‘Blue Highway’: Govt Moots $ 25-40m Coastal Shipping Network


A new report commissioned by Waka Kotahi calls for massive investments in a coastal shipping network to future-proof New Zealand’s supply chain and reduce emissions

The amount of inland cargo carried by sea rather than road or rail could double in the future when a new coastal shipping network is built.

This is one of the key conclusions of a new report on how Waka Kotahi should invest more than $ 30 million in funding earmarked for coastal shipping in the latest National Land Transport Program. The report, commissioned by the transportation agency and authored by shipping advisor Pacific Marine Management, also notes that a new feeder network, based on hubs in Auckland and Tauranga, could improve the resilience of New Zealand’s supply chains.

“The investment in the blue highway will make our supply chain more resilient, which is particularly important given the stresses caused by Covid-19 and global traffic jams. The Kaikōura earthquake also demonstrated the importance of having a reliable alternative to transporting cargo, “by road and rail,” says Transport Secretary Michael Wood.

“We have loaded containers on the quay, we have costs for all these containers that are here, we have customers waiting for them. In some cases we have to change the entire ordering process because we suddenly missed the ship. “
– Doug Paulin, sea lord

The report describes challenges such as the potential closure of the Tory Canal from Marlborough to Interislander ferries and other shipping companies, as well as the lack of a large dry dock in New Zealand.

Currently, around 78 percent of freight containers are moved across New Zealand by international ships – but this also includes freight that is indirectly imported from overseas or indirectly destined for export. As these ships get bigger and more expensive, the chances of them helping to move inland cargo from Tauranga to Lyttelton decrease. New Zealand’s smaller ports like Nelson will also struggle to accommodate the larger international ships.

The consultants say these trends are threatening the resilience of the supply chain. You set out a number of observations in the light of this “intermediate layer”.

“The domestic shipping network must be independent of international shipping services and port operations within the terminals that serve them,” the report said. This could include separate terminals at major hub ports in Auckland and Tauranga, or dedicated berths within those ports.

Currently, only one company operates a domestic-only shipping service in New Zealand: Pacifica / Swire Shipping. This service also only runs once a week and accounts for 40 percent of the domestic ocean freight carried in New Zealand (or 32 percent if you consider the need to distribute empty shipping containers across the country). The rest is picked up by international ships that have a reputation in the industry for being unreliable.

Right now Sealord has eight cool stores in the South Island full of frozen hoki, barracudas and mackerel. It has Chinese orders that it would like to fulfill, but it cannot. There are two reasons for this: labor shortages and the fact that the fishing society cannot rely on container ships to dock in Nelson.

“We have loaded containers on the quay, we have the cost of all these containers that are here, we have customers waiting for them,” said Doug Paulin, the managing director. “In some cases we have to change the entire ordering process because we suddenly missed the ship.”

Sealord exports to 62 countries and relies entirely on sea freight. But first, like other exporters, it has to bring its product to an international export port – mostly in Tauranga.

And that is becoming more and more difficult. Since deregulation in the 1990s, the number of New Zealand-flagged container ships has dropped from 34 to just one, the tiny Moana Chief, owned by Pacifica Shipping.

In order to serve customers such as Sealord and Sanford, the international shipping company Maersk has also done the rounds around the regional ports with the ships Seaspan Hannover and Maersk Nadi. But like the Moana Chief, they’re unpredictable: They missed eight of their last 24 scheduled stops in Nelson, Paulin said. And they are not specifically coastal tributaries; They are legitimate deep-sea vessels plying back and forth to the Pacific islands, and some of that slow rotation calls at smaller New Zealand ports.

Waka Kotahi’s report includes proposals to invest the $ 30 million government allocated to coastal shipping to repair this broken import / export infrastructure that is so vital to New Zealand’s economic survival.

“The international ships have less reliable schedules and are known to leave behind domestic cargo, which is treated like a ‘fill cargo’,” the report said.

A new hub-and-spoke network on the coast would include reliable service three times a week. This could help New Zealand companies make long-term commitments to use the service. Such a move would require tripling the amount of cargo carried by domestic vessels.

Some of this could come from the roughly 60 percent of all domestic cargo currently carried by international airlines.

“A logistics specialist stakeholder estimated that more frequent service could double the amount of domestic cargo transported by sea,” the consultants write. Growing demand for freight would account for part of twice the freight, but also from road and rail transport, which tend to have higher emissions.

However, the domestic freight market alone probably couldn’t deliver enough freight to triple current freight. The target quantities would also have to include at least part of the empty container transport and handling – imported cargo or containers destined for export that are exchanged between ships in an intermediate port.

The estimated cost of supporting the new coastal shipping service is $ 25-40 million and work should begin immediately.

The report also looked at ways to reduce greenhouse gas emissions. Shifting the cargo from trucks to ships would do at least some of the work, it turned out.

“We want to give companies more choices in how they move their cargo. Transporting more cargo by ship will also help reduce emissions, as shipping produces fewer emissions per tonne-kilometer than land transport, and also the number of trucks on the roads, which will improve safety and reduce congestion, “said Wood.

The wind propulsion – achieved via rigid sail-like wing profiles or rotating cylinders called Flettner rotors – could generate 20 to 25 percent of the energy needed to move ships, the report says. In order to achieve the goals of the International Maritime Organization of an annual reduction in CO2 intensity by 2 percent between 2023 and 2026, a reduction in CO2 intensity by 40 percent by 2030 and a reduction in CO2 emissions by 50 to 100 percent, would still be necessary low-carbon and non-carbon fuels will require total emissions by 2050, compared to 2008 levels.

New Zealand also has opportunities to make a contribution here, according to the report, because our renewable electricity enables the production of green hydrogen or ammonia for fueling ships. Adding biofuels can also reduce emissions in the short term.

The report also called for a number of assessments and business cases, including investigations into natural disaster preparedness and container terminal capacity of New Zealand ports, as well as an investigation into the profitability of a dry dock for the maintenance and repair of larger vessels, including Cook Strait ferries, larger coastal vessels, tankers , Cement ships and naval and NIWA ships. As things stand, these ships often require servicing overseas, with large amounts of fuel being burned to get there, and being put out of service for long periods of time.

The government is also cautioned to be careful with its funding for KiwiRail.

“Another challenge raised by stakeholders is the potential for market share distortion caused by any non-commercial government financial support for KiwiRail,” the report said.

“The dilemma for the government is to prevent this support, which is supposed to revitalize the rail network, from being used to unfairly compete in the trucking sector of the Cook Strait trade.”

The government must also consider how conflicts of purpose between financial support for the railways and potential financial support for coastal shipping can be avoided. “

Waka Kotahi is now considering the report, Wood said, and another engagement in the shipping sector will come in 2022.

The large container ships from Asia and North America would leave until Covid and, after they had deposited most of their freight in Auckland, would continue to load and unload goods and products in the country. But not anymore. The whole world is behind schedule, and the small ports have completely strayed from that schedule. In addition, the new container ships crossing the Pacific Ocean are too large to dock at most regional ports.

Paulin therefore welcomed Waka Kotahi’s report. He only cautioned that the ministry did not diversify its investments so broadly and shallowly that little was achieved.

“If nothing changes in the next three months, there is a risk that we will run out of cold storage and then I will have to stop fishing the ships,” he said. “That is why it is important to really work on this coastal feeder service – because there are many industries that are in the same boat.”

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