An Australian Rail Track Authority line through the outback

March2009 Contents The official Journal of Shipping Australia Ltd Level 6, 131 York Street, Sydney NSW 2000 PO Box Q388 Sydney NSW 1230 2 Announcements from the bridge Ph: (02) 9266 9911 • Fax: (02) 9268 0230 Economic uncertainty our main challenge www.shippingaustralia.com.au 4 Viewpoint Published for Shipping Australia Pty Ltd Being part of the solution, not the problem

6 Profile Grant Gilfillan, CEO Sydney Ports Showcase Publications P/L 8 Retrospect 26 Belmore Street, Surry Hills NSW 2010 Are our backs to the wall or are we Ph: (02) 9211 7422 Fax: (02) 9211 9061 luckier than ever? www.showcasepublications.com.au Director: Roger Conway 14 Railways feature 14 Rail Track chief tells it as he sees it editorial 18 Port Melbourne link almost complete Executive editor - Llew Russell 19 Work begins on Macarthur corridor Feature writer - Archie Bayvel 20 FreightLink latest 21 The private lines Advertising Co-ordinator For Advertising in the next issue 22 Shipping and greenhouse Call: Steve Moxey Ph: (02) 9211 7422 Email: [email protected] 26 Agents’ key changes by Ken Fitzpatrick

Production Manager and Design 30 Coastal shipping parliamentary report Paul Ortiz-Gomez Ph: (02) 9211 7422 32 NZ’s new coastal services Email: [email protected] 34 Break bulk and windmills Administration by Alan McDermid Sarah Abrahams Ph: (02) 9211 7422 Email: [email protected] 36 Containers’ 40th anniversary We kindly ask all readers to notify the advertisers that you saw their 38 The ubiquitous box advertisement in Shipping Australia, as it is only by their willing participation that this publication is available to you. We recommend that you use the advertisers wherever possible. 40 Signal Disclaimer. Readers are advised that Shipping Australia Limited Industry updates and the Publisher cannot be held responsible for the accuracy of statements made in advertising and editorial, nor the quality of the 42 Training goods or services advertised. Opinions expressed throughout the publication are the contributors own and do not necessarily reflect the views or policy of Shipping Australia Limited or the Publisher. 43 Letters to the editor While every reasonable effort has been taken to ensure the accuracy of the information contained in this publication, the publisher takes 44 SAL Annual Report 2008 no responsibility for those relying on the information The Publisher 45 Full contents list and Shipping Australia Limited disclaims all responsibility for any loss or damage suffered by readers or third parties in connection with the information contained in this publication. 184 Advertiser’s list Warranty and Indemnity: ADVERTISERS and/or advertising agencies upon and by lodging material with the Publisher Showcase Publications for publication or authorising or approving of the publication of any material indemnify the Shipping Australia the Publisher, its servants and agents, against all liability claims or proceedings whatsoever arising from the publication and without limiting the generality of the foregoing to indemnify each of them in relation to defamation, slander of title, breach of copyright, infringement of trademarks or names of publication titles, unfair Cover pictures: 1. An ore train competition or trade practices, royalties or violation of rights or on Fortescue’s line through the privacy regulations and that its publication will not give rise to any Pilbara; 2. Grant Gilfillan; 3. rights against or liabilities in the Publisher, its servants or agents 1 2 3 Anthony Albanese; 4. Michael and in particular, that othing therein is capable of being misleading Carmody; 5. David Marchant. or deception or otherwise in breach of Part V of the Trade 4 5 Practices Act 1974. Announcements from the bridge by Llew Russell

Economic uncertainty: The main challenge to be faced in 2009

learly the rollercoaster ride we charters but using their own vessels and Association of Australia New Zealand experienced in the latter part cooperating and coordinating their services conference in November last year which of 2008 as a result of the global even more closely with those of other lines. sets out many of the problems that Cfinancial crisis is going to continue this It is interesting to note that the EU shipping agents face. year and regrettably for some time. In my took a historic decision to withdraw the In order to cope with the long term view it is vital that this year the maritime exemption for liner shipping conferences growth for inter-city freight in Australia, industry in Australia becomes more from 1 October last year. Unlike the it is essential that more freight is carried united in meeting the challenges that this situation in Australia, Europe has a on rail and a number of State governments economic crisis presents. different regulatory regime applicable to have set percentage targets in terms of We must seek ways and means of consortia. In Australia, it is all covered by transferring freight from road to rail. Our achieving an unprecedented level of one regulatory regime under Part X of the special feature in this edition relates to the cooperation and coordination between all TPA. The EU is currently conducting a rail freight industry in Australia, where the those associations that have a stake in the review of that consortia regulation which gaps are and its likely long term future. maritime industry as well as facilitating expires in 2010. We are pleased to be able to profile Grant Australia’s overseas trade. By working This year we celebrate the 40th anniversary Gilfillan who was appointed CEO of more closely together we have a chance of the introduction of containerisation to Sydney Ports Corporation and with the to collectively find solutions to enhancing the Australian international liner trades. release of the government’s white paper on the performance of our supply chains, World trade would not have grown as the carbon pollution reduction scheme, it reducing the potential for congestion in rapidly over the past 40 years without the is most opportune for us to examine the our ports and providing more coordinated advent of containerisation. Equally, of possible impact of this white paper on the recommendations to government and course, with the downturn in global trade maritime industry. government agencies on much-needed it impacts rapidly in terms of lowering the In Retrospect, Archie Bayvel presents new infrastructure and increased demand for container shipping services. contrarian views to those of some daily utilisation of existing infrastructure. 2008 was a year of submissions. It is hoped media on the global financial crisis’ impact A more unified approach will also assist that 2009 will be a year when substantive on Australia. He revisits on-the-ground us in dealing with border agencies and decisions and actions are taken. executives whom he met during his travels and reports their views on their current I was indeed pleased in 2008 to see the 2009 has begun with requests for situation. My own view is that there is Office of Transport Security, relevant areas submissions covering the review of no suggestion that Australia is immune of the Australian Quarantine Inspection the future of the National Transport from the effects of the global downturn, to Service, Customs and the Department Commission, a review of the regulation the contrary, but rather the impact varies of Immigration and Citizenship joining of Victorian ports, an annual review of depending on individual sectors of the together to find the best practical methods regulatory burdens on business by the economy and the length of the downturn. of enhancing security relating to cruise Productivity Commission, input into Undeniably, Australia is better placed than vessels. The Australian Maritime Safety the economic framework for an efficient many countries to weather this financial Authority would also benefit from a more transport marketplace being considered by tsunami. unified and coordinated industry voice. the Ministerial Taskforce established under Regular readers of this magazine will the National Transport Policy Framework The article reminds me of a story that, in be aware that many international that is being progressed by the Australian my view, applies to certain sections of our liner shipping operators are parties to Transport Council, and comments have media: ‘Facts, truth and fantasy went on agreements that are registered under the been provided on the NSW Opposition’s a long and arduous journey but only the Australian Trade Practices Act which paper on “Planning for Prosperity: exploits of fantasy were reported upon by gives them limited exemption from our Economic and Fiscal Priorities”. A long the general media’. anti-trust laws in order to provide the level list indeed. To say that 2009 is going to be a of services required by container exporters Similar to the past two years, we have challenging year for our industry and SAL and importers in Australia. There is now an adopted the format of having our quarterly would be an understatement. However, urgent need for those operators to consider magazine as well as the annual in the may the forecasts of continuing economic rationalisation of services to increase March edition. Also in this edition of the gloom be as accurate as those forecasts that vessel utilisation in order to reduce magazine we have an extract of an address anticipated the boom continuing on for OOCL Australia operating costs if possible by not renewing by Ken Fitzpatrick to the Maritime Law many years to come.

