CBH freight rates: Cost recovery key to increase in bin rates

CBH heavyweight Mick Daw has opened up about the “myriad” reasons the co-operative increased freight rates so much this year, saying some of the increases have made rates “more consistent” across different sites. CBH last month announced it would increase rates for the 2021-22 harvest by an average 18 per cent — or $2.41/tonne — across the network to smooth operations. At the time, the co-operative revealed it had solved supply chain issues causing major delays in shifting grain to port after months of disruption, but said the increased rates were needed to keep it that way. Mr Daw — CBH’s acting chief operating officer — told Countryman the freight rates had increased to cover rises in underlying 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. Mr Daw said individual sites had a different calculation of rates. He said factors included distance to depot or port, whether transport to port was by road, rail, or both, and the relevant market rates or access agreements for both road and rail. “CBH manages freight on a not-for-profit, cost recovery basis and therefore cost increases are reflected in higher freight rates,” Mr Daw said. Mr Daw, pictured, 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.” 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. WAFarmers grains section president Mic Fels said some farmers would be inclined to deliver to different bins this harvest, but many just “wanted to get the crop off”. “Whether farmers deliver to different bins will be governed by how the crops are going,” he said.