Reform crippling shipping costs

If ever an industry needed reform to cut costs for businesses and reduce living costs, it is shipping. Commerce is being crippled by rules Anthony Albanese devised as transport minister in 2012 to prop up the faltering domestic shipping sector, as Charlie Peel reported on Monday. Owners of foreign vessels, which dominate the sector, are forced to pay “top-up” wages to their crews when picking up cargo at one ­Australian port and taking it to another, hiking up costs. The Prime Minister has been a strong advocate of such cabotage laws, insisting they protect Australian jobs and economic sovereignty. His brand of protectionism has failed, however. After falling in number from 55 in 1996, to 21 in 2011, Australia’s shipping fleet has fallen further, to nine. And the high pay rates have raised transport costs, increasing reliance on road and rail freight and undermining the competitiveness of local manufacturers.

The costs forced on Tasmanian paper miller Norske Skog, the country’s last remaining newsprint producer, which supplies News Corp, publisher of The Australian, is a prime example. The company’s sales, marketing and logistics manager, Michael Heinecke, says sending paper from Melbourne to Brisbane would cost 86 per cent more than to send it from Melbourne to China. It would cost 76  per cent more to go to Sydney than to China. In some cases, moving freight from one Australian state to another can be more expensive than sending a product overseas and back again on the same ship.

In August, the government announced a review of shipping legislation, including coastal trading regulations. It needs to recognise that government intervention has failed and extra competition and freeing up the sector would be a better approach.

As Australian Industry Group chief Innes Willox says, Australia needs policies to bring in more international shipping lines to increase transport options for business, reduce freight costs and decrease reliance on land transport. Repealing part of the Competition and Consumer Act would deregulate the shipping industry and enable foreign vessels to more easily carry cargo between Australian ports. As he says, lack of competition in parts of the maritime logistics system is raising costs for consumers and business, adding to the cost-of-living crisis. Regardless of the Prime Minister’s 2022 election promise to develop a national strategic shipping fleet of 12 domestically registered, owned and crewed vessels, crippling coastal transport with cabotage costs is creating exorbitant inefficiencies. Open markets would better foster a productive economy.