Wool Trade

Australian wool industry hopes for re-start of auctions next week

Terry Sim, February 28, 2020

WOOL auctions could recommence in Australia next week, the industry’s major software provider Talman said today.

However, the industry is already considering alternative systems as exporters who have missed contract shipment dates and brokers unable to sell growers’ clips consider the cost of the disruption.

After a ransomware cyber attack on the Sydney-based Tamna company stopped all auctions this week, chief executive officer of the Ozdocs/Talman Group, Dr Pramod Pandey, said the auction system has been the first priority in the rebuild.

Australia’s wool auction and pre-shipment systems depend on Talman software and the company has been building a new IT infrastructure and using back-up data in an effort to allow wool testing, catalogue, selling and delivery of wool from grower to exporter re-commence.

AWEX’s National Auction Selling Committee yesterday morning cancelled all wool auctions this week after Talman advised it expected it would be Sunday before all Application Service Provider clients were restored and the OZDE EDI Network, which is critical to exchange of ownership of wool, was not yet up.

Dr Pandey said the company expected to have the auction network going today, hopefully ready for auctions next week.

“We will get that going before we start addressing each and every client.

“That is something that should be up by the close of the day,” he said.

“Right now we are testing it.”

Dr Pandey said to make the wool software systems “bullet-proof” in the future, the only alternative is to have two duplicate systems operational and the industry should also have a contingency plan. He said this is the first incident like this to affect Talman in its 40 years of servicing the wool industry.

Wool shipping deadlines missed and growers unable to sell

Endeavour Wool Exports trading manager Josh lamb said there will be orders with shipping dates for next week that will be missed.

“Everyone in the industry either uses Talman or the OzDocs network, for that reason we will miss some shipping deadlines next week, which means orders will be outside of contract.”

Mr Lamb agreed the software breakdown has brought the industry to a halt.

“The wool we purchased last week, which is what we call Week 34, that wool would be moving from last Friday and in different stages this week to the dumps from brokers’ stores – that has all stopped.

“Even the wool we purchased in the weeks leading up to this can’t be moved, so essentially the whole industry has completely ground to a halt,” he said.

“You’ve got brokers turning up at sales in Sydney, Melbourne and Fremantle with wool growers from the bush and see their wool sold, we can’t transact any wool and we can’t tell China what the market is this week.

“Even South Africa is asking what is going on as far as market levels go.”

He said Australia sells the most wool in the world by auction and this often sets the market for other countries.

Should force majeure be invoked?

Broking and exporting company Fox and Lillie’s managing director James Lillie said he is “led to believe that we should be reasonably positive that they will get it fixed, so that’s the good news”.

“But it might take till tomorrow (Friday) or Monday, so I reckon there could be some sales next week, but I don’t think we are going to have selling on Tuesday, Wednesday, Thursday, that kind of thing.

“I really hope, I think it is a real mess, and there is other stuff, as soon as this is fixed to be looked at.”

Mr Lillie said his company would miss some shipping deadlines.

“It remains to be seen who is going to pay; which exporters are going to pay tomorrow, and it remains to be seen which brokers are going to pay their growers.

“There is no industry-wide decision on that as far as I can see and I think that’s regrettable,” he said.

“So the next question is force majeure.”

Force majeure is a common clause in  contracts that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties prevents one or both parties from fulfilling their obligations under the contract. In practice, most force majeure clauses do not excuse a party’s non-performance entirely, but only suspend it for the duration of the force majeure.

“I mean I am a believer that (force majeure) should be invoked because we are going to get these delays and we don’t want clients to be using them as an excuse to get out of contracts,” Mr Lillie said.

Mr Lillie served on Australian Wool Innovation’s Wool Selling Systems Review Panel which looked at the Talman system.

“It was one of the issues that was highlighted, but WoolQ seemed to be front and centre, but we are reliant on a third party piece of software and you can see now how reliant we are on it, so it needs to be robust.”

“We can’t have this as companies, we can’t really exist with these sorts of things happening.”

In his weekly newsletter, National Council of Wool Selling Brokers of Australia executive director Chris Wilcox said before the cyber attack on Talman in the early hours of Tuesday morning, buyers were saying that they had received a lot of interest from overseas for this week’s auctions and there was a feeling that wool prices would rise.

“Then, the cyber-attack came in the early hours of Tuesday morning and shutdown the OZDE EDI network, the NZDE EDI network and Talman’s Application Service Provider (ASP) hosting service.

“The ASP service is used by most buyers and some brokers, while the OZED EDI network is critical to exchange of ownership of wool within the Australian industry, while the NZDE EDI network is vital to the New Zealand industry,” he said.

“As a result of the attack, the National Auction Selling Committee (NASC) on Wednesday afternoon rescheduled the auction for that day.

“Then, late on Thursday morning, National Auction Selling Committee cancelled the Week 35 auctions in Australia.”

Mr Wilcox said Talman, NASC and AWEX expect that the ASP will be restored for clients on Sunday 1st March, as will the OZDE EDI network.

“Brokers will re-allocate lots that were to be offered this week to next week and to coming weeks.

“As a result, next week’s sale currently has just under 70,000 bales rostered, one of the largest selling weeks in recent years,” he said.

AWTA offer of alternative system ‘seemingly ignored’?

However, Mr Wilcox said one of the most disappointing things from this week’s events is that AWEX and NASC “has seemingly ignored” an offer from AWTA managing director, Michael Jackson, on Tuesday that AWTA could provide an electronic mailbox for industry EDI transmissions (including catalogues, delivery orders, invoices), at least as a stopgap while the OZDE EDI network is down.

“AWTA has since worked with AWH on the processing of wool delivery orders, enabling the delivery of wool to recommence, at least for some buyers/exporters.

“I urge NCWSBA members to investigate the AWTA option as an alternative until the OZDE EDI system is back online,” Mr Wilcox said.

Mr Jackson told Sheep Central that he did make the offer of the electronic mailbox to AWEX.

“If a you are a buyer and you are using a service other than Talman and you can still pick these things up and run your own office computer, then the mailbox meant you could get the catalogue, provided the broker also wasn’t reliant on Talman to produce the catalogue.

“The big brokers, for example, don’t use Talman to put their catalogues together and not every exporter uses Talman.”

Mr Jackson said use of the electronic mailbox would be something AWTA would discuss directly with AWEX.

Sheep Central has asked Mr Cother for a response on the AWTA offer.


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