2 March 2009 Celebrating 20 years in Australia Viewpoint

Shipowners want to be part of the solution, not the problem

Photo: long sigh escaped the lips of the stevedoring companies for the provision Tribunal of New South Wales found in its Sydney Ports truck driver as he looked at his of services, they do not set out operating review on improving landside efficiency watch and realised that he had procedures in terms of yard versus berth at Port Botany, less than a third of bulk Abeen waiting four hours and still was not priorities. The point is that congestion in runs of empty containers are sent to the at the front of the queue to enter the Port the terminal itself with the build up of terminals during peak times and it is at the Botany container terminal. He had turned containers quickly translates to ship delays. discretion of the container terminal not off his engine at times during his long wait It is in the interests of the stevedore’s the shipping company. which technically meant that he had rest operation and the ship operator for periods and therefore still complied with containers to be handled as quickly as Shipping lines have, in fact, encouraged the fatigue laws but he was tired. possible within the terminal itself be that the empty container parks to advertise either on road or rail. Around 40 per cent when bulk runs are occurring after hours He moved his rig a little closer and of containers at the terminal can spend at so that others can access the parks at that reflected on the comments of the owner least four days there before they are moved time. In addition, Shipping Australia, of a trucking company at the second off the terminal. That is not good enough Tradegate, ports and empty container industry briefing on 3 February by Sydney for any of the stakeholders. parks have been working together to Ports regarding the Port Botany landside improve park utilisation and the flow improvement strategy. Whilst there was There have been cases where four vessels of information along the chain to assist much discussion on current problems and operated by just one SAL member have coordination and operational efficiency. planning for three trials to be held over waited to berth because of congestion at the next few months and who should pay a Port Botany container terminal. This That is the key! All parts of the supply a peak pricing surcharge, the words of this means those four vessels will miss berthing chain working closely together to effect particular owner stuck in his mind. windows at other ports. Importers and real operational improvements. It will He had said words to the effect that exporters suffer from these disruptions, not happen if all we can do is blame each the real problems lay at the feet of the especially those involved in just-in-time other. supply chains. This also results in the shipping companies. They were the The issue of detention whereby the late ones earning big bucks and dictating to bunching of shipping schedules whereby two vessels can turn up to load at a return of containers to empty container stevedoring terminals what priorities parks or exporters keeping empty they should employ in terms of handling port overseas within days of each other and then there is a long gap before the containers for packing for unreasonably ships versus trucks, taking up valuable long periods incurs a late fee has been time by running in bulk empty containers next ship arrives. This results in a poor frequency of sailings and certainly does the subject of much debate between from empty container parks to the shipping lines and trucking companies terminals during peak times and not not meet the requirements of exporters in many states. That large steel box is a paying the empty parks to open after and importers. revenue-earning entity and keeping stocks hours. Furthermore, they were charging at a reasonable level assists in preventing detention when containers were not Shipowners want shipping costs being unreasonably high. returned to empty container parks within What is often not understood is that seven to 10 days of being picked up at the an efficient sea-land container terminal. Shipping companies interface as much as the delaying the return of an empty container were the ones causing the main problem can mean that exporters have to wait to be of congestion because they insisted all quick despatch of vessels. able to pick up that container to pack for the labour should be directed to handling It is not a case of either/ export. containers on and off the ship as quickly as or; it has to be both. An efficiently functioning logistics chain possible and transport came a poor second. benefits all parties. Empty container parks are another issue. The truck driver wondered if all this was The parks themselves say that when they As far as earning big bucks is concerned true. open after hours, no or few trucks turn up. the shipping industry is really suffering From the perspective of the shipping The container terminals determine when from the current global financial crisis and companies the comments could not have bulk runs of empty containers will be freight rates are very low. If it is so good, been further from the truth. Whilst allowed, not the shipping companies. As why bother with the trucking industry; shipping companies do contract with the Independent Pricing and Regulatory become a shipowner!

4 March 2009 DPC2420 GENERIC 210x297vert:DPC new MINERALS A4 31/1/08 8:36 PM Page 1

Viewpoint

A u s t r a l i a ’s n o r t h e r n g a t e w a y. With dedicated multimodal facilities, 775 metres of continuous deepwater T h e p o r t o f c h o i c e . berths, an extensive bulk liquids terminal and no congestion, the Port of Darwin is capable of handling a diverse range of cargoes.

