OUR SPONSORS & SUPPORTERS

Logistics Conference 2019

DAY ONE SUMMATION& DAY TWO OUTLINE

GEOFF FARSNWORTH

Chair – GTA Transport Storage & Ports Committee

OUR SPONSORS & SUPPORTERS

Logistics Conference 2019

PORTS – CHALLENGES OF THE NEW ENTRANT

JOCK CARTER

Executive Director Newcastle Agri Terminal

New Port DevelopmentsGTA Logistics Conference

Rendezvous Melbourne

April 2019

‹#›

History of NAT Development

2009 2010/11 2012 2013 2014 2015 2016

NAT was

established

NAT commenced

full operations

Legend:

NAT Business Case / Approval Process

Construction / Commissioning Process

Operational Milestones

NAT

commenced

commissioning

NAT

commenced

construction

Commencement of

lease with Newcastle

Port Corporation

First rail receival

Planning approval

obtained

Commissioned new

road receival and

container packing

facility

ACCC exemption granted for NAT

First road receival

First shipment filled

by NAT

East Coast drought conditions affect export volumes

‹#›

RAIL

• LOOP – Unloaded up to 72 wagons (5000mt)

• 1800mtph

• Rail direct to Vessel

ROAD Recieved & Outloaded up to 3500mt per day

STORAGE 60,000mt with fumigant recapture

SHIP LOADING Siwertell ship loader rated to 2,000mtph

VESSEL DISCHARGE Import grain capability

BERTH DRAFT Berth draft of 12.8m, capable of Panamax Class

CONTAINER PACKING

Established container packaging capability 2000mt / day

Key Capabilities and Capacity

Why NAT?

• Churchill Fellowship

• Deregulation created interest in competition and optionality

• Independent service focussed

• Opportunity for innovation and creativity

• Leverage coal industry infrastructure

Innovation• Increasing train size – mega train

• Export rail direct to vessel

• Fumigant recapture system

• Loading rail direct farm to wagon

• Import grain direct hopper to terminal

• Rail outload capability

CHALLENGES / OPPORTUNITIES

Overcapacity??

‘Oils ain’t oils’• Important to differentiate

capacity

• US Shuttle loading terminals

• Black Sea export facilities

CHALLENGESVESSEL FUMIGATION

• Current situation is legislated environmental vandalism

• Multiple unnecessary fumigations

• Huge cost to industry and community

CHALLENGESEFFICIENCY = INDUSTRY CAPACITY

• Collaboration

• Competing Exporters / Competing Rail Providers / Competing Road Carriers / Competing Ports

• How do we achieve this whilst maintaining the competitive environment?

• Coal Industry HVCCC

• Supply chain costs ultimately are borne by the grower

The Challenge of Competition & Co-operation

Potential Concepts• Grain style HVCCC?

• ACCC sanctioned planning discussions

• Sharing of non-commercial logistics related information

• Involvement of key supply chain participants grower to vessel

• Continuous improvement – no capacity at the moment for industry to critically analyse and improve performance

“Criticism may not be agreeable, but it is necessary. It fulfils the same function as pain in the human body. It calls attention to an unhealthy state of things” Winston Churchill

Potential Concepts - Fumigation

• On board fumigation on the basis of minor detection sanctioned

• Consistency in treatment of ‘source’ across road / rail / ship / containers

Questions?

QUESTIONS?

Logistics Conference 2019

PORTS – CHALLENGES OF THE NEW ENTRANT

SIMON BARNEY

Chairman – Quattro Ports

Quattro PortsPort Kembla Grain TerminalCommenced Construction – August 2014Commenced Operations – January 2016

From this ….

To this ….

To this ….

And finally, to this ….

And this ….

Logistics Conference 2019

RESEARCH & DEVELOPMENT- DELIVERING IMPACT

JUSTIN CROSBY

GRDC

AUSTRALIAN GRAIN LOGISTICSCONFERENCEMELBOURNE APRIL 2019

RD&E PLAN – DELIVER IMPACT TO GROWERS

▪ Support research to advise policy and investment decisions that lead to reduced post-farm-gate costs

▪ Invest in R&D that informs industry and government approaches to trade and market access for Australian grain into export markets

▪ Improve the reliability and cost effectiveness of on-farm grain storage to reduce handling costs and capture market opportunities

▪ Improve automation of transport and handling activities and/or alternative logistics and distribution models to realise greater value capture by growers

Post Farm Gate Key Investment Targets (KITs)

GRDC RD&E PLAN 2018-23

Grains Research and Development Corporation (GRDC)

