CBH and ARC agree to terms on rail deal

CBH and ARC agree to terms on rail deal

Grains
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A new deal has been struck, allowing CBH to run grain trains on the 15 freight lines it currently uses, including the Miling line that was recently plagued by derailments.

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A new deal has been struck, allowing CBH to run grain trains on the 15 freight lines it currently uses, including the Miling line that was recently plagued by derailments.

On Monday the CBH Group announced the new seven-year deal has been done, starting on January 1, 2020 and concluding at the end of 2026.

Under the Commercial Arbitration Act 2012 both CBH and rail lines operator Arc Infrastructure must both agree on release of any financial details.

Arc Infrastructure was Brookfield Rail when the process started and remains part of the Canadian-based rail, road and port logistics, energy and gas storage and transmission conglomerate Brookfield Infrastructure Partners.

CBH is planning community meetings with grain growers to advise them of the arbitrated outcome, but growers may still have to trawl through annual report figures and ask questions at annual general meetings to try to establish what the negotiated freight rail costs are on their lines and what the whole process under the Railways (Access) Code 2000 has cost them.

The past three and a half years of the process involved CBH and Arc sharing the cost of flying the arbitrator, Queen's Counsel, commercial law expert and retired Federal Court judge Kevin Lindgren, to and from Sydney to preside over negotiations.

On top of the shared cost, each company paid for its own legal representation.

On Monday CBH chief executive officer Jimmy Wilson acknowledged the legal costs were "expensive" for both CBH and Arc.

But he and CBH chairman Wally Newman were adamant WA grain growers "are in a better position today than if we had not sought access under the rail access code".

"The question is always was it worth it?" Mr Wilson said.

"The average freight rate across the entire network today is lower than what it was in 2011," he said in answer to his own question.

Mr Wilson pointed to CBH figures that showed the average freight rate - rail and truck - across its network set for the current financial year is $13.44 per tonne, an increase from just under $13/t for the past three financial years due to the arbitration outcome, smaller crop size expected, annual inflation and uncertainty around fuel price.

Without investment in its own trains and other above-rail efficiencies CBH had achieved, the projected freight rate would have been $16.32 this year, the figures showed.

  • Read the full story on the deal, along with industry response, in this Thursday's Farm Weekly.
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