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      Discussion Paper
        Prepared for
 The South Australian Freight
        Council Inc.

    Source: D Bourne Jones: Mal_de_Mer

    Source: Flinders Ports website

                      Ian Lovell
                10th December 2008

A Grain Industry Forum hosted jointly by Shipping Australia Limited and the
South Australian Freight Council was held on Monday the 24th of November
2008. Background papers prepared for the Forum can be found at: .

This paper is based on participant input at the Forum aimed at mapping the
export grain chain and associated issues.

The objective of the Forum is to identify grain export supply chain
impediments in order to formulate an improvement strategy. This discussion
paper forms an integral part of the process.

This report has been prepared based on information sourced from or supplied by third parties.
Accordingly, Ian Lovell accepts no liability resulting from the accuracy, interpretation, analysis
or use of information provided in this report. It is important to understand that much of the
information gathered is anecdotal or based on information provided by third parties and as
such has not been corroborated.

The Export Grain Chain
The export Grain Chain is complex and incorporates a large number of
players [over 30] involved in commercial, operational and regulatory functions.

Before bulk wheat and in SA/Victoria barley export market de-regulation the
export of grain was controlled by the „single desk‟ marketers: AWB for wheat
and ABB for Barley. A limited number of specialised grain types such as
Durum wheat were exported by other companies but in terms of total exports
this was small. Both AWB and ABB operated vertically integrated operations
spanning the supply chain from buying, storing, contracting transport and

Since grain market de-regulation in 2007-2008 abolishing the „single desk‟ the
number of participants, particularly buyers and sellers have increased.

Concurrently there is an increase in smaller volume shipments particularly of
containerised grain.

In the last year containerised wheat exports have doubled and volumes
through the Port of Adelaide are estimated at 1,500 twenty foot equivalent
units (teu) per month.

For transport operators and service providers the number of firms they deal
with has increased as has the complexity of coordinating service provision.

In addition drought conditions in Australia are forcing stronger competition for
grain between the domestic and export feed and food market.

High employment levels are also affecting the availability of adequately skilled
labour in the grain supply chain.

The Export Grain Chain – Generalised
Grain export ports in South Australia include: Port Adelaide, Port Lincoln, Port
Pirie, Port Giles, Thevenard, Wallaroo and Ardrossan. Due to draught
restrictions some bulk grain vessels load in one port and top-off in a second
port. Port Adelaide has key bulk loading facilities at the Inner and Outer
Harbor. Containers are loaded at the Outer Harbor DP World container
terminal. Loading rates differ from Port to Port.

Key parties involved in the grain chain include:
Grain Forecasters [e.g. PIRSA]
Buyers [e.g. Overseas or Australian companies]
Grain Exporters [e.g. Overseas or Australian companies]
Insurance companies [including EFIC]
Ship Owner
Shipping Agent
Bulk Handlers/Loaders [e.g. ABB Ltd]
Port Operators [e.g. Flinders Ports, ABB Ltd]
Pilots [e.g. Flinders Ports, ABB Ltd]
Stevedores [e.g. Patrick‟s]
Towage Operators [e.g. Svitzer, Port Lincoln Tug Co]
Road Operators
Rail Operators [e.g. GWA ]
Rail Track Operators [e.g. ARTC]
Depot operator
Bunker Services
Waste Disposal Operators
Ship Cleaners
Marine Surveyors
Labour Providers
 Internationally: IMO, AMSA, SOLAS, ISO 14001, MARPOL, UNCITRAL
    and import country regulators
 In Australia: Australian Customs Service [ACS], Australian Quarantine
    Inspection Service, Environmental Protection Agency(s) [EPA],
    Department of Immigration and Citizenship [DIaC], Department of
    Infrastructure, Transport Regional Development & Local Government [DI],
    Department for Transport, Energy and Infrastructure [DTEI], Department of
    Health & Ageing
 Generic regulators at a Federal & State level for functions such as
    Occupational Health Welfare & Safety etc
A number of firms fulfil more than one of these functions.

Set out in the following diagram is a generalised map of the grain supply chain.

