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BHP Billiton looks to lower shipping costs via new online freight platform

BHP Billiton Group launched an online freight platform that is expected to slash the group's shipping costs by making shippers compete to offer the best price to haul commodities to the mining giant's clients, bypassing brokers who traditionally negotiate shipping rates, Reuters reported Jan. 26.

The company used the auction-style platform Jan. 25 and invited 13 ship owners and operators to submit offers for the haulage of 170,000 tonnes of iron ore from west Australia to China next month.

BHP Billiton spokeswoman Angela Perera did not identify the winning bidder but noted that the final price was almost 30 U.S. cents below the spot price and that over 50 offers were made in an hour. According to the newswire, the spot freight index rate from Western Australia to China closed at US$5.19 per tonne Jan. 25.

The miner added that five vessel owners that were not invited to the auction requested to be included in the second bidding next week.

BHP Billiton Freight Vice President Rashpal Bahtti told Reuters that the company plans to ramp up the online freight platform and extend the auction system to a "certain percentage" of the group's freight book.

Shipping costs for 275 million tonnes of iron ore from Western Australia to global markets cost BHP about US$764 million in the year that ended June 30, 2016. The main destination for these shipments was China.