CBH confident it’s on right track

The first load of grain as part of CBH's $175 million dollar investment into rail transport in WA rolled out of Merredin station last week a month ahead of schedule.

The train, loaded with 3500 tonnes of wheat, ran from Merredin into Kwinana on Friday, with 50 of CBH's new wagons pulled by a leased locomotive.

CBH rail contract manager Andrew Mencshelyi said it had been necessary to bring forward the start date of Watco's operations because of an underwhelming performance by QR National.

"Watco were contracted to start on May 1, but we were desperate for them to start as soon as they could because we saw a decline in the performance of QR," he said.

"To be able to get another trainload of grain a week means that's 3500 to 4000 tonnes fewer on road we have to move to Kwinana."

Mr Mencshelyi said QR National was carting 150,000 tonnes of grain a month less than expected as it moved toward the end of its contract.

QR National would continue to shift grain for CBH until its contract expires at the end of this month.

The rail operator cited a lack of drivers and insufficient trains as the main reasons for its underperformance.

Mr Mencshelyi said CBH was in discussions with QR about is contractual obligations, but he didn't expect a positive outcome for CBH's grower shareholders.

"The contract is 10 years old and doesn't have a lot of protections for growers and CBH," he said.

"QR is paid to a certain level of performance and then they are in breach - they are getting close to that level (of breach) now, but there is only a month to go so there is not a lot of value in it."

A QR National spokesman said the rail operator was committed to the grain industry in WA and would continue to work with customers to offer the best available service.

"We do not comment on our contractual arrangements with customers," the spokesman said.

The spokesman said QR intended to continue carting grain in WA in 2013 on the basis that the ACCC revocation of Grain Express remained in place subsequent to CBH's Appeal to the Australian Competition Tribunal.

Mr Mencshelyi said about 60 per cent of QR National's drivers who carted for CBH were expected to move to Watco.

CBH leased three locomotives to pull its wagons while it transitions to its own full fleet for the upcoming harvest.

CFCL Australia, a subsidiary of Chicago Freight Car Leasing Company, leased two of these locomotives to CBH.

Seventeen narrow-gauge locomotives, five standard-gauge locomotives, 446 narrow-gauge wagons and 128 standard-gauge wagons would be delivered as part of CBH's new rolling stock.

CBH general manager Operations Colin Tutt said delivery schedules for the new rolling stock were on track with its initial plans.

"We will have the leased locomotives running for us over the next six months to help out with the transition," he said.

CBH awarded its 10-year above-rail contract to Watco WA Rail in late 2010. The contract is officially to start on May 1.

The co-operative invested $175 million in buying its own fleet of locomotives and wagons.

The first of the 22 locomotives is on its way to WA from the US with the remaining 21 not far behind, and of the 574 wagons, 128 standard-gauge wagons are already in WA.