Around the sale

11 August 2008

Aerial view of the Brisbane Ritchie auction site

Aerial view of the Brisbane Ritchie auction site

Held at Yatala, half way between Brisbane and the Gold Coast, the Ritchie Bros auction in late June was the company’s largest auction in Australia and its first two-day one. A large number of late model cranes, prime movers and specialized trailers were up for sale at the unreserved auction. Representatives attended from every crane and heavy haulage company across Australia and New Zealand, as well as other international companies.

Almost 1,800 people from 17 countries registered to bid in person on the cranes, trucks and earthmoving equipment at the event. More than 1,100 items were sold, attracting a record number of bidders for that site and generating record gross auction proceeds of AU$55 million (US$53 million).

“The auction could not have gone better,” said Simon Ross, Ritchie Bros. regional manager. “The yard was full of good quality, late model used equipment and the auction theatre was full of interested buyers... Demand for cranes and transportation equipment remains strong and resulted in exceptionally high prices on auction day. Buyers and sellers went home happy.”

The Queensland auction had 11 late model cranes, more than 100 prime movers and 84 specialized low loaders, platforms and dollies. Most of the inventory was put up for auction on behalf of Skelton Transportation, which operated truck and crane fleets as part of its specialized freight forwarding operations through parent company Skelton Tomkinson.

The writer managed to spend some time on a very busy auction day with ST group founder, Brad Skelton, who explained the reasons for listing such a large and modern fleet at the auction. “Our core business over the past 13 years has been freight forwarding. The crane and trucking component of our business was the thin edge of the wedge, at about 15% of total turnover. The returns we were receiving from transporting and lifting goods ourselves were not as high as the freight forwarding components of our business. The mining boom in Australia has tightened the labour market to the point that we cannot source operators at times. We have millions of dollars of equipment that can be under-utilised due to labour shortages, particularly in Western Australia.”

Skelton continued, “We started our company utilising sub contractors, which we are very selective in choosing. We base our choices on safety and reliability records and a management system that can prove a chain of responsibility. The divestment away from our own heavy equipment has been decided as a way of spreading the more rewarding aspects of our business to more locations throughout the world.”

The Skelton group operates from nine offices around the world, with another 27 agents spread through each continent. There has been a recent push from the group to purchase more land for freight handling terminals, where there are benefits of being a one stop solution in freight handling. Skelton claims that 50 to 60% of all heavy machinery that passes across the waterfronts of Australia is handled by the ST group. The new land purchases will add value to the company’s range of skills. These include forwarding, logistics, cleaning and quarantine services.

Plans are in motion to expand into the Dubai market, where Skelton was recruiting for a head of operations. The depot will be open before the end of the year, adding to the international depots in Houston, Amsterdam, Yokohama and Auckland. Skelton also operates in all major Australian ports, and the head office is based in Brisbane.

The cranes auctioned in Brisbane were all late models and the prices achieved were at or above new price, according to auction attendees. Advantages for the purchaser in paying a premium is clear as the cranes that they have just bought can be delivered to their new locations immediately after the close of the auction. The 2007 Grove GMK4080 sold for AUD$ 1.4 million, about AUD$100,000 more than its replacement cost, auction attendees commented. But, with a delivery time of 2010 for a new crane, the new owners can fill contracts almost immediately.

Much to the surprise of both Ritchie Bros and many attendees, all the cranes were bought by Australian buyers. The high prices achieved at the sale, plus freight costs to re-locate the cranes overseas, may have been a disincentive to the active internet bidders around the world.

The two Manitowoc 2007 Model 12000 crawlers were both sold with 71 m of boom and 21 m of jib. Both cranes showed less than 800 hours and reached AUD$1.1 million. Word around the auction was that this was a 10% premium over a new one. Both cranes were sold to a company in Victoria, so a 1,600 km road trip awaited them.

The 2004 model Grove GMK5100 and 2007 model GMK4080 both sold to Muswellbrook Crane hire, a division of the publically listed Tutt Bryant group. The 2006 GMK4080 was successfully bid on by Mann’s crane hire of Goondiwindi at AUD$1.15 million.

Both the 55 tonne machines (the GMK3055 and the GT550) were also purchased by local Brisbane crane companies. The two Franna cranes both went to Golding Contractors, a mining and civils company based in Gladstone, Queensland. The 2004 AT20 made AUD$475,000 and the 2006 MAC25 achieved AUD$525,000. A widely held view among auction attendees was that the waiting list for these machines is such that it pushed the sales price above that of a new one. There were no surprises in the high price attained for these two machines; the demand for pick and carry cranes in the domestic market appears insatiable. In response, both XCMG and Zoomlion are starting production of similar machines in China.

Late additions to the auction were a recently imported 2003 Tadano GR120 city crane and an older Kato NK200 H-V. The 12 tonne all terrain went to Prestige Logistics in Western Australia for AUD$190,000 and the older Kato went to Western Cranes from Victoria for AUD$85,000.

There were also numerous lots of lifting equipment, including spreader bars, lifting chains and slings as well as spare parts and rigging gear boxes. All of the sundry items were also sold.

The second day of the auction was set aside for the prime movers (tractor units) and a wide range of specialized transport trailers. The range was varied in the trailer units from dual axle dollies right through to a Drake ten row of eight 22.1 m steerable module comprising five, three and two rows with removable gooseneck and hydraulic ramps.

Many of the prime movers were high power versions. Largest were the 620 hp Mack Titans and the 600 hp Western Star 6900 series.

The steerable platform and module trailers all reached prices up to AUD$100,000 a row. There was also large interest in the drop deck tri axle trailers, ideal for carting crane counterweights on the bottom deck with jib sections across the top. At least one such unit was purchased by Universal Cranes from Brisbane, the Australian representative for the Sarens group.

Tony Canci, managing director of Western Australia-based Freo Cranes, was the winning bidder on a ten-row platform trailer. Added to its recent purchases of a second Liebherr LTM 1500 telescopic mobile crane and an AUD$20 million order for fifteen new Grove all terrain cranes in 80, 130 and 220 tonne capacities, this kind of spending shows huge commitment to the future of the crane industry in the resource-rich western Australia.

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