The $8.4 billion commitment to the inland freight rail connection between Melbourne and Brisbane, and passing through major cropping areas on the east coast, is a boon for the sector and critical in Australia’s challenge to remain competitive in the global grains market.
Supply chain costs typically accounts for 30 per cent of export grain values in Australia, of which, transport to port is the largest single component. Reducing grain transport costs is a major priority to maintain the competitiveness of Australian grain in global markets.
A major limitation of the current east coast rail network is that grain movement is funnelled to port within its state of origin. The inland freight rail as planned will facilitate north south rail movement, increasing the number of export port options and linkages between production areas and end-users domestically. Given the upward trend in annual grain production and increasing annual grain freight task, never more on the sector’s mind than after the 2016/17 record season, this commitment has not come too soon.
The inland freight rail commitment also comes at a time when on-farm grain storage capacity continues to reach new heights, and increasing containerisation of grain is a feature of the export landscape. The inland rail investment has the potential to open further opportunities for individual farm operators, networks of farmers, and/or regional grain accumulators to develop export pathways, currently mostly limited in regional areas to those on existing west to east freight rail lines. Possibilities of new vertical integration opportunities, such as grain and pulse packing, may also emerge. How the forthcoming inland rail network shapes farm storage investment decisions and use of containers will be of interest to all in the Australian grain supply chain.
With a planned completion date in 2024 however, there is much grain to flow before efficiencies can be gained. There are a range of issues that need to be progressed as the lines are rolled out and upgraded over the next seven years, not least of all that this needs to be within a wider freight strategy that considers all modes of transport, connected rail networks and branch lines and all commodity movements. Detail of the interconnectedness between transport modes, storage and handling infrastructure will be key to the efficiencies gained.
Amidst this opportunity to make gains in cost of delivery to global markets, the sector cannot however lose sight of the fact that Australia does, and must continue to, deliver on value. Ensuring that Australian grain remains valued for its superior reliability, safety and functionality must go hand in hand with efforts to be competitive on cost. A sustainable future for the Australian grains sector depends on it.