Coles calls for upgrades to crucial WA rail connection to east coast after five interruptions in three years

Supermarket giant Coles has revealed the huge cost to its WA operations from floods that cut the crucial rail link to the Eastern States earlier this year and kept shelves bare for weeks. Coles wants Government intervention to fix vital infrastructure such as the trans-Australia rail line, which was damaged for the second time in two years as floods hit the State’s east in March, arguing such moves would enhance competition in the supermarket industry. Coles’ percentage of packaged goods delivered in full and on time to its Perth distribution centre near the airport slumped to near 50 per cent in March, the lowest since December 2022. The proportion fell to 40 per cent in early 2022, during floods in SA that kept the train line out of action for just over three weeks. Coles has told the Australian Competition and Consumer Commission in a submission to the watchdog’s supermarket prices inquiry it has been affected by outages on the same rail corridor on at least five occasions since 2021, each incurring substantial costs. “The increasing number of severe natural events in Australia is exposing the acute vulnerability (and in many cases, the underinvestment in climate resilience) of vital supply chains,” it said, naming the rail link between Adelaide and Perth, Adelaide and Darwin and Brisbane and Far North Queensland as the most exposed. “Coles services its stores in WA, the Northern Territory and Far North Queensland primarily by rail transport. These networks involve monopoly below rail infrastructure and single above rail providers.” The 2022 outage of 24 days forced Coles to absorb approximately $20 million in extra costs, only half of which was recoverable by insurance. Disruptions earlier this year took more than 50 staff away from their regular jobs, Coles reported, to re-direct and re-prioritise orders, amend layouts and promotions and support suppliers to access alternative transport. There were additional costs of $3.9m in the first few weeks of the disruption on Coles Connect Transport, its freight provider, which accounts for about 30 per cent of transported goods to WA. The cost of transporting just one container soared from about $8000 by rail to about $32,500 by road in this time. “Due to the integrated nature of the road and rail networks, increases in costs and congestion in one corridor flow through to other corridors as trucks shift west, creating national impacts,” Coles told the ACCC. In response to the latest outage, the WA Government urged the major supermarkets to increase the proportion of grocery items they warehoused here. Coles sources all of its own brand red meat, poultry and duck in WA as of earlier this year, a decision spurred on by the constant transport disruptions. But Australia’s largest producers of dry grocery products — which is what Coles and other supermarkets have freighted to the State — are almost entirely based on the East Coast. That coupled with the relatively short shelf life many products have makes such a suggestion difficult to execute. Coles told the ACCC the geographic scale of product transport, relatively small volumes and inefficencies in underutilised long distance backhaul operations “all contribute towards high-cost operations” — and limited numbers of transport operators able to meet its requirements. “The transportation outages and supply impacts in these areas means that Coles is sometimes unable to offer the same promotions as in other areas due to concerns around bait advertising and . . . to avoid letting customers down through out-of-stock situations,” it said. “Improved infrastructure will also help avoid the sometimes significant costs that supermarkets incur in developing work around solutions to transport goods to these regions, as well as the environmental and safety issues that arise when substantial volumes of goods need to be transported by road rather than rail.”