Driver drain derails grain supply chain

Driver drain derails grain supply chain

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A lack of train and truck drivers has contributed to delays in CBHs comprehensive shipping program, threatening its reputation as a reliable grain exporter.

A lack of train and truck drivers has contributed to delays in CBHs comprehensive shipping program, threatening its reputation as a reliable grain exporter.

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"We are still getting tonnes out, but we're behind where we would like to be in the program..."

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A SHORTAGE of truck and train drivers has resulted in multiple delays to the CBH Group's shipping commitments, threatening the grain exporter's reputation as a reliable supplier.

The lack of available skilled workers has been exacerbated by the Wooroloo bushfires in February, floods in Northam in March and a third party train derailment in the Avon Valley late last year, which all led to railway closures.

Since the start of its shipping period on October 1, CBH had loaded 178 vessels (as of April 7), containing about seven million tonnes of grain - close to half of the above average 15.1mt of grain that WA farmers harvested last year.

CBH chief operations officer Ben Macnamara said the shortage of drivers, along with the natural disasters, had significantly impacted the co-operative's ability to move grain to ports as rapidly as required to meet the fully-booked shipping commitments.

"We are still getting tonnes out, but we're behind where we would like to be in the program and we are predicting that will get worse over the next four to six weeks," Mr Macnamara said.

"We set ourselves a target of a four-day vessel turnaround time and over the last month our turnaround time performance has been satisfactory, except in Geraldton which has been performing quite poorly.

"Kwinana, Albany and Esperance have been performing acceptably so far, but the shipping stem is suggesting some serious delays, so over the next four to six weeks we're looking at days, and in some cases weeks, over what our turnaround expectation would be at all ports."

From a rail perspective, given the fear of the WA borders shutting, the resources sector is trying to attract people located in WA and that is putting a drain on other parts of the economy.

As a result, rail drivers are being lost to the resources sector and other competitors that are able to pay more.

While on the road side, a lack of available truck drivers has been amplified by grower demand for lime and fertiliser, with trucks being used to get those inputs out into regional WA.

"Growers are needing a lot of lime at the moment for their deep ripping programs and fertiliser is in high demand particularly because of the good rainfall earlier this year, as a result of that we lose trucking capacity," Mr Macnamara said.

"That has been exacerbated by not being able to get truck drivers internationally or from the east coast - on a daily basis we need between 130 and 150 truck drivers and we are about a third short of that need.

"To put the effect of that in context, we need to get about 100,000t from the Lakes District to the Esperance port and we normally try and do 4000t per day, which would take us 25 days, but we currently have about half the amount of trucks, so it's going to take 50 days."

WAFarmers grain section president Mic Fels said people would be quick to criticise CBH for the problem, but ultimately it's not their fault.

"CBH has handled bigger crops than this in the past without any problems, so we know that they can do it, but they just cannot get and keep enough skilled labour," Mr Fels said.

"When I'm talking about skilled labour I mean train and truck drivers, not brain surgeons, but they're still highly skilled operators, just like our seeder and header drivers are.

"It's already been costing the economy with all the individual farm businesses who don't have access to skilled labour, but now it's affecting big business as well and when it's a big organisation like CBH it seems more obvious because it expresses itself in one large entity."

CBH is in the process of working on short-term solutions to improve the shipping outcomes, while longer-term remediation plans are in place to make sure the co-operative meets the expectations of growers and its customers.

In the short-term, CBH is leasing additional narrow-gauge rail fleets and drivers, working with Arc Infrastructure to optimise scheduled track works to fit within the rail transport schedule, engaging additional trucking contractors and increasing the frequency of movements and working with customers to optimise vessel loading efficiency.

In the longer-term, the co-operative has plans to invest in critical rail outloading infrastructure to improve the pace of transporting tonnes to port, assess the requirement for additional rolling stock and work with the trucking industry to enhance long-term sustainability.

Critically, CBH will also continue to execute sustaining capital programs that enhance the performance of existing infrastructure at port terminals and upcountry sites.

"It's really important that we work through our remediation plans, particularly around our infrastructure, because that will be important for our reputation in international markets," Mr Macnamara said.

"Being able to deliver on time and to specification is one of the things we pride ourselves on and clearly we are not meeting our expectations in that regard as we sit here today.

"We need to ensure that our short and long-term plans put us in a better position where we can continue to have the trust of international markets."

While there is an estimate on how long the delays to the shipping schedule will be, the amount of demurrage - charges payable to the owner of a chartered ship on failure to load or discharge the ship within the time agreed - are harder to calculate.

"The majority of the losses are being forecast, rather than having already occurred, so it's very difficult to give a number on what the demurrage will be," Mr Macnamara said.

"Some of these vessels, as the year progresses, will go into dispatch which means we load them faster than that four-day turnaround and they can get money back which offsets against that demurrage.

"We don't want to shy away from it, there will be demurrage incurred which is not a good outcome for WA growers who will eventually wear the cost of this."

Mr Fels said there was no denying that ultimately the delays would affect WA growers' bottom lines.

"If it reduces the attractiveness of WA as an origin for grain, which I suspect it probably will, then customers are going to start preferentially buying grain from elsewhere," he said.

"This could potentially be tens of millions of dollars in losses to the economy if customers start cancelling contracts and going somewhere else to get their grain.

While the outlook for the next month is bleak, CBH is optimistic it will be able to get the issue under control in the second half of the year.

Roughly 65 per cent of grain is shipped out in the first half of the calendar year, so overall the co-operative is forecasting longer turnaround times over the next six weeks but the ability to catch up as demand slows in the middle of the year.

The story Driver drain derails grain supply chain first appeared on Farm Weekly.

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