New shipping agreements pass first test

New shipping agreements pass first test


GRAIN marketers and CBH are reporting the first real test of the new long-term agreement (LTA) shipping system is a success, post-harvest.


GRAIN marketers and CBH are reporting the first real test of the new long-term agreement (LTA) shipping system is a success, post-harvest.

Both parties were set to benefit from the new approach employed for the first time last year through flexibility, reduced risk and cost savings.

Plum Grove was among 10 exporters allocated 10 million tonnes of capacity last August, with a further 6mt made available through a first-in, first served process that will be conducted annually.

Plum Grove senior commodity trader Tony Smith said the change from the auction system had been smooth and good for his business.

In a move to take advantage of the new lower-cost LTA system, Plum Grove paired with its grain marketing shareholder Mitsui to increase its exporting power in the next five years to 1mt annually.

"Under the LTA, the risk isn't as much, the flexibility is very good and the system they use is all online, so it's fast and simple," he said.

"If I needed to move capacity around, I could do it.

"I could be talking to a buyer on the other side of the country and if they want to move a shipment out from March to June I could jump online and do it as long as there's capacity there."

Mr Smith said while their LTA capacity was adequate to deal with the 2015 season, there was scope in the future to buy some of the additional capacity if required.

Prior to the LTA process being approved last year, it wasn't uncommon for marketers to pay $30 a tonne for a shipping slot.

Marketers have since reported savings of up to $20/t under the new system where grain marketers can buy capacity at $5-9/t depending on the time of year.

This opportunity was created following an Australian Consumer Competition Commission (ACCC) review of the port access codes in Australia, which were previously solely offered via an auction system.

CBH Group logistics manager Ben Raisbeck said with 10.2mt booked under the LTA and a further 3mt booked under short-term capacity arrangements for this year, the system is providing the market with what it needs.

"We've had some really positive feedback from exporters that the system is working, it's providing them the flexibility to move capacity around when it's required to reflect market demands and the IT system that sits behind it provides real-time data," he said.

"This harvest has seen strong shipping programs but we're certainly not done yet - 1.75mt of capacity has been released for March and this could mean record tonnes shipped during a single month.

"Rail has been performing well, helping feed into our ports to aid the shipping programs and we're expecting to hit some records during the next few months for that too."

CBH has 13 grain exporters storing and shipping through its network and has led the industry nationally in developing innovative ways to allocate shipping capacity to ensure that customers can meet international market demands.

"LTA suit some of them,while the flexibility to secure capacity through the short term, first-in-first-served, approach suits others," Mr Raisbeck said.

" I think we've got the balance right but we will continue to work with our customers to ensure we address any concerns.

"Satisfied exporters means competition for growers' grain, and having a supply chain that is working to meet growers' international customers' needs is how we can create value for our growers here on the ground."


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