 Grain Chain Map                                                                                                 DI: Transport Security
                                                                                  Bulk                           IMO, AMSA, SOLAS, ACS, AQIS,
                                                                                  Handler        Regulatory      EPA, DIAC, DoHA, DTEI, ISO
  Grain                        Grain              Charter, Vessel &
  Buyers                       Sellers            Logistics
                                                                                                 Authorities     14001, MARPOL, UNCITRAL
                                                  Arrangements                   Port            ==
                                                                                 Operations       Ship’s
                                         Import                                                   Agent
                                                              Vessel                                                  Security, Berth Allocation
   Finance,                              Permit               Schedule &                                              Pilotage, Towage,
   banking,                                                                                 Approvals                 Mooring, Marine Survey,
                       Grain                                  Stowage
   insurance                                                                                                          Stevedoring – Labour,
                                                                                                                      Providores, Bunkers,
                                                                                                                      Waste, Survey, Cleaning,
Grain                Harvest &                Unload & store on farm or                                               Fumigation
Grower               Transport                at Bulk Handler Silo                   Load for transport to
                                                                                     export bulk handler                 Sea, rail or road to
  Unload at                                             Ship’s Agent                                                     export port silo
  export silo                                                                                                  Marine Survey,
  AQIS                 Make up export                                                Vessel                    ACS / AQIS               Load to
  registered &         consignment:                     Transport to port            Arrival &                                          ship &
  approved             Segregation &                    bulk loader                  Berthing                                           Vessel
  establishment        Blending                                                                                                         Departure
                                                                  Customs, Health
                                                                  Security, Inspections,           Unload grain
  Ocean Voyage with or              Berth Vessel at               approvals                        to store                Load grain
  without 2nd port loading          destination port                                                                       to transport
                                                                                              Purchase by
  Sea, rail or road linehaul                                                                  consumer(s)
  to destination                         Unload grain delivery to customer (s)

      Key Documents/Approvals

    Commercial Export Arrangements - Buyer with Seller                                     Seller – buys grain from grower
    Financial arrangements / Letter of Credit / Insurance                                  Cash Forward Contract Firm Grain Offer Pool
    Shipment specifications / Ship Charter / Delivery Date                                 Grower / Seller organises transport to accumulation site /
    Import Permit                                                                          export port

    Charter Party               Ships Agent at                        Notifies: Seller, Port Operator/ Port services tugs, pilotage, mooring labour,
    Arrangements                export port                           berth allocations, harbour services, stevedore, bulk handler, Transport Security,
                                                                      Marine Surveyor, AMSA, AQIS, ACS,

Ship prior to port entry                                                                                               Arrival at Berth
Load Port, Survey, AQIS Quarantine Pre-Arrival Report (QPAR) 96 to 12 hours prior to arrival, Stow Plan
   Instructions                                                                                                        Ready to Load Declaration
& AMSA Stability Calculations, Ballast Water Plan, ACS arrival forms, De-Rat & Sanitation Certificates,
   Arrangements                                                                                                        Marine Survey
Gypsy Moth Certificate if reqd, ISSC, ship‟s security level, last 10 ports of call, power, water, waste,               AQIS Pratique Inspection
bunkers, stores, SOLAS, ETA, Vessel Entry Form
                                                                                                                       AQIS Ship Inspection
                                                                                                                       Incinerator Inspection
              ACS: Export                     ACS: Export Clearance No.                             Fumigation         ACS/DIAC/Security
Exporter      Declaration                     Authority to Deal                                     Certificate
              Request to Load Ship            Certificate of Clearance
              Stores, Departure                                                                                      Load                 AQIS
              Report                                                                                                 Vessel /             inspection
                                              AQIS                                                                   Lodge                of grain &
                                              Export Permit [WEA bulk wheat]                 Bulk Handler            manifest             loading
                         Import               Phytosanitary Certificate                      Approved                                     equipment
                         Permit                                                              Establishment
                                                                                                                     Vessel               Vessel
                                                                                                                     Clearance            Departure

Containerised Grain Exports

Containerised grain exports differ from bulk grain exports in a number of ways.
Essentially the grain export process involves grain being packed into a
container in bulk or in bags. This takes place at a registered and AQIS
approved facility. Once the container and grain is inspected by AQIS or under
an AQIS approved arrangement the container is sealed and enters the
„regular‟ container export supply chain. The empty container can be inspected
at the container depot and sealed for transport to the packing facility.

In contrast with bulk ship vessel grain exports the containership does not need
to be „grain‟ inspected. An additional point of difference is that most
containerships run to a fixed day sailing schedule and generally face fewer
vessel delays compared to bulk charter vessels.

Containerised grain exports can be packed off-port in regional areas with the
containers being delivered from the container depot to the packing location by
road and/or rail. The physical inspection may occur in the regional packing
facility or if remote on arrival at a metropolitan location.

AQIS requires different grade containers to be used for export bulk and
bagged grain. Shipping Australia Ltd has produced the following guide.

