Freight war on track

THE new owner of Westrail’s freight business is looking at targeting selected regional areas with rate reductions to lure business away from the road transport industry.

But Australian Railroad Group, a joint venture between Wesfarmers Limited and international rail operator Genesee & Wyoming, has ruled out across-the-board reductions in freight rates.

ARG CEO Charles Chabot remained guarded about his strategy when he spoke to Business News, revealing only that the company may follow its South Australian approach of offering selected reductions for grain growers in three strategic regions to extract efficiencies and increase its share of the grain freight market.

“We will only be offering them in cases where we can extract efficiencies in the way that we did for three different geographic regions in South Australia,” Mr Chabot said.

“Grain freight rates are relatively low here now.”

In South Australia, ARG subsidiary Australian Southern Railroad delivered reductions of up to 8 per cent on some routes to increase its share of the grain task from 35 per cent in 1997 to 50 per cent.

Westrail currently earns around $90 million annually from carting 75 per cent of WA’s grain task and ARG estimates this can be increased to 80 per cent.

Mr Chabot declined to be specific on possible rate reductions for WA, but said the new owner would work closely with all marketing boards to ensure they maintained existing and won new business.

The minerals and agricultural sector would fare better from a service provider unhampered by bureaucratic ties and could focus on customers rather than government.

“Westrail has been doing a good job, but I would have to say it has been way too government focused,” Chabot said.

The $585 million purchase of Westrail’s freight business and 49-year track lease to the Australian Railroad Group is due to be finalised in mid-December.

ARG will operate under two names in WA. Australia Western Railroad will be responsible for rail haulage and West Net Rail will manage the state’s track network.

In an address to the WA Rail Summit on Monday, Wesfarmers director of business development Gene Tillbrook promised reduced pressure on the state’s road system through increased rail freight.