Thursday, May 19, 2022

‘Pick winners’ to float coastal shipping

A major freight company says plans to kickstart coastal shipping will be dead in the water unless the Government backs commercial winners, rather than “taking shortcuts” in the form of taxpayer subsidised sailings.

A Pacific Marine Management report noted the need for a purpose-built import-export west coast hub, likely at Manukau Harbour, able to address the issues that limited size ports face in accommodating larger ships.

A major freight company says plans to kickstart coastal shipping will be dead in the water unless the Government backs commercial winners, rather than “taking shortcuts” in the form of taxpayer subsidised sailings.

Move Logistics executive director Chris Dunphy said while it’s good to see heightened interest in coastal shipping by the Government, the priority should be to pick winners and back them – ensuring spending is targeted.

A Waka Kotahi NZ Transport Agency report by Pacific Marine Management was released in December advising on how to invest between $30 million and $45m earmarked for coastal shipping under the current national land transport programme.

It found a resilient and efficient coastal shipping network would need increased capacity in the domestic fleet.

Coastal shipping currently accounts for about 11 million tonnes of cargo freight, about 4% of the overall volume of the total tonnage of 278.7m tonnes.

The report said there are a number of hurdles to domestically operated coastal shipping, including higher rates than the international ships they are competing with and “hidden subsidies” for international operators.

It noted domestic operators are also on the hook for Emissions Trading Scheme levies that aren’t levied on international players.

NZX-listed Move, a major player in freight forwarding and warehousing, recently launched a coastal shipping service for inter-island cargo.

The move is aimed at bypassing the overburdened road-based supply chain.

Dunphy, a former director at Mainfreight, said it will expand its coastal business with or without government funding.

He said the firm had entered into a charter arrangement and is also involved in a lease-to-buy on another ship which “it isn’t waiting on Waka Kotahi money for”.

Dunphy said the Government investment “will go nowhere if it’s going to be handed over to Pacifica, MSC or Maersk to simply subsidise sailings between Tauranga and Port Chalmers”.

The Pacific Marine report also noted “priority berthing” and independent berth facilities at port terminals could be needed, with a purpose-built import/export west coast hub likely at Manukau Harbour able to address the issues that limited size ports face in accommodating larger ships.

That suggestion echoes the finding of an earlier report by economic consultancy Sapere, also paid for by Waka Kotahi, which recommended Manukau as a likely solution to Ports of Auckland congestion. 

However, Manukau has been consistently scotched as a port on the back of major shipping challenges, costs and environmental impacts.

NZ Port chief executive officer group independent chair Charles Finny said neither the transport agency nor Pacific had consulted with any representative of the port sector before the publication of the strategy.

Suggesting the report was more of a political tool, he told BusinessDesk “we have written to the minister and Waka Kotahi to express our views”.

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