E-commerce and the coal industry

Industry observers currently peg the share of 'spot' contracts in Australia's black coal export market (valued at $9 billion a year) at 15%, compared with only 5% of market share four years ago. This quantum shift in purchasing habits is being driven largely by abundant coal supplies, a multi-source availability of coal, and falling prices - a scenario that is expected to remain unchanged for at least the next three to five years. Contracts are not only becoming shorter, they are also dealing with lower tonnages. And, unlike under older long term contracts, where prices are reset every one to two years, under the modern versions prices are being reset every three to six months. As buyers push to achieve more competitive pricing outcomes and maximise the supply of competitively priced fuel, this forces everyone associated with operating power plants to look for ways to reduce costs and implement higher levels of efficiency, by saving time and paperwork. Net-based trading in coal is happening. The major buyers and sellers operate most of the existing sites. Buyers see the Net as a means of reducing the cost of their fuel; sellers see it as a means of better displaying the product they offer. The use of the Net is seen as providing improved market intelligence, greater transparency, better marketing and service levels and enhanced efficiencies. The one-to-one approach remains a fixture and its future is assured. However, whether the Net will ultimately support independent trading sites similar to those whose income will come from brokering deals is hard to judge. Copyright (2000) CSIRO Energy Technology and Exploration and Mining