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ARG assesses grain transport options

QUESTIONS have been raised over what the Australian Railroad Group (ARG) plans to do now that the CBH Group has awarded its rail freight management contract to the American giant, Watco Companies.

After CBH’s announcement late last year ARG has been noticeable for its silence on the deal.

Industry buzz suggested that the company might plan to go into competition with the CBH Group (CBH) by building rival facilities at key grain delivery sites throughout the State.

This idea bought into question the very nature of the company’s planned key efficiencies, policies and outlay with regard to owning its own infrastructure.

Rumours suggested that ARG might work hard with marketing companies to pull grain out of the CBH system but it all depended on whether or not CBH’s Grain Express monopoly was dissolved.

ARG announced it was exploring new strategic opportunities for growth in the grain sector in WA which had been created by the Australian Competition and Consumer Commission’s (ACCC) decision to revoke CBH Group’s monopoly exemption in their draft plan.

But a spokesperson couldn’t clarify what the exact opportunities were.

Executive vice president and chief executive officer of freight Ken Lewsey said ARG wanted to take advantage of a potentially deregulated grain market in WA.

“One door closes and another opens,” Mr Lewsey said.

“We’re disappointed with CBH’s decision but are committed to the agricultural industry nationally, where we see exciting new opportunities.

“It’s a whole new ball game.

“The ACCC decision could free up the market and offers chances to develop alternative supply chains and ARG will be pursuing them with vigour.”

Mr Lewsey said ARG also had strong prospects for sustained growth in the resources sector and that, coupled with the potential deregulation of the grain haulage industry, would ensure profitability and employment opportunities.

He said ARG would start to haul an additional 3 million tonnes per annum of iron ore for Mount Gibson Mining next year and it had executed a heads of agreement with Karara Mining for the transport of up to 11mtpa of magnetite concentrate and direct shipping ore.

Mr Lewsey said ARG would redeploy some assets to growth markets in WA, Queensland and NSW at the end of the CBH contract while pursuing other long-term opportunities.

The CBH decision gave ARG 16 months to consult with staff in WA.

The role of Australia’s largest private rail freight business Pacific National is also the subject of speculation.

The nationwide operator was cited as a potential alliance for ARG and suggestions questioned whether Pacific National in conjunction with ARG might aim to take a larger market share in WA, provided they could beat CBH’s price and provide the best overall package for growers.

CBH continued its plan to move forward with Watco as its main service affiliate.

But many growers were puzzled as to why CBH hadn’t yet signed off on an access agreement with previous service provider, WestNet.

Coorow grower and District 1 nominee for a CBH Group director position Michael O’Callaghan wasn’t necessarily happy with the partnership between CBH and Watco.

“I think the concept is good but CBH hasn’t signed off on access agreements with WestNet and I just find that amazing to be up front,” he said.

“That’s like buying a fleet of trucks and then working out whether you’re allowed to go on certain roads or not.

“I just hope it’s not going to be more streamlined towards standard gauge railway lines, more so the investment CBH is making in rail.

“Is it just really going to assist, fast track and streamline that standard gauge through Merredin at the detriment of other areas?

“Rail is so important, there’s $175m being put in and I really think we should see the benefit in places like Beacon, Dalwallinu and all the way through the system.

“With that much money, to find out the finite details would be good.”

A representative from Pacific National was unavailable for comment at the time Farm Weekly went to press.

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