WEST PERTH, AUSTRALIA — The CBH Group announced on Dec. 12 plans to make an investment of up to A$175 million in rolling stock as part of a landmark decision to award its long-term grain rail contract to U.S. transportation group Watco Companies.

CBH Group Chief Executive Officer Andrew Crane said the announcement marked a new era for grain rail freight in Western Australia which would deliver significantly greater value, efficiency and safety to grain growers and the grain industry.

"Our decision to go to tender for the first time for our rail transport requirement has resulted in the introduction of competition for the first time in the Western Australian grain rail freight market and the first major investment in new rolling stock for decades," Crane said.

"We still need continued support and engagement with below-rail provider WestNet and the state government to achieve an optimal outcome.

Subject to a satisfactory new track access agreement, and with a A$350 million state and federal governments funding package, the planned investment means more than A$500 million has been committed this year to the grain transport network after decades of neglect, Crane said.

Crane said Watco had been chosen as CBH's long-term rail partner following a year-long tender process which had drawn competitive interest from rail companies locally and around the world.

The new 10-year agreement will begin in May 2012 and will include a comprehensive rail logistics planning service including train planning and scheduling, tracking, maintenance, inventory control and crew management.

Watco would operate and maintain the new rolling stock to be acquired by CBH, which would include a number of locomotives and a fleet of wagons to be delivered over the next 18 months.

"We welcome Watco to Western Australia and have great confidence that their experience and innovative and performance-driven culture will enable us to implement the most efficient grain logistics supply chain for WA growers and their customers and help us to keep the maximum amount of grain on rail," Crane said. "We also anticipate the new arrangements will deliver our growers material improvements in freight efficiencies."

Watco Executive Vice-President Ed McKechnie, said Watco welcomed the opportunity to partner with the CBH Group and the grain growers of Western Australia as its point of entry to Australia.

"We want to grow the rail business in Western Australia and we will do that by providing exceptional customer service," McKechnie said. "We are committed to operating a safe and efficient railroad that creates value for growers. This is done by moving more tonnes to port and doing it through creativity and innovation.

Crane said the existing interim agreement with the incumbent provider Australian Railroad Group will run until April 2012 and CBH looked forward to working with ARG to ensure a smooth transition to the new arrangements for the benefit of both companies and the grain industry.