VITERRA has announced it will shift its grain movements to roads on the Eyre Peninsula from June 1, ending its rail agreement with Genesee & Wyoming Australia.
Viterra Commercial & Logistics Manager James Murray said the decision was based on providing an efficient and cost-effective service to its growers.
“We have a long term commitment to providing grain storage and handling services to EP growers and maintaining Port Lincoln as a key export terminal for South Australian grain,” he said.
“Since 2010, Viterra has spent $128 million on maintaining and improving our supply chain and services to growers and exporters on EP.
“As a customer of the rail service, Viterra spent a significant amount of time working with 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.”
Viterra said the condition of the rail infrastructure, along with operational restrictions, such as weight and speed, meant rail was no longer an efficient or cost-effective way 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.
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.
Viterra will transition from a combination of road and rail transport to use only road transport for moving grain on EP.
“This is a significant decision for the business, one we have very carefully assessed and considered," Mr Murray said.
"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.”
Transport, Infrastructure and Local Government Minister Stephan Knoll addressed the issue in parliament today, saying it was a commercial decision by Viterra and GWA.
"The economic viability of this rail network has been in doubt for a long period of time," he said.
"It is important to keep in mind this is a very aged network only capable of low axle loads.
"In the coming months, Viterra will make investments to support the transition to road transport only. We understand GWA has advised employees today.
"We have welcomed the openness with which both Viterra and GWA have kept us informed throughout discussions.
"It should be noted that some 60 to 70 per cent of grain is currently hauled by road on the EP.
"We have been informed that closure of the rail will lead to around an extra 50 trucks per day in and around Port Lincoln."
"We are very mindful of what this might mean for residents and have been exploring a number of options with the Commonwealth government."
More to come.