Already confirmed as the nation’s second LNG port and the preferred supply base for the Timor Sea offshore oil and gas industry, the Port of Darwin operates a new $24 million dry bulk material handling facility, including a 2000 tonne per hour ship loader, to meet the growing needs of the minerals export trade.

The Port is also the country’s leading exponent of live cattle exports. Linked to the national transport network, Australia’s nearest port to Asia offers substantial hardstand areas to handle break-bulk and project cargoes. And there’s still plenty of room for expansion.

Choose a port with the experience, infrastructure and support capabilities to handle just about everything.

Choose the Port of Darwin.

Darwin Port Corporation GPO Box 390, DARWIN NT 0801 Australia Phone: +61 8 8922 0660 Fax: +61 8 8922 0666 Email: [email protected] or visit our website at www.darwinport.nt.gov.au I Profile Grant Gilfillan chief executive officer, Sydney Ports Corporation by Archie Bayvel A Black Swan or goalie for The Jags?

goalie for Lerwick Thistle Soccer Club “Our new master plan will co-ordinate all – otherwise known as The Jags - in the that and there will be reciprocal penalties desolate Shetland Islands, far north of and rewards for complying with it, a peak Scotland. Wrong guy! pricing structure to encourage warehouses and container parks to open at night and But quite a few of the remaining 70,000 at weekends, and commercial incentives to Google entries are about the bloke who is access off-peak time slots.” CEO of Sydney Ports Corporation and the person this profile is supposed to be Gilfillan accepts that he will stand and be about. judged by the degree of success his team achieves. Only a year into his three-year Right now he’s preoccupied with the Port contract, his port’s a different place. He Botany Landside Improvement Strategy inherited a management team of seven – an unimaginative name for what he people, today that’s down to four and all says will emerge as a world breakthrough are new. “We have,” he diplomatically says, in port management - whose objective “a very different level of energy. All I say to is to co-ordinate all interfaces between everyone is: ‘Watch this space.’” ships, stevedores, road and rail transport, warehouses, Customs and customers. Over the years this magazine’s Viewpoint articles have reviewed bottlenecks and “We’re already more than half-way to anomalies in the shipping industry and achieving that,” Grant says, “and we’ll have complained that their satisfactory solution a big chunk of the whole operation in could be achieved only by appointment of place by August. riting about Grant Gilfillan someone with over-arching authority plus isn’t as easy as it seems. “We will be a world first where a port the Nelson Touch; someone prepared to authority has created and put into effect a turn a blind eye to the naysayers and rally Invited to his office the other really efficient, fully co-ordinated logistics the fleet to do what must be done! WThursday for morning water one got a blueprint for its port. visual image pretty much what one would Joe Tripodi, who assures me he reads expect: A large youngish man of middle “It means the whole cargo handling the magazine, has delegated exactly such age apparently in excellent health doing process will be predictable and on- authority to Sydney Ports’ new chief and what port managers do. schedule. if all goes well with Gilfillan and his team the result of their labours will appear like a “It will see an end to the situation where It was a shock therefore to look up “Grant veritable Black Swan. Gilfillan” on Google only an hour later and truckies complain about peak-hour find 70,100 entries. Even more astounding performance at the terminal and say that Trendy US philosopher Nassim Nicholas to discover in only the second entry that even when they do pick up at night there is Taleb defines a Black Swan as a highly Grant had broken his leg and a lot of nowhere to deliver because the warehouses improbable and unpredicted event that young women were deeply concerned are closed. has massive impact and which, post- event, seems less random and more about him. A third entry declared the state “It will also end the truck queues in which predictable than it really was. The concept of his injury depended on “how drunk I drivers don’t know whether it will take of Port Botany without truck queues and am”. Interesting days indeed for a leader at them one hour or three to drop-off or pick everything running on time seems to fit Sydney Ports! up. that description. A lot seemed to have happened to the “Traditionally terminals have a high Grant is a country boy from Jamieson, bloke I’d left undamaged and sober such a commitment to service: Ships expect to in South Australia, where his father was short time before. arrive at a specific time, unload at a specific a wheat farmer who served 12 years in time and depart on time. But it’s been And so the best part of an afternoon is Parliament. But Grant never fancied a different story for landside transport. shot finding out there’s another Grant politics; he liked tinkering and fixing Stevedores traditionally haven’t believed Gilfillan who at age 38 blogs that he is things around the farm so when he left they need to service the transport industry “scared of nothing” and happiest when he’s school at Scots he went to uni and became beyond their so-called best endeavours. skiing. Turns out he’s the highly acclaimed a mining engineer.

