grain industry bulk supply chain export contracts and
TRANSCRIPT
Grain Industry Bulk Supply ChainExport Contracts and Documentation – May 2020
Tim Ross - GTA
Contents
Grain Supply Chain Overview
High Level System Differences
Supply Chain Participants
The Bulk Export Process Pre Vessel Arrival On the Berth
The Risks
Industry Framework
The Supply Chain - 24 Bulk Export Terminals
Ports-West & South
1- Geraldton
2- Fremantle
3- Albany
4- Esperance
5- Thevenard
6- Lincoln
7- Lucky Bay
8- Pirie
9- Wallaroo
10- Giles
11- Adelaide (2)
Ports- East
12- Portland
13- Geelong
14- Melbourne
15- Kembla (2)
16- Newcastle (3)
17- Brisbane (2)
18- Gladstone
19- Mackay
20 Bunbury
18mmt
9mmt
1.0 mmt
17mmt
19
1.0 mmt
1.5 mmt
1.0 mmt
Port Capacity ~ 50mmt
Australia's Export Focussed Supply Chain
Mobile Bulk Loaders
Containers Versus Bulk
AEGIC – Australia’s Grain Supply Chains
Container Growth
Competitive freight to reposition boxesLower entry costLower working capital costLogistics at destinationShipping line consolidationSource: ABS
Seaport Terminal Sea Freight to Asia
The Supply Chain - Site and Rail Network
Country Site – Average Distance to Port
Source: AEGIC
Queensland Characteristics Regions
CQ / SQ -Darling Downs Agronomic:
Summer (Sorghum) & Winter CropsPremium Wheats (APH1/APH2 ) Pulses
Transport Infrastructure:Rail – NG track
Aurizon; WatcoRoad - Extensive rural fleet Extensive Farm storage 300km average
Ports/Packers 3 ports / numerous packersOperators GNC & Wilmar (Gavilon)
MarketStrong Domestic Demand – Multiple destinations.
NSW Characteristics Regions
Northern (Liverpool Plains)/Central/Southern Agronomic:
Summer (Sorghum - Nthn) & Winter CropsNthn Premium Wheats (APH1/APH2/Durum) Pulses
Transport Infrastructure:Rail – SG track
Pacific National, SSR, QUBE, FletchersRoad - Extensive rural fleet Extensive Farm storage 500km average
Ports/Packers 2 ports / numerous packersOperators GNC, Quattro, NAT
MarketStrong Domestic Demand – Multiple dest
Grain Storage – Farm
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Growth Drivers:Harvest Efficiency
Reduced transport costQuick turn aroundAround the clock operationsQuickly deal with “out of spec”
Direct to End User DeliveryContingent on local marketsAllocate handling and warehousing costs to the on-farm investment
Marketing/Price OptimizationA small percentage of On Farm Stored GrainTiming
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On-farm storage is growing in many shapes and sizes..