Grade                                 Criteria                                  Commodities
FOOD CONTAINER                        No Taint                                  Dried Fruit
(FC)                                  No Flaking Paint                          Flour
(Including DPI Grade)                 No Interior Transferable Stains           Grain/Peas/Cereals
                                      Clean & Dry Floor                         Rice
                                      No Cargo Residue
                                      No Infestation
CLEAN CONTAINER                       No Obnoxious Odours                       Milk Powder
(CC)                                  No Flaking Paint                          Canned Fruit
                                      No Transferable Internal Rust             Personnel Effects
                                      No Transferable Floor Stains              Pet Food
                                      Clean & Dry Floor                         Bulk Food
                                      No Cargo Residue                          Commodities
                                      No Infestation                            (with fitted liner)
GENERAL CARGO                         No Cargo Residue                          General Cargo
(GC)                                  Dry Floor                                 Cotton
                                      Normal Wear & Tear                        Steel
                                      Acceptable                                Machinery
MULTI PURPOSE                         No Cargo Residue                          Hides
CONTAINER                             Cargo Worthy                              Bone Meal
(MC)                                  Suitable for carriage of                  Bagged Chemicals
                                      nonsensitive Cargo. Includes              Scrap
                                      containers prepared with
                                      linings & absorbent material.

In the case of grain AQIS rejects the container if it finds live pests in residues
or on the structure of the container; live rodents or evidence of rodents
harbouring behind linings; residue infestible by pests; structural damage that
pests could enter after loading; non-infestible materials, odour, water, rodent
carcasses or droppings.


The following Australian Customs Service picture depicts export of
containerised grain from a registered approved depot to the Container
Terminal Operator. A guide is on the ACS website.

       Source: ACS website

       In addition to ACS AQIS documentation through EX-Doc is shown


                           AND REQUESTS THE RFP TO BE FORWARDED TO THE AA                                   AA ESTABLISHMENT
                           ESTABLISHMENT AT FINL STATUS

                                                                   EXDOC VALIDATES THE MESSAGE, OBTAINS EDN AND RETURNS THE RFP
                                                                   NUMBER, STATUS AND EDN TO THE EXPORTER OR AA ESTABLISHMENT

                          EDI USER AMENDS RFP WITH FURTHER DETAILS                 IF A STATUS OF INIT          IF A STATUS OF FINL

                                                                     EXDOC VALIDATES RFP AND ASSIGNS A STATUS OF EITHER INIT OR

                                                                     AA ESTABLISHMENT AMENDS & AUTHORISES RFP AND FORWARDS
                                                                     THE RFP TO THE EXPORTER AT HCRD STATUS.  EXDOC ASSIGNS A
                                                                     STATUS OF EITHER INSP OR HCRD OR COMP

                         AA ESTABLISHMENT MUST AMEND RFP IF STATUS IS INSP                               EXPORTER

                                                                      EXDOC WILL ASSIGN A STATUS OF EITHER HCRD OR COMP

                                                                     AQIS OFFICER PERFORMS FINAL SECURITY CHECK ON RFP WITH
                                                                     HCRD STATUS. EXDOC ASSIGNS A STATUS OF COMP


                Source: AQIS

Exporters through Ex-Doc notify AQIS of a potential export of product
using the request for permit (RFP) suite of messages. An Export
Permit Number (EPN) is required for all prescribed grain & horticulture.

Grains: whole seeds of -
 wheat
 oats
 barley
 canola
 dried field peas
 sorghum
 soybeans
 mung beans
Grains: whole and split seeds of –
 vetch
 lentils
 chickpeas
 lupins
 faba beans
Grains: plant products
 hay and straw of cereal origin

The receipt of an RFP [request for permit] initiates a regime of
validation activities to ensure that the product complies with Australian
and NPPO country standards. The final step in the approval process
for RFPs is the allocation of an Export Permit Number (EPN) where
applicable and production of the appropriate certificate by AQIS.
RFP includes:
 Grain & Horticulture export registered/listed establishment, where
    the product is to be inspected
 quantity, description and identification marks of product
 description of how the product is packed, and container number(s) if
 exporter details
 name of vessel, voyage number (or alternatively flight details), date
    of departure
 consignee, country of destination, port of discharge and place of
    final destination
 the type of Certificates and endorsements required, if applicable.

