Better ag export networks start with more interstate sea freight

Produce and agricultural equipment currently crisscrosses the country via costly road freight routes or an under-capitalised rail network when it could be sailing around the coastline more cost effectively.

While historically shipping lines and busy ports were the foundation of Australia’s development and trade wealth, our domestic coastal shipping services are now almost non existent, with the exception of passenger services.

Domestic shipping handled just 15 per cent of the 738 billion tonne kilometre domestic freight task in 2016.

According to Ports Australia that was only 1pc more freight than coastal vessels carried in the early 1990s.

The peak port group says more domestic cargo activity via more of Australia’s 70 capital city and regional ports would also create incentives for a greater investment focus on freight support services linking ports and the inland regional centres where our exports originate.

At present these links were frequently frustrated by rail, road and loading bottlenecks, adding big costs to grain, meat, horticulture and fibre and processed food destined for export.

Ports Australia chief executive officer, Mike Gallacher, said while recent free trade deals were being celebrated for opening up more Australian exports to the world, much must be done to get our own house in order to ensure local businesses had a competitive edge before export produce even left our shores.

“There have been lots of high-fives over the TPP deal and the promise of fewer trade barriers for our farm products in foreign markets, but we still don’t have our domestic market working efficiently enough to drive down producers’ export costs,” he said.

Coastal shipping had become a wasted opportunity to utilise port infrastructure better, stimulate inland freight network efficiency and cut transport emissions.

Australia had to be better prepared for a tsunami of freight growth hitting the road, rail and port network in the next decade.

Nationally, shipping container movements are forecast to grow 165pc over the 22-year period from 2008 to 2030, while non-containerised movements will rise almost 140pc.

Mr Gallacher said existing transport infrastructure would be hard pressed cope with a projected doubling of freight activity before 2040, even with the extra investment planned in some areas, including a massive $75b spending boost from Canberra.

Ports Australia claims even the surge in air freight services to export markets and talk of new regionally-based international airports is unlikely to have much impact on the nation’s 98pc dependence on ports and related transport networks to dispatch and receive our total trade effort.

“I’m surprised something as important as coastal shipping has not been explored as much as other aspects of infrastructure have been studied and lobbied for,” said Mr Gallacher, a former NSW Government Police Minister.

“We could be sending meat or fruit and vegies by ship around Australia and reducing long distance truck movements, road damage and the traffic safety risk, but sadly all the administrative fuss and costs can make North Queensland mangoes shipped to Melbourne or Adelaide less competitive than imports.”

He noted NSW Government calculations showing every 1pc rise in freight efficiency saved the national economy $1.5b.

“We’ve seen significant discussion about the inland rail link in eastern Australia, which is a good thing, yet governments have stepped away from taking responsibility for our ports and better utilising and connecting that infrastructure to efficient rail and road networks.”

The National Farmers Federation has long been concerned about restrictive coastal shipping laws giving priority to a limited few Australian-registered vessels moving produce and equipment between domestic ports.

Two years ago it told the federal government moving goods by sea was rising and freight volumes were falling despite federal legislation introduced in 2012 aimed at maximising Australian-registered shipping activity.

The NFF said, frustratingly, Australia’s interstate sea trade was perceived to be “all but closed to foreign ships”.

Foreign flagged vessels must apply for a temporary license to operate between domestic ports, specifying at least five voyages planned in the coming year.

NFF argued there has been no obvious investment in the Australian fleet and current restrictions were hurting farmers’ freight costs and services, particularly on the island state of Tasmania.

Critics of the coastal shipping laws say they are overly bureaucratic, unreasonably specific in their requirements of shippers to identify future potential cargoes, and while designed to promote counter-tenders by local companies they effectively discourage competition and ensure industry assistance at a significant cost to those relying on coastal services.

“Although there are less than 24 Australian vessels left servicing domestic ports, it’s easier for the foreign flagged ships to dump their load and leave here empty rather than jump through so many hoops just to carry domestic cargo up the coast,” said Mr Gallacher.

Ports Australia has just commissioned a major study by Deloitte Access Economics to identify the exact savings likely to flow from moving freight “cheaper and smarter” via coastal shipping’s “blue highway”.

It will look at the impact on easing transport artery congestion, wear and tear on country roads, road safety and the flow-on job benefits in regional port economies from Bunbury to Bundaberg if they can enhance coastal freight handling abilities.

Extra service gains likely to be mutually beneficial to exporters will also be assessed.

Mr Gallacher said he did not promote coastal shipping at road or rail freight’s expense, but rather as part of a logical improvement to Australia’s freight challenge, particularly for non-time sensitive shipments.