Grain handling business, Viterra Australia, will no longer supply the Eyre Peninsula by rail.
In a bid to provide its growers and exporters with a competitive supply chain the company announced it will move to supplying grain entirely by road transport.
The move from trains to trucks on 1 June is understood to be part of an cost-effective initiative as Viterra works towards making South Australian grain competitive internationally.
Rail infrastructure conditions and the restrictions it imposes on operations made it less efficient the company said in a statement.
With Viterra the only customer using the rail network grain is the only commodity currently being transported on it.
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Viterra Commercial & Logistics Manager James Murray said the company was committed long term to providing grain storage and handling services to Eyre Peninsula growers and maintaining Port Lincoln as a key export terminal for South Australian grain.
“Since 2010, Viterra has spent $128 million on maintaining and improving our supply chain and services to growers and exporters on Eyre Peninsula,” he said.
“As a customer of the rail service, Viterra spent a significant amount of time working with Genesee & Wyoming Australia (GWA) to assess a number of different options to continue using the rail network,” Murray said.
“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.”
The current rail agreement between Viterra and GWA was extended for a further two months until 31 May 2019 to meet export shipping bookings for the 2018/19 season.
Viterra will transition from a combination of road and rail transport to use road transport unreservedy for moving grain on Eyre Peninsula.
“This is a significant decision for the business, one we have very carefully assessed and considered. We are reviewing the need for investment at our sites to support the transition from rail to road.” said Murray.
“We have made this decision based on the current situation and the information we have available. 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,” he said.