Seafreight strategy

Client Situation

• A Brazilian coal mining and power generation company, advised Drewry to suggest freight procurement options for importing coal (as feedstock) for its local thermal power plants. The company could either source coal from its captive mines in Colombia (which are in the process of ramping up production over the next few years) or from other global locations such as Australia, Indonesia, South Africa or US.
• Additionally, coal consumption at the power plants presented seasonal variations, since their dispatch depends on the Brazilian electrical system, which is strongly based on hydroelectric generation. Drewry’s aim was thus to examine freight procurement options to meet the client’s obligations to provide secure energy supplies at a reasonable cost, by formulating an economic shipping strategy.

Drewry Approach

• Drewry reviewed the client’s inbound and trading marine transportation requirements by analysing and projecting coal demand for the thermal power plants against evolving power generation policies in Brazil. Drewry evaluated the full spectrum of methods of securing sea freight transportation - from spot chartering to vessel ownership for optimising the client’s freight coverage.

Result Achieved

• A comparative analysis was presented with the associated risks and organisational requirements for each option. The most economically suitable freight procurement strategy was then selected in discussion with the client.