World Grain - April 2017 - 79

FEATURE: AUSTRALIA'S SUPPLY CHAIN CHALLENGE

grain from up-country to export.
Hindering this strategy was the rail
lines themselves. In comparing the
Australian rail network with that of
North America, Kingwell said the investment dollars needed to improve track
speed and weight was not there. This, he
said, was due to the relative low volume
of grain and a lack of diversity of commodities that use the rail network.
Government, he argues, constrained by
budgets that are already stretched are unlikely to invest in rail networks. He said
despite this, the rail network badly needed
investment to replace aging track that cannot handle extra weight and faster trains.
Kingwell pointed to CBH's purchase of
aluminium grain wagons that could carry
more grain without adding weight pressure to existing network as a good example
of innovation meeting the rail challenge.
Capper told World Grain that CBH had
invested A$175 million to buy locomo-

tives and wagons in 2011-12 to improve
what it can but also pointed out that some
of the state's rail network is 100 years old
and restricted capacity.
Talking about the east coast rail network, Johns pointed out that there was
a challenge of an aging network and six
UDLO JDXJHV WKDW PDGH LW GLI¿FXOW WR HI¿ciently move grain between state borders.
He pointed out, however, the New South
Wales government and the Victorian government were both making investments
in the rail network to standardize and improve rail line capacity.
On solving the lack of investment in the
rail network, Kingwell pointed out that
government could make investment in
the grain rail network more attractive by
encouraging diverse transport asset portfolios. This would spread the return across
a base of assets and not rely on rail that
has poor returns due to low grain volumes
moving on the network.

Another area Kingwell said may improve the supply chain costs was a change
in regulation relating to road and rail.
The Australian Productivity Commission
handed a report on the competitiveness of
Australian agriculture to the federal government in November 2016. It is expected
the report will make recommendations
that may reduce the cost of rail but may
increase the cost of road. Currently, the
full cost of rail is passed to the user due to
privatized networks, while the cost of the
road network sits with the taxpayer.
Kingwell said Australian grain growers
will produce more grain over time and this
would continue to create demand for grain
supply chain infrastructure assets.
Chris Gillies is a freelance writer based in
Sydney, Australia. He may be reached at
chris@jamtincopy.au.
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