Pressure on coastal shipping rules builds

By: Paul Howell

Industry welcomes Federal Government intentions to reform shipping regulations.

Pressure on coastal shipping rules builds
Warren Truss says existing regulations have led to signfiicant increases in cargo rates for shippers.


Australian ship owners and logistics operators have welcomed the Federal Government’s continued interest in reversing 2012 reforms that have restricted the use of foreign ships on domestic trade routes in Australia.

Since that legislation, foreign-flagged ships have required permits to carry domestic cargo between Australian ports.

Successful permit holders have been subject to Australian workplace regulations, including minimum rates of pay for onboard staff, throughout those journeys.

This has reduced the incentive for foreign ships to take advantage of any spare capacity they have between Australian ports, with new statistics from the Bureau of Infrastructure, Transport and Regional Economics (BITRE) revealing a significant drop in the total amount of domestic freight moved by sea over the first two years of the reforms.

Federal infrastructure minister Warren Truss has indicated new reforms are now a priority, describing the permit system as "bureaucratic" and "ill-considered".

In a speech, Truss told Shipping Australia’s membership many shippers had faced significant increases in cargo rates.

"Bell Bay Aluminium (a Launceston-based smelter) saw an increase in the rate from Tasmania to Queensland from $18.20 a tonne in 2011 to $29.70 a tonne in 2012," Truss says. 

He says this is the result of the reduced capacity and increased overhead costs facing foreign ships in Australia, which in turn is making Australian shipping increasingly uncompetitive.

"For example, Cristal Mining says the difference between using Australian and foreign ships costs an additional $5 million every year," Truss says, adding that container rates from Melbourne to Brisbane are almost twice those from Singapore to Melbourne.

Industry representatives are in enthusiastic agreement on the need for new and different reforms.

Australian Logistics Council (ALC) managing director Michael Kilgariff says reducing red tape in the shipping industries is part of a wish-list the group put to the major parties before last year’s election.

"One of ALC’s primary concerns has been the additional costs of shipping between Australian ports imposed by the legislation," Kilgariff says.

"These costs add incentive for Australian business to import produce rather than move Australian produce between Australian ports."

Major shipping customers have also chimed in, with everyone from the National Farmers Federation to the Australian Mines and Metals Association voicing support for change.

Broader business advocates the Business Council of Australia and the Australian Industry Group have also applauded the Government’s intentions.

But the Opposition and the seafarers’ union are steadfast in their defence of the existing regime.

Opposition spokesman on transport and infrastructure Anthony Albanese says any turnaround will undermine the domestic maritime industry and also reduce safety.

"The only major shipping accidents in Australian waters in recent years have involved foreign-flagged vessels which were not observing Australian safety standards," he says.

Maritime Union of Australia national secretary Paddy Crumlin says the 2012 reforms are just beginning to improve conditions for Australian operators, with the number of major vessels (over 2,000 tonnes) licensed under the scheme now at 18 (up from 13 in 2012-13, but down from 30 in 2006-2007).

"We need to maintain a regulatory framework that provides an access regime built on the principle of fair competition," Crumlin says.

Shipping Australia CEO Rod Nairn says changes to the 2012 reforms are desperately needed but that it is important to also offer some stability to the industries involved.

He remains confident a compromise solution can be found.

"We urge all parliamentarians not to dwell on past mistakes but to work together for the good of Australia's overall prosperity, save thousands of Australian jobs in primary industries and manufacturing sectors, and release the chains of protectionist over-regulation that will allow coastal shipping to flourish," Nairn says.

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