6 March 2009 Profile

Soon after that he married and headed off terminal I was right in the middle of it full government and industry support for to his first job at Paraburdoo, in the Pilbara dealing with the strike committee and the carrying it through. It’s the first time in A Black Swan of WA. The township was so small that his unions. the world a port authority has taken such a bride didn’t notice it until the plane had role, often they are just landlords. “I learned that there had to be changes of landed. cultures and personalities on both sides. “Everyone knows I’m dead-set serious, a or goalie At Paraburdoo Grant worked virtually as Some of our managers clearly weren’t man on a mission and it’s going to happen. a labourer for 12 months driving trucks right and likewise for some of the union My expectations of myself are getting and drills before being promoted to a people; there needed to be a change of higher and higher.” supervisor of other people doing the same. personalities. for The Jags? You never wish an actor luck before a big “The mine superintendent was Peter “And that’s what happened. We changed performance; they prefer to be told: “Break Coates who went on to become a coal supervisors, moved people around and a leg.” Grant Gilfillan faces the most industry icon,” he says, “and under him I some people took redundancy; on the demanding performance of his career so got to know what people do and learnt union side there were retirements. we should wish him the same. It seems to to appreciate how a blue-collar worker have worked for that guy in the Shetlands “All that made Port Botany a much operates. It had a profound impact on me – scared of nothing! better place to work and got me back to and moulded me on how to view people. doing what I like: managing people in an It was an experience that has helped me in atmosphere of mutual responsibility and Sydney, in Dubai, in Romania, wherever enjoyment. I’ve worked.” “When I left there one of the union people After five years in the Pilbara with CRA said: ‘Grant, you’re a completely different (now Rio Tinto) he moved to Singleton person to when you arrived here.’ In fact in the Hunter Valley in 1982 to work we’d both changed. In the early days the for Coal & Allied (now also part of Rio union people had walked into my office Tinto). and made demands and I had to be hard. The coal strike of 1997 was a landmark Now they were coming with effective year. He was mine manager at Hunter suggestions on how to make things better Valley No. 1 opencut and for the 16 weeks and in that atmosphere there was no cause of the strike the management operated to be hard.” the mine. The strike there was a long one Altogether he spent six years at P&O with because of the severity of the dispute. a short break midway through as managing “My job was to drive trucks as well as director of CSX World Terminals. manage the mine,” Grant says. “It was a Immediately before joining Sydney Ports, most profound experience because when Grant worked in Africa, the Middle East the dispute was over we had shown the and Europe as a senior vice-president, miners that they could trust us, the mine managing director and general manager for executives, to operate the equipment and DP World. that broke down many barriers between them and us. It also taught me personally That involved a six-month stint as director how to handle tough working conditions. of operations at Constanta on the River Danube, in Romania, then nine months “But at the end of it all I’d had enough based in Dubai. of coal, got a chance to change jobs and decided my time had come and moved not “In Dubai the philosophy has been: Build just to another company but to a whole it and they will come. But the question new industry – stevedoring – with P&O is: How long will they keep coming? Ports. Construction has been fuelling its boom and if you take that away, why would “I arrived as general manager at Port people go there? We’ll soon find out Botany just in time for the 1998 because the construction bubble appears to waterfront dispute. be bursting right now? People call Dubai “I walked into a very hostile industrial The Miracle but it could just as easily be environment ... Patricks had locked out its The Illusion.” workforce and we were left to move all the His task at Sydney Ports involves a cargo at Port Botany. fundamental issue that he says hasn’t been “Even when the issues at Patricks had addressed anywhere in the world. been resolved we still had a hostile “We’ll have the rest of the world coming workforce because it had not been part of to see it when we’re finished,” he says. that resolution so we had to spend 1999 “The Minister driving it has the vision negotiating. That involved a lot of hard and power to implement it but he wants bargaining and as general manager of the the port management to run it. We have

March 2009 7 Retrospect by ARCHIE BAYVEL

This Australia: Backs to the wall or luckier than ever? You be the judge...

ot many things in my experience If there is a writer who has seen – actually the total context and, besides, manganese turn out exactly as we’re told seen as distinct from heard about – more is now beginning to pick up again. about them. When you actually of Australia recently I’d like to hear from Iron ore has not been greatly impacted arrive at ground zero the reality can range them. because what I see is very very N in terms of the number of ships loading from simple variation to cataclysmic different from what we hear about day- although current commodity prices may difference. by-day. not be as exciting for the mines as they In the past year I have visited almost every So different in fact that I feared I’d got were. But even if there’s a 20 per cent drop region of Australia and found nothing but it wrong, that something had happened in iron ore prices everything will continue massively prosperous industries, busy and in the few weeks since I’d actually stood full steam ahead. amid the billion-dollar whirlwinds of these sincere populations, national and personal So far as we’re concerned business is still prosperity machines. wealth being created at a whacking rate. on its growth path and we are projecting They range from Darwin’s multi-billion- So last week I picked up my phone a throughput of 171 million tonnes per dollar ocean gas deal, giant ore and coal and dialled around the nation to hear annum this year compared to 131 mtpa enterprises in the Pilbara and Hunter how things really are at this apparently last year. That is a slight retreat from our Valley through Gladstone’s billion-dollar alarming time in Australia’s economic earlier predictions of 180 mtpa but it is coal seam gas and coal rushes to a tuba- history. Here is what I was told; see what still very big growth. you think... playing schoolteacher on King Island who Fortescue has slightly downgraded its collects rainwater off his roof and sells it At Port Hedland, Andre Bush is CEO of expectations but is tackling its challenge for £9 a bottle in London and Paris. He what will emerge this year as Australia’s and its berths have a capacity of 55 mtpa calls it King Island Cloud Juice! biggest bulk port. He says: Hedland must and Andrew Forrest is very positive. A lot of Fortescue’s perceived slowdown is not Yet our news is full of doom and be the only place in the world not affected a slowdown but the natural result of most gloom, stories of cancelled deals, daily by recession. Everyone here is showing of its establishment work having been pontifications based on economic confidence and after a very brief lull all the completed. abstracts and folly on Wall Street which planes are full again and accommodation rentals are still very high from the press of is half a world away and in a different BHP is doubling its rail track to the workers. universe from Digger Thee and Digger port and its Rapid Growth Project No. Me. The world is roooned according to We had a small hiccup in the last quarter 5 has just been approved which targets them and Australia, ever keen to mount when Consolidated Minerals did not production rising to 255 mtpa. a bandwagon, is rooted with the rest of export chromium and manganese had a A few hundred kilometres south lies last-year’s them. downturn. But their figures are small in top ore-tonnage port of Dampier. For iron ore it is a Rio Tinto town but rivalling that is the massive Withnall Bay gas terminal Darwin: construction continues with more needed there owned by Woodside Energy Limited and its $12 billion new plant abuilding on the port’s north shore to serve the new Pluto offshore gasfield. The port’s CEO, Steve Lewis, confirms iron ore’s last-quarter dip but says: We’re certainly getting throughput now and expect record tonnages but not record prices. The price of iron ore will be set on the Chinese market in the next few weeks and prices may see a 30 per cent reduction but as they have risen 300 per cent in the past four years so what! The business

8 March 2008 fundamentals still hold. The gas industry here hasn’t missed a beat and salt is strong with 4 million tonnes out of Dampier last year and about the same out of Port Hedland. If there is any recessionary signal it has been in a slight downturn for contractors at Port Lambert where some construction projects have been delayed by Rio Tinto because of extraneous factors and the simple fact that it doesn’t have as big a balance sheet as BHP. We have a lot to be optimistic about and Hedland more than anyone with BHP there having confirmed its Project 5.

