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A report commissioned by Environment Australia October 1997
Commonwealth of Australia
ISBN 0 642 54548 0
Australia is the fifth largest user of shipping in the world, with around 12 000 ships arriving from overseas each year. There are 68 major ports handling around 350 million tonnes of freight each year. Worldwide, there are over 28000 ships of greater than 1 000 gross registered tonnes and 40 per cent are Asian-owned.
Australian flag ships carry about 12 million tonnes of freight internationally each year, which represents about $1.6 billion, or 16 per cent, of Australia's total freight bill. Shipping employs about 4 200 Australians and the fleet comprises 67 vessels in excess of 2 000 dead weight tonnage. About 35 vessels operate in coastal trade, generating an annual freight bill of about $600 million, and another 32 operate either internationally or in both coastal and international waters.
Total shipping charges for imports and exports to Australia amount to about $10 billion, but with international shipping open to competition Australian ships account for only a fraction of this amount. International shipping is a mature industry which includes large international fleets of long standing.
There is a trend in which shipping is moving towards the development of mega carriers and mega consortia in the container trades, with large ships calling at a few hub ports, supported by feeder services to countries and ports away from the linehaul sea lanes. One of the growth areas will be in feeder services between Australian ports, Singapore and Hong Kong, while direct services will diminish.
Growth in the Australian industry will depend on reducing the high cost structures of the Australian flagged fleet. There have been some reforms since 1983 including reduced manning levels, multi-skilling and reduction of industrial disputes. Operating costs of the industry have been reduced but are still higher than world best practice.
One of the major environmental concerns linked with shipping is the control of ballast water to prevent the transfer of harmful marine organisms around the world. Ballast water is an essential feature of safe ship operation for many vessels. In developing guidelines for the environmentally sound control of ballast water discharges, the International Maritime Organisation (IMO) recognises the need to maintain safety of vessels and on-board practices.
Hull fouling may also be a vector for introduction of exotic species. Shipping uses TBT paints as a means of controlling the growth of exotic organisms on hulls, both to improve fuel efficiency and control the introduction of exotic species. While the international shipping industry is examining alternative anti-fouling treatments, it is likely TBT paints will continue in use for some time until an effective alternative is available.
There is a growing emphasis on the enforcement of the IMO safety and environmental standards for all shipping. Through the IMO, the international shipping community has developed a broad framework of controls on safety and marine environmental protection issues. Implementation of these standards is uneven, however, which may confer a commercial advantage on the operators of unsafe ships. The IMO has encouraged regional actions to combat unsafe shipping and port States in Europe, North America and the Asia-Pacific region are enhancing their port State controls on ships visiting their ports. Regional agreements on port State control have set as a minimum target the inspection of 25 per cent of ships annually.
Commercial shipbuilding in Australia is worth around $400 million each year, of which some 80 per cent is for export.
Australian shipbuilders are world renowned for their fast aluminium ferries, ranging in size from 30 metres carrying 250 passengers to more than 90 metres carrying 900 passengers and 240 cars with some configurations accommodating coaches and trucks. The Australian commercial sector, which is mainly export oriented, is also internationally competitive in niche markets such as luxury motor yachts and fishing vessels.
The Australian industry is a market leader in the design of fast ferry catamarans which are lighter, faster, require relatively less power and are therefore more economical to operate than the existing generation of steel vessels and hovercraft.
Recent technological advances, including design, have improved the commercial viability of operating these vessels, leading to a much wider sphere of potential use. The next decade will see further advances in vessel design and further adoption of fast ferry concepts in global markets.
Government policy towards the shipbuilding industry is to encourage the growth of the industry through creating a competitive environment with emphasis on strategies to enhance the immediate and long term international competitiveness of the industry. These include innovation, capital investment, skills development and market analysis. Shipbuilders are developing strategies to address these issues.
In the light of expectations that the international commercial ship market will grow significantly in this decade, Australian shipbuilders will pursue opportunities to supply vessels that capitalise on the industry’s strengths and capabilities in areas such as fast ferries, patrol craft, fishing vessels and other small ships, both in the short and longer term. A resurgence of large ship construction in Australia seems unlikely.
