August 19, 2014

19/08/2014: Infrastructure constraints the biggest obstacle in Australia's grain sector

Infrastructure constraints continue to be the biggest obstacle to grains sector efficiency gains, but a collective lack of will to implement change means the issue is still stagnating, according to a logistics specialist, reports The Land.
Australian grain transportation supported on creaky branch lines and a road network falling apart

And things need to move on down the east coast and through South Australia away from port zones set essentially on state lines.

Speaking at the Australian Grains Industry Conference (AGIC) earlier in the month, Luke Fraser of Jutarna Infrastructure said serious change to the supply chain would be needed to create efficiencies and bring down transport costs.

"We've got a system where freight costs can be up to 30 percent of the cost of production, according to Australian Export Grain Innovation Centre (AEGIC) figures, a creaky branch line system and a road network that is failing and underfunded," he said.

Mr Fraser believes the solution lies in cutting down the number of ports, getting them to work efficiently and filtering grain through to port via a system of mainline rail.

Interestingly, he said with the right investment in mainline capacity, it would be possible for grain from Central West NSW to go to port in Queensland or in South Australia, rather than having to snake its way through heavily populated and mountainous routes on the way to NSW grain ports.

He pointed to the lessons from Canada.

"In Canada, the branch lines service major sites on the mainline rather than the port, and there is a focus on a handful of large ports.

He said the port in Vancouver handled over 15 million tonnes of grain a year, dwarfing Australia's largest grain port, Fremantle.

"With six grain terminals and the capacity to unload two-kilometre long trains, you really generated some economies of scale."

General manager of supply chains at GrainCorp, Matthew Warrington, agreed the rail network needed work through GrainCorp's network.

"We've got storage capacity that is 2.4 times the average production, and port capacity 2.9 times the average export program, but the problem is the bottlenecks created by inefficient rail systems."

Read more HERE.

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