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16
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Victoria Characteristics Regions
Eastern, Northern, Central, Western (Wimmera, Western District) Agronomic:
Winter CropsHomogenous Wheats, Barley, Canola, Pulses
Transport Infrastructure:Rail – SG & BG track
Pacific National, SSR,Road - Extensive rural fleet Expanding Farm storage 300km average
Ports/Packers ports / numerous packers
Operators GNC, Quattro, NATMarket
Strong Domestic Demand –Multiple Destinations
South Australia Characteristics Regions
Eyre Peninsula, Yorke Peninsula, Mainland – North, SE, Mallee Agronomic:
Winter CropsHomogenous Wheats, Barley, Canola, Pulses
Transport Infrastructure:Rail – SG/BG/NG track
G&W Road - Extensive rural fleet Limited Farm storage 150km average
Ports/Packers 7 ports? / Minimal packersOperators Viterra, Cargill, T-Ports, ADM
MarketMinimal Domestic Demand
WA Characteristics Regions
Geraldton, Kwinana, Albany, Esperance Agronomic:
Winter CropsHomogenous Wheats, Barley, Oats, Canola, Pulses - Lupins
Transport Infrastructure:Rail – SG/NG track
WatcoRoad - Extensive rural fleet where requiredLimited Farm storage 350km average
Ports/Packers 5 ports / Minimal packersOperators CBH, Bunge
MarketMinimal Domestic Demand
Contents
Grain Supply Chain Overview
High Level System Differences
Supply Chain Participants
The Bulk Export Process Pre Vessel Arrival On the Berth
The Risks
Excess Capacity exists on East Coast
AEGIC – Australia’s Grain Supply Chains
Rationalisation is Occurring - Excess Capacity
AEGIC – Australia’s Grain Supply Chains
Contents
Grain Supply Chain Overview
High Level System Differences
Supply Chain Participants
The Bulk Export Process Pre Vessel Arrival On the Berth
The Risks
Rural Supply Chain Participant Sector Discussion & Trends
Grower Brokers/Trade counterparties
• Provide accumulation capacity, market intelligence & liquidity
Grain receival and storage
• Point of sale and grain testing/segregation/husbandry• Increase capacity in the farm storage sector
Road transport • Rural based fleets• Increased share of the grain freight task in EC
Rail transport – Above Rail
• Decreasing capability in all regions• More closure of regional branch lines• Management of fixed cost risk is and issue
Rail transport – Below Rail
• Complex government and private sector arrangements• Increased closure of regional branch lines• Management of fixed cost risk is an issue
Supply Chain Management Systems
• Inventory management and logistical coordination capability is essential – glue to hold this all together.
Port Supply Chain Participants Sector
Port Terminal Services • Key Supply Chain Assets – access is critical to execute export contracts
• Greater use of low-cost mobile ship loaders
Port Authorities/Owners
• Multiple different ownership arrangements – privatisation• Manage protocols around vessel arrival – Pilotage & Tugs • Port asset management – wharfs/berths/channels etc
Stevedores • Responsible for the oversight of the vessel loading• Work in conjunction with the Terminal operator and the vessel captain
Agents – Ship Owners/ Charterers / Shippers
• Agents represent their clients interests in all aspects of the vessel arrival, survey, berthing, loading and loading delays
Ship Owners • Companies that provide bulk vessels to the trade.
• Consolidation of the shipping industry is underway
Ship Broker • Provides a service between Charterers and Ship Owners
Shipper (Charterer on occasions)
• Cargo owner and on occasions will mange the vessel through a time charter
Contents
Grain Supply Chain Overview
High Level System Differences
Supply Chain Participants
The Bulk Export Process Pre Vessel Arrival On the Berth
The Risks
To be able to export in bulk fromAustralia a shipper needs todetermine its trading strategy
Physical/PaperExport/DomesticBulk Export / ContainersState and Port/sGrains and customer demand
Strategy will drive accumulationand sales and lead to supply chainactivity including:
Which assets do I want access to andwhen? Timing is a critical aspect.
Accessing Services – Contracts
Once the strategy is clear the supply chain contracts and relationships must be established
What is Capacity Capacity per Day Discussion
Country Loading • Sites x Tonnes per Day • 10 sites @ 600tpd = 6k mt
Transport Capacity • Capacity to match country loading and discharge
Port Discharge • Commencement time• Slot booking / available hours • Tonnes per Hour capability
Port Storage for accumulation
• Access and Allocation for a high proportion of the cargo is ideal to pre-accumulate.
