Coastal shipping the solution

National Secretary

The ongoing shipping shortage is biting hard. The maritime industry is in a chaotic state. Our supply chain is in trouble. Exports are struggling to get on ships and imports are seriously delayed. Costs are ballooning. In some cases, time sensitive cargo is missing shipping windows. Behind the COVID 19 pandemic itself, this is one of the biggest threats to our economy and general wellbeing.

New Zealand is a maritime trading nation, we are remote and isolated, and dependent on global shipping networks. We have a small population base. Our transport network suffers from a decades long failure in policy and investment. The shipping debacle has its cause in global events which are to some degree out of our control, but our exposed situation is also the result of poor decisions.

The idea that cheap, reliable overseas shipping would always be available has proved to be a bad mistake. New Zealand has found itself reliant on global shipping lines whose commitment to us is based, unsurprisingly, on their own self interest. International shipping demand is outstripping supply and more money can be made in bigger markets elsewhere. Record profits are being made even in the midst of the pandemic.

The result is shipping services have become unreliable, port calls are missed, and the problems are feeding back down our supply chain. Our bargaining position is weak because global shippers know we don’t have any choice.

There are a few big fish who dominate the small pond of the New Zealand economy. Chartering vessels is an option for them, even if an expensive and inconvenient one, and they still get priority treatment from the global shippers over others.

This leaves smaller exporters vulnerable. Although they might not have the swing of big bulk producers, these companies are often creating high value niche products. These are the kind of products New Zealand needs to be focussing on to develop and diversify from being a bulk commodity price taker. But they don’t have the ability to independently source vessels.

The other side to the shipping equation is of course imports. Whole sectors are struggling with congestion, spiralling costs and delays, with the building sector being one of the more prominent.

Some claim a massive surge in new builds for ships may solve the problem in the future. It seems worrying if the best we can look forward to is a see saw of shortage and glut. Perhaps it’s time to take control, rather than leaving our economy hostage to fortune. The entire global network is in a painful period of crisis and restructuring, which may become a permanent state of affairs. This will require new thinking. More rational operators in the industry appreciate the need for New Zealand coastal shipping as one part of the puzzle.

New Zealand flagged and crewed coastal vessels will provide the reliability of service currently missing. Working on a hub and spoke model, these coastal ships would ensure regions get freight to larger ports where international shipping calls are less likely to be bumped at short notice.

New Zealand coastal shipping would reduce COVID infection sources through overseas vessels making multiple port calls. This has already created major costs and inconvenience, and is a threat to our frontline workers and the public. Coastal shipping is a life saving backstop for communities isolated during natural disasters such as earthquakes or floods, which disrupt land based links.

Regional shipping with a national shipping operator could provide essential links on the Trans-Tasman trade and to the Pacific Islands. There are numerous options how this could work. A public entity chartering vessels, or purchasing them, flagged to New Zealand and crewed by New Zealand seafarers, is an obvious path. The sound of KiwiShip has a good ring to it.

The weakness of the New Zealand maritime industry is its fragmentation and short term focus. Our shipping capability has been wound down at the cost of long term security. But some industry figures are now showing an open minded and pragmatic approach. They can see the advantages of domestic shipping capacity and a skilled, dedicated New Zealand seafaring workforce.

New Zealand shipping is a great fit for getting New Zealand where it needs to be. The Government has committed to reducing carbon emissions by building up coastal shipping, encouraging mode shift from road freight to coastal shipping (reducing emissions, congestion, and the cost of road investment) and discouraging unsafe employment practices.

The Hīkina te Kohupara discussion document envisages a shift to biofuels and electrification of coastal shipping in the coming decades. None of this is possible without New Zealand-flagged vessels carrying our coastal freight.

The key goals going forward will be security, reliability and redundancy. The primary focus needs to be ensuring our logistics network is functioning. We need to have New Zealand coastal shipping back in the mix.