PERTH, AUSTRALIA — CBH Group secured long-term access to Western Australia’s grain freight rail network through an arbitrated outcome with Arc Infrastructure.
Arc Infrastructure manages the freight rail network on behalf of the state government. The agreement provides CBH and Western Australian grain growers access to the rail network, including the Milling line. The new access agreement ends at the end of 2026.
Wally Newman, chairman of CBH, said the objective always has been to achieve a fair price for the level of performance provided so that Western Australian grain growers can remain internationally competitive.
“The arbitrated outcome has resulted in our growers being in a better position than if we hadn’t sought access under the Code, resulting in a sustainable, long-term access agreement with minimum performance standards for the grain rail freight network,” he said.
Newman said Tier 3 lines would not be re-opened as part of the arbitrated outcome because of the deterioration of the lines and the capital costs determined by arbitration to re-open them.
“Unfortunately, after years under ‘care and maintenance’ the capital costs associated with re-opening Tier 3 lines, as part of the arbitrated outcome, were substantial and the investment required was simply uneconomical for CBH to accept on behalf of growers as it would have required freight rates to increase significantly,” Newman said. “While the costs are confidential, due to arbitration obligations, accepting these costs would have significantly impacted the international competitiveness of growers and the entire Western Australian grain industry as a whole.”
Jimmy Wilson, chief executive officer of CBH, said that following the arbitrated outcome, there would be no changes to CBH rail operations, and as already announced at the start of harvest, grower freight rates from rail sites have increased partially because of the arbitration outcome.
However, the majority of the increase is related to annual inflation, the crop size forecast to be significantly below average and the uncertainty around fuel prices, Wilson noted.
“In order to avoid a repeat of our experience, CBH will continue to engage in the state government’s review of the Railways Access Code and push for substantial and immediate changes, with the objective of gaining reasonable access prices, greater transparency and more appropriate timelines for decisions,” Wilson said. “CBH will also continue to drive for fundamental changes to the Western Australian transport landscape in an effort to maximize tonnes we move on rail and to ensure we have the least cost pathway to export markets, keeping our growers internationally competitive and in support of our regional communities.”