Loss of NZ ship a Government ‘own-goal’

Media Release

26 November 2003

Loss of NZ ship a Government ‘own-goal’

The New Zealand Shipping Federation today said that the withdrawal of another New Zealand ship from coastal trade was a sad point of proof that the industry was in decline because of Government inaction.

The Federation’s Manager, Paul Nicholas, said the Government still had not yet acted on a Shipping Industry Review in 2000 which recommended a range of actions designed to rejuvenate the industry.

“The loss of another local ship is an own-goal for the Government.

“Foreign ships are dumping capacity on the local market, forcing prices down below the real cost.

“Dumped capacity, which doesn’t need to worry about scheduled services and local compliance costs, sets the market rate. At those rates, there is no profit in the business for local shipping operators.

“The only routes which are profitable for local operators are on the Cook Strait – which is the only place where everyone competes on an effectively level playing field. However, even on the Cook Strait routes non time sensitive cargo is lost to “transit ships” which puts the fixed costs onto the time sensitive cargoes.

“We believe that once local operators are forced out of business, foreign operators will move in and put prices back up again – just as happened on the Tasman routes,” Mr Nicholas said.

Mr Nicholas warned manufacturers and farmers who have benefited from the government subsidy on foreign ‘transit’ ships, to watch for a repeat of the Tasman experience.

“There are no longer any NZ ships on the Tasman route - and rates are gradually increasing. We predict the same will occur on the NZ coast.

“The base freight rates might currently appear low but we warn users to watch the addition and increase of other charges.

He was incredulous at the failure of the Government to take action.

“It is hard to believe that our own government is willing to let this happen.

“Bizarrely, the Government can’t even find its way to eradicating the ridiculous situation in which local shipping operators have to get permission for their ships to travel between ports.

“The only action from our legislators to date has been to increase the costs of operations for NZ companies, which has just increased the cost differences. When it comes to paying wages, taxes and other compliance costs, Government rhetoric turns out to be of no use at all.

“The solution is clear: match the rest of the world by allowing local operators to move ships between any ports, and restrict foreign shipping operators to exports and imports,” Mr Nicholas said.

He said the industry was in talks with the Government aiming to achieve this solution, but progress was frustratingly slow.

ENDS

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