The Pastoralists and Graziers Association (PGA) has launched a campaign to introduce competition into Western Australia’s grain haulage system to provide a more open, transparent and low-cost service.
The Pastoralists and Graziers Association (PGA) has launched a campaign to introduce competition into Western Australia’s grain haulage system to provide a more open, transparent and low-cost service.
The ‘competition on rail’ campaign calls on the Australian Competition and Consumer Commission (ACCC) to revoke WA grain handler Cooperative Bulk Handling’s (CBH) right to operate its Grain Express service.
Grain Express requires growers who store grain in its ‘up-country’ storage facilities to also use its transport services.
The ACCC last year made a draft ruling in favour of revoking the notification, stating that Grain Express allows CBH to leverage its market power to prevent competition to supply transport services to customers who use CBH’s up-country storage facilities.
Revoking the notification will provide growers who use CBH’s storage facilities with choice about who they use to move their grain to port.
The PGA’s Western Graingrowers chairman Rick Wilson said the association was calling for the most efficient rail system for the WA grain industry, with multiple operators vying for customers.
“Competition is paramount for West Australian grain growers to have an efficient and best-value grain haulage system, as well as protecting our communities by keeping grain on rail,” he said.
CBH awarded a long-term grain rail contract to US transportation group Watco Companies in December and announced plans to make an investment of up to $175 million in rolling stock.
The 10-year agreement would start in May 2012 under which Watco would provide a comprehensive rail logistics planning service, including train planning and scheduling, tracking, maintenance, inventory control and crew management.
Watco will operate and maintain the new rolling stock to be acquired by CBH, which includes a number of locomotives and a fleet of wagons to be delivered over the next 18 months. The existing agreement is with Australian Railroad Group (a subsidiary of QR National), which will finish its current contract in April 2012.
Mr Wilson said that introducing competition would lower transport costs, increase grower profitability and enhance the competitive reputation of Western Australian grain.
“However, any of these benefits will continue to be thwarted through the continuation of Grain Express, which prohibits competition throughout the grain supply chain in favour of protecting CBH’s monopoly,” he said.
The PGA said that, should the ACCC allow the conduct by CBH, Australian Railroad would have little choice but to remove its equipment, technical expertise and operational nous from the market.
