Port operators are boxed in
24 January 2005
Australian Financial Review

High traffic puts pressure on Patrick and P&O to let in a third operator,reports Morgan Mellish.

The soaring level of trade passing through Sydney's largest port is causing so much congestion that freight companies are having to pick up and drop off containers in the middle of the night.

The problems are increasing pressure on the port operators, Patrick Corporation and P&O Ports, to agree to let in a third player.

The latest container trade figures have prompted the chairman of the Australian Competition and Consumer Commission, Graeme Samuel, to renew his call for change.

"All the signs are starting to point in the wrong direction in terms of the capacity of the ports to handle the demand," Mr Samuel said.

Total container trade in December jumped 10 per cent on the previous December to 122,185 containers, largely driven by a manufacturing boom in China.

To deal with the projected increase in traffic, the Sydney Ports Corporation wants to reclaim 63 hectares of Botany Bay to build five more shipping berths. But the duopoly of P&O and Patrick says the existing facilities can be used more intensively before they reach capacity.

Last year Mr Samuel accused Patrick's chief executive, Chris Corrigan, of resisting competition and trying to protect a "cosy duopoly".

"If there's a continuing trend of increasing demand, capacity constraint and rising unit costs then the flashing amber light I've described will ultimately turn to a flashing red light," Mr Samuel said on Friday.

"If that happens and there is still no response by the stevedores, then there is a question mark as to whether there's a proper competitive environment."

Importers complain that a lack of capacity on the waterfront is making them operate at night.

The congestion has "changed the way we've approached wharf transport in Sydney", said Alex Milne of freight forwarder Milne Dunkley.

"It's much easier if we pick up containers after-hours, generally 10pm to 2am. Before, during the day, we were queuing up in truck queues and that was getting uncontrollable."

Thomas Carroll, general manager of chemical importer Lubrizol, said: "There's uncertainty about exactly when we will get a container off the wharf due to the congestion there.

"We've made some changes with our security arrangements and we now accept containers 24/7. That's solved some of the problems."

Mr Samuel, who has known Mr Corrigan since the 1980s, said his criticisms of the Patrick chief was not an attempt to prove that no one was safe from the ACCC's gaze.

"Chris and I are longstanding professional associates. I wouldn't say we're longstanding close friends far from it," he said.

"I have a public responsibility to perform. It will be performed rigorously and fairly without fear or favour."

The Australian
February 8, 2005 Tuesday
Port bottlenecks hold back boom
SOURCE: MATP
Katharine Murphy

AUSTRALIA'S exports are languishing during a global resources boom because of bottlenecks in the major ports and a failure of investment in the late 1990s.

The Reserve Bank of Australia's warning, was supported by Treasurer Peter Costello, who called for more investment in ports to turn around the export performance.

"We have to clear the ports," he said. "It's quite clear to me that there's been under-investment in some ports and it's very important we get to the bottom of the reasons for that and improve capacity."

The RBA says supply constraints in rail and port infrastructure have begun to hamper export growth in the resources sector and prevented the industry taking advantage of a recent surge in global demand.

It says the transport network is poorly placed to meet the boom for bulk commodities such as coal, and predicts inefficient infrastructure will remain a constraint on exports at least until the end of the decade.

The resources sector has campaigned for months for governments to do more to invest in infrastructure.

But the RBA's resources outlook is not entirely bleak -- a recent turnaround in investment is likely to boost Australia's production and export prospects in coming years, it says.

"The implied increase in overall resources production over the next three years, if realised, would facilitate resource export growth over the next few years at about the same pace as seen in the 1980s and 1990s."

yeah i noticed with Australian ports there real small you guys need big ports like Rotterdam now that would be good for Australia.

i agree its hampering gdp growth. Well just goes to show 600 million dollars on worthless abrams tanks (for aus) is a complete waste.

The Port of Brisbane has recently reclaimed enough land to increase the size of the port by about 50%-70%. Due to it's closeness to Asia and ability to expand, I see Brisbane becoming the busiest port in Australia down the track.

Australia regulator extends Newcastle port quota system
26 February 2009

PERTH, Feb 26 (Reuters) - Australia's competition regulator has given preliminary approval for Newcastle port to extend a export quota system until June to prevent a renewed build up in ship queues at the world's largest coal export terminal.

The Australian Competition and Consumer Commission (ACCC) said on Thursday the capacity balancing system (CBS) seeks to manage the coal vessel queue while the producers come up with a long-term solution to share port facilities.

The system provides all coal producers with an equal pro-rata share of available coal chain capacity and matches vessel arrivals with capacity, so that excessive vessel queueing is eliminated.

The CBS was first introduced in 2004, and was then reintroduced last April when queues at Newcastle port surged to a high of over 70 vessel as miners rushed to sell coal amid robust prices, stretching limited port infrastructure and raising a backlog of ships waiting at the port to load coal.

It ended in December, but the ACCC in mid-December gave an interim approval to extend the scheme until March after a request by the port operators.

