Mua 2010 Final
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Transcript of Mua 2010 Final
Source:
Commercial shipping operations in Australia and the diminishing involvement of Australian
registered ships
Shipping Industry Policy
John Francis │ Director │ Maritime Transport Policy Centre (MTPC)
Source:
Dalrymple Bay Anchorage
MTPCSource: Southern Cross Maritime
Source:
Declining involvement of Australian ships in the Australian dry bulk trades
Australian international + coastal freight task
Involvement of Australian flagged ships in these trades
Ship types engaged in the dry bulk trades and their place of registry
How are these ships contracted to carry Australian bulk cargoes?
Reasons for the decline of the Australian register
MTPC
Source:
Australia’s exports by commodity 2007-08
Commodity Exports (tonnes) Commodity rank (tonnes)
Iron ore & concentrates 314 738 744 1
Coke, coal & briquettes 252 920 470 2
Petroleum oil 12 162 333 3
Confid transactions NES 24 966 000 4
Aluminium ores & alumina 24 377 928 5
Petroleum oils & refined products
2 250 762 6
Cork & wood 13 154 304 7
Crude minerals 11 420 940 8
Cereals 11 791 978 9
Other metallic ores & scrap 10 040 760 10
MTPCSource: BITRE 2009
Source:
Australia’s exports by commodity 2007-08
Commodity Exports (tonnes) Commodity rank (tonnes)
Iron & steel 1 663 538 12
Fertilisers, manufactured 672 494 15
Lead & zinc ores & concentrates
2 825 517 17
Animal feed 1 496 591 20
Copper ores & concentrates
1 787 134 25
Sugars and honey 548 011 36
Mineral sands 435 347 43
Liquefied natural gas (LNG)
5 854 240 ($,000) 14 (ranked by value)
MTPCSource: BITRE 2009
Source:
Australia’s imports by commodity 2007-08
Commodity Imports (tonnes) Commodity rank (tonnes)
Chemicals 6 214 422 11
Fertilisers, manufactured
2 863 134 15
Fertilisers, crude 718 258 34
MTPCSource: BITRE 2009
Source:
Australia’s exports by destination 2007-08
Destination Export weight (tonnes)
Japan & N Asia 317 903 221
E Asia 249 723 231
Europe 43 219 971
South Asia 28 935 905
South East Asia 24 402 366
Middle East 9 313 879
South America 8 588 326
Destination Export weight (tonnes)
N & Central USA 8 294 819
Africa 6 030 812
New Zealand 5 149 194
Rest of the world 2 341 834
Pacific Is & PNG 1 940 763
Total 705 844 322
MTPCSource: BITRE 2009
Source:
WSJ forecast growth in ore exports (March 2010)
300 million tonnes
$38 billion
Combined trade of
Dampier and Port Hedland in 2009
Combined value of the commodities exported from the ports
MTPCSource: Wall Street Journal
Source:
WSJ forecast growth in ore exports (March 2010)
$25 billion
$12 billion
In Iron Ore,Volumes could triple within 5 years
in LNG
Smaller volumes of other bulk minerals, salt and general cargo
MTPCSource: Wall Street Journal
Source:
Australian coastal freight
Summary of Australian coastal freight, 10 years to 2007-08
MTPCSource: BITRE 2009
Source:
Coastal permits
Date SVP Tonnes Carried
CVP Tonnes Carried Total Tonnes Carried Under Permit
Total Coastal Tonnes
1990/00 3,581,651 133,613 3,715,264 51,325,000
2000/01 6,738,345 258,625 6,996,609 52,003,000
2001/02 8,974,727 1,359,132 10,333,859 52,432,000
2002/03 10,573,004 1,729,244 12,302,249 52,825,000
2003/04 10,430,190 1,755,127 12,185,318 53,194,000
2004/05 11,030,905 2,015,719 13,046,624 53,672,000
2005/06 11,470,959 2,230,131 13,701,090 55,249,300
2006/07 14,836,938 1,836,476 16,673,414 56,384,800
2007/08 13,691,895 1,211,434 14,903,329 59,534,400
Freight Carried Under Permit (Tonnes) 1990/00 – 2008/09
MTPCSource: BITRE 2009
Source:
Coastal permits
Impact of voyage permits on coastal trade 2007-08
MTPCSource: BITRE 2009
