AWB Limited (AWB) and GrainCorp Limited (GrainCorp) have announced the creation of a Joint Venture (JV) Company to better manage the logistics of grain exports on the east coast of Australia.
The JV is designed to improve co-ordination of the grain export task, increase efficiencies and, over time, lower supply chain costs to improve the competitive position of Australian grain growers in the global market.
The JV will be incorporated and owned jointly by AWB and GrainCorp. It will provide export logistics services to the two companies and will consist of a small number of expert staff based separately from the operations of its parent companies.
AWB Managing Director Andrew Lindberg and GrainCorp Managing Director Tom Keene said the venture stemmed from the recognition by both organisations that there was scope to further improve supply chain efficiencies in Queensland, New South Wales and Victoria.
Importantly, the work of the JV will involve only logistics for grain earmarked for export and will not affect either company’s activities for domestic grain, or their competitive position on up-country grain storage and handling.
Detailed proposals for the JV have been submitted to the Australian Competition and Consumer Commission (ACCC) for final approval.
Mr Lindberg said through the JV, AWB was focussed purely on improving efficiencies in the supply chain, and reducing costs for the AWB National Pool. He said the JV would have minimal financial impact on AWB Limited.
“We expect this JV will drive improvements in rail cycle times and coordination between rail and shipping tasks, making a more efficient grain supply chain on the east coast,” Mr Lindberg said.
Mr Lindberg said the venture would also encourage investment in supply chain infrastructure development, a need which was highlighted in the recently released grains industry strategic plan and discussed in detail at the Grains Week conference in Perth this year.
“There is a clear recognition that the lack of investment in infrastructure is impacting adversely on the competitiveness of the grains industry. We expect this JV will encourage participants to invest in the supply chain to improve areas such as train loading times and handling efficiencies at storage sites,” Mr Lindberg said.
“While GrainCorp and AWB may continue to have different views on some aspects of the industry, we certainly agree that by working together we can improve coordination of the export grain supply chain on the east coast.” Mr Keene said.
“This joint venture will provide clearer commercial incentives for investment in the grain supply chain. The result will be a faster and more efficient system that will benefit both producers and buyers of grain.
“The JV will not restrict the ability of either company to sell grain to domestic customers, or to provide other services to growers and traders. AWB and GrainCorp will remain strong competitors in grain storage, acquisition and marketing services”, Mr Keene said.
The main features of the Joint Venture Company:
- Incorporated and jointly owned by the parties;
Will contract with AWB and GrainCorp to manage and co-ordinate supply chain activities in Eastern Australia in relation to their export grains;
It will enter into contracts for receival, storage & handling and rail services with all service providers and other entities to provide an integrated storage and transport service for AWB and GrainCorp export grain businesses;
It will operate in a neutral and independent manner, keeping each party’s confidential information ring-fenced from the other party.
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