Port congestion and long vessel queues at Newcastle had been a headache for coal miners such as Centennial Coal and Xstrata Coal , which had to face surging demurrage costs and lower sales that cut into profits.

While vessel queues at Newcastle port has since fallen to an average of between 17-20 vessels, excessive queues will likely reform in the absence of a port allocation system, the ACCC said.

Earlier this week, the ACCC decided not to extend a shipping queue management system at the Dalrymple Bay coal terminal in Queensland state, saying the system reduced the incentive to develop long-term solutions to vessel queues.

Vessel queues at Newcastle port stood at 17 for the week ended Feb. 23 data from Newcastle port showed on its Website.

New bulker ‘deluge’ to counter congestion effect
8 July 2009
Lloyd's List

OWNERS of dry bulk tonnage hope chronic delays at ports in China and Australia will continue to prop up freight rates, as a “deluge” of new ships is delivered from yards this quarter.

Although Chinese port congestion has eased from records set two weeks ago, it remains a central driver of spot rates, especially for capesize and panamax vessels.

Port infrastructure has failed to cope with China’s unexpected demand spike for coal and iron ore, delaying ships by as much as three weeks last month.

This reduced the number of available vessels on the spot market, pushing up rates, even though the pace of bulk carrier newbuilding deliveries picked up in the second quarter.

London broker Simpson, Spence & Young said 50 capesize vessels were waiting to load at ports in Australia yesterday, including 30 at iron ore ports in Western Australia.

A further 77 were waiting an average of 17 days to discharge their cargo at iron ore terminals in China. A record 88 were delayed in China two weeks ago.

“It is another symptom of the large demand [for iron ore and coal] generated by China,” said SSY director of consultancy and research Derek Langston.

Capesize vessels face an average wait of four to five days to berth at Australian iron ore ports.

Significantly, port congestion has also re-emerged at Australia’s eastern ports, after China’s appetite for coal helped prop up panamax rates there as well.

More than 9m tonnes of coal a month has poured into Chinese ports from around the world, said Mr Langston.

As a result, the number of panamax vessels waiting outside Australian coal ports doubled last month, hitting more than 90 by the end of June. Waiting times average 12 days.

“It is not quite as many as the record numbers in mid-2007, but it is still fairly significant,” Mr Langston said.

But the capesize picture emerging for this quarter is not as rosy, despite congestion. London-based consultancy Maritime Strategies International has warned Chinese demand will fall off. This will be combined with an “inevitable” rise in capesize newbuilding deliveries, forecast to exceed 8.1m dwt this quarter.

“The vessels might be initially delayed, given that over a third of scheduled deliveries are from new or greenfield yards. Nevertheless, the deluge will arrive,” MSI’s monthly report for July said.

As a result, capesize average time charter rates were forecast to fall 76% over the second half of 2009, to average $25,200 per day in September and $20,800 per day by December. Yesterday the average time charter rate lost $5,000 per day to reach $61,060.

These falls were also expected to drag down spot rates for the global fleet of nearly 1,600 panamax vessels for the rest of 2009.

Panamax average time charter rates were forecast to fall by around 50%, reaching $10,200 daily in September and $8,400 daily by December, MSI said.

Caution on rates despite iron ore trade imbalance COAL and iron ore seaborne trade hit 460m tonnes in the second quarter of 2009, the fifth highest volume recorded since 2004 and up from 419m tonnes the previous quarter, writes Michelle Wiese Bockmann.

Simpson, Spence & Young partly attributed the rise to booming Chinese demand and port congestion.

Tonne miles also accelerated as rising commodities volumes from Brazil saw more capesize vessels ballast from China to reload iron ore from South America — a trend more frequently seen in 2009.

A fall in European steel demand also meant fewer cargoes from Brazil, which has seen a sharp imbalance develop between the Atlantic and Pacific trading basins.

For the first time this year, Brazil will send more iron ore to China than the rest of the world combined, if volumes for the first six months are extrapolated to the rest of the year.

Taking these factors into account, SSY forecasters are cautious that the enormous number of bulk carriers on order at Asian shipyards and the global economy will blunt a lasting freight rates recovery.

“For tonne-mile demand growth to match fleet supply growth in 2010 we would not only need to see a non-delivery rate of more than 50% for newbuildings in 2009 and 2010 (with no new orders), but also scrapping of over 30m dwt in these two years,” said SSY’s Derek Langston.

“As well as this, there needs to be a sharp, V-shaped recovery in tonne-mile demand. Such a demand recovery scenario would need to be stronger than our current expectations.”

• 14.6% of the global fleet of 870 capesize vessels delayed at ports in China and Australia on July 7.

• June capesize fixtures for China iron ore shipments from the big three iron ore producers at 58, including 28 for BHP Billiton.

• Capesize net fleet growth to reach 5% in second half of 2009, panamax at 2.5% in Q4.

• Panamax average time charter forecast to fall to $8,400 per day by December.

