Port plans approved | My Machinery
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Port plans approved

The Australian Competition and Consumer Commission (ACCC) has approved GrainCorp’s plans to for long term agreements with exporters wanting space at its seven port terminals. The green light opens the door to potentially big efficiency gains in ship loading operations by partly replacing the year-by-year contracts which exporters currently apply for. It also gives GrainCorp the chance to lock in $8 a tonne “take or pay” commitments from exporters for up to three years for as much as 60 per cent of port capacity, smoothing out port earnings regardless of whether the season delivers a good, average or poor yielding crop. The big grain trader, handler and processor has a similar “take or pay” contracts locked in for rail freight movement of its own grain using Pacific National and QR National train sets. More efficient throughput is a key plank in GrainCorp’s strategy to achieve a $110 million incremental lift in earnings before interest tax depreciation and amortisation (EBITDA) by 2016-17. GrainCorp is predicting the improved reliability of port bookings will encourage more grain exports. However, while welcoming the port access changes, that view is not entirely shared by exporters like Bunge Agribusiness general manager Chris Aucote. “It certainly allows better planning, but unless we build more export capacity to get grain out, particularly at peak harvest times, “I don’t think much extra volume is likely to flow through the exisiting ports,” said Mr Aucote, who also heads the Australian Grain Exporters Association. However he said exporters recognised that infrastructure asset holders like GrainCorp needed to have the security of long term returns from their port facilities and locking in export volume commitments should encourage investment in the supply chain. He believed GrainCorp’s strategy was likely to be a first step towards similar moves being adopted at ports nationwide, notably by grain handlers, Viterra and CBH in South Australia and Western Australia. GrainCorp says the port deal is a good news breakthrough for the whole industry which will substantially improve the flexibility and international competitiveness of its bulk grain port facilities and assist planning horizons for exporters. It argues exporters will be making long term delivery commitments to customers, potentially leading to more sales and competition for Australian grain. Giving exporters and their customers more export certainty would also drive investment in expanding the capacity of trains delivering grain to port. Long term arrangements will be offered under revised port terminal services protocols from February. Canberra’s enactment of the Wheat Export Marketing Amendment Bill this week, providing for an industry code of conduct to replace the existing port arrangements from 2015, also promised to help streamline port operations. GrainCorp managing director Alison Watkins said the developments were a significant step forward for the eastern Australian grain industry, making grain from the company’s network more internationally competitive. “Our exporters can plan and respond more effectively to the increasingly dynamic international market, while growers get more competition for their grain, particularly from overseas.” The revised port protocols also reduced the substantial supply chain costs by minimising port block-outs by ships and related transport cancellations. Cargill’s corporate affairs director, Peter McBride said the international trader supported GrainCorp’s “most progressive step in the right direction” towards achieving a fair and equitable supply chain. However Cargill still believed grain exporters needed more autonomy and greater flexibility in allocating Australia’s export capacity for shipping to achieve full equitable access to ports and the successful deregulation of Australia’s grain market.

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