Watco wins GrainCorp's Queensland contract

 
  Sulla1 Chief Commissioner

I wonder if Watco is talking to Tasrail about the 2050s as well.
After all, they bought the two D's from them.
lkernan

The 2050s (former QR 2150s) in their current unmodified form are too heavy for all of the Western and South Western grain lines, although they could be used on the Central Queensland lines apart from the Clermont (Capella) Branch. Reducing fuel tank capacity to that of the 2170Fs would be necessary to make weight - a little bit of work, but nothing that hasn't been done before.

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  Bulbous Assistant Commissioner

.... Of course, the MPI units were so late that Watco got three more units in compensation.
M636C


Just to correct the thread, the MPI units in WA were purchased and are owned by CBH Group, not Watco. The extra units also went to CBH Group, not Watco.

Watco had been leasing spare units for the infrastructure trains in WA from CBH, and now have three SG units and two NG units of their own to use for those trains (and the port shuttles).

Cheers,

Matt
  Sulla1 Chief Commissioner

Watco has released further information - they will be obtaining 128 wagons, which probably suggests three sets in operation.
  james.au Chief Commissioner

Location: Sydney, NSW
Which is consistent with what Aurizon provided to GrainCorp.
  james.au Chief Commissioner

Location: Sydney, NSW
What is the likelihood of Aurizon chasing new grain business with their now available fleet?  Is there business to chase, ie rail connected non GrainCorp sites?
  Graham4405 Minister for Railways

Location: Dalby Qld
What is the likelihood of Aurizon chasing new grain business with their now available fleet?  Is there business to chase, ie rail connected non GrainCorp sites?
james.au
None that I'm aware of.
  M636C Minister for Railways

.... Of course, the MPI units were so late that Watco got three more units in compensation.


Just to correct the thread, the MPI units in WA were purchased and are owned by CBH Group, not Watco. The extra units also went to CBH Group, not Watco.

Watco had been leasing spare units for the infrastructure trains in WA from CBH, and now have three SG units and two NG units of their own to use for those trains (and the port shuttles).

Cheers,

Matt
Bulbous
CBH must have been leasing Watco locomotives as well....  I have photos of FL220 leading a CBH grain train loading at Merriden.

Peter
  Sulla1 Chief Commissioner

What is the likelihood of Aurizon chasing new grain business with their now available fleet?  Is there business to chase, ie rail connected non GrainCorp sites?
james.au

It's not impossible. GrainX has been trying to set up bulk grain deliveries by rail to Allora, and then containerising that grain for rail delivery to Fishermans Island since at least 2014. Increasing flows of rice and chick peas is occuring to Sun Rice's new rice mill at Brandon too - so far all by road - with packaged product also leaving by road. This mill is located beside a 3ft6 gauge branch on Wilmar's Pioneer Mill network. Bulk rice exports out of the Burdekin is also on the horizon, in the 1980s bulk rice was moved from the now cloced Home Hill Rice Mill to Brisbane for export, although new flows would go to Townsville or Mackay I imagine. There would be other non-GrainCorp grain flows in Queensland as well, particularly feedlot grain, the question is whether Aurizon could interest itself in that traffic.
  Graham4405 Minister for Railways

Location: Dalby Qld
the question is whether Aurizon could interest itself in that traffic.
Sulla1
And that is a very big question!!
  M636C Minister for Railways

Just to correct the thread, the MPI units in WA were purchased and are owned by CBH Group, not Watco. The extra units also went to CBH Group, not Watco.

However, they are operated by Watco, just as the Glencore coal trains were operated by Freightliner before G&W bought both Freightliner and the Glencore fleet.

So Watco have experience of operating the largest MPI fleet of locomotives in Australia.

Peter
  james.au Chief Commissioner

Location: Sydney, NSW
I wonder if, if time was rewound, Watco would have purchased the rollingstock in WA and run other services with it too?
  jmt Deputy Commissioner

I wonder if, if time was rewound, Watco would have purchased the rollingstock in WA and run other services with it too?
james.au
Watco won the tender to manage the CBH fleet, awarded in December 2010, for a period of 10 years. CBH's business plan is to own the above rail assets associated with the shipment of grain, and contract out day-to-day operations.

Once established in WA, Watco started looking for additional work to supplement it's CBH management fees.

In 2016 Watco Australia was awarded an infrastructure train contract by Brookfield Rail. This was the trigger for Watco obtaining its own locomotives

Watco purchased a controlling interest in Intermodal Group, July 2017, and commenced running the Forrestfield to Fremantle Harbour intermodal container service, previously operated by SCT Logistics.