Source:
Coastal permits
Permit voyages undertaken as per cent of coastal tonnes
MTPCSource: BITRE 2009
Source:
Deadweight
A vessel’s carrying capacity at a particular draft expressed in metric tons. Normally refers to
capacity on summer salt water
MTPCSource: BITRE 2009
Source:
Classes of bulk carrier by deadweight
Capesize 100,000 dwt+ (typically ~150,000 dwt for older vessels. Modern units 170,000 dwt +)
Panamax Over 60,000 dwt (typically ~75,000 dwt) max 32 mtrs beam
Handymax 40-60,000 dwt Note Supramax >50,000 dwt
Handysize 10,000 dwt +
Source: H Clarkson & Co. Ltd. MTPC
Source: MTPCSource: Southern Cross Maritime
Source: MTPCSource: Southern Cross Maritime
Source: MTPCSource: Southern Cross Maritime
Source: MTPCSource: Southern Cross Maritime
Source: MTPCSource: Southern Cross Maritime
Source:
Source: Sanko Kisen MTPC
Source:
MTPCSource: Southern Cross Maritime
Source:
Discharging sodium sulphate (1)MTPCSource: Southern Cross Maritime
Source:
Discharging sodium sulphate (2)MTPCSource: Southern Cross Maritime
Source:
Imported hot rolled coils
MTPCSource: Southern Cross Maritime
Source:
Australian dry bulk tonnage
The Australian flag is not competitive for ships engaged in the Australian dry bulk export trades
MTPC
Source:
Australian LNG tankers
There are just 4 Australian flagged LNG tankers engaged in the North West Shelf LNG export trade
MTPCSource: North West Shelf Shipping
Source:
The net result....
Less than 1% of Australia’s exports carried by Australian flagged vessels
MTPCSource: ASA, MUA
Source:
Major foreign registries
MTPC
6 flags of registration with the largest share of registered deadweight tonnage as of January 2009:
Source: UNCTAD “Review of Maritime Transport 2009”
Panama 8,065 vessels 22.98% (274 mill dwt)
Liberia 2,306 10.57
Marshal Is. 1,265 5.74
Hong Kong 1,371 5.38
Greece 1,498 5.29
Bahamas 1,446 5.20
Source:
Nationality of controlling interests
MTPCSource: UNCTAD “Review of Maritime Transport 2009”
Panama
Japanese ship owners who account for more than half of the registry’s tonnage (128.4 million
dwt of ships > 1,000 GT)
Owners from China (22.8 million dwt)
Greece (19.4 million dwt)
Rep of Korea (19.2 million dwt).
74.1% of Japanese tonnage is registered in Panama
Source:
Germany (39.5 million dwt) Greece (23.2 million dwt)
Liberia
MTPC
Nationality of controlling interests
Source: UNCTAD “Review of Maritime Transport 2009”
Source:
A small and declining fleet....
95 the number of Australian ships over 300 gross tons in 1983
37 the number of Australian ships over 300 gross tons in 2008
MTPCSource: BP Shipping
Source:
Contracting vessels to carry Australian cargo to overseas markets
Sale terms: FOB – free on boardCFR – cost and freight or CIF – cost, insurance and freightCritical issue is whether seller or buyer is responsible for
ocean freight See generally the international commercial terms
(“INCOTERMS”) published by the International Chamber of Commerce
MTPCSource: INCOTERMS 2000
Source:
Major terms under a voyage charter party(single voyage or COA)
MTPC
Source:
Timecharter
MTPC
Source:
The rationale for the Navigation Act 1912
...that the main reason which actuated Parliament in placing the Act upon the statute-book, and which lifted the subject to the plane of great national importance above the ordinary considerations of party politics, was the desire to build up an Australian Mercantile Marine.
The Report of the Royal Commission on the Navigation Act, 1923-24 Cth 103, Vol 2, 1019 at 1024 – cited in ML McConnell “Cabotage and the colonial corset: The great Australian bind” (1988) 5 MLAANZ Journal p3.
