CBH freight rates: Cooperative announces plans to increase freight rates by 24 per cent or $3.80 per tonne

Farmers delivering grain to CBH Group this harvest will be slugged their highest freight rate increase in history as the grain marketer and handler seeks to recoup rising inflation costs ahead of a second bumper harvest in a row. CBH announced on Friday it would increase the rate it charges farmers to deliver to its sprawling network of upcountry sites by an average of 24 per cent or $3.80 per tonne. It comes after last year’s increase — of an average 18 per cent or $2.41 per tonne — which worked out to be an average increase of $12,500 for a farmer delivering nearly 5000 tonnes of grain. CBH stores and markets the majority of WA’s harvest, and is gearing up to receive most of a near-record crop of more than 20 million tonnes in the next few months after deliveries started last week. It is still busy with the mammoth task of trying to truck and train WA’s record 2021-22 grain crop, which exceeded expectations at a record 24.3Mt. A total 21Mt of that was delivered to CBH. CBH chief operations officer Mick Daw said the cooperative continued to experience significant price increases for labour and transport costs “intensified by COVID-19 and elevated market pressures”. He attributed the “significant” increase to the 40 per cent increase in the cost of fuel, higher train and truck driver wages due to driver shortages and a 7.4 per cent increase in CPI. “Due to the 2021-22 record crop size and ongoing supply chain challenges, CBH has implemented new logistics strategies to increase shipping capacity requirements and meet market demand,” he said. “As a result, more tonnes have been moved through road haulage contracts. “Cost increases are reflected in higher freight rates. “Adjusting our freight rates to reflect the current market conditions enables us to improve the supply chain and ensure that it is sustainable so we can get tonnes to port and to customer, at the right time of year to maximise the value of the WA crop.” The rates are charged to farmers who deliver to CBH’s network of more than 100 upcountry grain receival sites across WA and are calculated on a non-for-profit, cost recovery basis. Factors determining the rate include distance to depot to port, whether transport to port was by road or rail, and the relevant market rates or access agreement for both road and rail. The move has sparked concern among many farmers, who are also absorbing skyrocketing prices for critical farm inputs including fertiliser, chemical and fuel - all while battling a chronic labour shortage. Mr Daw said the cooperative understood the “magnitude” of the increase and the potential impact it would have on farming businesses delivering to CBH. However, he said the rates were now “more consistent” across CBH’s network of 100 upcountry receival sites and “Similar to last year’s increase, the freight rate estimates at all sites have gone up due to these changing conditions and increase in costs – some more than others,” he said. “Looking at it from a net tonne per kilometre basis for roads, the freight rates are now more consistent across most of the network.” He said the biggest percentage increases had occurred at sites where grain was moved by road-only, including at some sites in the Esperance Port Zone and Kwinana South Zone. “In many cases this is because the freight rates in our contracts with our road contractors are coming off a lower base,” he said. “These contracts were negotiated in a different market environment and therefore have been adjusted to meet the current competitive conditions. “Some regions have also had significant shifts in contractual rates due to specific market pressures.” The flagged increase comes as CBH this week revealed it would hand down its 2021-22 results to the year September 30 in early December, and flagged a record surplus for its marketing and trading division and plans to reinvest most of that surplus back into the business. The rates released this week are just an estimate and are revised, calculated and charged to farmers once harvest has wrapped up in February.