CBH freight rates: Every bin ranked from most to least expensive

A deep dive into CBH Group’s flagged freight rate increases for 2021-22 has revealed the cost of delivering grain to some sites has increased 71 per cent, with the biggest dollar rise $6.49/t and the smallest just 46¢. Countryman has crunched the numbers to work out which bins are flagged to be the most expensive and the most economical to deliver grain to this harvest. Holleton is now the most expensive bin to deliver grain to in WA, at $37.62/t, while Shark Lake and the Esperance Port are the cheapest at $1.83/t. CBH last month announced it would increase rates for the 2021-22 harvest by an average 18 per cent — or $2.41/t — across the network to smooth operations. For a farmer delivering nearly 5000 tonnes of grain, it would be an average increase of $12,500. CBH acting chief operations officer Mick Daw said there were myriad factors contributing to the increase — mainly road and rail transport costs. “This includes increases in the cost of fuel — up 20 per cent during the past year — driver wages due to driver shortages, CPI increases of 4.19 per cent, and re-negotiation of road and rail contracts to deliver greater certainty, resilience and efficiency across our supply chain to meet market demand,” he said. “CBH manages freight on a not-for-profit, cost recovery basis and therefore cost increases are reflected in higher freight rates.” Mr Daw acknowledged that many road transport rates — particularly in the Albany and Geraldton zones — had a higher percentage increase but were “coming off a low base”. “These contracts were negotiated in a different market environment and needed to be adjusted to meet the current competitive conditions,” he said. “Despite this difference, when looking at freight rates on a net kilometre per tonne basis, the rates are now more consistent across all sites.” The biggest year-on-year dollar increase was at Jacup — in the Albany Port Zone — where the cost per tonne rose $6.49, from $16.02/t to $22.51/t. The smallest year-on-year dollar increase was at Esperance Port and its satellite site Shark Lake, where the cost rose just 46¢/t — from $1.37/t to $1.83/t. Three of the cheapest bins in WA had the biggest percentage increases, with Geraldton, Moonyoonooka and Narngulu rising 71.1 per cent to $2.31/t. The cost of delivering directly to the Albany Port and its satellite site Mirambeena also rose 42.42 per cent, to cost just $1.88/t. The smallest percentage increase was at Greenhills at 8.6 per cent, up $1.36/t to $17.11/t, and Bencubbin at 11.6 per cent. The increases came as CBH Group battled to make up lost ground after major shipping delays rumoured to have cost upwards of $20 million in demurrage. CBH revealed in April it had missed multiple shipping commitments because of WA’s skills shortage, which had affected its ability to get grain to port. Announcing the rates in April, CBH acting chief executive Ben Macnamara said they would help rectify supply chain issues. Countryman’s investigation has revealed bins in the Geraldton and Albany Port Zones have experienced the biggest percentage increases, but farmers in the Eastern Wheatbelt will fork out the most. Most expensive CBH sites Holleton, Mt Walker, and Bonnie Rock are the most expensive bins to deliver to in WA. Growers planning on delivering to Holleton would have forked out $37.62/t, up $4.91/t from 2020-21 — but the bin is closed this harvest after frosts in the Wheatbelt in September. Holleton farmers are now driving 40km south-west to CBH’s second-most expensive bin, Mt Walker, at $34.87/t. Mr Daw said “distance to port” was the main reason Holleton, Mt Walker and Bonnie Rock were the most expensive bins. The third-most expensive bin, Bonnie Rock, costs growers $34.73/t, followed by Bullfinch (also closed this year) at $34.43/t, South East Hyden at $33.77/t and Dulyalbin at $33.79/t. Of CBH’s 20 most expensive bins, 13 are in the Kwinana North Zone, four are in the Kwinana South Zone, and three are in the Albany Port Zone. A total 17 CBH bins cost more than $30/t, while 25 bins cost between $25/t and $29.99/t to deliver grain to. Pastoralists and Graziers Association of WA western grains committee chair Gary McGill said growers mainly accepted the rate increases. “CBH is a monopoly service provider,” he said. “It’s like fertiliser and chemical costs — the increase is confronting but we just have to deal with it, we don’t have any option. “CBH’s increases are in line with everything else going up. “We don’t have a competitive environment, so we have to hope that CBH continues to consider its members.” Biggest dollar increases The biggest dollar increases were in the Albany Port Zone, where the cost of delivering grain to Jacup, Nyabing, and Pingrup rose more than $6/t. Jacup — 210km north-east of Albany Port on South Coast Highway — had the biggest dollar increase of any CBH site after rising 40 per cent, or $6.49/t. It costs $22.51/t to deliver to Jacup, up from $16.02/t last year. West River farmer Peter Kuiper delivered to Jacup for the first time last year because it was $3.88/t cheaper than his local. But the gap between West River and Jacup has narrowed to just 22¢/t now, after West River rose to $22.29/t this year. “We took wheat and barley to Jacup because it was quite a cheap bin in comparison to some others,” Mr Kuiper said. Nyabing had the second-biggest dollar increase, up $6.30 from $15.63 to $21.93. The third-biggest dollar increase was at Pingrup, up $6.11/t