Containers piled high at Port of Tauranga a sign of the shipping times. Photo / Supplied
With global container shipping reported to be expecting a net profit of US$100 billion ($142b) this year, helped along by New Zealand shippers paying through the nose for ever-shrinking space and service, the pressure's on the Government to lead the salvage of domestic coastal shipping.
The call is coming from a united seafaring front – shipping sector and maritime union leaders.
They say not only would a coastal shipping revival ease supply chain congestion, our reliance on indifferent, price-gouging international carriers and an empty container shortage at needy regional export ports, but there'd be lower freight transport carbon emissions and more jobs for Kiwis.
The good news, they say, is Transport Minister Michael Wood is listening – the first minister to pay any attention to coastal shipping since Labour's Annette King 16 years ago.
The "language" from the Beehive has apparently changed.
Wood himself has told the Herald preparation by his ministry to devise a national supply chain strategy includes recognition coastal shipping is an essential transport option. He notes the Government's also allocated $45m over the next three years to plan some action.
Not to rain on the hopefuls' parade but many in the export and import sectors would suggest the minister would be derelict in his duty if he wasn't looking into this option to reduce unsustainable pressure on the supply chain.
With reports of shipping costs increasing up to 400 per cent due to the consumer-driven pandemic shipping boom, freight delays from congestion at ports and supply chain choke, unreliable ship calls as carriers skip ports because they're running late and a shortage of empty containers jeopardising export revenues, it's not just lockdowns impacting Kiwi businesses.
As New Zealand Shipping Federation president Clive Glover puts it: "New Zealand has increasingly become a backwater for international carriers which can trade very profitably elsewhere".
True freight coastal shipping in New Zealand today is limited to ferry services carrying vehicles and rail wagons between the North and South Islands and a container vessel operated by New Zealand-registered Swire Shipping. Just under 30 years ago there were 34 New Zealand-flagged vessels.
Also plying local waters but sensitive about being called "coastal services" because that'd put them at odds with New Zealand law, are international carriers which may or may not decide they have the room and time to load domestic freight and empty containers on their way from dropping imports at North Island ports to pick up exports in the South Island.
Unlike New Zealand-registered players, these "accidental" carriers of freight don't have to pay GST, PAYE or ETS charges on fuel.
This uneven playing field has long been a gripe never really addressed by transport ministers and has led to the demise of New Zealand coastal shipping, say sector insiders.
Leonard Sampson, chief executive of New Zealand's biggest port, Port of Tauranga, offers another good reason for a return to dedicated coastal shipping, which boomed in the early 20th century.
"It's not whether we need it now or potentially, it's going to become a greater requirement moving forward. Like it or not we are going to see cascading larger vessels out of the (main) trade lanes into New Zealand or Oceania trades. The container industry has the second biggest order book (for new builds) in history.
"Over the past decade vessels have moved up from 2500-3000 teus (twenty foot equivalent containers) to 4500 teus, now 4500 to 6000 teus is the norm here in New Zealand. And they're only going to get bigger.
"Can every New Zealand port take vessels in the 8000-10,000 teu range? The short answer is no. Not only they can't, but they shouldn't. You shouldn't have every port in New Zealand investing to take 8000-10,000 vessels, the pure economics don't play out.
"So with fewer port calls, you're going to need these smaller ports to have feeder services to feed to the bigger ships. That happens now globally and I don't think New Zealand can think any differently. We are very much on the edge of that now. In all likelihood it will mean other ports have to be covered with a coastal feeder."
The benefit of a coastal shipping service for freight is a no-brainer when roads and rail lines are blocked or washed out in events like earthquakes and floods.
But more pertinent, say promoters, is its place in the carbon emissions debate.
Sampson for one says the response of international carrier lines and shippers to the carbon reduction mandate should be considered.
"If the cost of carbon continues to be a big part of decision-making it will drive two things: carriers will build larger ships.
"The larger the vessel the lower the fuel cost per container and therefore the lower cost of carbon per container.
"But it will also drive importers and exporters to bigger ships as they take into account their own emissions. In our view of the future you might have those 8000-10,000 teu vessels calling at two ports – one in the North Island, one in the South Island. Smaller coastal feeders will do milk runs from other ports to centralised cargo bases."
Talking emissions, coastal shipping of freight wins hands down over road, and to a lesser extent, rail, says the NZ Shipping Federation.
Executive director John Harbord says shipping produces one eighth the emissions of road and half that of rail.
"We are probably some years from alternative technology like hydrogen trucks being commercially viable, (meanwhile) you could substantially reduce the transport sector's emissions by moving more freight from road on to coastal shipping. If we are going to hit our target of net zero carbon by 2050 then we have to move freight off road to coastal shipping."
Federation president Glover offers another comparison.
"You bring a locomotive up to Auckland and it might have large diesel engine similar to a small coastal ship but there's a limited number of wagons it can pull, maybe up to 50. A box boat could take 600 units."
Obviously a coastal vessel travelling at 15 or 16 knots per hour will deliver freight later than a truck doing 90km/h.