MTPC
Source:
The Australian mercantile marine
Age of Australian trading fleet 2007(percentage of total in terms of deadweight tonnage)
MTPCSource: BITRE 2008
Source:
Crawford Committee recommendationdepreciation of 20% p.a. commencing in the year prior to commissioning, provided manning levels were in accordance with levels determined by the manning committee
1984 1985 1987
Some industry milestones 1984-99
Source: IRAS p.14, MUA Submission 45 p.26 MTPC
Source:
Maritime Industry Development Committee produced a report “Moving Ahead” envisaged crew reductions to 21/vessel (in 1994 improved to 18/vessel or less)
1984 1985 1987
Source: IRAS p.14 MUA Submission 45 p.27 MTPC
Some industry milestones 1984-99
Source:
Ships (Capital Grants) Act Taxable grant equivalent to 7% of the purchase price of the vessel, provided vessel crewed by Australian seafarers
1984 1985 1987
Source: IRAS p.14 and ASA Submission 29 p.99 MTPC
Some industry milestones 1984-99
Source:
International Shipping (Australian-resident Seafarers) Grants Act
provided a rebate of Group Tax remitted by employer on behalf of crew in vessels that traded overseas for >50%.
1994 1996 1998
Source: ASA Submission 29 p.99
1999
MTPC
Some industry milestones 1984-99
Source:
Coalition elected to office – financial support repealed
1994 1996 1998
Source: IRAS p.14 and MUA Submission 45 p.28
1999
MTPC
Some industry milestones 1984-99
Source:
Minister Anderson commissioned and received a report to advise on the development of a competitive shipping industry
1994 1996 1998
Source: ASA Submission 29 p.100
1999
MTPC
Some industry milestones 1984-99
Source:
December industry dinner John Anderson: “Australia is a shipper nation, not a shipping nation”
1994 1996 1998
Source: IRAS and ASA Submission 29 p.100
1999MTPC
Some industry milestones 1984-99
Source:
The Australian coasting trade
A vessel must be licensed to engage in the Australian coasting trade - s 288 Navigation Act 1912 (Cth)
See generally Part VI of the Act (ss 284-293A) at:http://www.austlii.edu.au/au/legis/cth/consol_act/na1912123/
MTPC
Source:
Permits to engage in the coasting trade
Section 286 Navigation Act 1912 (Cth)...and the Minister is satisfied that it is desirable in the public interest that unlicensed ships be allowed to engage in that trade, the Minister may grant permits to unlicensed ships to do so, either unconditionally or subject to such conditions as he or she thinks fit to impose. S 286(1).
MTPC
Source:
Owners of licensed vessels at a disadvantage
The permit system has for many years disadvantaged Australian ship owners operating licensed ships.
The differential between the cost-base of foreign flag ship operators and Australian flag ship operators derives from the fact that foreign vessels are exempted from the application of Australian law.
MTPCSource: ASA Submission 29
Source:
Statutes that create cost disadvantage (1)
Customs Act 1901Vessels that are licensed under the Navigation Act 1912 are ‘imported’ under the terms of the Customs Act.
Vessels imported under the Customs Act are covered by Part II of the Navigation Act and consequently covered by the Seafarers Rehabilitation and Compensation Act 1992 and the Occupational Health and Safety (Maritime Industry) Act 1993
MTPCSource: ASA Submission 29 pp.64-69
Source:
Statutes that create cost disadvantage (2)
Migration Act 1958o When foreign ships visit Australia to carry coastal cargo,
their crew are required to hold a Maritime Crew Visa. o If a ship is imported under the Customs Act, MCV’s are
not available. A Long Stay Business Visa (“a 457”) is required.
o 457’s are the exception rather than the rule on Australian ships because Australian ships are generally manned by Australian crews.
MTPCSource: ASA Submission 29 pp.64-69
Source:
Cost differential of Australian crews
BP operates 12 identical new product tankers (Virtue Class), 2 of which are manned by Australians, 5 manned by British officers and Filipino crew, while the remaining 5 vessels are manned by Indian officers and crew. The 2007 operating costs are –
Australian officers and crew US$10,100 / day
British officers / Filipino crew US$ 5,500 / day
Indian officers and crew US$ 4,100 / day”
MTPCSource: BP Shipping – Submission 16 to HRSC
Source:
Coastal permit policy
Regulating a coastal cabotage regime inevitably produces a clash between the interests of domestic ship owners and their crews and the interests of shippers and receivers.
Clear policy statement is important to guide the administration of cabotage (particularly given there is no appeal process)
Investor confidence is easily undermined.
