Rail giant Aurizon takes full control of WA’s grain-on-rail network as CBH cuts ties with Watco after 10 years
Australia’s biggest rail operator has taken the reins of WA’s entire grain-on-rail network after finishing a three-month transition period with Watco Australia this week.
All of the trains carting grain from CBH’s upcountry sites to port are now being driven by Aurizon in a deal flagged to boost WA’s grain on rail capacity by 30 per cent.
This includes all 10 fleets of CBH-owned and branded trains, which includes 28 locomotives and 574 wagons it purchased in 2011.
CBH has two narrow gauge fleets in the Albany Zone, two narrow gauge fleets in the Geraldton Zone and six fleets in the Kwinana Zone made up of two standard gauge and four narrow gauge.
Aurizon plans to add three fleets — two narrow gauge and one standard gauge — to the Kwinana Port Zone portion of the network next year but exactly how many trains and locomotives this will include is still being determined.
US transport group Watco drove its last train for CBH on October 17, after nearly a decade of carting WA growers’ grain from CBH’s upcountry sites to the Geraldton, Kwinana and Albany ports.
An Aurizon spokesman said the transition with Watco had gone smoothly, with the takeover starting in CBH’s Geraldton and Albany Port Zones before Aurizon assumed rail services in the Kwinana Port Zone this week.
CBH acting chief operating officer Mick Daw said Aurizon’s first narrow gauge fleet would come online around March next year, and the other two around April.
“We are very pleased with how collaboratively CBH, Aurizon and Watco have worked together to ensure there is minimal disruption to the supply chain,” he said.
As part of the deal, Aurizon will maintain all of the grain trains with plans to reopen its Avon and Wagin depots for the first time in nearly a decade and upgrade other regional depots, including Narngulu, Merredin and Albany.
The Avon site — a large, dual gauge transfer centre near CBH’s Avon bins — will become Aurizon’s primary maintenance hub for trains involved in the CBH deal.
CBH announced in August that Aurizon had been awarded a minimum six-year contract to haul grain in WA using its own and the CBH-owned fleet. CBH broke a 10-year contract with Watco about six months early to swap to Aurizon, an ASX-listed company known for coal-carting in Queensland.
CBH has declined to reveal how much the Aurizon deal is worth or how much it cost its grower members to break the Watco contract.
In announcing the deal in August, CBH acting chief executive Ben Macnamara said it was one of “a number of different factors” contributing to CBH’s biggest ever freight rate increase lumped on CBH’s 3900 grower members last month for the 2021-22 season.
Mr Macnamara this week thanked Watco for its important role helping CBH establish its rail portfolio, revealing the company had carted 70.5 million tonnes of grain for CBH since 2011.
He said Watco had averaged about 3000 return trips each year, notching up some impressive milestones including a weekly delivery record of 226,000 tonnes.
We are very pleased with how collaboratively CBH, Aurizon and Watco have worked together to ensure there is minimal disruption to the supply chain.
Other CBH-Watco milestones included a monthly record of 1.66 million tonnes in May 2017 and a yearly record of 8.9 million tonnes in 2019, all while averaging 1.4 million train kilometres a year.
“Watco worked alongside us when we first invested in our rail fleet to take on the grain transport task back in 2012, and thanks to their support and involvement, made the rail operations an integral part of our business,” Mr Macnamara said.
“I would like to thank Watco for their service to WA growers for nearly a decade, and for working diligently and collaboratively with Aurizon to transition ahead of our peak rail period.”
CBH has done business with Aurizon previously — when the rail company was named ARG — but dumped the rail freight operator in favour of Watco in 2010. Aurizon’s official takeover coincided with the October 22 news the rail group would pay $2.35 billion to buy freight rail group One Rail Australia from Macquarie Asset Management.
The purchase will make Aurizon the key service provider for South Australia’s dominant bulk handler Viterra — the agricultural arm of Glencore — and will transport grain from bins at Bowmans, Crystal Brook, Gladstone, Keith, Port Pirie, Snowtown, Tailem Bend and Wolseley to its port terminals.
Aurizon’s acquisition of One Rail and its takeover of the handling of grain-on-rail in WA come as the company moves to diversify away from coal in coming years.
The company’s CEO Andrew Harding has previously said Aurizon is aiming to snare a 20 to 25 per cent marketshare of what could be a $1.25 billion profit pool for bulk haulage by 2030.
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