Multimodal supply chains: iron ore from Australia to China

Abstract

Purpose

This paper aims to analyse available multimodal transport route variations for iron ore shipments from northwest Australia to northeast China, focusing on a major iron and steel manufacturer.

Design/methodology/approach

The research is focused on a case study and uses an established cost model as a framework, for the first time, in the context of heavy bulk cargo shipments. Field interviews and a questionnaire form the principal methods of primary data collection. The characteristics of bulk iron ore transport flow are analysed against traditional criteria and an appraisal of the transport infrastructure in north east China is made, considering both road and rail options, and various possible combinations for transport being evaluated. All factors affecting modal choice in the region are examined, including cargo volume, weight, and value, transport distance, transit time, transport costs and schedule reliability.

Findings

The volumes of iron ore moved are large, with a high weight‐to‐volume ratio, and shipments are regular. The research initially confirms that sea and rail transport combinations are the most appropriate for the movement of iron ore. However, where rail transport corridors are congested, provided that the transport distances are not too great, road haulage appears to be an effective substitute and the most competitive multimodal transport route, at least in the short to medium term, is found to be a rail‐sea‐road combination via Port Bayuquan in China.

Research limitations/implications

The research focuses on the delivery of iron ore to one major steel manufacturer in northeast China; so findings may not be transferable to other companies or circumstances.

Practical implications

The paper first demonstrates that, for heavy, high volume cargoes concentration of flows on to one corridor, perhaps under the control of one service provider, maximises scale economies, but works against competition and route/mode choice. Second, it demonstrates that, for long haul shipments of iron ore, port variations and modal differences for inland transport yield only marginal differences in overall logistics costs.

Originality/value

An assessment of high volume/heavy/low value cargoes such as iron ore has not previously been undertaken using this cost model. This paper therefore provides an original analysis of such supply chains.

Citation

Beresford, A., Pettit, S. and Liu, Y. (2011), "Multimodal supply chains: iron ore from Australia to China", Supply Chain Management, Vol. 16 No. 1, pp. 32-42. https://doi.org/10.1108/13598541111103485