One of the main determinants of the future of fast freight vessels will be finding a market niche between conventional shipping services and air freight. The vessels could form a part of a rapid cargo service to meet the needs of manufacturers of high value added cargoes or consumer requirements for fresh produce.
A key factor that could influence the growth of the shipbuilding industry is the move by the OECD to remove subsidies, though for the time being Australia opted to maintain its shipbuilding bounty to the end of 1997.
The defence shipbuilding industry is worth more than $1 billion each year. The potential for growth in defence shipbuilding will depend on Australia's ability to win export contracts and diversify. Domestically, the major customer is the Royal Australian Navy. The annual expenditure on the repair and refit of naval ships, submarines and equipment is around $250 million. Even if the defence shipbuilding industry does achieve exports it is expected that the Navy will remain a significant customer well into the future.
As nations around the world seek to develop their marine resources, there is likely to be growth in related services and in high technology industries, such as oceanographic instruments, robotics, communications and navigation equipment, and data processing and analytical tools. Worldwide, these industries are worth tens of billions of dollars and Australia has strong capabilities in many of these areas which can be developed. This will require investment in R&D and some commercial risk taking.
Australia has a strong skills base in marine engineering and coastal engineering and management and there is much potential to build on existing exports in these areas. This is particularly so given Australia's level of expertise in tropical research and its proximity to Asia. Also, with the increasing value placed on the environment by the global community, Australia has begun to develop a sophisticated environmental management and consultancy industry. Australia is well known for the development of MPAs which has opened up opportunities for the export of services in this area.
The expected growth in worldwide in marine industries, such as shipbuilding, deep sea exploration for oil and gas, will also increase demand for high quality research, education and training services. The growth of marine based industries is likely to provide Australia with opportunities to develop further its innovative export market for education services.
Australian Bureau of Agricultural and Resource Economics (ABARE) 1996 Australian Fisheries Statistics 1996, Australian Bureau of Agricultural and Resource Economics, Canberra.
Australian Marine Industries and Sciences Council (AMISC) 1996, Draft Marine Industry Development Strategy, Department of Industry, Science and Tourism, Canberra.
Australian Marine Industries and Sciences Council 1997, Marine Industry Development Strategy, Department of Industry, Science and Tourism, Canberra.
Beattie, A. (ed) 1995, Biodiversity: Australia's Living Wealth, Department of the Environment, Sport and Territories, Canberra.
Biodiversity Unit, Environment Australia 1994, Australia's Biodiversity: an Overview of Selected Significant Components. Biodiversity Series, Paper No 2, Department of the Environment, Sport and Territories, Canberra.
Bureau of Tourism Research (BTR) 1996, International Visitors Survey & Domestic Tourism Monitor, Commonwealth of Australia.
Bureau of Tourism Research 1996, International Visitors SurveyDecember Quarter.
Hilary, J. & assoc (eds) 1996, Directions in the Maritime Industry to 2010. Shipping PartnershipBackground Papers, Australian Science and Technology Council, Australian Government Publishing Service, Canberra.
Kelleher, G., Bleakley, C. & Wells, S. 1995, A Global Representative System of Marine Protected Areas, Environment DepartmentThe World Bank, Washington.
McKinnon, K. R. 1989, Oceans of Wealth? A Report by the Committee on Marine Industries, Science and Technology, Australian Government Publishing Service, Canberra.
Tourism Forecasting Council 1997, Forecast June 1997.
Zann, L. 1995, Our Sea, Our Future. Major Findings of the State of the Marine Environment Report for Australia, published by the Great Barrier Marine Park Authority for the Department of the Environment, Sport and Territories, Canberra.
Zann, L. & Sutton, D. C. 1995, The State of the Marine Environment Report for Australia. Pollution Annex 2, published by the Great Barrier Marine Park Authority for the Department of the Environment, Sport and Territories, Canberra.
Zann, L. 1996, The State of the Marine Environment Report for Australia. Technical Summary, published by the Great Barrier Marine Park Authority for the Department of the Environment, Sport and Territories, Canberra.