El Zorro could come to rescue of grain chain as PN plans exit

By: Jason Whittaker


Alternate rail freight provider El Zorro stands ready to take up the slack in grain movement if Pacific National (PN)

Alternate rail freight provider El Zorro stands ready to take up the slack in grain movement if Pacific National (PN) abandons its rural operations, but is seeking commitment from customers to invest in the necessary resources.

The Melbourne-based provider has also hit out at moves by Pacific National to seek government subsidies for its failing grain operations.

El Zorro Business Manager Geoff Tighe has told ATN that "inquiries have picked up" following news from PN parent Asciano to review its grain business in Victoria and New South Wales in the wake of heavy losses.

"A number of parties are a bit apprehensive about the future and asking what other options have we got and have started to turn towards us to inquire about our capacity and our readiness," Tighe says.

"What we need to do is get a customer to show some commitment to us and then we can have a longer-term contract and we can invest in better quality equipment."

Tighe says the company is waiting to hear what will become of the PN business.

"We've done us much preparatory work as we can in terms of understanding what resources we can muster and what people we need and what training we might require ... what finances we might need to get those resources in place," he says.

"So we've done a lot of that sort of work and we just stand ready to discover just how PN will stand in the marketplace in the future."

El Zorro already has a contract in place with AWB GrainFlow which sees two trains moving grain from the company's network and other bulk handling company country grain storage facilities, one operating on standard gauge track and the other on broad gauge.

Tighe estimates the company would need seven to eight trains to fully service Victorian grain growers if PN walked away. He says the company could purchase the stock, possibly ex-PN fleet, and have it operating within a "reasonably short lead time".

Reports this week suggest PN will ask the Victorian Government for subsidies to keep operating in the State.

Tighe questions the motives.

"I was a bit surprised that a company would go to the trough and seek to get government funding for essentially a private enterprise activity," he says.

"I think they're trying to force government into feeling exposed..."

He also questions the independence of a review launched by accounting firm KPMG into PN's operations. "Are they going to get the report that they want?" he asks.

Meanwhile, AWB says it is unconcerned by PN's plans in the short term with low volumes of grain as a result of the drought.

But company spokesperson Peter McBride tells ATN it wants a competitive grain haul market in the future.

More on Pacific National's moves and the future of grain chain operations in the February edition of ATN, out next month.

What do you think of PN's review of grain operations? Will it impact your business? Send us your feedback.

You can also follow our updates by joining our LinkedIn group or liking us on Facebook