Australia’s competition watchdog has delivered a potential boost to private trucking and rail freight operators by ruling that CBH group cannot continue its monopoly practices in the grain market.
Australia’s competition watchdog has delivered a potential boost to private trucking and rail freight operators by ruling that CBH group cannot continue its monopoly practices in the grain market.
CBH currently requires growers and marketers who use its storage facilities to also use its rail transport services to receive and deliver grain for export.
This prevents farmers from using alternative transport methods such as road to get their produce to port.
The Australian Competition and Consumer Commission ruled last week that the practice must end on May 1 next year.
In its ruling, the ACCC said transport alternatives could have been more cost effective and more convenient for farmers than the bundled rail service operated by CBH.
CBH Group has expressed its disappointment at the decision and will seek advice from experts to consider the best course of action.
CBH chief executive Andrew Crane has previously defended the tied arrangement, arguing that by maintaining control of both storage and transportation, the cost and logistic difficulties would be minimised.
“By allowing CBH to manage the inland transport of all grain delivered into our network, Grain Express, results in grain being moved to port in a way which maximises the efficiency of the logistics system,” he said last year after the ACCC announced its review.
Dr Crane contends that the entry into the market of multiple buyers threatens to cause severe disruption to grain storage and transport in Western Australia.
“This threat remains if multiple buyers request to access and transport individual parcels of grain stock received at our 190-plus country receival sites,” he said.
The ACCC acknowledged there were efficiencies in the CBH bundling system but the ruling would now allow for growers to explore alternative transport options and still utilise the CBH storage facilities.
Industry participants had expressed frustration at the service offered by CBH and its restriction on seeking alternative transport, according to the ACCC.
The Pastoralists and Graziers Association welcomed the ruling.
PGA’s Western Graingrowers chairman John Snooke said the decision would be beneficial to the grains industry in WA.
“The PGA has always held that competition is paramount for Western Australian grain growers to have the best value grain haulage system,” Mr Snooke said.
The ACCC believes CBH will likely continue to be a major provider of transport services but other suppliers would be able to compete for these services.
The ruling comes at a time when there are substantial changes to haulage services and increased investments in rail infrastructure from the state and federal governments.
CBH has recently awarded a 10-year haulage contract to US transport group Watco Companies starting in May next year.
This comes into effect after the existing contract with Australian Railroad Group (a subsidiary of QR National) ends.
Under the agreement, Watco would provide CBH with comprehensive rail logistics services, including tracking, maintenance, inventory control and train planning and scheduling.
According to the PGA, Australian Railroad Group would be forced to remove equipment, technical and operational expertise from the market if CBH had maintained control of the network.
