AusRAIL, Market Sectors

CBH in WA – a breath of fresh air for rail

<span class="" id="parent-fieldname-description"> The bid by Western Australian grain handler and marketer CBH Group to take over responsibility for the ownership and maintenance of the Tier 3 grain lines in WA is a bold one, and while it would hardly raise an eyebrow, say in North America, in Australia it is virtually without precedent, writes Mark Carter. </span> <p>The saga of WA’s Tier 3 grain lines has been dragging on for a few years now and through pressure from WAFarmers it continues to pop up in the headlines and in <em>Rail Express </em>from time to time.</p><p>Following a number of reviews into the future of grain transport in Western Australia a combined state and federal funding package was put together at the end of 2011 for investment in a substantial part of the grain rail network in WA.</p><p>There was also a road funding component to compensate for the 700km of so-called Tier 3 lines that it was said were uneconomic to maintain.</p><p>Neither CBH nor WAFarmers were ever really convinced by this and CBH says that with changes in market conditions and the experience it has gained from running its own trains, it now believes it can make a go of managing and maintaining the Tier 3 lines by itself.</p><p>In North America there is a tradition of customers being involved with more marginal short line operations when it serves their interest, but entrenched bureaucratic attitudes stemming from decades of government rail ownership in Australia have virtually precluded any such innovation here.</p><p>Canada’s Saskatchewan province even goes to the length of providing a fleet of grain hoppers for its constituents and ensures that the regulatory environment is appropriate for low speed operations on marginal branch lines. </p><p>The move by CBH in the last couple of years to take control of their destiny by purchasing their own locomotives and wagon fleets, while not without precedent in the Australian marketplace, was a very public and brave decision.</p><p>It was only natural that the next logical step would be to take control of track ownership given that the lines in question are 100% dedicated to grain transport.</p><p>With a modest $30m upfront investment from government, CBH says it would be happy to take over responsibility for ownership, but the CBH proposal will face a number of challenges if it is to get off the ground.</p><p>Brookfield Rail, the current track lessor and manager, who so far according to media reports have avoided comment on the CBH proposal, will no doubt be unimpressed. While not particularly proactive on the issue they have shown some sympathy in the past for the Tier 3 cause. However, a transfer of track ownership to CBH can only lead to greater scrutiny in the future of the current access regime and its application to the Tier 1 and Tier 2 grain lines.</p><p><span style="line-height: 1.5em">I also fear for the success of this gambit, given Australia’s obsession with gold plates standards in regards to operations and track maintenance. The words ‘fit for purpose’ do not seem to appear in the regulators vocabulary.&nbsp</span></p><p>In Saskatchewan the regulator’s view is that a train travelling at 30km/h is not going to travel very far if it drops off the rails and as such the risk is manageable.</p><p>As if to highlight the uphill bureaucratic battle CBH is likely to face, already one expert has been quoted in the media and saying that CBH has underestimated the enormity of the task in proposing to manage these lines – ‘gold plated’ standards to the fore again.</p><p>The proposal is likely to gain more legs over the next few weeks as the WA election campaign hots up. The opposition Labor Party says it will come up with the $30m over three years while the state’s transport minister has yet to respond publicly to the CBH proposal.</p><p>The irony of course is that both political parties have been quite prepared to come up with multi-billion dollar promises for unplanned urban rail projects to woo city voters, but an upfront $30m to save a few grain lines and keep several thousand grain trucks of city roads is beyond their comprehension.</p><p>It’s doubtful that the future of the next Government will hinge on a handful of marginal rail lines in the WA Wheatbelt, but it would be nice if it got the pollies to at least stop and think for a moment. </p>