Image of a ship at port with cranes in the background

Building a COVID-resilient supply chain episode three: our maritime network

RashpalBhatti 2017
Rashpal Bhatti

Vice President, Maritime and Supply Chain Excellence

The maritime supply chain is vital to BHP’s success as a global supplier.

The vessels we charter are essential for transporting the commodities we produce to our customers and importing the overseas-made machinery and products we need to run our operations.

In this third and final episode of our resilient supply chain series, Rashpal Bhatti, Vice President, Maritime and Supply Chain Excellence explains the steps we’ve taken to manage the impact of COVID-19 and identify new opportunities emerging in our maritime supply chain.

If you missed the first two episodes in the series, you can read them here: Episode one: procurement | Episode two: customers.

As one of the world’s largest charterers of bulk and containerised ocean freight, BHP plays a significant role in the success of the global maritime industry.

In 2019, we commissioned over 1,500 voyages to import the mining equipment we needed to keep our operations running and export the 250 million tonnes of iron ore, coal, copper and petroleum products we produced to our customers around the world.

The extraordinary conditions surrounding COVID-19 have had a profound impact on global maritime operations and disrupted seaborne trade to varying degrees.

In particular, international border closures and intense quarantine restrictions impacted the industry and the 1.8 million seafarers worldwide, which meant we had to act quickly to protect our inbound and outbound supply chain and support the safety of the crews on our chartered vessels.

Throughout this period, there are many examples of how we kept our business running. We worked with a major rolling stock supplier to secure a prompt shipment of iron ore cars to our Western Australia iron ore business; delivered care packages to our seafarer crews moored offshore to improve their mental wellbeing; and trialled new digital technologies to maintain safety standards across the industry without compromising operational continuity.

We see significant opportunities for our industry to create a resilient, technology-enabled, safer and more efficient future state of freight in a post-COVID world.

Collaborating for success

The iron ore trade between China and Australia has contributed to the recovery of the Chinese economy and it will likely continue to support international trade as the world emerges from COVID-19.

BHP’s commodities are shipped across the spectrum of maritime sectors including all sizes of dry bulk, wet bulk and container liners. Just as each global region has been impacted by COVID-19 in different ways, each sector of the maritime industry has also faced unique challenges.

Our inbound and outbound containerised freight network ensures we receive the critical equipment we need to operate and that our customers continue to receive our commodities. As vessel service availability reduced and container positioning became imbalanced, safeguarding this network was integral to maintaining our business continuity.

Collaboration and establishing new ways of tackling challenges with our diverse partners, was a critical enabler to navigating the crisis.

Delivering equipment to our iron ore business

We used our automated software and worked with port authorities to stagger vessel arrivals at our Port Hedland export facility to manage the 14-day quarantine restrictions and ensure the safe and prompt loading of our iron ore onto our chartered vessels.

And in collaboration with freight forwarding business Westlink Logistics (Westlink), vessel owner and operator Swire Bulk (Swire), and rolling stock supplier QRRC Qiqihar Rolling Stock Co. Ltd (Qiqihar), we prioritised a shipment of 134 ore cars essential to our Western Australia Iron Ore business.

BHP and Qiqihar worked together to ensure they were one of the first companies to restart manufacturing once restrictions eased. Qiqihar delivered our fabricated ore cars to Dalian port for a specialised shipment organised by Swire and Westlink to Port Hedland, which ensured the ore cars made it to our business when we needed them.

Rob Carbon, the Operations Manager at Westlink, said the project was successful because of the strong relationships already in place between the four parties.

“We collaborated as an integrated team to put project specific risk mitigation strategies in place to foremost protect the wellbeing of our team and successfully transport the ore cars,” he said.

Protecting the mental wellness and health of seafarers

Approximately 30,000 seafarers representing many nationalities enter BHPs supply chain each year on our chartered vessels.

During COVID-19, this workforce contended with border closures, reduced shore leave and less flights, which prevented many of them from joining their vessels or returning home for extended periods, impacting mental and physical wellbeing.

We have found this has safety implications, with a link between negative seafarer wellbeing and mechanical incidents on board vessels. We focused on improving their physical wellbeing by working closely with authorities to protect crews and shore communities, and through our port networks, we provided care packages that included locally produced products, to vessels anchored off shore.

Resetting for a more efficient, technology-driven maritime supply chain

Social and regulatory responses to the COVID-19 outbreak have varied across countries, necessitating a variety of technological innovations to improve safety and maintain the continuity of the global maritime network.

Together with our industry partners, we trialed remote inspections on our vessels to reduce the reliance on physical inspections, used sensors and camera technologies to understand vessel performance and assess crew welfare, and extended our business continuity processes into the supply chains of our vessel owners to better prepare for further unplanned shocks and disruptions.

Although these technological initiatives were developed in response to COVID-19, they will remain in place indefinitely as they build on our ambition to develop a safer and more digitally connected supply chain of the future.

Through this pandemic, we have also successfully embedded our automated vessel schedule and queue management software, and we are driving transaction efficiency along our supply chain by combining the latest market platforms with BHPs in-house systems. We are also close to finalising an algorithm with our industry partners that uses machine learning to improve vessel incident predictions.

These are undoubtedly challenging times for us all, and the actions of BHP and its industry partners demonstrate the collaborative and innovative spirit of the players within the global maritime network. We see significant opportunities for our industry to create a resilient, technology-enabled, safer and more efficient future state of freight in a post-COVID world.