Phytosanitary Certificate
Where a Phytosanitary Certificate is required AQIS procedures are
clearly spelt out in “Phytosanitary Certificate Completion (Exports)
Work Instruction”, at

Below are examples of Phytosanitary Certificates for
 Grain for Consumption – Methyl Bromide Fumigated
 Grain for Consumption – Phosphine Fumigated
 Bulk Grain

Phytosanitary Certificate – Grain for Consumption – Methyl Bromide Fumigated

Phytosanitary Certificate – Grain for Consumption – Phosphine Fumigated

Phytosanitary Certificate – Bulk Grain

The Phytosanitary Certificate is the official means by which the Australian
Government certifies to the National Plant Protection Organisation [NPPO] of
the importing country that the product meets that country‟s import standards
and regulations.
The following diagram represents a simplified export grain container chain.

Containerised Bulk Grain Chain -                   Exporter
                                                                                                            Forwarding Instruction to
Grain                         Grain                                        Shipping line quote &            Line / Agent from exporter
             Finance,                         Booking request to           booking confirmed
Buyer        Banking,         Seller          Shipping Line / Agent
  Grain                                                 Depot Inspection          Container
  Producer                   Transport to                                                              Instruction to          Bill of
                                                        Declaration               Inspection
                             packing                                                                   Container depot         Lading Cut
                                               Pick up of empty             Container
                                               container from depot         Release                              PRA & Book
     Pack                Grain                                                                 Port              Time Slot to Depot
     Container           Inspection                                                            Operations        & Container
                                                     CTO                                       & Services        Terminal
                                                     Container              Vessel
Seal                     Transport to                receival /             Arrival &
Container                Container Terminal          load to stack          loading
                                  ACS /                                                              Departure
                                  AQIS /                                    Vessel &
                                  Line /                                    Cargo
                                  Agent                                     Clearance
                                  & docs


ABB Grain Storage & Bulk Handling Facilities at Outer Harbor. Source: ABB Grain Ltd

A range of issues were raised at the Grain Forum and some solutions
suggested at and after the Forum. This section summarises them.

Market Information
Information on the production of grain and market demand for it is dispersed
across various sources / organisations
Solution: Consider a linked web portal to make such information more

Grain Market Deregulation
The deregulation of export grain has a number of impacts apart from
increased competition. There is an increase in containerised exports as
smaller volume/specialised traders and sellers enter the market. This is
exacerbating a shortage of Food Quality export containers.
Solution: AQIS approval to use liners in lower grade containers as a functional
barrier between the cargo and the container

As the market becomes increasingly dispersed in terms of grain exporters the
transport task is becoming harder to manage, particularly in terms of avoiding
berth clashes, schedule slippage, provision of tugs and use of rail.
 Make better use of information technology and shared information portals
 Produce a Grain Export Information & Procedures Pack for all parties in
    the supply chain accessible on the web

Drought conditions are increasing competition between the domestic and
export markets for feed and food grain
Solution: Greater efforts needed to drought proof farms / business

Shorter Lead Times/Delays/Inspections/In-Transit Fumigation
Order lead times are getting shorter and can be between 5-21 days. This puts
pressure on the whole supply chain. This is exacerbated by grain being
shipped „year round‟ not just in peak season. The impact is that shipments
can be delayed increasing costs.

The new grain loading facility at the Outer Harbor has some 60,000 tonnes
storage capacity and grain sourced from the Inner Harbor silos relies on a
continuous/reliable transport chain. This increases the risk of ship delays in
the event that:
 Grain is found to be unfit for export
 Loading equipment is not cleared as suitable for export grain
 The ship is not cleared as ready to load

With the advent of Panamax ships the ready to load failure rate is significantly
higher than smaller vessels

 Use ships that have demonstrated procedures in place and appropriate
   levels of equipment to pass inspection – Develop International Standards
 Tighten supply chain coordination and use sound practice to ensure
   rejections are minimised
 Have grain inspections carried out earlier in the chain – e.g. at Inner
 Inspect ships at anchorage by the use of remote inspection technology
 Allow in-transit fumigation for minor infestation of grain where permitted by
   importing country – examine Export Control Act

24/7 Operations
Grain Ports, associated facilities and transport corridors need to be able to
operate 24/7.

Solution: 24/7 capability needs to be safeguarded by all three tiers of

Availability of Services
The availability of Tugs and AQIS inspectors to meet the grain task is an issue.
The issue of availability of trained labour was also raised

 Better coordinate vessel arrivals by early advice of berth and tug
 Increase AQIS staff levels and/or productivity
 Increase pool of trained inspectors, particularly in regional areas

   e.g. Use same staff to conduct pratique as ship hold inspections
   e.g. Use Marine Surveyor or third party to conduct inspection using remote
    technology uplinked back to AQIS office
   Increase training effort to meet labour shortages

EPA Requirements
In the case of Ballast Water Australia has a dual system, one from Victoria
and one for other jurisdictions. Emission controls being developed are

Solution: Raise need for national consistency with Government

Consistency in Regulation and Regulatory Criteria
Many of the regulations applied to grain exports are to an extent subjective
and this can lead to inconsistency in their application. AQIS inspections are a
case in point that AQIS has sought to address.

