Shipbrokers around the world are waking up to the shock news that one of the world’s most important shippers, miner BHP Billiton, has debuted a system that avoids any need for a middleman.
Reuters is reporting that BHP’s new online system works as an auction site between shipowners competing for shipments with the first charter contract of this new type of deal fixed this week.
BHP plans to increase the number of deals it does on its new platform in the coming months.
Yesterday’s auction saw 13 owners compete to move 170,000 tonnes of iron ore from west Australia to China next month.
More than 50 bids were submitted in 60 minutes and the final agreed price was almost $0.30 below the spot price of $5.19 per tonne, BHP said without revealing which owner won the contract.
A second auction with a total of 18 owners has been scheduled by BHP for next week.
BHP is the world’s largest miner. In its last financial year it moved 275m tonnes of iron ore from Western Australia mainly to China.
In a report last year global shipowning body Bimco predicted: “On standard fixtures it may be difficult for brokers to add value, and that is where digitalisation may gain the first foothold into an otherwise reluctant industry. For instance, where a large exporter frequently ships under standard terms to the same discharge port, a digital portal for tenders and offers may facilitate doing business without the assistance of a broker.”
Brokers are increasingly aware of the need to provide online platforms in order to survive. In a poll carried on this site last year, 57% of readers maintained computers would not replace shipbrokers.
Nevertheless, readers warned brokers need to be aware of how new technology can change whole industries with Uber and Airbnb cited.
Middlemen being knocked out of shipping supply chains is becoming a noticeable trend in recent months. For instance, in the container segment, Splash recently reported on how Chinese online retail giant Alibaba has concluded a deal with Maersk Line to take space on its boxships, negating the need for freight forwarders, while today our site carries a report on how Alibaba’s American rival, Amazon, has started operations as an ocean freight forwarder.