A Level 4, East Building, 4 National Circuit, Barton, ACT 2600 Australia

P PO Box 5367 Kingston, ACT 2604 Australia

T +61 2 6166 4500

F +61 2 6166 4599

www.grdc.com.au

@thegrdc

Logistics Conference 2019

MORNING TEABREAK

Logistics Conference 2019

PORTS – OPPORTUNITIESOF MOBILE SHIP LOADING

MARK LEWIS

General ManagerRiordan Grain Services

AUSTRALIAN GRAINS LOGISITCS CONFERENCE – 10TH APRIL

PORTS – OPPORTUNITIES OF MOBILE SHIP LOADING

Riordan ValuesSafety and WellbeingInnovation and Drive

RespectCommunication

Community

300000T OF BULK BARLEY LOADED VIA PORTABLE LOADER 2017

Mobile Ship LoadingLow cost infrastructure – droughts & rain

Intensive logistics task – 140 loads pd, 24/7. Happy

to pay for service but it needs to be earned.

Many moving parts – storage, trucks, quality,

people…

Location of grain & storage access critical

TONNAGE GROWN IN REGIONS

The storage networkON FARM STORAGE - Needs to be as good as private

system

PRIVATE STORAGES – Flexible

THE SYSTEM - Needs to be flexible, price paid for extra

help

Innovation and disruption in the supply chain

Match Equipment to demand, utilization of the

fleets we have - AB triples, B triples, Quad, Quad B

/ Doubles.

Operating costs increasing, global competition

becoming more efficient & diverse.

Rail has its place in the supply chain.

Thank you

Logistics Conference 2019

QUESTIONS TO SPEAKERS -PORTS

Logistics Conference 2019

EVOLVING SUPPLY CHAIN TECHNOLOGY

SINCLAIR DAVIDSON

Professor of Institutional EconomicsRMIT Blockchain

45

—

Evolving Supply Chain Technology

Sinclair Davidson

RMIT Blockchain Innovation Hub

46

What I’m not going to talk about today

• Gory technical detail

• Do you really know how your mobile phone works?

• Investment advice

o It is true that bitcoin is now trading at levels not seen since late last year this does not

mean the technology is a dud

o If you don’t understand the investments you are making you shouldn’t make them

o Early investors in many new innovations lose money

o Do not participate in ICOs/IPOs where the blockchain application is not obvious

47

What is a blockchain?

• A blockchain is a decentralised, distributed ledger

• The challenge with a distributed ledger is ensuring everyone agrees what the ledger says

48

Understand the Blockchain in three easy steps

49

Some major use cases

• Money and finance (lots of cryptocurrencies aiming for cross-border transactions).

• Land titles and digital asset registries (e.g. intellectual property)

• Decentralised identity management (e.g. for displaced peoples)

• Supply chains

• Sharing economy.

• Democratic voting/collective decision making

• Healthcare (and data markets generally)

50

The third generation of the internet

• First generation was internet of data (email, file sharing)

• Second generation was social internet (mobile phone, apps)

• Third generation is internet of value, with native property, rules, money, contracts,

organisation (blockchain, DAOs)

• Digital assets move to the internet (money, stocks, titles, debt, IP, votes, securities,

knowledge, records, data …) and can be exchanged P2P without intermediation.

• But is all of this really possible?

51

Blockchains are incredibly inefficient

• Slow (block confirmation times)

• Expensive (mining, transaction fees, storage requirements)

• Hard to scale (transaction times)

• Horrible consumer experience (exchanges, key storage)

• Unnecessary (there are simply better databases, trusted third parties aren’t that bad)

• May destroy the planet (mining)

52

Or the institutional cryptoeconomics view…

• We’re applying a large body of economic thought (institutional economics) to understand

how blockchains will change the economy and society.

• What happens to the shape and size of firms? What is the role of government? How does

blockchain change civil society?

53

What sort of technology is blockchain?

• We started with what seems like a basic question: what kind of technology is blockchain?

1. Production technology?

o Lowers production costs

2. Exchange technology?

o Lowers transaction costs

3. We argue blockchain is really exciting as an institutional technology:

o Lowers information costs

o Blockchain is a technology of governance.

54

So when can we use blockchain?

• When the economic problem involves:

1. Information…

2. Moving through time…

3. In a potentially untrustworthy environment.

• Such as:

o Hostile governments (degrading property rights)

o Complex contracts (layers of subcontracting)

o Suspicious customers / producers / collaborators (certification)

o Any environment with possible opportunism

55

Blockchains Industrialise Trust

• Blockchain limit opportunism and industrialise trust

• Convert expensive energy to economically valuable trust

• A whole lot of our economic institutions provide trust

• 35 per cent of the US labour force works in professions of trust

o Lawyers

o Accountants

o Managers

o Law enforcement

o Bureaucrats

• Heroic assumption: trust is a $29 trillion industry

56

Trade as an information problem

• When we think supply chains we often think transportation costs.