Nominal Elevation Capacity
• Portland 35k for 15 days = 2300 TPD [Rated at 1400 TPH]
Loading 6k Tonnes
Transport 3.5k
Port Discharge 10k
Port Storage No pre -
accumulation
Potential List of Contracts Sector
Port Terminal Services • Key Supply Chain Assets – access is critical to execute export contracts
• Greater use of low-cost mobile ship loaders
Country Storage & Handling Agreement
• Multiple different ownership arrangements – privatisation• Manage protocols around vessel arrival – Pilotage & Tugs • Port asset management – wharfs/berths/channels etc
Rail / Road Freight • Responsible for the oversight of the vessel loading• Work in conjunction with the Terminal operator and the vessel captain
GrainCorp Port Terminal Services Example:ACCC exempt Ports:
Newcastle , Geelong, Brisbane & Port KemblaAll others strict Port Protocols apply
Category A Port Terminals - Port Kembla, GeelongCategory B Port Terminals - FI, CarringtonCategory C Port Terminals - MacKay, Gladstone, Portland
GrainCorp Port Terminal Services GrainCorp Port Terminal Services KeyTerms:
Assigned Load Date - QueueBooked Elevation Capacity - TonnesBooking Fee – Non refundable fee - $Confirmed Elevation Period – ShippingWindowElevation Capacity – Tonnes per CEPElevation Period – Half a calendar monthETA – Vessel arrivalNominated Elevation Capacity
Long and Short Term AgreementsShort term Agreement user can access 40% ormore of nominated Elevation CapacityLong Term arrangements
3 Shipping year based on 30k or 50k mt per monthfor 3 / 5 or 10 months
GrainCorp Port Terminal Services – The Process
GrainCorp Port Terminal Services Process:Shipping year commences on 1 Oct.Indicative Elevation Capacity is set by 31 Dec for 3 years – 12 month lead timeCustomers must commit to Long Term CapacityGrainCorp assess Long Term Nominations and consult/assign capacity – LongTerm Allocated Capacity (Booking Fees apply)Shipping Stem is opened End of June – Long Term Allocated Capacity must beconverted into Elevation Capacity via Cargo Nomination ApplicationCNA
Port & Elevation Period (15 days )TonnageBooking Fee applies
GrainCorp – Pre Vessel Arrival
GrainCorp Port Terminal Services Process:Estimated Time of Arrival - 21 to 42 Day with arrival in the Elevation PeriodETA to contain:
ETAGrain / GradesVessel name [Check it fits]One Port or Two
Post receipt of the ETA GNC will provide an Assigned Load Date (based on ETAdate/time of receipt)
First come first served
Stem is Updated – (Updated…NNnnnnnnnn)Vessel Nomination – Confirmation of Vessel and details [Make sure it fits]
NameLength, depth, max air draft etcLast 3 cargoesMarine and PEOM pre-load survey information
Vessel changes are monitored - impact to Stem is monitored
Contents
Grain Supply Chain Overview
High Level System Differences
Supply Chain Participants
The Bulk Export Process Pre Vessel Arrival On the Berth
The Risks
GrainCorp – Vessel Arrival
Vessel arrives – AnchorsVessel Survey –
Marine – fit for voyage;DAWE – fit for cargo
Notice of Readiness is given – Time counts towards the Shipper forDemurrage and Despatch calculationVessel Authority to Load is provided to the BHCVessel is called to Berth and commences LoadingVessel Completes loading and time stops counting for Demurrageand Despatch CalculationBill of Lading and all related export documents are completedCounterparties exchange payments/Service Providers compensated
High Level Vessel Process
Commit – Sale / Slot / Vessel /Accumulation
Vessel ETA -Transport /Purchase
Orders
Market Analysis Contracts &
Relationships
Pre-Berth Prepare Cargo & Vessel
Market and Supply Chain Strategy
Berthed & Loading
Complete Contracts and Docs Process
Vessel Sails – Money exchanged
Contents
Grain Supply Chain Overview
High Level System Differences
Supply Chain Participants
The Bulk Export Process Pre Vessel Arrival On the Berth
The Risks
Major Risk Discussion Sector What can go Wrong
Grower Brokers/Trade counterparties
• Inability to meet contract obligations
Other Shippers • Knock on impacts from prior vessels can be catastrophic
Grain receival and storage
• Inability to deliver service/grain quality• Breakdown• Admix / Insects / fumigation issues• Inventory gaps – quantity and/or quality• Port storage access
Road / Rail transport • Does not deliver promised capacity for various reasons
Supply Chain Management Systems
• Inventory management and logistical coordination capability is lacking and key activity is missed or is delayed.
Vessel • Fails Survey or other contamination issues
• Demurrage blow-out
Vessel Support • Failure to manage shippers position – cost/time and increased risk
Questions..?
Surety
Reliability
ReputationConfidence
Customer Value
Tonnes Transacted