CBH’s port challenges resolved but growers hit with steepest freight hikes in a decade

Australia’s biggest grain exporter has told farmers it has resolved supply chain issues that were causing major delays in shifting grain to port — just as it confirms plans for its steepest-ever rise in freight rates. CBH acting chief executive Ben Macnamara said its four ports — Kwinana, Geraldton, Albany and Esperance — were now operating as expected, with average turnaround back to about four days. That followed months of disruption as train and truck driver shortages meant grain could not be shifted soon enough to meet shipping commitments, resulting in tens of millions of dollars in demurrage and damage to Australia’s reputation as a reliable supplier. Mr Macnamara expects smoother operations ahead but said freight rates for the 2021/22 harvest would increase on average by 18 per cent — or a $2.41 per tonne — across the network to ensure that happened. Based on average WA farmer grain production of almost 5000t this harvest, that would amount to an average increase of about $12,050. Some zones and sites will see higher increase than others, with Geraldton and Albany prices to rise by up to 40 per cent. CBH said the increases reflected underlying cost increases, including fuel prices, high driver wages amid a skills shortage and CPI increases. The co-op has negotiated new contracts, including road transporters and new above-rail contracts with Aurizon, which provides additional rail capacity and certainty. The first train under the new Aurizon contract rolled out of Geraldton late last month. Mr Macnamara said CBH’s freight fund aimed to break even rather than make a profit, and increases represented cost recovery. “CBH started taking accountability of the freight task about a decade ago and acquired its above rail assets in 2012,” he said. “In that time we have seen a general decline in grower freight rates, or at the very least a stable freight rate, well lower than CPI increases. This year’s increase is certainly the largest we’ve had since CBH has controlled the freight task.” He said in the past year CBH had suffered from insufficient road and rail resources. Mr Macnamara said he could not rule out further supply chain challenges. “Given the market we are operating in with a global pandemic, I don’t think anything is certain in life. Additionally with closed borders it makes it difficult to attract additional driving resources,” he said. “What we’re doing here is setting ourselves up for the greatest chance of success in being able to meet the shipping stem and to deliver on our reputation by delivering grain to port on time.”