Wednesday, May 19, 2010

Australian Rail Freight News Update

Grain Rates Down While War Breaks Out in Queensland
Shipping News Feature

AUSTRALIA – Some good news as GrainCorp, the privately owned agricultural supply chain provider, announce that rail rates for this seasons harvest will be reduced by an average 6% for more than 100 sites nationally. The overall reduction for all 197 sites is around 2%. GrainCorp, who also handle in excess of 1 million tonnes of road freight annually, say they will continue the practice, initiated last year, of offering site-based rather than at-port prices to growers. The company point out that road rates are likely to vary as these are based on the company’s estimates of forward fuel prices and are influenced by demand for trucks at peak periods.

Release of these rates is important to grain suppliers as they enable them to clarify the traditional problem of location differentials. Grain Trade Australia (GTA) location differentials have traditionally been used to deduct a ‘freight’ component from port prices.

Last year we wrote how the state government was to sell of Queensland’s rail freight and port assets. Now the move has provoked a reaction from ports and rail operators the Asciano Group who say they have applied to the National Competition Council, Australia’s Monopoly Commission, to declare the position of the rail track assets. Asciano believe that a privatised QR National could otherwise control movement of freight, principally coal, on the track and indulge in anti competitive practices.

The move has brought a strong reaction from Queensland Treasurer Andrew Fraser who says by insisting the track assets are “declared” are merely trying to frustrate the proposed privatisation. Asciano in turn retorted that their proposed A$1.5 billion investment in the region was forfeit unless they were convinced QR National could not negotiate a preferential position for themselves and that they saw possible advantages for themselves in the privatisation provided track access was not compromised.

Photo:- Grain by Rail