Coastal Trading - Where to from here?

Posted on
November 21, 2019

Australia, a country surrounded by sea and with more than 85 per cent of its population living around the coastline, does not utilise coastal shipping to move most of its domestic freight. While over 98 per cent of our total trade with the world is reliant on shipping, only 15 per cent of our domestic freight task is moved by shipping. Mass volumes are not transported via the ‘Blue Highway’, which is more efficient and environmentally friendly than any other mass transport mode and which does not require Government investment to build or maintain.

The effect of poor policy, a lack of successive government foresight and courage, and conditions that are not suited for business investment in shipping has resulted in a significant decline in coastal trading. Australian ships number as little as a dozen, from around 100 three decades ago.

Ports Australia urges Government to go back to basic principles in improving the legislative framework so that the objectives of the Coastal Trading framework can be met, and Australia can have an effective coastal trading system that delivers benefits for the community. The outcomes Government should focus on are:  

  • that there is an Australian shipping industry (other than the existing subsidised Bass Strait passage);
  • that the legislative framework and policy enables growth in the number of Australian seafarers; and
  • that Australians are not paying a premium for their goods due to other transport modes moving freight inefficiently as a result of the coastal trading system not working effectively.

Current administrative burden in complying with legislation and the lack of timely systems and decision making by government to enable the commercial world to undertake freight movement via shipping will see the death of coastal shipping and with it, Australian seafaring jobs (except for the subsidised Bass Strait passage).

An illustration of the current failed framework can be seen by the lack of Australian container ships and vehicle carriers and the resulting lack of benefits to Australian seafarers.  Of the dozen Australian ships traversing our coastline undertaking domestic freight movement none are container ships or car carriers traversing our capital cities (except the Bass Strait passage), which is flabbergasting given most of our imports arrive by ship.  International shipping lines manned by international crews undertake the coastal domestic freight task as part of operations to/from Asia, Europe and Oceania.  

The crews on these ships are to be paid Australian wages in accordance with government regulation.  The end result does not benefit Australian shipping nor Australian seafarers.

Government needs to consider alternative approaches that enable efficient coastal trading while supporting Australian shipping and seafarers for routes that are viable in the commercial world.  

A proposal put forward by industry is to create a register (or expand the current register) of Australian registered ships that are undertaking coastal trading and that this register include the licensing details (timeframes, vessel type, tonnage, route,etc).  This will enable applicants for temporary licenses to understand and assess when and where potential Australian vessels could contend for advertised coastal cargo.  Temporary license applicants would make reference to this register in putting forward their case for approval. In parallel an alert mechanism should be enabled to those listed on the Australian General Shipping Register allowing them 24 hours to update their contestability arrangements (with evidence assessed by government) for the proposed route by the temporary license applicant.

Planning of the supply chain and land precincts around the port are also highly relevant in making coastal trading a viable alternative. A study commissioned by Ports Australia highlights that coastal trading is cost effective, efficient and environmentally friendly for certain goods and where planning of infrastructure and land facilitates efficient movement.  The sugar example (movement of raw sugar from North Queensland to Victoria), outlines that lower line haul costs of ocean transport, the ability to move freight in mass volumes without being containerised, the lower value oft he commodity (resulting in lower cost of holding the commodity in inventory),and that the good can be accommodated and processed near the port, ensures that coastal trading is the right transport option for the movement of this good.  Factors such as the establishment of the Yarraville sugar refinery adjacent to the wharf facilitates low cost transfer of cargo from the vessel to the processing plant.  

Some of our larger regional ports (e.g. Townsville, Geelong, and Geraldton) have suggested that they have already begun discussions with shipping lines on increasing coastal trading through their ports and the economic settings for its viability.  As a result, initial modelling has indicated that increased trade throughput can result in 50-100 jobs at the port (direct and indirect) and many more for the regional economy.  Jobs in stevedoring, port operations,customer relations are some of the areas which will benefit from increased coastal trade, not to mention increases in trucking and jobs in related industries.  

Zinc loading at the port

While increases inland-based jobs and growth in the regional economies is guaranteed as a result of increased coastal trading, focus should also be given to increasing jobs for Australian seafarers.  Qualified and experienced seafarers are vital to keeping our ports running.  Without these Ports Australia is concerned that suitable candidates for occupations such Marine Pilots, Harbour Masters,Tug Masters and even those that provide senior direction in organisations such as the Australian Maritime Safety Authority, will be hard to secure in the near future.  

While we can secure maritime skills from overseas, we need to grow the talent we have at home for the simple fact that by 2020 it is expected there will be a global shortfall of around 80,000 seafarers.  Furthermore, the International Chamber of Shipping estimates that we can expect a shortage of 16,500 officers.  A 2018 industry survey highlighted that 75 percent of employers are already reporting experiencing a maritime skills shortage.

When you couple this information with the fact that the average age of a maritime personnel is 49 years with many workers 45 years or older (62.7%),an alarming picture of key unmanned posts can be envisioned in the not too distant future.  

As outlined previously, the current legislative framework (through temporary licences) does not ensure that ships plying their trade on our coast will have Australian seafarers. Government should consider providing tax incentives/discounts for shipping companies to hire qualified Australian seafarers.  These incentives/discounts do not have to be significant and should be modeled around calculating the financial viability of making coastal trading effective on specific routes.  Through such mechanisms the Government can ensure a future supply of mariners to service Australian industries such as ports which the country depends on for over 98 per cent of trade.

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