AusRAIL, Market Sectors

Keeping grain on track

<span class="" id="parent-fieldname-description"> With serious concerns over the long term viability of the secondary rail networks serving the grain industry, farmers could end up paying higher freight costs for the movement of their product unless they become more involved in the grain supply chain, according to a senior rail industry figure. </span> <p>By Mark Carter</p><p>The privatisation and corporatisation of the rail freight industry during the late 1990s removed much of the government funded safety net that had allowed the grain rail network to function relatively untouched for so long.<br />In recent years, the deteriorating state of the rail infrastructure and line closures on these networks has become a serious concern, while in some cases private rail operators have sought to direct assets to more lucrative bulk haulage contracts over grain transport, impacting upon the capacity of the rail fleet to handle the harvest.<br />The situation has been graphically highlighted by the recent grain rail freight inquires in New South Wales and Western Australia. Governments have given sympathetic hearings to the findings, but there have been few promises of any significant investment to prolong the life of the grain networks beyond the short term. <br />Australasian Railway Association chief executive Bryan Nye says the relatively small size of the grain freight task, between 5 and 6bn nett/tonne kilometres annually, or about 10% of the overall rail freight task, indicates that it needs to become better integrated into the broader national freight network.<br />“It can no longer operate as isolated businesses and lack of integration with other rail operations makes grain transport extremely capital intensive, unduly expensive and of marginal significance from a policy perspective and for freight rail operators,” Nye said.<br />“The uncertain nature of grain task has meant that rail operators and track owners have become increasingly wary and little has been invested in above or below rail infrastructure in recent years, leading to poor track quality and an ageing locomotive fleet.”<br />Nye said farmers need to become more proactive and involved in the supply chain as they can expect little help from Government when it comes to fixing up the rail network.<br />“Grain is already marginal business for both road and rail. With Governments focussed on improving supply chain efficiencies to accommodate the massive growth in coal exports running at around fifteen times the volume of our grain exports, expanding and investing in the grain supply chain is not high on their agenda,” he said.<br />“If farmers lose their rail services then costs will increase. Increased fuel costs have a greater impact on overall road transport cost than they do for rail while a more transparent method of road access pricing for heavy road vehicles is inevitable to better reflect road damage and externalities.”<br />Integrating grain transport into the overall intermodal supply chain through the greater use of containerisation is one way Nye said farmers could become more closely involved in the supply chain.<br />“Containerisation could bring about a number of benefits facilitating decisions on the future of grain lines to be made in line with the broader imperatives for the national rail and inter-modal freight networks,” he said.<br />“It would allow farmers to deal more effectively in supplying niche markets, especially in the emerging Asian markets, and in some cases eliminate the need for downstream storage and handling.<br />“There is also a case for vertically integrating some rail freight operations, where appropriate, such as farming groups taking over control of grain lines or owning the fleet assets required for the task as been the case in Canada.” <br />Nyealso acknowledged that the rail industry needs to do more as well to bring efficiencies to the supply chain. <br />“The age of the locomotive fleet is major concern and it would be good to see some more investment in this area, while rail operators need to be more responsive to customer needs when it comes to introducing improved technologies to better handle the task at hand.”</p><p>Source: Lloyd’s List Daily Commercial News – <a target="_blank" href=""></a><br />&nbsp</p>