Specific issues in Eyre Peninsula led by cost
Viterra will transition to road transport for the movement of all grain on Eyre Peninsula from June 1 in a move that has disappointed the South Australian Freight Council (SAFC).
Though the Eyre Peninsula’s is a limited and specific network, the move is a setback for rail freight supporters at a time when larger states have sought to invigorate grain rail logistics.
Viterra laid the blame on efficiency and cost, citing the need to provide growers and exporters with a globally competitive supply chain.
“We have a long term commitment to providing grain storage and handling services to Eyre Peninsula growers and maintaining Port Lincoln as a key export terminal for South Australian grain,” Viterra commercial and logistics manager James Murray says.
“Since 2010, Viterra has spent $128 million on maintaining and improving our supply chain and services to growers and exporters on Eyre Peninsula.
“As a customer of the rail service, Viterra spent a significant amount of time working with Genesee & Wyoming Australia [GWA] to assess a number of different options to continue using the rail network.
“We entered a three year agreement in 2015, and extended it for a further 12 months in 2017 to allow more time for us, GWA, government and stakeholders to work through options.”
Read how Viterra responded to the ESCOSA costs probe, here
The SAFC expresses its regret about the move and seeks government input.
“SAFC is disappointed that rail maintenance and investment costs have risen to the point that it is no longer economic for Viterra to move grain on the Eyre Peninsula rail network,” SAFC executive officer Evan Knapp says
“Given that Viterra is the sole customer of the EP rail network, today’s announcement effectively means the closure of the rail line.”
“This will inescapably see thousands of additional truck movements on the Eyre Peninsula road network, interacting with locals and holidaymakers alike. It will also require DPTI to increase road maintenance expenditure on the peninsula to ensure that these roads remain in a safe condition for all road users.”
“As the premier grain port in the region, Port Lincoln is likely to bear the brunt of additional truck movements to its bulk grain terminal, with implications for traffic in the local area and township.
“We are aware that SA’s Department of Planning, Transport and Infrastructure [DPTI] and the rail operator, Genesee & Wyoming Australia jointly commissioned engineering consultancy, SMEC, to undertake an Eyre Peninsula Freight Strategy in 2017, with the final report provided to SA Transport Minister, the Hon. Stephan Knoll, late in 2018. However, this report has never been publicly released.
“We call on the minister to release this report so the public can understand what options it contained for keeping the rail line open, including potentially providing government support, and the impact of forcing grain on to road.
“While the rail network is privately-owned infrastructure, it makes sense to consider government intervention when a decision to close the lines will raise road maintenance costs on the Eyre Peninsula for government and have implications for the broader EP community.”
“The SAFC also requests that the Minister urgently work with Viterra and GWA to develop options to keep the line operational for the 2019/20 harvest season and beyond.
Viterra insists the condition of the rail infrastructure, the restrictions it placed on operations, and ultimately the cost “have all contributed to rail no longer being efficient or cost effective to move grain.
“In addition, volume is vital for the competitiveness of rail and Viterra is the only customer using the rail network and grain is the only commodity transported.”
It notes the current rail agreement between Viterra and GWA was extended for a further two months until May 31 to meet export shipping bookings for the 2018/19 season.
“With an outcome reached, Viterra will transition from a combination of road and rail transport to use only road transport for moving grain on Eyre Peninsula,” it says.
“This is a significant decision for the business, one we have very carefully assessed and considered. We are reviewing the need for investment at our sites to support the transition from rail to road.
“We have made this decision based on the current situation and the information we have available. If the situation changes with rail on Eyre Peninsula and it becomes efficient and cost effective compared to road freight, we will certainly reconsider our options.”