MTPC
Source:
SVP/CVP Administrative Guidelines
The Independent Review of Australian Shipping, 2003 (The Hon John Sharp and The Hon Peter Morris) observed: “The Review heard overwhelming evidence that over the past few years the [Administrative Guidelines] criteria have been administered in such a way that the coastal trade could now be regarded as virtually de-regulated.”
http://www.asa.com.au/upload/news/IRAS%20Blueprint%20Final.pdf
MTPCSource: IRAS, page 13
Source:
Why is the coast ‘virtually de-regulated’ if Australia has a cabotage regime?
MTPCSource: Sanko Kisen
Source:
Amending Ministerial Guidelines
1998 and 2004 amendments to Ministerial Guidelines steadily reduced the protection to Australian flag ship
operators.
Source:
Ministerial Guidelines - 1998
The question of whether licensed ships are available and adequate is addressed on a case by case basis
“The delivery requirements of shippers are the primary determinants of whether licensed vessels are adequate ....”
MTPCSource: See the DITRDLG website for Ministerial Guidelines
Source:
Ministerial Guidelines - 2004
[For a licensed ship] to be considered adequate, carriage must be available to the shipper on reasonable commercial terms
What is ‘reasonable’? Is ‘reasonable’ a static concept, based for example on
ROCE or is it a market driven concept?
MTPC Source: MUA Submission 45 pp.28-30
Source: Source: H Clarkson Ltd.
Large bulk carrier market
MTPC
Source:
Ministerial Guidelines - 2004
A licensed ship may be considered unavailable if the operator cannot guarantee that it will be presented to ship cargo according to a schedule that meets the reasonable needs of the shipper. As a general rule, the Department will consider a licensed ship available if it can carry the cargo within a window of 3 clear days either side of the sailing date stipulated in the application.
MTPCSource: Ministerial Guidelines 2004, paragraph 36
Source:
Administration of permits - ASA observations
Officers of the Department can be placed in an invidious position having to administer the permit system for contestable cargoes
They have no commercial/shipping background Open ended discretion can create commercial
uncertaintyLack of appeal process
MTPCSource: ASA Submission 29, page 72
Source:
Anthony Albanese
At NATSHIP 2009 the Minister strongly challenged the foundation of the coalition’s “shipper nation” policy. The minister recognised:
The need to integrate shipping into national and international logistics chains; and
That resource companies have an interest in controlling their supply chains; and
The role played by the shipping industry in training and supplying personnel with maritime skills to shore-based positions (pilots, HM’s, surveyors etc.)
MTPCSource: Anthony Albanese, NATSHIP Sydney, 2009
Source:
Coastal opportunities – national logistics chains
“Coastal shipping has two major reasons to be taken seriously as the third transport mode (in addition to
road and rail) of any national domestic surface transport strategy “
MTPCSource: Thompson Clarke Shipping Pty Ltd, Submission 26
Source:
Coastal opportunities – national logistics chains
1Its prime long distance infrastructure (open sea and port
channels) requires little or no incremental capital investment over and above that already provided for international ship
traffic - in stark contrast with the capital cost of overloaded and inadequate road and rail infrastructure
MTPCSource: Thompson Clarke Shipping Pty Ltd, Submission 26
Source:
Coastal opportunities – national logistics chains
2Its carbon footprint is (according to EU) statistics - in grammes of
CO2 per tonne km) superior to rail and some 5 times better than road....
MTPCSource: Thompson Clarke Shipping Pty Ltd, Submission 26
Source:
Coastal opportunities – national logistics chains
Noting...Competitiveness of freight movement by sea, from the customer's cost and service standpoint, is in many cases critically dependent on an efficient interface with land transport, which in turn is dependent on the development of effective land transport corridors particularly in metropolitan areas.....”
And see the MUA Submission 45 page 61 (placing shipping on an equal footing with road/rail)
MTPCSource: Thompson Clarke Shipping Pty Ltd, Submission 26
Source:
Other impacts of a successful shipping policy
MTPCSource: MUA Submission 45 p.68
Source:
The future
Shipping registries have to compete in the international market.
Australia would reap substantial rewards from having a thriving first (and second) register. The current freight services imbalance would rapidly improve.
MTPC
Year Freight Service Credit ($mill)
Freight Service Debit ($mill)
1997 953 4625
2001 969 5856
2007 625 8163
Source: ABS 2009 – and see MUA Submission 45 p.23; BP, BMP, AIMPE, etc
Source:
Some may see the business of ship owning as romantic, but it is rarely sentimental!
MTPC
We need the Australian first (and second) register(s)to be competitive
Source:
Thank you for your attention
MTPCPhotograph: BP Shipping