This could be a good time for of Inpex’s $50 billion Ichthys LNG some while others are planned. New Koorarang infrastructure investment while some commitment there. This will take 12–18 coal facility at Coal throughput of 90 million tonnes costs are a bit lower. We need roadworks months and involve a $250 million Newcastle last year will be 95 million this year so at Dampier, for example, with only one expenditure on engineering and survey there has been no decline in volume narrow access road to a huge port. But work. the Karratha airport is being upgraded despite the capacity balancing system to take 767s. Inpex has already established a knocking back 12 per cent of what the permanent office in Darwin and miners want to sell. A day’s journey away from the red dust of technical teams will be brought into the What coal producers have lost in China the mining ports and Geoff Strickland, NT for this stage. CEO of the Ord River Irrigation orders they are diverting to other Project at Kununurra, says: The WA Jeff Stewart, a director in the NT Chief markets. Rio Tinto has found demand Government is standing by its promise Minister’s Department says: The NT is in Europe and Thailand and Xstrata is of $200 million over the next four years not immune to recession but Darwin’s sending more coal to Mexico. retail spend is supported by its high to double the size of the irrigation area Exports to Japan have not dropped percentage of government employees and Kevin Rudd has come up with the off although only about 25 per cent of and continues to underpin the city’s same amount which has heightened Hunter Valley product is the coking coal economy and there is strong retail expectations for the project. needed for Japan’s blast furnaces. Most growth as a result. First work begins next week with is thermal coal used by power stations. A range of major projects is on the clearing the channel of accumulated A recent event has been the arrival of a horizon and the government has a wear-and-tear. All big ticket items such ship to load coking coal that had been record level of public works spending as native title and environmental issues diverted from Gladstone. It faces a 10– plus the national $20 million building have already been ticked off. 12-day wait at Newcastle whereas there package so we are well positioned is no queue at Gladstone. Speculation is Greenfield prices for the 40 new economically. 400-hectare blocks will depend on how that it might be the forerunner of a play the land is released, cleared or whatever. Tourism continues to attract more to force down the price of Gladstone All blocks will have 100 per cent water overseas visitors and the airlines have coking coal. increased their number of international availability and ball-park land prices General cargo has dropped off a little flights. are around $12,000 per hectare; close- but is more than compensated for by the enough to $5 million for a 400-hectare Thousands of kilometres to the south and return of grain exports, the first in two farm. the recession has had no effect to date years. on Newcastle and most people are How the land sale will be promoted has The big issue in Newcastle today has confident that it won’t have because still to be decided but the government is nothing to do with coal, grain, Wall of the coal port’s capacity balancing likely to seek low-key broad expressions Street or any of these matters. It’s about system. of interest from would-be investors. whether or not the central railway In an earlier conversation Strickland The system to reduce port congestion station should be moved out of the city predicted a land rush. has been extended to the end of March to an inner suburb so a new glamour The recession has had no impact on while the port tries to find a solution complex can be built on the CBD site. acceptable to the ACCC. Today 21 coal plans or on the Kununurra township, he Down south you can’t get much farther ships – about a week’s capacity – are says. With both governments pledged from the big world than Port Lincoln: waiting outside the port. to the expansion the project is insulated Tough old local fishing king and self- and its economy is buffered against The new NCIG terminal under made multi-millionaire Hagan Stehr recession. construction is expected to be operating has become a world-figure on the fish Darwin is busily settling into the newly next year on schedule and existing Port scene since his successful breeding of announced planning and design stage Waratah has permission to build more southern bluefin tuna in captivity. berths and is getting ready to build

March 2009 9 Dampier: Woodside’s vast gas plant with another being built as you read this

understand that our nation is doing exhilaratingly well, far far better than steady-as-she-goes and that, contrary to the other fairytale, the king is not stark bullockers and we’re not either? To reach a balanced conclusion I think we must agree that there are serious issues facing the global economy and that it is in recession. Look at economic numbers (GDP and unemployment) in Japan, UK and USA. They are undeniably horrible. Where my observations are relevant Despite that world-shaking breakthrough likely to build anything before 2013, L&G is in indicating Australian sectors his shares had plunged 82 per cent off (Arrow) is aiming for 2011. and companies likely to outperform last year’s high to a mere 39 cents; on the international crisis. The five primary Two entirely new industries have emerged face of it an inexplicable performance sectors that are the focus of my optimism for the city – Gladstone Pacific Nickel for a tightly managed, ground-breaking are CSG, iron ore, thermal coal, and now has approval to build a refinery and company. bluefin tuna and the guy with the cool tin Boulder Steel confirms an immediate roof. But he came out fighting at the agm of go-ahead for a $1 billion seamless steel his Clean Seas company when he told his tube mill and a pig iron plant on a 100 or The fish and cloud juice are anomalies shareholders: “If you hang around long 200 hectare site. The pig iron plant will because their high potentials are micro enough, you’ll all be millionaires. There is a enhance the project returns by ensuring black swans. They’re small triumphs out future after the current downturn.” the quality of the steel and reducing of the blue compared to the great gas and production costs. The project, possibly mineral demand caused by urbanisation of Catches of wild southern blue-finned tuna financed with Saudi Arabian investors, will China and India and throttled supply. That are tightly restricted to only 5265 tonnes a create almost 700 jobs in the Gladstone urbanisation is the key to outperforming in year but there is no limit to the harvesting region and is currently in the early stages this market. Whether it will be big enough of land-bred fish. A 250,000-tonne of its impact statement. to save the world remains to be seen. shortage of seafood is predicted by 2012. From what I’ve seen, the wealth from Going farther south yet and Robert McGuire, So there you have it straight it is enough to ensure the companies, CEO of Tasmanian Freight Logistics, says: towns and cities generating it have already They talk of a downturn but it hasn’t begun from the mouths of the horses created a flow-on effect that will cushion to happen yet in Tasmania. really doing the heavy work Australia. All we’ve got to do is stay cool, In Queensland, Gladstone is still Australia’s in pulling our national keep planning, and keep working. Many fastest-growing industrial city. It remains thousands of men and women in the unknown to many Australians but cart... impact zones are cheerfully doing just that. continues to grow by billions of dollars- Does it suggest our economy is rooted, The Brits showed in 1941 that being worth of industry and opportunity every CELEBRATINGalmost everyone is out of work; our backs cheerful kept one going even as bombs year, this one included. are to the wall and the barbarians are at rained on their cities and as Ned Kelly The focus is still on gas both as LNG the gates; consider shooting your mother- more-or-less said: “We should fear and coal seam methane with six or seven in-law to spare her from them. recession as we fear a cup of tea!”. For possible projectsCOSCO’s in the offing and major OR ... 30th yearmyself I’m confident of enough to lash out gas players remaining as Santos, BG, on a glass of Cloud Juice. Here’s a tenner. ConocoPhillipsliner and Shell. While service none are Would it be a truer conclusionto to AustraliaKeep the change.