Solution: Greater transparency in criteria used by regulators shared with
industry may assist as may chain participant training courses – including web
based training.

Safety on the Waterfront
Safety on the waterfront and at sea remains an ongoing issue that requires
continual improvement without imposing a cost burden.

Solution: Better national & international safety information sharing.

Issues raised at the Forum include:
Market Forecast Information – Better Use of the Web
Consistent Grain Export Procedures – Grain Information Pack
Managing the Transport Task – Sharing Of Information
Shortage of Food Quality Grain Export Containers – Use of Liners
Drought - Diversification
Shorter Lead Times: Supply Chain Coordination
Ship Inspection Failures – International Ship Standards
Grain Inspections at Outer Harbor – Risk of failure
Ship Delays – Berth Availability
Inspection Of Ships At Anchorage – Remote Inspection Technology
In Transit Fumigation for minor infestation where permitted by import country
24/7 Operations
Availability of Services
EPA Requirements - Consistency
Consistency in Regulation and Regulatory Criteria
Safety on the Waterfront

The grain chain is not only complex but is becoming „time‟ compressed as a
result of larger ships, relatively smaller holding load capacity at ports and
market demand.

In looking at the regulatory arrangements there appears to be significant
opportunity to streamline both functions and processes.

In terms of industry there also appears to be scope for improvement through
better sharing of information, albeit consistent with ACCC requirements.

It is suggested that this paper and the minutes from the forum be widely
circulated to grain chain participants, forum attendees and key Government
agencies including:

   Australian Transport Council of Ministers [ATC]
   National Transport Commission
   AQIS & Grain Industry Consultative Committee
   DAFF
   ACS
   Department of Infrastructure, Transport, Regional Development and Local
   DFAT
   Austrade
   DTEI

In addition to circulating this information a follow on Grain Chain Solutions
Forum is suggested to crystallise key issues and recommend tangible
solutions at both a policy and operational level.

Comments on this discussion paper should be sent to:

Neil Murphy
General Manager
South Australian Freight Council Inc
296 St Vincent St, Port Adelaide SA 5015
Tel: (08) 8447 0688, Mob: 0427 089 240
Fax: (08) 8447 0606

Ian Lovell
Ian Lovell
Tel 0400 708 182

AQIS Special Terms / Glossary

     Term                 Meaning

     AA                   Approved Agreement (with AQIS)
     ABS                  Australian Bureau of Statistics
     ACS                  Australian Customs Service
     AQIS                 Australian Quarantine and Inspection Service
     AHECC                The Australian Harmonised Export Commodity Classification
                          assigned by the Australian Customs Service
     AFFA                 Department of Agriculture, Forestry and Fisheries - Australia,
                          was previously known as the Department of Primary
                          Industries and Energy (DPIE).
     EDI                  Electronic Data Interchange
     EDIFACT              UN Standard EDI for Administration, Commerce and
     EDI User             An exporter or agent who has Third Party Interface Software
                          and is registered for a particular commodity
     EDN                  Export Declaration Number obtained from ACS
     EDS                  Electronic Documentation Section of AQIS Central Office
     EPN                  AQIS Export Permit Number ( PIG / PIH number)
     ER                   AQIS Establishment Register System
     EXDOC                Export documentation software
     ICS                  Customs Exports integration system software. EXDOC
                          interfaces with it to obtain an EDN
     LAN                  AQIS Local Area Network running EXDOC programs
     NPPO                 National Plant Protection Organisation
     Prescribed Goods     Fresh fruit, Fresh vegetables, Dried fruit, Prescribed grain,
                          Plants or Plant products for which a Phytosanitary certificate
                          or any other official certificate is required by an importing
                          country authority
     RAS                  AQIS Remote Area Site running EXDOC programs
     RFP                  Request for Permit to Export „Prescribed‟ Goods (EXDOC
                          EDI message) (old EX28/EX222 document)
     RO                   AQIS Regional Office
     SANCRT               The United Nations EDIFACT registered global electronic
                          certificate covering animal, plant and fish products
     Third Party          Software developed by 3rd party software developers as the
     Interface Software   interface between the exporter and EXDOC
     UN                   United Nations
     VAN                  Value Added Network (an alternative name for Carrier)
     WAN                  AQIS Wide Area Network running EXDOC programs


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