A NEW rail freight agreement has been reached, resulting in a maximum 21pc increase in grain transportation costs.
Australian Rail Group (ARG) chief executive officer Ken Lewsey confirmed a one-year deal was struck last week after negotiations between the contract’s signatories: AWB, CBH, the Pastoralists and Graziers Association and WAFarmers.
The protracted negotiations came after the previous nine-year agreement expired at the end of October.
Each of the signatories agreed it was a fair outcome in what would otherwise be a low tonnage harvest.
Mr Lewsey said the increase was justified because there had been few rises in almost a decade.
He said the network had been subject to higher running costs during that time and they were reflected in the new deal, extra charges for fuel price escalations in particular.
The 12-month deal was the best possible outcome for the grains industry because of the uncertainty about wheat marketing and doubts surrounding the rail network’s immediate future, Mr Lewsey said.
The network is controlled by Westnet which is not connected to ARG but which does lease its infrastructure under a long term arrangement from the WA Government.
Mr Lewsey said the network was also facing a large number of potential closures over the next twelve months as Westnet considered the track’s long term viability.
He said the new deal did contain some positive news, with CBH and the AWB agreeing to work together with ARG to reduce running costs and increase efficiencies.
Mr Lewsey said WA’s major grain marketing and storage companies would do what they could to ensure the majority of grain harvested was cleared with a minimum of fuss during the contract’s early stages.
He said ARG would schedule more trains and increase rolling stock volume to help CBH and the AWB keep pace with the higher demand during the first six months of activity.
The move is designed to help growers cash in on high world grain prices.
“This was the deal that we had to have to get us through this harvest,” Mr Lewsey said.
“We have approximately $130 million invested in rail operations in WA and more than 200 staff.
“For us it is really just a breakeven situation.
“It will be a very busy six months and then we will start working towards next year and beyond with increased investments to make it a world class supply chain.
“What we have now is really just a carryover agreement that has been put in place to get us through this year.”