Grain handler Viterra will discontinue the use of G&W trains in the Mallee region of South Australia later this year, citing the lower cost of alternative road transport.
Viterra group commercial manager Andrew Hannon told ABC Rural the move wouldn’t increase costs at the farm gate for producers, as it was made to keep costs down.
“Our decision to utilise road transport in the area … is about providing the most cost-effective access to freight in that Mallee region,” Hannon said.
Viterra extended its agreement with operator Genesee & Wyoming Australia 12 months ago, but decided against renewing this time around.
“We’ve been working with the rail provider over the last 24 months,” Hannon explained, “as the only customer of the Mallee rail lines.”
Based on Viterra’s estimates, the move will put 3000 more B-double journeys on the region’s roads each year. The transition will take place on August 1.
Hannon ensured growers that the method would be just as efficient, for them, as the existing rail method.
“This will have no impact on our services at harvest,” he said. “Those sites in the Mallee region will continue to operate the same as they have previously, and road transport during that harvest period is completely unaffected.”
Viterra choosing road over rail in this instance is likely due to the low usage of the rail lines in the Mallee region. As Viterra is (according to Hannon) G&W’s only customer on the lines, it is fair to assume that the fixed costs relating to that line would all have to be considered in a contract with Viterra.
Interestingly, the main roads that will be used by the 3000 new truck journeys were recently described by the South Australian Opposition as being in a state of disrepair.
But Hannon was confident the grain handler could keep its producers happy.
“We’ll be able to provide strong links by road through to port infrastructure, from the Mallee region,” he said.
Viterra will still use rail in the supply chain of the grain, just closer to export sites.
“Much of the Mallee road will truncate at Tailem Bend and the task from Tailem Bend will continue to be completed by the important rail service that operates down the main line,” Hannon concluded.
This is a very short sighted decision that takes no account of the real impact of extra road traffic, a change to a monopolistic mode, and the long term aspirations of transporting goods to and from the Mallee. There is a lot of bravado in Hannon’s comments and an expectation that grain growers will accept their lot and shut up. There is also some contradiction, such as road puts you closer to port infrastructure (as it is more direct) but grain will still go (the long way) via Tailem Bend and a mode transfer. Perhaps the state government should look at a few issues in detail – why have the lines suddenly become “uneconomic” ? Pricing of grain hasn’t changed, road freight rates haven’t dropped… Can some comparisons be made between creating a new road mode monopoly in the Mallee and the outcomes of having created a road mode monopoly around the Mount Gambier area, and are there lessons to be learnt?