The Covid-19 pandemic completely turned the world on its head, in more ways than one. Beyond the devastating medical challenges, border closures, national shutdowns, and a declining economy (rivaling that of the 2009 global financial crisis) have placed unparalleled pressure on global supply chains, resulting in intense challenges for logistic companies.
The mining industry has not been exempt from these challenges. Remote locations and multimodal transportation systems ensure that mining logistic companies have always faced the risk of delays, cancellations and resource shortages — mining is an industry that faces inherent highs and lows, with 2020 seeing these come into reality.
Whilst revealing just how complex these supply chains are, the pandemic has also highlighted the resilient and innovative nature of logistics companies. A variety of short-term plans mitigated immediate concerns whilst suppliers and international shipping companies worked hand-in-hand to implement permanent changes, working to prevent future contraction and ensure the long-term health of supply chains.
A day in the life of an international shipping logistics company
International logistics companies are an integral member of the mining family, working cross-country, and continent to deliver resources, machinery, and assets. Mining equipment can be enormous in size, with each delivery presenting unique challenges in terms of weight, dimensions, permits, and regulations.
Logistics companies are responsible for not only for the safe physical transport of machinery but are also required to have an in-depth knowledge of customs regulations, security laws, and international shipping guidelines.
Maintaining good relationships with officials is therefore crucial to ensure supply chains remain intact. On a national level, logistic providers work hand-in-hand with authorities and government departments, to identify potential hazards and understand the local transport environment.
Often an unsung hero, logistics teams work tirelessly to ensure the stability and smooth running of the industry and essential supply chains.
Covid-19 and global supply chains
The complexities of international shipping are something all too clear to International Global Logistics, part of the National Group.
Due to the current situation, only essential services have been able to continue to operate as normal, with services deemed non-essential facing delays. A State of Play survey conducted in April 2020 found that 70% of Australian mining operators felt they were facing supply chain shortages due to the coronavirus crisis.
The survey (which has been conducted since 2012, discussing industry innovation and performance) revealed that whilst some robust companies were not overly concerned about the ongoing effects of the pandemic, other smaller producers with more diverse portfolios were worried about commodity pricing and resource shipment.
Mines themselves remained open in some countries but others, such as those in Peru, South Africa and Canada, were forced into closure due to government-mandated shutdowns. This placed greater pressure on suppliers in other locations (and thus, the logistics companies who service them).
The Australian Government responded a little differently and in testament to the integral role the industry plays in the overall economic health of the country, FIFO (fly-in-fly-out) workers traveling to Western Australia were exempt from the 14-day quarantine made mandatory for every other traveler to the state.
With each country around the world implementing its own border closures and lockdown laws, the effect of the pandemic on global supply chains varied enormously and the repercussions may be felt for some time yet.
Meeting the challenges
Innovative by nature, international shipping, and national haulage companies such as National Heavy Haulage, part of the National Group was quick to adapt to challenges faced by the spreading pandemic.
Back in April, the ACCC granted authorization for members of the Mineral Council of Australia and other mining associations to work together, in order to manage critical supplies and services. Member companies were permitted to collaborate in sourcing, purchasing, and distributing vital supplies that ensured the safe and timely operation of mine sites.
In fact, the Australian mining industry’s positive response to the crisis has led to experts predicting that the sector will emerge from the pandemic in better shape than both the 2008 financial crisis and 2015 commodity market downturn. Heavy haulage and transport logistics operators had a large role to play in this, navigating state border closures and government mandates to ensure that this vital industry remained steadfast and operational.
Further afield, international companies looked to diversify and relocate their supply chains, based on location and safety. Sourcing resources and equipment locally often became the more feasible option, in order to maintain both productivity and profitability.
Being an unprecedented event, the Covid-19 pandemic revealed valuable information about global supply chains and how to transport logistics companies can safeguard their clients and practices moving forward. Experts have commented that traditional global supply chains are structured to be lean, cost-efficient, and anchored around lynchpin geographical centers and operators, which does not lend itself to the challenges faced during a global pandemic.
Recommendations moving forward having included developing crisis scenarios to identify gaps in global supply chains and international shipping. Authorities in the field have also suggested investing in more collaborative, agile fulfillment plans — such as the decision made by Australian mining companies to share resources and supplies.
Force majeure was a term frequently used in the early stages of the pandemic, referring to an unforeseeable circumstance that prevents a contracted party from fulfilling its obligations. It has been advised that suppliers, international shipping, transport logistics, and mining corporations themselves understand their rights and responsibilities to each other.
The Covid-19 pandemic has undoubtedly been a catalyst for change in many industries, including international shipping and national heavy haulage. With the mining sector being an integral part of many national economies, it was incredibly important for logistics companies to find ways to overcome newly formed barriers.
The result was a series of both short and long-term changes that will no doubt ensure the future stability of the resource industry for years to come.