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Four areas of interest...

The first thing one learns on setting out to write the definitive article on our national rail networks is that it just can’t be done. There are so many divisions, sub-divisions, operating companies and aberrations it would take a year to grasp them and a book to detail them. So this article focuses on four areas of interest: Fi r s t is the national standard-gauge line and other lines under the care of the Australian Rail Track Corporation whose chief executive David Marchant delivered an excellent wide-ranging address to the National Press Club which is reported here in full. Se c o n d is the progress being made in facilitating greater and faster rail access to our two main ports – Melbourne and Sydney. Th i r d is the status of FreightLink, the rail line few people east of Adelaide or west of Port Augusta know very much about but which has transformed the present and future of Darwin and the entire Top End. The line has been in administration for some months and getting information about it was harder going than its efforts to find a buyer. Its CEO, John Fullerton, has since given an exclusive interview to Shipping Australia. Fo u r t h is the rail network that almost nobody knows about yet train-spotters from all over the world come to gape at it, jot down engine numbers and do whatever else train-spotters do if the movie is to be believed. This is the slim bundle of lines that serve the great iron mines of the Pilbara and are operated by Andrew Forrest’s Fortescue Metals Group, BHP-Billiton, and Rio Tinto. There are other and possibly greater railway operations than any of the above – QR and Pacific National, for example – but their time, for this feature at least, has not yet come.

Our trucks are e live in a car-centric society, Our freight transport activity has grown be it from the Holden over the last two decades by around 1.6 ute, the Sandman of my times our gross domestic product. The among world’s Wyouthful past, or the SUV. Our vast question is, can we be reliant on trucks for continent and spread of cities has driven the movement of our goods and can that best but rail is five us to an addiction to cars and trucks. be sustained for the next 20 years? Since the 1960s we have doubled our Our challenge requires confronting some efforts in moving goods by truck. Our fundamental structural impediments. times more fuel intermodal freight rail transport system One, fuel pricing and availability; two, was progressively run down, under- the reduction of CO2 emissions; three, efficient and one invested for performance, as we embarked urban congestion and, four, labour force on making our truck activities more structural and demographic changes. productive and more efficient. train can carry 100 Although we are presently going through Today our medium and long distance the shock of the world credit crisis and trucks would be amongst the most consequent fall in oil prices, we should not truck-loads efficient in the world. New axle loads, take comfort thinking the recent fall in oil semi-trailers extended to b-doubles, and prices is a sustained outcome but rather a triples are just some of the initiatives short term aberration. This is a transcript of a that have developed an outstanding Oil prices in the 90s averaged around luncheon address to the road freight sector that is the envy of its American and European counterparts US$20 per barrel. In 2008 they peaked at National Press Club, in who are severely restricted on truck approximately US$147 per barrel. Canberra, by David Marchant, lengths and routes and who are more and In November this year they had fallen more impacted by user-pays and tolling to US$50 per barrel. The International CEO of the Australian Rail on top of fuel taxes and registration. Energy Agency has forecast the future of Track Authority. Australian trucking initiatives from fuel prices as ranging between US$50 to the 1960s to today have opened up our US$124 per barrel in the 2020s. The days logistic arteries and enabled Australia of the US$40 barrel have gone. to cost-effectively move goods in a Carbon reduction programs and carbon substantially growing transport market trading schemes have significant flowing from the progressive globalisation implications for our land transport sector. of our economy. At present Australia’s land transport

