Extra trains to clear Geraldton zone harvest

Extra trains to clear Geraldton zone harvest

Grains
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Negotiations are underway for extra 'train paths'

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CBH Group is negotiating with Arc Infrastructure and a second train operator to run extra grain trains to clear the better than expected harvest in the Geraldton port zone.

It is understood CBH hopes this week to conclude negotiations with WA freight rail network operator Arc for extra 'train paths' and to sign a new contract with its former grain train contractor and Australia's largest freight rail operator Aurizon Holdings Pty Ltd.

Aurizon is expected to supply 30-year-old P Class locomotives, XT class aluminium hopper wagons with a payload of 59 tonnes of grain - slightly more than CBH's own grain wagons - and train crews for the extra grain trains.

The locos and wagons Aurizon is expected to use exclusively on the two narrow-gauge lines in the Geraldton zone to clear CBH grain, are likely to be the same ones it used when it was CBH's rail freight contractor before 2012 - when CBH purchased its own locos and grain wagons.

It is not yet clear whether CBH's proposed arrangement with Aurizon, as a second rail freight contractor for the Geraldton zone, is intended as a temporary measure because of the volume of grain to be transported to Geraldton port this year, or whether it is to be a permanent arrangement under CBH's long-term ambition to move more grain on rail.

Existing CBH rail freight contractor Watco WA Rail Pty Ltd still has a little over two years to run on its 10-year contract with CBH.

Under that contract Watco provides train crews - usually a driver - for CBH grain trains and manages the logistics of grain train planning, scheduling, tracking and also maintenance of CBH's 28 locos and 574 grain wagons.

It is understood CBH first approached Watco to run extra grain trains in the Geraldton zone, but Watco was unable to meet that request.

Watco WA is owned by Watco Australia, a subsidiary of United States short haul freight rail specialist Watco Companies.

It was formed in 2010 specifically to operate CBH grain trains in WA, but has since also developed its own freight rail business, including a busy intermodal shuttle service between the Forrestfield freight centre - which incorporates CBH's Metro Grain Centre and its containerised grain operation - and Kwinana port.

In 2019 Watco signed a seven-year contract to cart grain in Queensland for GrainCorp Ltd.

It is understood Watco also aims to compete for other freight rail contracts in WA and has recently advertised for technicians.

It is also believed to be seeking additional train drivers.

With CBH Watco has achieved some WA milestones, including longest grain train and most grain shifted on rail for a harvest.

CBH's latest figures show it received 2.84 million tonnes of grain in the Geraldton zone during the just-completed harvest.

So far, the 2020-21 harvest has produced a total of 15.02mt for CBH, with 3.68mt and 2.75mt received in the Kwinana north and south zones, 3.07mt in the Albany zone and 2.68mt in the Esperance zone.

In its final harvest report for the season last month, CBH said the "initial receivals estimate for the (Geraldton) zone has been surpassed".

It said wheat comprised more than 70 per cent of receivals, with lupins, canola and barley making up the remaining tonnes and quality was "very good overall" in the zone.

Current harvest receivals in the Geraldton zone compare to just 1.3mt out of a total of 9.7mt for the 2019-20 harvest and 3.3mt out of a total of 16.4mt received in 2018-19.

The 2018-19 harvest was the second largest CBH has received and, according to its 2019 annual report, it moved its largest amount of grain on record - 8.9mt - by rail to port terminals and the Metro Grain Centre over the year.

It also had to lease two extra locomotives and 131 standard and narrow-gauge wagons to do it.

In 2019-20 it moved more than 6.1mt on rail.

Also in 2018 CBH seized an opportunity to add to its grain train fleet with the voluntary winding up of Aurizon's WA intermodal business.

It purchased 10 second-hand 37 and 36-year-old DBZ diesel-electric locomotives, which varied in condition, for an undisclosed price from Aurizon to add to its fleet.

Three of those locomotives have re-entered service hauling grain trains and the remaining seven are stored at CBH's Avon yards near Northam and at Beverley.

The proposed extra grain trains in the Geraldton port zone will service the Marchargee, Coorow, Carnamah, Arrino, Mingenew and Narngulu bins on one line and Latham, Perenjori, Morawa, Canna, Mullewa and Moonyoonooka bins on the second line, with both lines feeding into the Geraldton port terminal.

It is understood Aurizon will base its CBH-contracted grain rail business in Geraldton.

Some of Aurizon's P Class locomotives in WA are named after local shires in the Geraldton zone, including City of Geraldton, Shire of Mullewa, Shire of Morawa, Shire of Perenjori, Shire of Carnamah, Shire of Coorow and Shire of Three Springs.

They generally retain the distinctive yellow and red livery they had when they last hauled grain wagons for CBH.

The yellow and red was Australian Railroad Group (ARG) colours.

ARG was part of QR National, the former Queensland government railways which was floated as a public company in 2010 and rebranded as Aurizon in 2012.

In 2010 CBH was concerned about continuing steep increases in the costs of railing grain to port, but was unable to determine whether the cost increases where due to rail access under Brookfield Rail (later rebranded as Arc) or operational costs under ARG/Aurizon.

To counter rising costs, CBH's board determined to buy its own rail fleet for $175m.

The new fleet entered service in March, 2012, with ARG/Aurizon replaced by Watco as contractor.

The following year CBH began negotiations with Brookfield in an attempt to cap long-term grain train access costs for the standard and narrow-gauge freight rail network.

After protracted and sometimes fraught negotiations, CBH and Brookfield's successor Arc, reached an arbitrated agreement in October 2019 on grain train access to the network through to 2026.

CBH was contacted for comment on its proposal to run extra grain trains in the Geraldton zone.

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