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«Break Bulk Shipping Study TABLE OF CONTENTS List of tables List of Figures Executive Summary 1 BREAK BULK CARGO 1.1 Definition 1.2 Types of Break ...»

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While these charges impact on ship operating costs and shipowners/operators resist increases particularly under the difficult trading conditions now being experienced, the most criticism about costs at ports was related to stevedoring and associated charges.

Stevedoring charges and according to some importers, storage/demurrage incurred for over-time cargo on the wharf, are due to the market domination by service providers.

One major steel importer indicated that the handling cost is 20-25 dollars per tonne in Australia compared with Asian countries at about 5 dollars per tonne. Even in Japan, the labour cost is not as high as Australian ports and they generally provide seamless service with generally no damage to cargo.

Excessive port charges and cargo handling costs in Australia will impact directly and indirectly on various stakeholders and probably influence the direct port related activities undertaken by firms and organisations, shipowners, stevedores, terminal operators and importers/exporters in moving cargo through the port. For instance, because the port charges represent a large proportion of overall operating costs, the variation of port charges will have a significant impact on shipping lines especially in dealing with low margin products such as timber and steel.

High port costs could also jeopardise international trade because of a port’s vital position in the international logistics chain especially for Australia. In order to maintain and encourage inbound/outbound trade in Australia, port authorities should be encouraged to provide smooth and efficient services at competitive port charges.

In addition, port users interviewed also stated that port charges are excessive in the current gloomy economic climate which will lead to a lose-lose situation for both port users and port service providers. One major carrier is already considering options for calls at Fremantle due to the excessive stevedoring costs at that port with the following three options: 1) their vessels could go to Bunbury instead of Fremantle in order to avoid the high cost; 2) they might reduce the frequency of port calls in Fremantle (once a month instead of twice); 3) they could reluctantly go direct to Melbourne and by-pass Fremantle.

The impact that high port charges particularly towage have on operating costs would be better analysed with the availability of actual port data.

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7.1 Brisbane The Port of Brisbane is located in the south-east corner of Queensland and provides Southern and South-Western Queensland and Northern New South Wales with an optimum gateway for international trade. Brisbane is an important logistics location as indicated by the number of ship calls - 2,618 port calls made by over 50 shipping lines in 2007/2008. There are 28 operating cargo berths including 5 general cargo/motor vehicle berths.

The majority of port activities for Brisbane are situated at Fisherman Islands at the mouth of the Brisbane River; most of the port’s break bulk facilities are located here at the AAT Terminal. The remaining facilities are located upstream at the Hamilton precinct - Maritime No. 1 and Hamilton No. 4, close to the cruise ship terminal.

The port authority is the Port of Brisbane Corporation (PBC), a Queensland Government owned entity with a commercial operating philosophy. Under PBC management the port achieved a total trade volume growth of 7.7% to reach 30.2 million tonnes valued at A$37.5 billion in 2007/2008; profit after tax reached a record result of A$438.7million, an increase of 282% on the previous year (PBC 2008).

The main break bulk imports into Brisbane include steel, building products, timber, machinery, paper and wood pulp; these account for 13.11% of its total imports while 7.61% of exports from the port comprise steel, timber and metal manufactures which are carried in break bulk form.

7.1.1 Break Bulk Cargo Traffic

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break bulk imports (including steel, building products, timber,  break bulk exports (including steel, timber, paper &wood pulp  paper & wood pulp and machinery) and building products) total imports (including dry/liquid bulk, break bulk) total exports (including dry/liquid bulk, break bulk)

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Brisbane has experienced rapid growth in break bulk import/export volume which was faster than the total trade throughput growth.

The volume of break bulk cargo trade between 2003/2004 and 2007/2008 increased from 2,100,951 tonnes to 3,429,631 tonnes - a growth of 63.24% which is almost triple the growth rate of total trade throughput at 22.78% (see Figure 5) over the same period.

28  Between 2003 and 2008, break bulk imports volume grew at 79.61%, with the rate exceeding 24% in 2003-2004 and 12% in 2005-2006 and 2006-2007 respectively (see Figure 6).

The cumulative growth rate of break bulk exports was 39.42% in the period of 2004see Figure 7). In contrast, the cumulative growth rates of total imports and exports are 23.52% and 21.84% respectively since 2004, which lagged behind the cumulative growth rate of break bulk imports and exports.

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According to the State Government, Queensland is the fastest-growing state in Australia and is expecting to add approximately 90,000 new residents to the population annually for the next 23 years to 2031. Population and economic growth is driving the demand for new infrastructure development in Queensland, e.g. roads, rail links, new residential buildings and other community facilities. Queensland is also well placed to capitalise on the world’s growing demand for its resources—coal, bauxite, zinc and copper that generates a need to ensure port facilities keep pace with the expected demand; this will also include land-side transport facilities to be able to handle importation of mining and construction equipment.

