Newsroom Blog
A queuing mentality
By Lloyds List Comment
Monday 1 February 2010
THE Australian coal export port of Newcastle is fast reclaiming its title as the demurrage capital of the world.
Near-record levels of congestion there are certain to dent the bottom lines of coal mining giants like BHP Billiton, Xstrata and Rio Tinto — some of the world’s largest charterers of bulk carriers — when they next report quarterly results.
Delays could cost these and the other 11 miners that export from Newcastle $4m-$7m a week in demurrage charges. Some 56 vessels face a 14-day wait to load thermal coal at two terminals, compared with a record 79 ships queuing in July 2007 and 60 vessels in mid-December 2009.
Senior management at the monopoly terminal provider, Port Waratah Coal Services, has declined to provide any explanation to Lloyd’s List about exactly why shipowners, operators and charterers are facing longer queues and rising congestion.
However, the history is well known. The Hunter Valley coal chain has faced years of criticism over poor planning and inadequate investment at all logistics levels, from the coal producers to government and private providers of rail and port infrastructure. Queues are now hovering near their highest levels in two years.
In January, Port Waratah Coal Services began operating under what the competition regulator called “ship or pay” contracts, landmark 10-year deals with miners that guarantee volumes, which in turn boost certainty needed for investment.
Given that the terminal is partly owned by coal miners Rio Tinto and Xstrata and their Japanese customers, such a lack of certainty is surprising. Doesn’t the right hand know what the left is doing?
Management did say in a recent media release about the new 10-year contract that it was important “we do everything we can to manage [queues] in the early stages” of implementation.
But do not expect any changes this year. The terminal’s capacity is 106m tonnes, and with Chinese demand for thermal coal forecast to rise by nearly 30% 2010, Newcastle is set to remain groaning under the triple strains of inefficiency, appalling planning and buck-passing.
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