30 November 2015

Ray Connell, CIO of Qube tells us how the company created clever technology to turn the low value bulk haulage of minerals into a high value logistics business.

Tell us how Qube was formed.

The company was formed in 2007 with the purchase of an automotive stevedoring and an empty container transport businesses from DP World. We spent $200m doing the deal. Seven years later the business is worth $2.4-$2.5b market cap depending on share price.

What were the key challenges starting out?

One of the first things we had to do was determine what our business was going to look like in the future. The traditional businesses were hard fought, well distributed across multiple players, and we knew there wasn't organic or tremendous growth in those parts. We had to start looking outside that. We had to build a completely new strategy and direction to the business. Our challenges were about finding new markets, demonstrating a capability we didn't have, and then gaining the confidence from customers that we could deliver services in those new market segments.

So, right from the beginning you diversified?

We moved from a predominantly import logistics supply chain to being very focused on import and export supply chain. And the industry mix changed for us. We moved from stevedoring, construction and cars to dry bulk – iron ore, nickel and copper etc. We had to find opportunities across different industries and very different clients. The reality is we didn't have solutions. We didn't have any clients. We had no proven capability. We were bidding on work and presenting extremely innovative solutions that we knew we could deliver but we didn't have in the market at that point. To prepare ourselves we started to have deeper conversations with the Sandfield team in terms of where we were going strategically and the projects we were bidding for and the type of technology that we were looking to deliver to the market.

"That's where Sandfield really did deliver for us - the innovation component."

What were the keys to winning your first clients?

To break into those markets we had to be value for money, but innovation was really the key. The guys who were in the industry probably didn't see us coming and we won tenders on the basis of our innovation. That's where Sandfield really did deliver for us ­– the innovation component. We went to a number of bulk haulage tenders with very innovative solutions. The innovation around our technology was a major contributor to winning some of those significant contracts.

Give us an example of the kind of innovation that won you business.

We identified a gap in the market in the mine-to-port handling and haulage of concentrate minerals. We developed the rotabox technology – the actual container – and the rotating technology that we use to handle the containers to the vessel. The physical technology around containerising high concentrate minerals was quite innovative. The second part of the innovation was to deliver the visibility to the client – the tracking of those containers through the supply chain.

How did Qube's new 'hardware' revolutionise bulk haulage in Australia

Traditionally minerals would have gone into tipper trucks at the mine then been driven to a shed. The product would be tipped onto the floor then pushed into stockpiles. Then you've got to pick it up again, move it out to the wharf, then put it onto a conveyor. We compressed multiple points of the handling into a very smooth operation.

Rotabox containers are multi-use. They're filled at the mine. When the vessel is available we'll move those containers to the vessel site. The rotator we've developed lifts the container, takes the lid off in flight and then tips the minerals into the hull. As it rotates back it replaces the lid then places the container on the wharf where it goes back into the supply chain. What you end up with is a completely sealed product. The minerals have very strict moisture and mineralogy controls. The product is not exposed to the environment. There's no water getting into it while it's in storage.

When you're loading these minerals there's a high carcinogenic component. Uranium, absestos and lead are all present in high concentrates, so when you're dumping that on the wharf and using grabs to pick it up you've got environmental issues. It's a difficult clean up and any spill can contaminate a wharf or marine habitat. With Rotabox there's no loss, no waste, no environmental contamination, no clean up. It's proving very popular with the clients.

How does the digital technology you've developed give Qube an edge?

Because of the RFID technology the system is fundamentally automated so there's very little hands-on data capture. It's all captured automatically. That's important. The mines are in remote locations and putting people out there is expensive so the fact that the loader driver is using the system when he loads the trucks, and the trucks are being tracked through all the key locations automatically, means there are very few human touch points where mistakes can be made. That keeps the cost of managing the system down, but also allows our clients, because it's web based, to see exactly what's happening in the supply chain.

Are your competitors catching up?

What our competitors have replicated is the hardware. They've copied the containerised operation. That's the sort of stuff they can observe, film, then go off and replicate. The part they're struggling with is the technology. We've retained a leadership position in the technology. We're always looking to innovate and keep our clients excited.

What's next in terms of innovation?

We're working on data visualisation – providing key productivity indicators graphically. We've been doing that for a while, but now we're looking at incorporating more and various feeds of information across traditional transaction and data handling. For example we're combining weather information with productivity data.

"What we've always been really impressed with is their ability to get their heads around problems and get their sleeves rolled up and deliver."

Because we load the vessels outdoors, inclement weather can impact on a vessel. We can have a period of rain or heavy wind and we're generally required to shut the hatches to protect the commodity from water. At the end of the vessel load the client will get a report that details periods of inactivity – our non productive time. With data visualisation we can present that information in real time, visually to the client. It'll mean we don't have people recording starts and stops then writing client reports. The info is now captured electronically.

We can also redirect assets because we need to shut the hatches. We can speed trucks up or slow them down. We make decisions because it benefits us and we can express to the client why we're doing it. We're developing a very clear picture and providing that to our clients around our operational performance.

Why does data visualisation warrant the investment from Qube?

Logistics companies typically hide behind the real operation of their supply chain. They don't want the client to see a lot of what's going on. We take a completely different view. We do want an open book. We want to collaborate. We want to integrate. It has been very successful for us. This is a concept we took to Sandfield. We definitely saw a capability around their capacity to take on quite complicated problems. We saw them as good partners around problem solving – some really clever people who were enthusiastic and prepared to back their capability. We worked a lot of this stuff out from scratch and what we've always been really impressed with is their ability to get their heads around problems and get their sleeves rolled up and deliver.

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