While the nature of infrastructure projects varies, the objective of investing in modern, efficient and sustainable infrastructure remains constant. The Queensland Government has committed more than $100 billion to planning and delivering infrastructure projects.

Due to the size and weight of materials needed for most infrastructure projects, they are most economically transported by sea. One of the most preferable discharge ports for these cargoes is Brisbane because of its optimum logistics location. As a result the flow of break bulk cargo through the Port of Brisbane in the not too distant future, could reach unprecedented levels.

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Ship Visits According to interviews with shipping lines and the statistics that they provided, every major break bulk shipping line regularly serving the Australian trade e.g. Spliethoff, Austral Asia Line, Swire, Gearbulk, NYK, Wallenius Wilhelmsen Logistics and Oldendorff, call at Brisbane to discharge/load break bulk cargoes. According to these lines, the primary break bulk cargoes that they carry can be classified into three main categories—steel, timber products, farm equipment and heavy machinery for the construction, mining and gas and agricultural industries. The majority of ships carrying this cargo range between 12,000 and 30,000 dwt and require a maximum channel depth of 13.5m. A small proportion of these vessels exceed 30,000 dwt and reach over 40,000 dwt, e.g. WWL’s RoRo vessels.

The frequency of port calls at Brisbane by ships with break bulk cargo is often characterised by cluster streams that place pressures on berth availability, work on and behind the berths that lead to port congestion and a need to speed-up cargo movements.

Ships with break bulk cargoes are more susceptible to weather delays than container ships and delays incurred at overseas and Australian ports can at times contribute to late arrivals at Brisbane with resultant bunching. In PBC’s opinion the cluster stream might also result from the production volume of certain break bulk cargoes (e.g. steel), special characteristics of some cargoes (e.g. project cargoes) and competition among shipping lines. Indicators are that there will also be more break bulk cargoes carried in car ships e.g. WWL’s vessels, which will affect the efficiency of loading and discharging operations and aggravate delays already caused by clustering.

Break Bulk Cargo Berths AAT Fisherman Islands Terminal Description AAT leases and manages Fisherman Islands berths 1-3 which are the main wharves for handling break bulk cargoes, motor vehicles and in some cases, containers. AAT operates as an independent facility manager with responsibility for wharf management, terminal planning and security, delivery and receival and general administration at Brisbane and other locations in major Australian ports. AAT’s provides stevedores with access to the facility as long as they meet the AAT’s requirements. AAT also provides PDI facilities for Motor Vehicles and operates a wide range of cargo handling equipment including a portainer crane, 2 mobile cranes, forklifts ranging from 4 to 36 tonnes capacity, RoRo equipment (Mafi) etc. This kind of operation allows greater consolidation of activity at the one location and efficient capital investment for future demand.

The continuous wharf face at Berths 1-3 is 697m long which is suitable for ships discharging/loading break bulk cargo e.g. steel, timber and machinery. In addition to break bulk cargo the AAT facility is used by a variety of other cargoes including dry 30  and refrigerated containers as the berths are equipped with one conventional portainer crane and access to a power supply. It is possible to berth three regular size vessels or two large size vessels (i.e. up to 200 metres long) simultaneously. The minimum depth of water alongside these wharves is 14 metres. However, the restrictions on pavement weight loading limit has significant impact on the handling of heavy lifts and project cargoes which increases the handling cost significantly due to the special equipment (e.g. jack up trailer) required.

Berth Priority The PBC has instituted a berth priority protocol for these berths and AAT implements

that procedure. The berth priority arrangements are:

“First priority of Berth 1 and 2 will be given to PCC/PCTC Vessels discharging motor vehicles for processing at Fisherman Islands’ facilities. First priority to Berth 3 will be given to RoRo, general, break bulk and containerised cargo vessels currently discharging at Fisherman Islands Berth 1 to 3 and those cargo vessels transferring from Hamilton wharves as part of the Hamilton Relocation. PCC vessels will always retain a minimum priority to any 2 berths at Fisherman Islands. The berth priorities will be maintained for up to 8 hours at the pilot station over a vessel of lesser priority.

A lesser priority vessel will not be held off the Berths awaiting the arrival of the first priority vessel for longer than 8 hours.” If disputes arise over the priority procedure, PBC is responsible for arbitration;

however, disputes requiring their intervention are rare.

PBC explained that their main reason for giving first priority to car carriers is based on the efficient operation of PCCs/PCTCs and the stronger potential for car trade in the future. In particular, the normal discharging hours for a car carrier is 8 to 24 hours while the normal time alongside for a ship with break bulk is 24 to 48 hours. Motor vehicle imports continued to be strong with an increase of 15-20% over last decade and has high growth potential in the future although the current global economic situation has caused a considerable fall in imports into Australia.

Major break bulk shipping lines argued that this berth priority practice lessens the berth availability for break bulk vessels and aggravates berth competition/congestion which leads to the conclusion that separate facilities are required for these different types of services.

Cargo Storage

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