05/01/2017 - 15:18

Watco buys WA freight business

05/01/2017 - 15:18

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Watco buys WA freight business
Intermodal Group runs the North Quay rail terminal. Photo: Attila Csaszar

US-based transport group Watco Companies is seeking further acquisitions and growth opportunities in Western Australia, after buying a majority shareholding in Intermodal Group and winning a contract with Brookfield Rail.

These moves come five years after Watco entered the local market by winning CBH Group’s rail haulage contract.

Watco Western Australia Rail chief operating officer Grant Thompson said the group would absolutely be pursuing further growth.

“CBH gave us an opportunity to establish in Australia and we are now looking to grow the business here,” Mr Thompson told Business News.

“We will certainly be looking at opportunities that fit our strategy.”

Mr Thompson said Watco was much more than a rail company in the US, where it also offered supply chain, terminal and port services, and therefore would look broadly for growth opportunities in Australia.

Watco would seek to boost the growth of Intermodal, which operates the North Quay rail terminal at Fremantle and a container park at Forrestfield.

North Quay rail terminal handled 104,000 containers in 2015-16, equating to 14.5 per cent of all container movements through the port, according to Fremantle Ports.

“From our perspective, it’s all about growing freight on rail,” Mr Thompson said.

“It keeps trucks off roads, it’s the most efficient option.”

The state government’s longstanding goal is to get 30 per cent of containers on rail, but the highest figure ever achieved was 15 per cent in 2008-09.

The Labor Party, which this week said it would scrap the Perth Freight Link road project if it won power at the March election, has also pledged to increase the subsidy that is paid to boost the volume of containers on rail.

The twice-daily rail service between North Quay and Forrestfield is sub-contracted by Intermodal to national company SCT Logistics, which took on the service in 2015.

Mr Thompson said that would continue for the time being.

Under its new ownership, which took effect on December 22, Intermodal will have a three-member board, with two Watco representatives, including Mr Thompson as chair.

Former owner Jim Stevenson will continue as a minority shareholder.

Mr Stevenson’s family also owns logistics company Stevenson Logistics, which is based at Rous Head and is a major customer of Intermodal Group.

Mr Stevenson said the acquisition was good for customers, team members and other stakeholders because IMG’s goals were aligned to Watco’s customer focus and innovative solutions.

“I am excited to be a part of a strong partnership with Watco,” Mr Stevenson said in a statement.

Mr Thompson said this was Watco’s second expansionary move in WA, after recently commencing a contract to haul ‘work’ trains for Brookfield Rail.

Brookfield, which operates WA’s 5,500-kilometre rail freight network, had previously outsourced most of its maintenance activities.

John Holland handled the civil and track maintenance and Brisbane-based Aurizon hauled the work trains, which carry bluestone ballast, steel, and other material.

Brookfield insourced the regular track and civil maintenance activities last August, adding to the signalling and communications systems maintenance capabilities that were already internally managed.

Watco took over the haulage contract in November.

The US company commenced operations in WA in 2012, after winning a 10-year contract with grain handler CBH.

It provides a comprehensive rail logistics service, including train planning and scheduling, tracking, maintenance, inventory control and crew management.

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