I guess that Watco acquired the Qld contract as a hedge against loss of the CBH contract which will be due for renewal post 2020.
  james.au Chief Commissioner

Location: Sydney, NSW
I wonder if, if time was rewound, Watco would have purchased the rollingstock in WA and run other services with it too?
Watco won the tender to manage the CBH fleet, awarded in December 2010, for a period of 10 years. CBH's business plan is to own the above rail assets associated with the shipment of grain, and contract out day-to-day operations.

Once established in WA, Watco started looking for additional work to supplement it's CBH management fees.

In 2016 Watco Australia was awarded an infrastructure train contract by Brookfield Rail. This was the trigger for Watco obtaining its own locomotives

Watco purchased a controlling interest in Intermodal Group, July 2017, and commenced running the Forrestfield to Fremantle Harbour intermodal container service, previously operated by SCT Logistics.

I guess that Watco acquired the Qld contract as a hedge against loss of the CBH contract which will be due for renewal post 2020.
jmt
Given Watco's presence elsewhere in the world (Watco is a short line operator, similar to G&W), Im thinking that they are possibly looking at growing into the Australian market.  The CBH contract was a low risk way for them to do so.  Now they're going to buy their own rolling stock in Qld, they've clearly changed their strategy.  I also wonder if they might be looking at entry into the SG more strongly...
  jmt Deputy Commissioner

I wonder if, if time was rewound, Watco would have purchased the rollingstock in WA and run other services with it too?
Watco won the tender to manage the CBH fleet, awarded in December 2010, for a period of 10 years. CBH's business plan is to own the above rail assets associated with the shipment of grain, and contract out day-to-day operations.

Once established in WA, Watco started looking for additional work to supplement it's CBH management fees.

In 2016 Watco Australia was awarded an infrastructure train contract by Brookfield Rail. This was the trigger for Watco obtaining its own locomotives

Watco purchased a controlling interest in Intermodal Group, July 2017, and commenced running the Forrestfield to Fremantle Harbour intermodal container service, previously operated by SCT Logistics.

I guess that Watco acquired the Qld contract as a hedge against loss of the CBH contract which will be due for renewal post 2020.
Given Watco's presence elsewhere in the world (Watco is a short line operator, similar to G&W), Im thinking that they are possibly looking at growing into the Australian market.  The CBH contract was a low risk way for them to do so.  Now they're going to buy their own rolling stock in Qld, they've clearly changed their strategy.  I also wonder if they might be looking at entry into the SG more strongly...
james.au
Agreed, however Watco's only operation outside of the USA is Australia

Watco Companies LLC is the group holding company

Wikipedia's explanation for LLC
A limited liability company. "A company—statutorily authorized in certain states—that is characterized by limited liability, management by members or managers, and limitations on ownership transfer", i.e., L.L.C.[12] LLC structure has been called "hybrid" in that it "combines the characteristics of a corporation and of a partnership or sole proprietorship". Like a corporation, it has limited liability for members of the company, and like a partnership it has "flow-through taxation to the members" and must be "dissolved upon the death or bankruptcy of a member"

You cannot compare Watco with Genesee & Wyoming Inc., its apples and oranges. Genesee & Wyoming is a public Company (NYSE GWR) and forms a component of the S&P 400. So MidCap with a market capitalisation of between $US1.4 and 5.9 billion.

G&W maintains or increases its working capital by calling on its shareholders, it is not solely reliant on borrowings. Watco has a glorified momma and poppa structure (not dissimilar to NRE), reliant on borrowing from banks and financiers for its operating capital.
  james.au Chief Commissioner

Location: Sydney, NSW
I was commenting on their business operations, not their capital structures.  You are correct but im not sure that is overly relevant, the relevant part is that both of them are extensive short line operators who have moved to begin operations in Australia.
  jmt Deputy Commissioner

I was commenting on their business operations, not their capital structures.  You are correct but im not sure that is overly relevant, the relevant part is that both of them are extensive short line operators who have moved to begin operations in Australia.
james.au
Agreed, but you are placing the US equivalent of El Zoro, with a similar reputation over there, on a level footing with an operator who is larger than either PN or Aurizon. G&W was not stressed finding the $334 million to purchase the assets of FreightLink. Watco will possibly have had to do the rounds of US banks/financiers to enable it to acquire the 8 locos and wagons for the Qld contract.
  The_trolley Deputy Commissioner