Ship queues rise at Australia's Newcastle coal port

PERTH, July 21 (Reuters) - Ship queues at Australia's Newcastle port, the world's largest coal export terminal, rose to to a near 18-month high of 48 in the latest week, while waiting times for ships to load coal also rose to a seven-month high.

Exports from the eastern coast port, which ships mostly thermal coal used in power generation, fell 5 percent to 1.95 million tonnes in the week to July 20, port data showed on Tuesday.

Waiting time for vessels scheduled to load coal rose to 14.7 days, the highest since January, while the number of coal ship arrivals slipped by two to 23.

In a bid to rein in lengthening ship queues, the port operator said last week it plans to cut all producers' shipping allocations by a total of one million tonnes for the rest of the third quarter.

Vessel queues are expected to ease to 37 at the end of July, Hunter Valley Coal Chain Logistics Team, which coordinates coal movements from nearby Hunter Valley mines to the port, said on its Web site.

The logistics operator said of the vessels waiting in the queue, 18 have coal availability issues.

A port official said recent heavy rains around the mines have slowed production, delaying some vessels at the port because producers do not have enough coal to load onto the ships.

Newcastle coal-port system under threat: regulator

SYDNEY, Sept 1 (Reuters) - Australia's system for rationing shipping berths at Newcastle, the world's busiest coal port, must now stop unless the New South Wales state government steps in to protect it from anti-trust action, a regulator said on Tuesday.

The Australian Competition and Consumer Commission's chairman, Graeme Samuel, made the comment after withdrawing anti-trust immunity for the system, which was originally devised as an interim step toward a more competitive long-term solution.

"The interim, transitional measure has been running for five years now," he told Reuters by phone. "We no longer think this (the immunity) is in the public interest," he added.

"I expect the queue management system will go into suspension for a period of time, until the (New South Wales) government spells out what it wants to do," Samuel said.

SCENARIOS-Where to now for Australia's Newcastle coal port?

PERTH, Sept 2 (Reuters) - A temporary system to cut coal ship queues off Australia's Newcastle port -- the world's busiest coal terminal -- was thrown into disarray after a coal producer group missed an Aug 31 deadline to agree on a long-term port-sharing proposal.

The last minute breakdown prompted Australia's competition regulator on Tuesday to withdraw anti-trust immunity for an interim pact allowing competing coal companies to share the port's limited loading capacity.

If an interim vessel queue management system in place is not reinstated soon, the backlog of ships waiting off the port could surge from the current near two-year high of 41 and spark a jump in demurrage costs.

While coal supplies in the region are unlikely to be affected in the short term, freight rates could rise as severe port congestion would tie up vessels and tighten ship supplies.

Without an agreement to overhaul the port's current operations, producers will also face uncertainties over how much coal they can export starting from 2010, casting a pall on their mine expansion plans and sales targets.

Here are possible outcomes of the crisis:

NCIG GROUP REACHES AGREEMENT WITH PORT, GOVT

The Newcastle Coal Industry Group (NCIG), a consortium of coal producers led by BHP Billiton Ltd , could sign off on the proposal if it could persuade the New South Wales government to make some amendments to the plan.

A resolution may be in the offing, with BHP saying on Wednesday it was in talks with the state government to resolve a number of "critical issues" and that it believed an industry-supported solution could be achieved.

"We were nearly at the end of the negotiations when the Aug. 31 deadline came. We now just have to iron out some humps and bumps in the agreement," said a source familiar with the talks.

The three parties had already reached in-principle agreement in April on a draft proposal, but BHP said the proposal was significantly changed by the government in the lead-up to the weekend deadline for a final signing-off.

Among the changes was a requirement that the NCIG commit to a second stage expansion, for which it has neither completed a feasibility study nor secured bank financing.

If NCIG agrees to the proposal, the three parties can return to the Australia Competition and Consumer Commission (ACCC) to reinstate an interim queue management system.

NEW SOUTH WALES GOVT BRINGS IN SHORT TERM MEASURE

With the ACCC having warned all parties that it would not extend approval for an interim port-sharing agreement, the state government could step in and implement a short-term port rationing plan.

The New South Wales Minister of Infrastructure said on Tuesday it would kick off talks with port operator Port Waratah Coal Services regarding the need to introduce short term measures to help manage coal exports.

Such a move may give NCIG and the goverment more time to complete the negotiations, and will also prevent a blow-out in vessel queues, which are already hovering at above 40, and in waiting time for ships to load coal standing at around two weeks.

GOVT AND PORT TO MOVE AHEAD BILATERALLY

If a three-way deal could not be reached, the government could impose a short-term port-rationing solution through regulation and eventually cut a bilateral deal between the government-owned Newcastle Port Corporation and PWCS.

Such a bilateral deal would need approval from the ACCC, which is unlikely to reject such a proposal. The ACCC Chairman Graeme Samuel said on Tuesday he would consider approving a bilateral deal, since it could still deliver the bulk of the benefits.