QR National in for the long haul

QR National plans to stay in the business of carting grain on rail into the future.

The company, previously known as ARG, was dumped as the sole provider of CBH's grain freight task in late 2010, when the co-operative awarded the contract to US company Watco.

QR National extended its contract to cart grain until this October to help CBH move its record harvest, but the future of its WA grain operations after that hinges on the outcome of Grain Express.

Last year CBH was unsuccessful in its bid to keep the Grain Express monopoly on up-country storage when the Australian Competition and Consumer Commission (ACCC) revoked the Exclusive Dealing Notification.

CBH has since appealed against the decision in the Federal Court, but if the appeal is lost growers and marketers will be able to choose how their grain is transported to port.

The time frame for the decision is uncertain, but QR National manager for new business Tim Collins said the outcome would determine whether WA would have competition on its grain rail network.

"On the basis of that decision, if the revocation that the ACCC put in place last year remains in place then we believe that QR National is well placed to continue to move grain for the industry," he said.

"The feedback we've had from the market is that the grain marketers are very keen for QR National to continue to be in the market."

QR National currently has three locomotives and more than 500 wagons, which it said were "captive" to the WA grain network.

But if CBH's appeal over Grain Express is upheld by the Federal Court - and it maintains its monopoly on grain freight from up-country storage to port - then QR National plans to abandon grain in WA.

"I expect when the Grain Express decision is made all that will do is make the future clear for us," Mr Collins said. "If the decision is that the revocation remains in place, we'll just keep doing what we're doing.

"If the decision is that the revocation is reversed, which will prevent us from operating in WA, then we will take immediate steps to shut down our grain business. At that point it will have no future."

But even if the grain freight is opened up to other parties, QR National is not planning to boost its number of locomotives and wagons.

Mr Collins said the company had enough assets to service WA's needs.

However, without Grain Express' monopoly the network is not only open to QR National but other rail providers as well.

Whether there will be two rail providers - Watco and QR National - or more remains to be seen.

"All we can do is look at NSW, Victoria and Queensland and in those states where there is a genuine open access to the track there seems to be reasonable competition," Mr Collins said.

"On some corridors there are two providers and other corridors there are more than two.

"There are challenges to anyone who wants to provide rail services exclusively to grain in WA.

"Any rail operator needs to have a diversity of task or some real flexibility in terms of their resources that allows them to park resources one year and bring them back to the table the next.

"It's a capital-hungry industry and that seems to suggest that too many operators would be problematic."

In response to the viability of the Tier 3 network, Mr Collins said QR National stood by its position that those lines were not economic.

"QR was part of the Strategic Grain Network Review (SGNR) that was conducted two years ago and that review demonstrated to QR that rail operations on the Tier 3 lines were not economic from the point of view of the capital cost of the lines and the economics of the line haul from the sites on those lines," he said.

"We've seen no evidence to suggest that anything has changed in that regard - we supported the SGNR when it was drafted and implemented and nothing has changed in the time since that would suggest we should change our view.

"We support the Government's decision to invest in Tier 1 and Tier 2 and invest in the road network to allow grain to pass from the areas previously serviced by Tier 3 into the Tier 2 so we can still maximise the volume on rail, but such that it's done in an efficient way."