May 18, 2010

Australia's GrainCorp decreases rail freight rates

GrainCorp has reduced the average freight rate per tonne by 2% across 197 GrainCorp sites served by rail.

"For more than 100 sites, we have reduced rail rates by an average of AUD2.40 per tonne, or over 6%," GrainCorp said in a statement.

GrainCorp said road rates would vary if the price of fuel increases above GrainCorp's forward estimates, or if demand for trucks outstrips supply.

GrainCorp also said it would continue the practice begun last year of bidding site-based, rather than at-port prices, to growers at GrainCorp sites. To arrive at the site-based prices, GrainCorp would use its own freight rate rather than Grain Trade Australia (GTA) location differentials.

"These have traditionally been used to deduct a 'freight' component from port prices," GrainCorp said. "We believe site-based pricing will help resolve the lack of clarity about the way location differentials are used."

GrainCorp chief executive Ian Wilton said GrainCorp hoped that the reduction in rail rates and the clarity of the rates compared to the use of location differentials would be seen as a positive signal by growers and give them extra confidence when making their planting decisions for the 2010/11 cropping season.