A LOOK at the freight rates paid by our rivals in the grain export world such as Canada have one central NSW farmer pushing to try and bring the cost of moving grain down.
Andrew Freeth, Collie, who completed a Nuffield Scholarship researching supply chain logistics in 2015 and has since joined the board of Growerco, a farmer focused freight co-ordination co-op, said on average freight costs in moving grain to port were around $20 a tonne lower in Canada than in Australia.
“It may not be practical to get savings of this sort of magnitude back to growers, but with best practice instead of what we have got at present I see the scope for good savings,” he said.
He said a lack of efficiency was the major obstacle for the movement of grain.
“As a whole, the current grain freight network on the east coast does not meet the needs of a modern, efficient grains industry,” he said.
“The current rail network was designed 100 years ago, when grain transport from farm gate to silo was in 80kg bags.”
“We need to look at what we would do if we were setting up a system today, rather than what we have, which in many ways is set up for the agriculture of 100 years ago.”
As part of that, he said the opportunity was there at present to rationalise current networks and invest in key choke points to improve rail productivity.
Mr Freeth said he looked to the supply chain infrastructure in the coal sector heading to the port of Newcastle for inspiration.
“Over the past decade the coal industry has transformed the Newcastle catchment, through better scheduling and co-ordinated maintenance, they have been able to avoid excessive cancellations or slowdowns and that has resulted in meaningful cost savings.”
Another inspiration is the Canadian grains industry model, which features a streamlined network of sites.
“There are probably less sites for delivery compared with Australia and they do not necessarily have the same storage, but what they have is high capacity rail loading facilities capable of loading large trains.
According to Canadian National Railway data from 2017, the average length of grain trains was almost 10,000 feet, or 3.4km, with loads between 9-12,000 tonnes.
“The key for them is to be able to have access to efficient rail facilities that allow them to get the grain to port when it is needed.
“Not only does this cut costs but it means they can maximise what they are paid for their product, whereas in Australia the turnaround time to get the grain to port can rule out some of those opportunities.”
Mr Freeth said he was also intrigued at the possibilities a change in the structure of rail could bring.
“Something like inland rail could make moving grain around, especially down the east coast, more attractive and spread those domestic opportunities to more people.
“The inland rail scheme certainly has the potential to be transformational for the grains industry, but equally there is room for it to be a stuff up if it is not done right, so we need to get it right the first time.”
He said the potential of IR extended beyond simply allowing longer trains with heavier axle weights, it would also reduce single points of failure that create delays for rail operators.
“The current rail network has a high rate of ‘single point failure’ that results in trains getting delayed, missing their ideal rail paths leading to higher costs for freight.
Think of IR like a high capacity Ring Road, if there is a failure on one section of track, IR and the existing branch network can be used to re-route trains around the failure to allow trains to make it to their destination on time,” he said.
Mr Freeth said to this end he would like to see a grain logistics strategic plan drawn up.
“At present it is all fairly fragmented, it is critical to get something together in terms of a vision for grain transport but at present it just does not exist.”
“Getting those savings back to growers will require us to develop a blueprint for the future.”
He said he wanted growers to play a role in helping bring the Australian grain supply chain into the modern age.
“The biggest impact of an inefficient rail system is on growers,” he said.
“Growers have the most to gain from more efficient rail network and that they needed to work to be part of the process of coming up with improvements.
“Grain farmers can’t sit back and expect governments and private enterprise to fix current problems for them, they need to be part of the solution.”