A dispute over access to Western Australia’s Grain Freight Rail Network has ended, but grain trucks will still be used while the freight line remains closed.
Arc Infrastructure, which manages the freight rail network on behalf of the state government, and grain handling co-operative CBH Group have been in arbitration since since 2016 after failing to agree over the cost of access to the state’s grain rail network.
The outcome, CBH Group announced on November 1, provides CBH and grain growers access to the rail network at least until the end of 2026.
“The arbitrated outcome has resulted in our growers being in a better position than if we hadn’t sought access under the Code, resulting in a sustainable, long-term access agreement with minimum performance standards for the grain rail freight network,” said CBH Chairman Wally Newman.
“Our objective had always been to achieve a fair price for the level of performance provided so that WA grain growers can remain internationally competitive.
CBH claimed Arc had demanded “unreasonable” price rises, while the Canadian-owned rail operator said the costs of maintaining and upgrading ageing lines were significant and needed to be passed on.
Due to the deterioration of the Tier 3 lines, however, said Newman, they would not be re-opened as part of the arbitrated outcome. The Tier 3 network was closed by the state government in 2014 due to concerns over its viability and maintenance costs.
“Unfortunately, after years under ‘care and maintenance’ the capital costs associated with re-opening Tier 3 lines, as part of the arbitrated outcome, were substantial and the investment required was simply uneconomical for CBH to accept on behalf of growers as it would have required freight rates to increase significantly,” said Newman.
“While the costs are confidential, due to arbitration obligations, accepting these costs would have significantly impacted the international competitiveness of growers and the entire Western Australian grain industry as a whole.”
“In order to avoid a repeat of our experience, CBH will continue to engage in the State Government’s review of the Railways Access Code and push for substantial and immediate changes, with the objective of gaining reasonable access prices, greater transparency and more appropriate timelines for decisions,” said CBH Chief Executive Officer Jimmy Wilson.
“CBH will also continue to drive for fundamental changes to the Western Australian transport landscape in an effort to maximise tonnes we move on rail and to ensure we have the least cost pathway to export markets, keeping our growers internationally competitive and in support of our regional communities.”