RAIL haulage of grain on South Australia’s Eyre Peninsula has entered a sunset period with yesterday’s announcement by the state’s bulk handler Viterra that its current agreement with rail operator Genesee & Wyoming Australia (GWA) will not be renewed.
The decision is expected to create up to 50 extra truck movements per day within the town of Port Lincoln, where Viterra operates the only export terminal on the Eyre Peninsula.
Viterra will transition to road transport only for the movement of all grain on Eyre Peninsula from 1 June to provide growers and exporters with a “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 said.
Viterra has spent $128 million on maintaining and improving its supply chain and services to growers and exporters on Eyre Peninsula since 2010, and is GWA’s only customer on the EP line, which links Port Lincoln to Cummins, the southern point of branch lines to Wudinna and Kimba.
“As a customer of the rail service, Viterra spent a significant amount of time working with Genesee & Wyoming Australia 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, restrictions placed on operations, and cost have all contributed to rail no longer being seen as efficient or cost-effective to move grain, the only commodity transported on the system.
The current rail agreement between Viterra and GWA was extended for a further two months until 31 May to meet export shipping bookings for the 2018/19 season.
Viterra said it was reviewing its need for investment at its sites to support the transition from rail to road.
“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.”
Grain Producers SA (GPSA) has called for increased investment in the Eyre Peninsula road network to better handle extra truck movements.
GPSA chief executive officer Caroline Rhodes said she would be seeking a detailed briefing from Viterra on how it planned to manage the enormous freight task exclusively by road.
“The grain export port terminal located at Port Lincoln is a critical piece of infrastructure for the South Australian grains industry,” she said.
“It is highly sought-after by grain exporters, with an annual shipping capacity of more than 2 million tonnes, and its location in a natural deep harbour means it can easily accommodate Panamax-sized vessels.
“It is in Viterra’s commercial interest to see this port remain competitive as new entrants begin to operate in the region.”
GPSA earlier met with Member for Flinders Peter Treloar and Viterra staff to better understand the impact of the potential closure of rail services and the capacity to manage additional road movements at the site.
Ms Rhodes said the EP road network needed to be capable of handling an increase in heavy-vehicle movements, including road-train combinations.
In addition, GPSA has called for a state-wide infrastructure blueprint for the grains industry to assist long-term planning and target government funding to improve export pathways.
South Australia’s Minister for Transport Stephan Knoll said the economic viability of the EP rail network had been in doubt for a long period of time.
“The condition of the rail infrastructure and the restrictions it places on operations have added to the costs for doing business for Viterra such that it is simply no longer efficient to move grain by rail,” Mr Knoll said.
“It is important to keep in mind this is a very aged network only capable of low axle loads.
Mr Knoll said 60-70 per cent of grain was currently hauled by road on the Eyre Peninsula.
“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.
“To date, we have had very productive discussions with the Commonwealth Government and we are confident that we are close to delivering a solution.
“We also look forward to engaging with Port Lincoln Council as we refine options going forward.”
GWA yesterday notified its employees of the news that Viterra would no longer be using the EP rail network.
“GWA has worked for the past four years with Viterra and the South Australian Government to explore all commercially viable future rail options, a GWA spokesperson said.
“These efforts have been in the face of reduced grain volumes on rail, and the historic legacy of the cost to upgrade and maintain what is an under-utilised narrow gauge-only rail network used only by one customer.
“The rail network remains open for the foreseeable future for any potential customer usage.”
Source: Viterra, GPSA, South Australian Government, GWA