World Grain - October 2011 - 35

FEATURE: IN IT FOR THE LONG HAUL

Deregulation shapes shipping market in Australia
In the U.S., the use of containers to ship grain has largely been driven by freight rates in the container shipping and bulk shipping markets. In Australia, deregulation of the wheat export sector has been the critical factor. The Australian Wheat Board was privatized in 1999. This set the scene for the first increase in exports by container, although exports had to “complement rather than compete with” the Australian Wheat Board International’s (AWBI) single desk marketing strategy, according to the statutes put in place at that time. The system was overseen by the Wheat Export Authority to which container and bag exporters had to apply for shipment approval. Under this scheme, each year the Wheat Export Authority typically received export applications from non-AWBI exporters totaling 2 to 3 million tonnes and approved 30% to 60% of these, or about 4% to 8% of total wheat exports, according to Australia’s Productivity Commission, which studied the sector last year. “However, actual exports by non-AWBI exporters made up only about 1% to 5% of total wheat exports,” the commission report said. “In the final two years of non-bulk export regulation, the total tonnages sought by non-AWBI exporters increased to 7 million and 17 million tonnes (including bulk and non-bulk export proposals),” the report said. “However, total consents for exports by non-AWBI exporters and actual amounts exported in terms of tonnage did not rise significantly.” The wheat export market was only truly opened up in October 2007, when, as part of ongoing deregulation, non-bulk wheat exports using containers and bags were fully liberalized. “Containers and bags were totally deregulated in 2007,” said Rosemary Richards, executive officer of the Australian Grain Exporters’ Association. ”There are no controls in place today.” Deregulation has enabled container exports in containers or bags with only limited regulatory oversight. By contrast, bulk exporters have to first be accredited as being ‘fit and proper’ companies by government body Wheat Exports Australia, a process
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which some have claimed offers an unfair advantage to non-bulk exporters because of the substantial cost of accreditation. Since 2007, wheat exports using containers and bags have gathered momentum, with Indonesia, Chinese Taipei, Malaysia, Thailand, Bangladesh and China

now all major buyers. In the 2008-09 marketing year, wheat exports in bags and containers reached 2.36 million tonnes, out of total exports of 14.57 million tonnes. In 2009-10, this increased to 2.42 million tonnes out of 14.66 million tonnes of total exports.

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World Grain - October 2011

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