight Australia has obtained contracts totaling more than $65 million.