The CBH Group today announced plans to make an investment of up to $175 million in rolling stock as part of a landmark decision to award its long-term grain rail contract to experienced United States transportation group Watco Companies.
CBH Group Chief Executive Officer Dr Andrew Crane said today's announcement marked a new era for grain rail freight in Western Australia which would deliver significantly greater value, efficiency and safety to grain growers and the grain industry.
"Our decision to go to tender for the first time for our rail transport requirement has resulted in the introduction of competition for the first time in the Western Australian grain rail freight market and the first major investment in new rolling stock for decades," Dr Crane said.
"We still need continued support and engagement with below-rail provider WestNet and the State Government to achieve an optimal outcome.
"However, subject to a satisfactory new track access agreement, and with the State and Federal Governments' $350 million funding package, our planned investment means more than $500 million has now been committed this year to the grain transport network after decades of neglect."
Dr Crane said Watco had been chosen as CBH's long-term rail partner following a year-long tender process which had drawn competitive interest from rail companies locally and around the world.
The new 10 year agreement would commence in May 2012 and would see Watco provide a comprehensive rail logistics planning service including train planning and scheduling, tracking, maintenance, inventory control and crew management.
Watco would operate and maintain the new rolling stock to be acquired by CBH, which would include a number of locomotives and a fleet of wagons to be delivered over the next 18 months.
"We welcome Watco to Western Australia and have great confidence that their experience and innovative and performance-driven culture will enable us to implement the most efficient grain logistics supply chain for WA growers and their customers and help us to keep the maximum amount of grain on rail," Dr Crane said.
"We also anticipate the new arrangements will deliver our growers material improvements in freight efficiencies."
Watco Executive Vice President, Ed McKechnie, said Watco welcomed the opportunity to partner with the CBH Group and the grain growers of Western Australia as its point of entry to Australia.
"We want to grow the rail business in Western Australia and we will do that by providing exceptional customer service," Mr McKechnie said.
"We are committed to operating a safe and efficient railroad that creates value for growers. This is done by moving more tonnes to port and doing it through creativity and innovation.
"We believe our experience in grain transportation and the successful execution of over 40 start-ups on railroads, rail car shops, switching operations and transload locations will be of significant value when commencing operations in Western Australia."
Dr Crane said the existing interim agreement with the incumbent provider Australian Railroad Group was due to run until April 2012 and CBH looked forward to working with ARG to ensure a smooth transition to the new arrangements for the benefit of both companies and the grain industry.