Livestock exporter, Wellard, is itching to replace the oldest of its three remaining ships with a revolutionary new age, wind-assisted vessel, but it says soaring steel prices and congested shipyard order books will delay its plans.
The MV Ocean Ute is 28 years old and will cost close to $100 million to be superseded by a sleek new ship, provisionally named the Ocean Jillaroo.
However, while Wellard is keen to begin its fleet upgrade, and has long been highly critical of the safety and animal welfare conditions on many ageing ships operated by others in the maritime freight sector, the Perth-based sheep and cattle shipper is also nervous about difficult conditions in the live export trade.
Tight market
Abnormally low export cattle movements to key markets in Indonesia and Vietnam from Australia in the past two years have been compounded by high fuel costs and significant sailing time delays, plus extra expenses associated with refreshing crews during the past year's COVID pandemic lockdowns.
Although it posted a full-year net profit after tax of about $14.8 million in August, executive chairman, John Klepec, told Wellard's annual general meeting the company's profit was "hard fought" after a 32 per cent fall in Australian exports where historically high beef prices had eroded buyer interest.
COVID costs robbed the charter company of almost $1m in 2021-22, plus 27 days lost due to crew change deviations to sailing routes.
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He said the start of the new financial year had been slow and shipments from Australia would likely be constrained throughout 2022-23, although trading conditions elsewhere were improving with good bookings and inquiry into the first months of 2023.
Opportunities for dairy and beef breeder heifer movements from Australia and Uruguay should open up as New Zealand introduced a ban on live exports next April.
Wellard was "acutely aware" of the need to replace the Ocean Ute, which had recently been in dry dock for a month.
Mr Klepec said a new 15,000 square metre vessel would have fewer maintenance and operating costs, and a lower carbon emissions footprint.
Wind assisted option
Concept designs and initial planning for the new Jillaroo include use of more efficient marine diesel motors and technology to propel it.
The potential for modern wind assisted technology was being closely explored and options for bolt-on hydrogen and electric powered motors were being considered, too.
Wind propulsion technologies are known to save up to 20pc in fuel use and associated emissions.
Giant rotor sails towers can be retro-fitted to ships with clear deck areas, such as ferries, car carriers, bulk carriers and tankers, or are being incorporated into new vessel designs.
The International Windship Association expects wind propulsion technology to be fitted to about 50 large cargo freighters with a combined tonnage capacity of 3m DWT by the end of next year.
It said the number of cruise ships and smaller commercial vessels was also growing as more were converted and a demonstrator vessel was being launched in the South Pacific.
The number of orders in hand for new ship builds has crowded out the specialist builds such as livestock ships,
- John Klepec, Wellard
Mr Klepec said the new Wellard ship would represent "an evolution in our thinking about how we can continue providing the world's most advanced livestock transport fleet".
However, skyrocketing container and bulk shipping costs had caused a spike in vessel building activity in the past year.
"It is apparent the number of orders in hand for new ship builds has crowded out the specialist builds such as livestock ships," he told last week's AGM.
"Therefore we have taken the prudent decision to pause the replacement program until ship building costs normalise."
Partner to help pay
Wellard was also looking at outsourcing some or all of the construction costs to avoid a huge increase in debt, although it was still to settle on an appropriate funding mechanism.
While a new ship could take about two years to be built, it would represent a significant boost of new technology to the global live export fleet, which has not had any new vessels launched for five years.
In fact, research last year found the average European Union-approved livestock carrier was likely to be a 41-year old vessel, built as a general cargo carrier and converted for livestock transport at the age of 29.
In comparison, the average age of the container ship fleet is 13 years.
One of the youngest export ships afloat is Wellard's former Ocean Outback, now six years old and re-named Bahijah after it was sold by the Australian company several years ago to cut its debts.
Wellard has continued pressuring the International Maritime Organisation about the lack of regulations governing livestock vessels, which it insists allow poor design and operation to lead to tragic losses of livestock and crews.
"In July this year the AlBadri 1 livestock vessel capsized in Sudan, drowning 15,000 sheep," Mr Klepec said.
"Incredibly that vessel was 49 years old, yet it was able to load the most sensitive of cargo ... and that loss adds to a long list of substandard livestock vessels which have sunk to the ultimate detriment of crews and animals on board.
"It's time the IMO righted these wrongs, particularly when a solution exists in Australia's Marine Orders 43 which governs the regulation of livestock vessels and the Australian standards for livestock export."
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