After threatening to withdraw from Victorian and NSW grain rail transport and taking the ball with it, Asciano (Pacific National) has signed a grain haulage contract with GrainCorp on which it cannot lose.
Asciano Group has finalised agreements with GrainCorp to provide export grain rail haulage services "that will deliver commercially viable outcomes for Asciano for the next five years". This is after Asciano said it would abandon its grain services in NSW and Victoria but refused to sell its specialised rolling stock to other operators in Australia.
Under the new agreements, Asciano’s rail subsidiary, Pacific National, will contract to GrainCorp eight trains that will service GrainCorp’s export haulage requirements in NSW and Victoria on a ‘take or pay’ basis. ‘Take or pay’ means that the trains will be at GrainCorp’s disposal even when not required, as it will have to pay for them even if there is no grain to be moved. Pacific National will benefit further through additional variable payments for export grain volumes moved.
“Securing a ‘take or pay’ contract with GrainCorp reduces Asciano’s risk in its grain segment and will ensure an acceptable rate of return for our dedicated grain assets”, Mr Rowsthorn said. “We are very pleased to have reached a conclusion that drives supply chain efficiency and satisfies the needs of the grain industry and of Asciano security holders.”
Mr Rowsthorn commented, “the Australian Bureau of Agricultural and Regional Economics is predicting a bumper winter grain crop this year. Asciano will be well placed to benefit from any upside while ensuring the grain business remains viable in the event that drought conditions persist”.
In concert with these new arrangements, Asciano has resolved its Broadacre obligations with the NSW Government and will, as was originally intended, invest in the future of the export grain rail haulage market in NSW.
This $70 million Broadacre obligation will reduce by $30 million upon the transfer of a number of ‘branch line’ rail assets that Asciano no longer intends to operate beyond the date of transfer. These assets will be transferred from Asciano to an entity nominated by the NSW Government. Certain elements of ongoing maintenance capital expenditure on main line locomotives used in the NSW export grain business will be credited against the remaining obligations. As a consequence, Asciano expects its obligations under the Broadacre agreement to reduce to zero within 5 years.
GrainCorp Managing Director Mark Irwin said, “GrainCorp and Asciano have entered into a deal that secures a commercially viable future for grain transport in NSW and Victoria.
“The dedicated trains are an investment that underpins our core business of storing and handling grain upcountry, and providing export opportunities for wheat, barley, sorghum and other grains through our ports. The trains will also be used for domestic transhipment of grain, a key part of our business,” Mr Irwin said.
The Freight and Logistics Council of NSW (FALCONSW) has released the long awaited report into "Innovation in the NSW Freight Logistics Industry".
This first phase of work outlines a series of actions that could be taken by (the NSW) government to stimulate innovation and efficiency within the NSW Freight Logistics Industry in both the short and long term.
Beyond the conventional barriers to innovation that affect all organisationssuch as cost, market related issues and skill shortages, the report has found a range of factors that act as particular barriers to innovation within the NSW freight logistics industry.
These were grouped into a three major categories:
– Limited ‘co-opetition’– fragmented and complex supply chains, and unsophisticated end users can often act as a barrier to improving efficiency (e.g. small transport operators and retailers that have basic business processes).
– Limited interfacing – transport operations are often seen as providing a competitive advantage which can prevent firms in different markets working together (e.g., combining transport operations/resources to reduce costs).
– Significant number of transactions along chain, limited utilisation of technology and availability of relevant data can also be an issue.
– Domination of incumbent organisations – high barriers to entry for new players and long term contractual arrangements (e.g. in the provision of infrastructure) can also prevent innovation.
The report found that "three particular supply chains within the NSW, export coal, domestic grocery and export grain supply chains, demonstrated innovative approaches to overcoming these barriers. Other chains appear to be lagging in their efforts to take advantage of the drive for innovation within their chain primarily due to a larger number of barriers present. Consequently these chains are unable to leverage cooperation or clustering into effective solutions."
The authors call for an agenda to be developed for actions that can be taken by government to help increase innovation in this vital sector. They recommend that the following actions be considered as early priorities:
– Gather improved and additional data on the NSW freight logisticsindustryIn particular developing a strategic vision and agenda for next steps and taking steps to establish a freight database for Sydney.
– Focus on integrated infrastructure planningProgressing AusLink projects.
– IPART recommendations for Port Botany and addressing issues surrounding Sydney Airport.
– Help industry make more informed decisions.
– Development of toolkits, case studies and reviews of new products and technologies to encourage greater take up of industry best practice.
– Establish benchmarking programs for the sectorDevelop indicators and programs to benchmark the sector against other jurisdictions and industries to gauge the relative success of any actions.
The report is available on the FALCONSW website (formerly Air Freight COuncil of NSW) at www.airfreightnsw.com.au under ‘Council Projects’, Innovation Report.