• But information costs can be higher than transportation costs:

o Where does my wine (really) come from?

o How old is this meat?

o Is this organic?

o Is this is a genuine pharmaceutical product?

o Does this present a biosecurity risk?

o Who needs this information?

o Consumers

o Governments / regulators

o Firms

57

What do consumers want?

• Consumers want to know where goods are from, their

characteristics, how they were transported (consumers largely

want information about provenance).

o Where was this fish caught?

o Is my lobster fresh?

o Is this diamond real?

o Was this product produced ethically?

• This information differentiates goods and gives them value.

• Much of this information is currently produced through brand

recognition at some level.

58

What do governments want?

• Governments increasingly demand information necessary to comply with

domestic regulations

o Biosecurity risks

o Ethical standards.

• Governments must trust that the information provided by the importer is true

and correct.

• As the number of regulations in each nation grow it becomes costlier to prove

the provenance of goods and whether they comply with local regulations.

59

What do producers want?

• Companies also demand information:

o Is there fraudulent activity up or down the supply chain?

o Are there missing markets?

o Can I optimise my supply chain? (e.g. predicting demand)

o Who are my final consumers? (e.g. entertainment industry).

60

Might blockchain help?

• Blockchain is a new economic infrastructure for the storage and maintenance of

information about goods as they move.

• Different way to bring down information costs than passing paper-based information

through a hierarchy.

• Blockchain effectively becomes a single focal point for all actors to view supply chain

information.

• Captures the dynamic information about goods.

61

Might blockchain help?

• IBM and Mearsk

• IBM and WalMart

• Alibaba

62

How could blockchain be used in practice?

• Scanning through QR codes – updating of dynamic information

• Internet of Things (IoT) – smart containers that upload information as goods move.

• Smart Contracts – lead to greater accountability. Don’t pay until the good arrives.

Insurance issues. Event scanning.

• New Data Markets – exciting potential for data markets here – supply chain data is worth a

lot of money, might connect into AI for effective demand management and better

understanding consumer preferences.

• Proof of Location – new next generation GPS technology – uses decentralised sensors to

track containers.

63

Where?

Which markets and jurisdictions would we expect blockchain supply chains to be adopted?

• Markets for differentiated goods (perishables, agricultural

products, high-end manufacturing, pharmaceuticals).

• Jurisdictions with comparatively high information

requirements. That is, countries that have high compliance

costs and large regulatory states.

• Where there’s friendly policy settings/government

recognition for the trial and testing of these solutions.

How will this happen? Perhaps through forced adoption – Walmart

in 2018 forced it supply chain to move towards blockchain.

64

Early examples

• Agridigital – agricultural products

• Everledger – diamonds, wine

• Traseable – tuna

• And now some broader predictions…

65

66

The world is made of supply chains

67

V-form networks

“V-form networks consist of a number of fully independent companies that effectively operate as one vertically integrated company through blockchain technology, coordinated and supplied by a third party.” – Berg, Davidson and Potts

68

Conclusion

• Supply chains face an information cost problem.

• Those information costs can be ameliorated by new forms of governance,

but institutional possibilities are constrained by existing technologies and

whether entrepreneurs can apply them.

• Blockchain is a new governance technology for distributed ledgers of

information, and can potentially be applied to supply chains.

• This could have longer-run impacts: de-commoditization, shifts in the value

chain, etc.

• Some policy challenges (government recognition, coordination of

standards) that may be partially overcome through a high-level policy forum.

69

References

• Allen, D, Berg, C, Davidson, S, Novak, M, Potts, J, ‘Blockchain TradeTech’, 16

May 2018. Presented to the APEC Study Centres’ Consortium Conference.

• Allen, D, Berg, A, Markey-Towler, B, ‘Blockchain and supply chains: V-form

organisations, value redistributions, de-commoditisation and quality proxies’, The

Journal of the British Blockchain Association, pp.1-8

• Allen, D, Berg A and Markey-Towler, B, ‘Predictions for trade in a blockchain

world’, Machine Lawyering, Chinese University of Hong Kong, 28 January 2019.

• Berg, C, Davidson, S and Potts, J, ‘Outsourcing vertical integration: Distributed

ledgers and the v-form organisation’, RMIT University Working Paper. 31

December 2018.

70

Keep up to date with our work

• http://sites.rmit.edu.au/blockchain-innovation-hub/

• http://cryptoeconomics.com.au/

• http://medium.com/@cryptoeconomics

• Twitters: @BlockchainRMIT @cryptoeconomico

@chrisberg @sincdavidson @profjasonpotts

@drdarcyallen

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