CBH takes Watco contract to market after 10 years

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CBH Group's longest grain train in Australia en route to Kwinana.
Camera IconCBH Group's longest grain train in Australia en route to Kwinana. Credit: Brad Harkup

CBH has taken its above-rail operations to market as it approaches the end of a 10-year contract with existing rail operator Watco Australia.

The grain handler last week launched a request for proposal process for its above-rail operations, with its existing agreement with rail haulage operator Watco — a US transport group — set to expire on April 30 next year.

The move comes three months after CBH engaged with a third-party train operator, Aurizon Holdings, to ramp up its export activities after a bumper harvest.

In January, CBH supplemented its own rail fleets with two locomotives, 48 wagons and train drivers from Aurizon in a short-term arrangement to transport grain from country sites to the Geraldton Port — a move CBH chief operations officer Ben Macnamara, pictured, said happened “from time to time”.

That six-month agreement will expire at the end of July.

CBH and Watco have done business together since 2011 when CBH splashed out $175 million to buy its own rail fleet, cementing the biggest investment in grain on rail in decades.

Its fleet now includes 28 locomotives and 574 wagons, used to cart about 60 per cent or 7.6 million tonnes of CBH’s export crop from upcountry sites to the Geraldton, Kwinana and Albany Ports each year.

Watco replaced Australian Railroad Group, a subsidiary of QR National, which finished agreement in April, 2012.

CBH has spruiked its investment in rolling stock for halting inflationary increases in freight costs and holding freight rates flat, “delivering tangible value to the grain growers of WA”.

Under the current agreement, Watco has been responsible for rail logistics planning services including train planning and scheduling, tracking, maintenance, inventory control and crew management.

But CBH has now invited several companies — including Watco — to submit a proposal for the operation, service and maintenance of CBH’s above-rail operations.

Watco Australia — a subsidiary of US short-haul freight rail specialist Watco Companies — was specifically formed in 2010 to haul grain for CBH and in 2019 expanded to Queensland under a contract with GrainCorp.

Between 2016 and 2020, an average 2884 trains have arrived at all CBH ports and terminals each year, delivering on average 7.6 million tonnes of grain per year.

The request for tender process is expected to be complete in the second half of 2021, with the new contract to take effect from May 1, 2022.

Watco was contacted for comment.

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