14 March 2009 Railways feature

produces 75 million tonnes per annum of closer links between pricing structures and level of demand. carbon emissions. On projections for 2030, the full cost of providing infrastructure and At the same time, our population growth without significant modal shift, it would services.’ and increases in innovation and productivity produce 105 million tonnes per annum of Reform in this area should be accelerated, will result in the volume of goods to be carbon emissions. If Australia is to reduce its he says, and the Productivity Commission’s transported increasing by greater than 75 per carbon emissions then land transport of our recommendations that incremental pricing cent over the same period. goods is a major area, a major contributor to form a precursor to mass distance location In the next 25 years, we cannot rely on trucks carbon problems. pricing for freight is worth another urgent doing all the heavy lifting that has been so Rail is an excellent option for reducing our look. Fundamental pricing relativity between much the growth story for the last 25 years carbon footprint. Rail freight is five times freight transport modes needs adjustment. when infrastructure investments have focused more fuel-efficient than road freight per Price is the most critical attribute. on facilitating greater freight transport on tonne carried. Influencing factors on price in medium to our roads between major cities and centres. Professor Garnaut, in his outstanding report, long distance road freight transport costs over Those same 25 years have seen a general reflects on long distance freight transport the next 20 years will be: Fuel costs, carbon deterioration in our freight rail infrastructure when he wrote: ‘The development of near costs, labour cost and supply, congestion costs and under-investment in improving its zero emission trucks may take longer than and infrastructure access charges. productivity and performance. for local freight due to the additional energy Carbon costs were forecast in the recent These policy and strategy settings will need storage required for long distance travel. There Treasury paper to move from $20 to $30 per to adjust if our country is to continue its are immediate and growing opportunities for tonne in 2010 to between $51 and $90 per economic growth and reduce our carbon modal shift, particularly from road to rail. tonne in 2030 based on 2005 dollars. How emissions. ‘In the long term the development of a more this will affect fuel pricing for commercial The trend since 1960 between our capital substantial rail freight network, along with medium and long distance trucks is not cities of Melbourne, Sydney and Brisbane intermodal terminals that allow the rapid known as yet. - our largest infrastructure:logistics market transfer of goods between trucks and trains Labour costs and the supply of drivers are - has seen land freight moved from around could permit an even greater share of freight likely to be a very large influence on the 50 per cent by rail to less than 12 per cent in to be transferred from road to rail.’ cost for medium to long distance trucking 2006. The volume of freight increased from Professor Garnaut gets it. Transport share markets. By 2010 labour cost has been approximately 1.5 million tonnes per annum of CO2 emissions is currently 14 per cent. If forecast to grow 20 to 25 per cent. One reason in 1960 to over 25 million tonnes in 2008. nothing is done it will comprise 66 per cent of for this is changing demographics and the X This growth above GDP will continue over the nation’s total target for 2050. and Y generational changes. My generation the next 20 years and cannot be adequately If Australia is to reduce its overall emission was prepared to hock our houses and raise handled nor cost-effectively undertaken by levels the relative pricing of road and rail debt to buy a rig, become a subcontractor continued reliance on road freight alone. freight needs to be placed on a basis that to one of the major firms and be away from The major planks of reform over the last enables rational decisions by users on the home for days at a time, sleeping in the 15 years in the rail freight sector have mode to be used. The bottom line is that rig. My children’s generation have other predominantly focused on moving above-rail freight users will determine their mode based aspirations. The price of attracting people to operations to the private sector. ARTC was on its cost to them, the end price. Professor that lifestyle is going up and the number of created in 1998 to progress the development Garnaut also states: ’It is desirable to have people prepared to do it is falling against the of a national interstate standard gauge rail network connecting our capital cities and ports. ARTC initially took up the former Australian National Rail infrastructure in South Australia and part of Western Australia, and the commencement of lease negotiations in Victoria for the standard gauge main line from the South Australian border to Melbourne and then Wodonga. And in September 2004, after years of negotiations, ARTC executed a 60-year lease of the New South Wales interstate standard gauge main line from Newcastle to the Queensland border, from Macarthur in Sydney to Albury, and from Cootamundra to Broken Hill. The lease also incorporated the Hunter Valley lines from the port of Newcastle to Werris Creek and the Ulan lines. In Victoria and New South Wales substantial maintenance deficits were acquired. The average speed in the Victorian network for a super intermodal container freighter David MArchant (right) meets the media was approximately 40 kilometres an hour.

March 2009 15 Railways feature

–Adelaide-Perth. Investments in the early on a $2.3 billion program to rejuvenate 2000s meant temporary speed restrictions infrastructure and performance on the were reduced from 24 per cent of the track north-south corridor. The program will in Victoria to below 2 per cent now for the be substantially completed in 2009 and whole journey. will reduce transit time Melbourne to Transit time for super freighters has been Brisbane by 7.3 hours to a total 26 hours. reduced by more than four hours from Melbourne to Sydney will be reduced Melbourne to Kalgoorlie through the by three hours, Sydney to Brisbane by provision of more loops, automated keying 4.3 hours and reliability increased from of turnouts, staff and ticket signalling the mid 40s to in excess of 75 per cent, eliminated from inner Melbourne and matching the east-west corridor which is replaced with electronic signalling, and a more reliable than our airlines. myriad of track improvements. Ninety per cent of the line will be concrete The result: Train lengths and capacity were sleeper, which reduces the impact of heat- increased, 1500-metre trains now run from related restrictions on rail lines. Melbourne to Adelaide, tonnage limits In 2009, Sydney’s southern city freight through the Adelaide Hills rose from 3300 line will be under construction with full to 5000 gross tonnes, 1800-metre double- completion by January 2010. stack trains run from Adelaide through to This line will separate freight from the Perth. urban passenger network from Chullora Real price reductions are around 20 per to Macarthur and overcome the curfew cent and the land transport market share on freight movements in Sydney in the for rail has moved from just over 60 per southern area. These curfews substantially cent in the 90s to over 81 per cent on the restrict freight capacity, as no freight is east-west corridor today. Rail is generally allowed on the urban system from 6am 30 per cent cheaper per tonne than road to 9am and from 3pm to 6pm every Temporary speed restrictions in Victoria door-to-door from the east coast to the weekday. These restrictions will still apply amounted to 24 per cent of the track. Train west coast. to northern Sydney. lengths were officially 900 metres and, In the United States, on average, it takes The southern Sydney freight line will in New South Wales, the maintenance around 73 hours for a freight train to be connected to the freight line from deficit was estimated at over $366 million. travel 3500 kilometres. On the Melbourne Chullora to Sydney ports, which will be Significant temporary speed restrictions to Perth corridor, it takes 54 hours to travel separated from the urban passenger system were placed on critical assets. the same distance, almost one day less than and brought under ARTC control. These points are not made to take a shot the US. The United States doesn’t have the Effectively, rail freight from Melbourne at previous management. They reflect benefit of the intense competition from port to Sydney port will be totally the lack of priority and commitment to b-doubles and triples that we have because separated from our urban passenger rail as being a value-adding component b-doubles and triples are not able to systems. to our national transport and logistics operate on any US highways nor generally Through the support of the Victorian infrastructure. They reflect 30 years of in the European Union. Government, ARTC’s lease in Victoria has running down of investment and the After the take-up of the New South been extended to 2059 and the Victorian outcome of distorted pricing signals Wales lease, ARTC with the support of Government has handed over the broad between commercial road and rail the Australian Government commenced gauge track adjacent to the standard gauge transport. a major program of improving the and ARTC is converting it to standard Road has investments determined on infrastructure on the north-south rail gauge. This will provide two standard- broad economic terms and cost distributed corridor, Melbourne-Sydney-Brisbane. gauge lines in eastern Victoria and amongst all users and non-users whereas This is the corridor most depleted in substantially assist in improving transit freight rail investments are generally performance over the last 30 years. Rail time reliability and capacity. commercially based and cost distributed market share had fallen from around 50 exclusively amongst the beneficial users. ARTC is partnered with Lockheed Martin per cent in the 60s to less than 12 per cent Pricing signals between the commercial and Telstra to develop an advanced train in 2008. In 2004, transit time Melbourne trucking market and the commercial rail management system and to roll out digital market will need to be addressed if there is to Brisbane for the very best super- communications on the standard gauge to be a greater shift to a more fuel-efficient freighter was 32.9 hours. Reliability was interstate rail corridor from Brisbane carbon-friendlier mode of transport. around 45 per cent. Between Melbourne through to Perth. A proven ATMS system and Sydney, the best super freighter could will replace old-time signals and manage The deficit accrued over 30 years is gain a transit time of 13.5 hours and trains through sophisticated computer progressively being addressed but the Sydney to Brisbane, the best was 19.4 programs and global positioning systems. infrastructure will need significant new hours with reliability at 45 per cent. Only investment if it is to meet the challenge The famous staff-and-ticket section of the some trains could run these corridors at over the next 20 years. main line between Casino in northern 1500 metres; most were restricted to less New South Wales to Acacia Ridge in Since 1998, ARTC has addressed than 1000 metres. Queensland has been removed and improvements in transit time, reliability ARTC, with the support of the replaced by a modern CTC system. The and capacity of the main lines Melbourne Australian Government, has embarked staff-and-ticket system was an excellent

