Source: John Garnaut, Sydney Morning Herald
COSCO, the world's biggest shipping line for bulk commodities, yesterday singled out Newcastle's dysfunctional coal loading systems to explain why iron ore shipping costs have doubled in four months and quadrupled since early last year.
"That's why in Newcastle there are so many ships; more than 100 vessels waiting for coal," said Yang Shicheng, deputy director of research at the COSCO group. "It is such a bad situation in Australia."
With about one in 20 of the world's bulk dry commodity ships tied up in a traffic jam at Newcastle on any given day, the average price for hauling ore in a cape-size ship to China has just broken through $US200,000 ($217,000) per day, from an already heated $US100,000 in the middle of the year.
Perversely, Newcastle's contribution to unprecedented global freight costs has helped lever BHP Billiton into its strongest-ever bargaining position.
Suddenly, it is far more cost effective for Shanghai steel makers to float ore for 10 days over 5000 kilometres from Dampier in Western Australia, than to cart it for 40 days over 20,000 kilometres from Tubarao, Brazil.
He too would like a piece of it: "Collecting this $US30 billion is a marvellous dream."
Traders and conference goers have booked out all 563 rooms at the Shangrila and 626 rooms at the equally extravagant Furama Hotel next door. They are waving mobile phones and openly signing contracts in the foyers and over cups of Chinese tea.
