Aurizon puts CBH rail on a new track

Aurizon puts CBH rail on a new track

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CBH Group's agreement with Aurizon is for six years with two two-year options to extend, with the new provider responsible for rail logistics planning services including train planning and scheduling, tracking, maintenance, inventory control and crew management.

CBH Group's agreement with Aurizon is for six years with two two-year options to extend, with the new provider responsible for rail logistics planning services including train planning and scheduling, tracking, maintenance, inventory control and crew management.

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CBH announced last week that Aurizon had been selected to take over the operation of rail services, securing the contract over Watco which was coming to the end of its 10-year agreement with CBH.

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GROWERS in Western Australia are set to face increased freight fees as a result of CBH Group's new rail service provider contract.

The co-operative announced last week that Aurizon had been selected to take over the operation of rail services, securing the contract over Watco which was coming to the end of its 10-year agreement with CBH.

Under the new agreement Aurizon will be responsible for rail logistics planning services, including train planning and scheduling, tracking, maintenance, inventory control and crew management.

The agreement is for six years with two, two-year options to extend, which are contingent on Aurizon meeting its relevant contract key performance indicators (KPIs).

The operating model proposed by Aurizon includes the provision of three fleets in addition to CBH's 10 existing fleets, access to maintenance and operational facilities around the State and an investment in Avon to put the maintenance facility and yards back into operation.

CBH acting chief executive officer Ben Macnamara said the co-operative started a request for proposal process in April which had identified objectives that needed to be met, with Aurizon's submission best aligning with those objectives.

"It came down to a need to increase tonnes moved on rail, optimise rail services, meet the needs of the CBH network and, most critically, meet the increasing task that we've been faced with from growers increasing their yield and tonnages," Mr Macnamara said.

"Ultimately Aurizon provided a few key benefits mainly around efficiency, reliability and the overall ability to get tonnes to port and this year's supply chain performance has really brought that to the forefront of everyone's minds.

"This deal also brings to the table three additional rail fleets, which compliments the fleets we already own, so there is almost a 30 per cent uplift in the fleet."

CBH wholly owns a rail fleet consisting of 28 locomotives and 574 wagons that generally transport grain from upcountry sites to three of four port terminals - Geraldton, Kwinana and Albany.

Rail transport plays a vital part in CBH's ability to get tonnes to port efficiently with about 60pc of tonnes transported by rail to port, providing growers a low-cost pathway to port.

Between 2016 and 2020, an average 2884 trains have travelled to all CBH ports and terminals annually, delivering on average 7.6 million tonnes of grain per year.

While the new contract will see tonnes moved to port efficiently and at the right time, it will also mean an increase in fees for farmers.

"Growers will notice an increase in cost which will translate to an increase in freight rates as we move forward," Mr Macnamara said.

"It's a commercial in confidence contract, so the specifics won't be released, but growers will get a really good understanding and insight into that when they see the freight rates come out in the ordinary course about early October."

One of the critical points of the Aurizon contract is maintenance facilities which goes to the reliability of CBH's rolling stock

The Aurizon footprint is highly complementary as the company owns maintenance facilities at Forrestfield, Narngulu, Merredin, Albany and Wagin, meaning CBH gets access to those facilities and their people to improve the overall reliability of the network.

Furthermore Aurizon has committed to an investment to have the Avon maintenance facility back online - that is an important part of the grain network and unlocks a lot of potential to get more tonnes to port and to improve reliability and the overall efficiency of the network.

"As part of this contract, we also will receive enhanced access to information to improve the way we schedule and leverage the rolling stock that we've got which also supports the overall efficiency point," Mr Macnamara said.

"Aurizon also has longer-term labour plans which include training programs and dedicated training facilities, plus they also have access to a national pool of drivers which we expect will help to alleviate some of the labour shortages we have been experiencing."

CBH's 10-year agreement with Watco was due to expire on April 30 next year, however the parties involved have agreed to transition the contract to Aurizon before the coming harvest and will begin a three-month transition later this month.

"In discussion with Aurizon and Watco, we felt it would minimise disruption to the supply chain by bringing it before harvest, rather than the transition occurring in the peak shipping months," Mr Macnamara said.

"Those plans have already been put in place and we'll transition in an orderly fashion starting with Geraldton in September."

CBH had already been working with Aurizon since January when a short-term arrangement between the two companies was agreed to in order to support CBH's export program, which has already started falling behind schedule.

Under that agreement, CBH supplemented its own rail fleets with an additional fleet of two locomotives, 48 wagons and train drivers from Aurizon.

That enabled CBH's rail fleets normally repositioned into the Geraldton zone during the post-harvest period to move back into the Kwinana North and South zones to assist with the export program whilst maintaining two rail fleets in the Geraldton zone.

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