CBH Group has awarded its long-term grain rail contract to US transportation group Watco Companies, replacing QR National subsidiary Australian Railroad Group.
CBH Group has awarded its long-term grain rail contract to US transportation group Watco Companies, replacing QR National subsidiary Australian Railroad Group.
CBH chief executive officer Andrew Crane said the co-operative would invest up to $175 million in new rolling stock as part of the landmark decision to call for tenders for the rail transport requirements for the first time.
Dr Crane said the existing interim agreement with the incumbent provider ARG is due to run until April 2012.
He said CBH looked forward to working with ARG to ensure a smooth transition to the new arrangements for the benefit of both companies and the grain industry.
"Our decision ... has resulted in the introduction of competition for the first time in the Western Australian grain rail freight market and the first major investment in new rolling stock for decades," he said.
However, Dr Crane said CBH still needed continued support and engagement with below-rail provider WestNet and the state government to achieve an optimal outcome.
"However, subject to a satisfactory new track access agreement, and with the State and Federal Governments' $350 million funding package, our planned investment means more than $500 million has now been committed this year to the grain transport network after decades of neglect."
Dr Crane said CBH had decided to award the contract to Watco after a year-long tender process.
The new 10-year agreement is due to start in May 2012.
It will see Watco provide a comprehensive rail logistics planning service including train planning and scheduling, tracking, maintenance, inventory and crew management.
In a statement, CBH said Watco would operate and maintain new rolling stock to be acquired by CBH, which would include a number of locomotives and a fleet of wagons to be delivered over the next 18 months.
"We welcome Watco to Western Australia and have great confidence that their experience and innovative and performance-driven culture will enable us to implement the most efficient grain logistics supply chain for WA growers and their customers and help us to keep the maximum amount of grain on rail," Dr Crane said.
"We also anticipate the new arrangements will deliver our growers material improvements in freight efficiencies," he said.
Watco executive vice president Ed McKechnie welcomed the opportunity to partner with the CBH Group and the grain growers.
"We want to grow the rail business in Western Australia and we will do that by providing exceptional customer service," Mr McKechnie said.
"We are committed to operating a safe and efficient railroad that creates value for growers.
"This is done by moving more tonnes to port and doing it through creativity and innovation.
"We believe our experience in grain transportation and the successful execution of over 40 start-ups on railroads, rail car shops, switching operations and transload locations will be of significant value when commencing operations in Western Australia."
The decision comes after the Australian Competition and Consumer Commission last week announced it was reviewing CBH's to remove Cooperative Bulk Handling's monopoly on transport from its 'up-country' storage facilities.
Transport Minister Simon O'Brien said CBH"s decision is good news.
"CBH's decision brings to more than a half a billion dollars the total recent investment in the grain freight network by Government and private sector," Mr O'Brien said.
"Last month, the State Government committed an additional $178.8 million towards the network which secured the Federal Government's contribution of $135 million.
"And there is no doubt the Government's investment in the grain freight network was the catalyst for today's announcement and the commitment by CBH."
On Monday, the Australian Competition and Consumer Commission issued a draft notice proposing the revoking CBH's notification which allows the company to require growers who store grain in its 'up-country' storage facilities to also use its transport services to move the grain to port for export.
CBH has about 4650 shareholders who grow grain and owns around 90 per cent of up-country storage facilities in WA.
It also owns and operates WA's four port export terminals.
