Revival in coastal shipping

The resurgence of interest in coastal shipping over the past month can drive regional economic growth through a shift towards an efficient distribution network in New Zealand.

That’s the view of industry experts, who say it’s becoming a major issue for the government after a drop in vessels visiting the country because of the coronavirus pandemic and related global supply-chain disruption.

On top of that, the nationwide road and rail supply chains have been damaged by 2016’s earthquake in Kaikoura.

However, the tide may be turning with Waka Kotahi recently unveiling the recipients of $30 million in co-investment for the industry and Maersk announcing two dedicated Kiwi-crewed vessels for coastal routes. 

Some of the transport agency’s funding will go to Move Logistics to set up a sea-freight solution between the South and North Islands, initially between Taranaki and Nelson. Pacifica Shipping also gets funds to bring a second boat on-line.

The two other recipients are Coastal Bulk Shipping, which operates a bulk vessel between west-coast harbours and elsewhere in the country, and Aotearoa Shipping Alliance, which is a network of iwi and business.

Michael Wood, Minister of Transport, says the government is committed to a multi-modal freight system to help secure our economic future.

“Coastal shipping is a key component of the system and was defunded by the previous National government. Recently announced investments by sector players highlight benefits that come from our strong commitment to coastal shipping.

“To support the wider system, we ‘re developing a national freight and supply-chain strategy to help tackle underlying challenges, as well future-proofing the system. As a result of this co-ordinated approach, I expect coastal shipping will play an increasingly significant role.”

With Maersk, Pacifica, Move Logistics, Coastal Bulk Shipping and Aotearoa Shipping Alliance investing into coastal networks, Craig Harrison, national secretary of the Maritime Union of NZ, expects that with some collective lobbying from export companies and freight movers, ports such as Taranaki, Gisborne and Bluff could come back to life.

He adds the revival could ultimately lead to a single port hub-and-spoke model. “The big problem is the ports have got to work out who’s the hub port and who’s the supply port.”

Doug Smith, managing director of Coastal Bulk Shipping, says his company has identified a second vessel to bring to New Zealand, which it hopes to be operating during the third quarter of this year. It will operate from the lower South Island to the lower North, which would open a market for Mainland’s grain, gravel and fertiliser producers.

“They’ve made do with international ships, which as the Covid slowdown showed, we’ve become reliant on those to move freight around,” he told NBR.

Matt McDonald, general manager at Nelson Port, says the company has seen new and existing coastal-shipping operators are looking to invest in new tonnage since Waka Kotahi’s funding announcement. “The idea of a link between Nelson and New Plymouth has been around for some time. It will be great to see this get across the line.”

Tauranga, pictured, also stands to benefit from a revival of coastal shipping as the country’s largest destination for international cargo vessels, with cargo then transhipped on its docks to coastal vessels and vice-versa.

Chief executive Leonard Sampson says the NZX-listed is a long-term advocate of increased coastal shipping as an efficient way to move cargo from the regions. 

“Up until supply-chain problems caused by Covid and issues at Auckland, Tauranga was seeing strong growth in transhipment as importers and exporters from around the country sought access to the frequent international services calling at Tauranga.”

That said, Tauranga’s ability to accommodate increased vessel visits is constrained by berth capacity, he adds, with a $68m project to build a fourth berth waiting on an Environment Court date.

Pacifica Shipping, owned by industry giant Swire, has yet to make a concrete announcement on what its second vessel and routes will look like. However, country manager Brodie Stevens describes coastal shipping as “the forgotten highway”. He adds a meaningful rebuilding of the industry would accelerate the existing hub-and-spoke trend.

More coastal shipping will have a large impact for freight-transport businesses, including Mainfreight. Its managing director, Don Braid, told NBR it’s good to have greater access to coastal shipping, which it utilises alongside rail and road transport,  with road always serving as the last mile.

Josh Tan, senior policy adviser with ExportNZ, says: “Over the past two years, we’ve seen cargo vessels having to skip New Zealand ports to make up for lost time due to disruptions overseas. If we’re able to lessen the number of ports these bigger ships have to call into, that should give businesses more certainty in their supply chains.

“With a reliable coastal-shipping system, more businesses may opt for coastal routes over trucking – taking some pressure off the road network and easing congestion on regional routes.

“We understand port infrastructure around the country will need significant upgrades to be able to cope with coastal and international cargo shipping, and transfers in between.

“Ensuring our domestic supply-chain systems are well-supported and allowing businesses to be agile is key to developing a future-proofed supply-chain system strategy. It’s important we refrain from investing totally in one or some modes of freight.”

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