So it's not the ideal carrier for fresh produce for example but there's plenty of freight that doesn't need to be delivered "just in time", say promoters.
Besides, while "just in time" is what the market has come to expect, it can't be counted on nowadays anyway.
Swire Shipping operates New Zealand's only dedicated coastal shipping container vessel, the Moana Chief.
Registered in New Zealand, Swire is the trading name of a 150-year-old merchant shipping operation whose parent company is Singapore-registered China Navigation.
Also operating multi-purpose vessels on services to the Pacific, Australia and Asia, Swire has been active in New Zealand waters since the 1950s. But the 1700-teu Moana Chief was only acquired six years ago after China Navigation bought Pacifica Shipping, which had operated in local coastal waters for 30 years.
The Moana Chief operates a weekly schedule 51 weeks of the year, calling at Auckland, Lyttelton, Nelson and Tauranga, switching Nelson for Marsden Point every second week.
Swire's New Zealand boss Brodie Stevens says the schedule works like a bus timetable every week. "We like to think people can set their clocks by it."
He believes shipping is the most sustainable and resilient transport solution for this country.
He acknowledges the local shipping sector was once "very protected" and says it's not a bad thing that international vessels have been allowed to carry coastal cargo because it's made the local sector more competitive.
But now is the time, he says, for "good, reliable" coastal shipping – providing year-round regular services to feed domestic cargo to and from the main hub ports, and move empty boxes to regions needing them for exports.
"At the moment you've people in places like Timaru, Nelson, and possibly Dunedin, who aren't getting the international services they need because of cancellations and reduced sailings."
More coastal shipping would also provide jobs for New Zealand seafarers, he says.
"We are a nautical country which relies on international trade but we don't have a great seafaring industry. A lot of the institutional knowledge has come ashore."
So if there are so many compelling arguments for a return to coastal shipping, why doesn't Swire buy more vessels?
Stevens says that's being evaluated.
There are snags.
A shipping boom is the worst time for vessel shopping. The cost of vessels has doubled and even trebled, he says.
A suitable coastal vessel to carry 1700-2000 teus could these days have a price tag of $20m to $25m.
Any such investment would need a cargo commitment.
So what's needed to kick start the revival?
Sector sources suggest it's not so much about the money but attention and Government recognition of the need for coastal shipping that's needed right now.
There's no shortage of ideas how to launch new services.
The shipping federation's Harbord suggests the Government could, in the short-term, underwrite the purchase of another coastal vessel.
No cash would be involved, just the show of confidence, he says.
Maritime Union secretary Craig Harrison, who's been the most vocal about the need for a coastal shipping revival, suggests a cooperative approach between exporters to launch a dedicated fleet of three or four vessels.
"Everyone needs to think about getting more resilience. The Government could support with legislation etc. They need to think about their climate change objectives.
"We're not talking big ships – with two or more they could uplift 1000 (empty) containers at a time out of Auckland and take them to the South Island. You couldn't put 1000 on the roads."
Like Port of Tauranga's Sampson, Harrison says the growing size of container ships make the need for dedicated coastal shipping inevitable.
"About eight or nine years ago the market changed. Global carriers started swallowing up other operators and ships got bigger. Going into ports like Nelson and Timaru starts to lose appeal. Economies of scale say it doesn't make sense to pick up 200 or 400 containers at Nelson or Timaru when you can go into Tauranga and pick up 4000.
"This wasn't a surprise. But no-one turned their minds to the small ports."
Harrison says while some shippers are chartering vessels to counter the shipping space squeeze, the numbers don't stack up "to run around New Zealand's coast".
"Big exporters like Zespri and Fonterra command a bit of the market. But the little importer or exporter, like a vineyard in Hawke's Bay with one container, hasn't got leverage. Then their ship bypasses Napier and they've incurred port charges for storage and then have to rebook on another ship.
"We've been saying the only way to fix this is to have a coastal shipping fleet or a system that integrates with road and rail and is complementary.
"Historically as soon as you say coastal ships, people think industrial action and high rates. All that's gone, a thing of the past."
The shipping federation's Glover says it will take a leap of faith for any company to invest in a coastal vessel but the signs are good.
The Maritime Union is on side and maybe will allow foreign labour to be used while a local fleet is established, he says.
"It's also about making sure you can get into a port – trying to get all the ducks in a row with port companies to support coastal shipping."
But as long as freight rolls across their wharves, will ports care who brings it?
The federation's Harbord assumes ports will because they're owned by local councils and therefore ratepayers.
"They focus on their regional communities and want to make sure goods are flowing in a way they can rely on.
"Covid has shown very starkly that you can rely on a domestic coastal shipping network but you can't rely on international carriers.
"The key thing is having the confidence to invest while we work through with the Government some of the longer, more entrenched issues, like labour supply and the lack of a level playing field with costs."
All eyes are now on the Government to take the lead.
But while the watchers remain hopeful because at last the Beehive is paying some attention, they note the billions poured into rail, and that the comparatively tiny $45m earmarked for a coastal shipping focus in the latest Government Policy Statement for land transport has already been whittled down to $30m of investment in the next three years by its transport agency Waka Kotahi NZTA.
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