Location: Writing Rail Express articles in praise of my railway employer.
Who has Watco placed the QLD wagon order with? If they've followed the lead of recent CBH and QLD purchases and gone with Bradken China I'm guessing the wagons will follow the "KGBY" design albeit smaller? It'll be interesting to see if the locomotives and rollingstock come fitted with ECP /Overlay as they proposed for some NSW based contracts. Overlay would leave the door open to haul the rollingstock with both new and older equipped motive power.
  M636C Minister for Railways

Who has Watco placed the QLD wagon order with? If they've followed the lead of recent CBH and QLD purchases and gone with Bradken China I'm guessing the wagons will follow the "KGBY" design albeit smaller? It'll be interesting to see if the locomotives and rollingstock come fitted with ECP /Overlay as they proposed for some NSW based contracts. Overlay would leave the door open to haul the rollingstock with both new and older equipped motive power.
The_trolley
The KGBY shares some features with the CBHN.
I'd expect a smaller CBHN myself.
I've just been told that Bradken have discontinued manufacturing (whatever that might mean).
It was interesting that the CBH trains didn't have ECP, since they run dedicated services.

Peter
  The_trolley Deputy Commissioner

Location: Writing Rail Express articles in praise of my railway employer.
If Bradken has indeed stopped manufacturing rollingstock I guess CNR and the like are would fill the void. Afterall we’re pretty familiar with most of the China based manufacturers here in Australia and could guess what form a wagon would take based on their previous offerings.

At the end of the day brake fitout comes down to what the customer specifies and I can only guess CBH decided not to outfit their equipment. I know Watco proposed ECP Overlay new builds for some NSW work so it’ll be interesting to see if they follow their own lead and employ it in QLD as well.
  Sulla1 Chief Commissioner

Considering the only narrow gauge covered hoppers built new for Queensland since 1984 are PN's new RGWY sugar hoppers (built by CRRC Yangtze with ECP), I suspect the Watco hoppers will follow a similar design. The RGWY's are certified by QR for 80-tonne gross and 100km/h running, although most grain lines Watco will run on will be restricted to 63-tonnes and 80km/h and won't need the clamshell doors. Aurizon uses quick-drop hopper doors on it's ex-coal wagon grain fleet, with associated unloading equipment at Fishermans Island, Gladstone and Mackay. Presumably the RGWY design will fit through the Toowoomba Range tunnels after the tunnels are modified.




https://youtu.be/CutOacqUe2g
  jmt Deputy Commissioner

Looking at STB filings it would appear that Watco have the bulk of their US fleet on a floor plan from the Bank of Montreal, plus numerous spot leases with NRE etc.

https://www.stb.gov/home.nsf/enhancedsearch?OpenForm&Seq=1

I think that it is a safe bet to assume that their 5 locos in WA are leased locally, and that the Qld rollingstock will be either leased or on some form of financiers floor plan

The .pdf link at the bottom of this doc is easier to read
https://www.stb.gov/recordations_2010s.nsf/WEBUNID/85257CA80045D32985257B36006EDAC5?OpenDocument
  james.au Chief Commissioner

Location: Sydney, NSW
I thought they purchased at least one G class from CFCLA(?).   I thought i saw a price quoted here somewhere.
  Dangersdan707 Deputy Commissioner

Location: On a Thing with Internet
I thought they purchased at least one G class from CFCLA(?).   I thought i saw a price quoted here somewhere.
james.au
G511 2.5 million from SCT?
  The_trolley Deputy Commissioner

Location: Writing Rail Express articles in praise of my railway employer.
As Jmt said, they might “own” the locomotive but it’s just like how you might “own” your house. In reality, the bank owns it and you’re paying it off. That or they’re leasing it as part of plan where it’s for all and intents your loco but owned by another controlling interest.

Watco is not alone in this regard, most of the small players on the scene especially in Australia are setup this way. Stop paying the bills and the bank will take “your” locomotive just as they’ll take your mortgaged home or car bought on finance.
  Jack Le Lievre Chief Train Controller

Location: Moolap Station, Vic
I thought they purchased at least one G class from CFCLA(?).   I thought i saw a price quoted here somewhere.
james.au
FL220 (42220), G511 & HL203 (42203) were all "purchased" as a bulk purchase from CFCLA they all passed through Islington Workshops to be repainted into Watco's Australian Livery which is similar to SSR's, but in reverse. They also "purchased" DR1564 & DR1565 at the same time, and were overhauled and repainted by Bendigo Rail Workshops. I am not sure of the purchase price.

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