Shipping Given Bum's Rush by Karen Phelps
Shipping has been overlooked in the draft New Zealand Transport Strategy, says CEO of Pacifica Shipping Rod Grout.
“Shipping tends to go unnoticed due to the small size of industry but the government need to take more notice of the benefits of coastal shipping,” says Mr Grout who was also on the government Shipping Industry Review board and is President of the New Zealand Shipping Federation.
Mike Wade from shipping company Baltimar has other ideas about why shipping has been overlooked in the transport debate:
“Marine transport does not generate votes and so politicians aren’t really interested in it.”
Paul Nicholas, manager of the New Zealand Shipping Federation thinks shipping
is a difficult issue for the government:
“If they come out in support of shipping they have to admit they are currently in
support of shipping belonging to foreign companies because it is the cheapest shipping available.”
Transport Minister Paul Swain declined to comment on the issue of shipping saying he is still in discussion with sectors of the transport industry working towards developing a final strategy:
“The draft transport strategy was provided to a cross section of the transport sector and user communities for review in June this year. There was wide support for the strategy but a few issues were raised which we are currently working through. Shipping has been included in the strategy and I look forward to releasing the strategy later this year.”
Mr Nicholas predicts an emissions charge, which may be established as part of domestic policy with regards to the Kyoto protocol, will provide an incentive for businesses to use shipping:
“Shipping will then be the preferred choice as it will be cheaper and more environmentally friendly,” he says.
It has been suggested that the emission charge, which will be part of the preferred policy package yet to be passed by cabinet, will be introduced in 2007/8 and set at the international emission rate but capped at $25 per tonne. Mr Nicholas believes shipping can make a positive contribution to the Government’s goals of enhancing its environmental policies. In the last 20 years the shipping industry has increased energy efficiency and reduced CO2 emissions, he says.
“It is important to note that although ships are responsible for the carriage of 80% of world trade by volume, they account for less than 2% of total global CO2 emissions. Ships have much higher energy efficiency than other modes of transport, using only 10% of the energy used by the road transport sector, and 20% that of rail transport,” he says quoting statistics from the UK Department of Environment Transport and the Regions.
Mr Wades says the Government should be looking at alternative transport modes such as rail and sea to take traffic off the roads rather than allowing heavier and longer big-rigs on the roads.
“This will not ease traffic congestion on New Zealand roads,” he says. “It’s a fallacy to say 'big-rigs' will reduce the number of trucks on the road and make it easier for motorists. The fact is that the trucks will be able to operate at less cost, cargo quantities being moved will rise and there will again be as many trucks on the road as the roads can handle as at present. Determining whether this would have a noticeable effect on traffic congestion is hard to ascertain.”
Vehicle-kilometres travelled by goods vehicles increased by 34% for light goods vehicles and 19% for heavy goods vehicles over the 1996-2001 period. According to the Transport Registry Centre in July 2002 total trucks (which includes a count of all vehicles currently licensed where the vehicle type is goods truck/van/utilities) was 366,553. Although that’s still way below the 1,965,952 cars registered, the figure suggests moving goods from road to sea could have a noticeable impact on congestion on the roads. But the issue is complicated by the need to transport goods by road to and from railheads and ports.
There is also a difficulty in assessing the market for domestic shipping. Mr Nicholas says that since the changes to cabotage rules that were introduced in 1994, data on the volume and value of coastal shipping has not been available as no distinction is made between coastal or international cargo.
“Port companies do record total volume of cargo in and out of their ports and Statistics New Zealand has these figures but accurate statistics of the extent of coastal shipping and its characteristics are non-existent.”
Mr Grout thinks the emphasis should be on determining which of the main modes of transport are most effective for transporting which products:
“We need to realise that both rail and sea need trucking. All modes – road, sea and rail - need each other in order to exist successfully.”
Mr Wade sees the most sensible option for transport in New Zealand is to move long haul goods by sea and by rail, with an interface for trucks over shorter distances.
“There would be a certain amount of double handling, but the New Zealand waterfront is amongst the cheapest and most efficient in the world. Most ports have existing infrastructures and do not need great capital expenditure input from the New Zealand tax payer to create any additional interfaces that may be required.
“New Zealand has sea and water all around it with 13 ports handing containers, forest goods, bulk cargoes, oil, etc. Each port is no more than about 200km from the next. It makes more national sense to consider interfacing water and rail transport for long hauls, and road for limited distance transport.”
PORT TAXES PART OF PROBLEM
Ports’ excessive profits contribute to the transport problem, says Fred Staples shipping manager of Pan Pac Forest Products and chairman of the New Zealand Shipping Council.
“They have a monopoly because if you are close to a port you can’t afford to carry goods to another port. For the industry to survive it is very important that the freight rates overall are not excessive.”
Mr Staples, who says transport is his single biggest cost accounting for 20% of operating costs, believes the rates at present are putting some people off moving goods by sea.
The Shipping Industry Review conducted in 2000 concluded that in many areas port companies were operating as virtual monopolies, the main problem being lack of any detailed information disclosure by port companies which prevented users from being able to accurately assess the fairness and equity of pricing.
A Review of Ports Market Power initiated by the Government last year stated that in some circumstances ports do have market power, but New Zealand Shipping Federation manager Paul Nicholas says the review was qualitative and therefore did not research the extent of the value effect of that market power:
“Because the port companies have no information disclosure requirement, which is unique in New Zealand for a utilities service provider, the only way information can be obtained for a quantitative review is through the Commerce Commission. A report made available to the ports market power review proves in our view that ports are excessively charging captive customers. We see the only way to achieve fair and reasonable pricing is for the Commerce Commission to do a review of ports pricing and concurrently change the legislation that governs port companies to provide for information disclosure and a dispute resolution.”