from $15.44/t to $21.55/t. Mindarabin — 30km north-west of Ongerup — had the fourth-biggest dollar increase after rising $5.61 from $12.39/t to $18/t. Pingrup’s 39 per cent increase — from $15.44/t to $21.55/t — was the biggest Doug Smith had seen during his 40 years of farming. He said growers were “prepared to wear it” if the increased rates helped CBH overcome its supply chain issues. “If we get to this time next year and it hasn’t,there will be some pretty upset growers,” he said. “My freight rates are up nearly 40 per cent, fertiliser is up 100 per cent, fuel has risen 20 per cent, and glyphosate has doubled in price. “I think there will be a lot of growers questioning how they will make the numbers work next year.” Nyabing farmer Scott Crosby said he was happy to wear his bin’s 40 per cent increase if it “fixed the issues”. But he plans to deliver more grain to CBH’s sole storage and handling competitor, Bunge. “The rates have changed where we are delivering grain, and it won’t all be to (CBH’s site) Nyabing,” Mr Crosby said. “The freight rate is higher at Bunge’s Kukerin site (at $22.50/t compared to CBH’s $21.93/t at Nyabing) but Bunge pay about $5 more per tonne (for some grains). “We will deliver a bigger tonnage to Bunge this year, about 40 per cent compared to the 10-15 per cent we would normally.” Lowest freight rates The cheapest sites were at or close to CBH’s four port terminals at Geraldton, Kwinana, Esperance and Albany. Shark Lake and the Esperance Port were the cheapest in WA, both costing growers just $1.83/t. Shark Lake — a 150,000 tonne storage facility — was opened in 2003 as a satellite site for CBH’s Esperance Grain Terminal. Albany Port and its satellite site Mirambeena tied for the second-cheapest delivery points, costing growers $1.88/t, up just 65¢/t from $1.23 last harvest. Delivering straight to Geraldton or its nearby bins Moonyoonooka and Narngulu all tied as the third-cheapest delivery points, costing just $2.31/t. Of the 20 cheapest bins to deliver to, seven were in the Esperance Port Zone, six in the Geraldton Port Zone, five in the Albany Port Zone, and two in the Kwinana South Zone. None of the 20 cheapest bins were in the Kwinana North Zone, where 13 of the 20 most expensive bins are located. David Cox runs two farms: his 5000ha home property at Nerridup, and 7000ha at Mt Walker. He delivers grain from his Neridup farm to CBH’s cheapest sites, Esperance Port and Shark Lake, and its second-most expensive bin, Mt Walker. “Shark Lake and Chadwick are nearly at the port, that’s why they are so cheap,” Mr Cox said. “Mt Walker has increased, but that is reflective of the cost of transport. Fuel and wages are going up, and I think it is realistic. “We never like it, but CBH has to run a sustainable business.” WAFarmers grains section president Mic Fels, who farms at Wittenoom Hills, said costs were a major concern for farmers, but most had “accepted it”. “A lot of farmers pay freight to contractors, and we know that everything has gone up,” he said. “So CBH is no exception to the rule, this is the reality of the COVID world we live in and everything has got really expensive. “CBH has passed on increased costs, and I take their word.” Lowest dollar increases The lowest dollar increases were in the Esperance Port Zone, with the two cheapest sites in WA — Shark Lake and Esperance Port — increasing just 46¢/t. Six other sites increased by less than $1/t: the Metro Grains Centre (64¢/t), Albany Port (65¢/t), Mirambeena (65¢/t), Geraldton Port (96¢/t), Moonyoonooka (96¢/t), and Narngulu (96¢/t). Four bins in the Kwinana South Zone made the list of the 20 smallest increases, alongside three in the Albany Port Zone and five in Geraldton Port Zone. The smallest increase in the Kwinana South Zone was MGC, then Greenhills, Avon, and Dale. South East Hyden had the smallest increase in the Albany Port Zone (13 per cent), while Canna (16 per cent) had the smallest increase in the Geraldton Port Zone. Bins missing from the list A total 24 bins disappeared from the 2021-22 freight rate list, which Mr Daw said meant they were unlikely to open for receivals but could be used for storage. Three Springs disappeared from the Geraldton Port Zone. and Jerramungup, Darkan, Boyup Brook, and Hollands Rock from the Albany Port Zone. There were five bins missing in Kwinana South — Beverley, Narrogin, Jennacubbine, Yorkrakine, and Normans Lake. Fifteen bins from the Kwinana North Zone disappeared (Bindi Bindi, Korbelka, Buntine, Wongan Hills, Manmanning, South Yilgarn, Yerecoin, Wilgoyne, Ejanding, Kodj-Kodjin, Yerecoin, Yarding, Bokal, Gabbin, and Maya). No bins were removed from the Esperance Port Zone. CBH focuses investment on 100 sites that receive more than 95 per cent of the annual crop, after unveiling plans to slash the number of bins in half from 2016. Bins outside the “100 sites of the future” list were categorised as having three to 10 years of “useful life” left. At the time, CBH vowed to not spend any money on the other 102 sites while they were phased out but planned to use them as surplus sites during big harvests. The strategy aimed to increase the speed of receivals at peak harvest times while keeping storage and handling charges down. CBH has built 1.5 million tonnes of emergency storage this year and plans to add another 500,000t as the season progresses. The co-operative also added 270,000 tonnes of storage to its Brookton, Hyden and Dale sites this year, as well as completing 200 “sustaining capital” projects.