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example of rail safety technology from the Climate Change Mitigation and the latest economic stimulus effects in our sort of 1880s which was still alive and well on world energy report by the International economy. the interstate main line between Sydney Energy Agency. Our analysis scenario ARTC’s prime objective has been to and Brisbane in 2008 and in the centre of has a 2017 oil price per barrel at US$85, revitalise our rail infrastructure and make it Melbourne in 1998. Australian-US exchange rate at 70 cents, a realistic competitor to road and value-add It required a driver to get out of the train labour rates increased by 22 per cent, to our national logistics infrastructure. truck contributions to road access charges at each signal, go to the signal box then to We’ve still got a way to go but we’re increased by 10 per cent; all these are in a dispensing machine and get what they working on it. Every night we see an almost 2005 prices. called a staff. It had an individual number endless stream of heavy trucks leaving and showed the location the driver can go Assuming the market responds rationally Adelaide, Melbourne, Sydney, Brisbane to. He goes then the next 20 kilometres to and infrastructure was in place in 2020, that and Canberra, heading for interstate or the next machine, gets off the train, puts would mean for our transport sector: intrastate destinations. Hundreds of trucks. the staff into the dispensing machine there, Rail market share Melbourne to Brisbane One 1500-metre train can replace 100 gets another one out, signs for it and then would be 83 per cent, an increase of 3.4 trucks. What I’ve advocated is a transport gets back on to the train, 4000 tonnes, and million tpa or over 346 per cent. mode shift to the benefit of our economy drives along for the next 20 kilometres. Road market share, Melbourne to and the environment. There is only one of these staffs for each Brisbane, would be 17 per cent, a decrease There’s an ad running on US television at section, each direction, and the reason it was of 2.3 million tpa or 73 per cent. the moment extolling the virtues of rail safe is only one person, one train could ever Rail market share Melbourne-Sydney over road and I’ve converted from imperial have the staff and in that fact was brilliant would be 45 per cent, an increase of 5.8 to metric the figures in the ad, and the ad’s rail safety in 1880. It’s safe because only million tonnes or 617 per cent and road message: A tonne of rail freight can be one train can have a staff and therefore no market share Melbourne-Sydney would carried 680 kilometres by 3.7 litres of fuel. other train can enter the section. Over one be 55 per cent, a decrease of 3.1 million Road can’t do that. Rail can. hour was lost in transit time as a result of tonnes. this activity and litres of fuel were wasted. Melbourne-Perth would see a significant Through AusLink, Infrastructure Australia In 2008 it has gone. It probably should have increase in goods travelling by sea from and the stimulus package of the Australian gone in 1958. less than 24 per cent now to over 40 per Government we can develop a rail system The investment program of over $2 billion cent of the total market east-west; rail that overcomes decades of neglect, we can north-south will provide a springboard would be 56 per cent and road 4 per cent. provide a transport platform which adds for rail market share growth. It will The most dramatic increase for rail would value to our economy. not be sufficient to address the market be Melbourne-Sydney, Sydney-Brisbane Price settings for the use of infrastructure requirements in an environment of and Melbourne-Brisbane. by commercial trucks and commercial increased fuel costs and a program of This possible scenario seeks to put a marker rail need to be progressively adjusted. carbon emissions in the transport sector. on the horizon and is a clear illustration of Unless we do so, the costs of our goods ARTC’s submission to Infrastructure why we need to address the infrastructure will substantially increase with obvious Australia in July 2008 outlined our analysis and structural issues if we want our consequences for our economy, our of the transport sector as a whole based economy to continue to grow and at the economic prosperity and our national on three scenarios and costs predicted same time reduce our carbon emissions. We competitiveness. for 2017-18. We have now updated our know the outcome of infrastructure projects These are not issues that can be solved market analysis to take into account the benefits generation after generation. The tomorrow. The road map for the adjustment Treasury paper entitled The Economics of creation of infrastructure has also immediate needs to commence today. Port Melbourne’s direct rail link almost ready

he Dynon Port Rail Link is a $120 million+ joint project of the Victorian and Australian governments to construct a direct, uninterrupted rail link from the Port of Melbourne’s existing West Swanson Dock and Appleton Dock sidings to the main line north of the Melbourne Markets area. It is the first major rail infrastructure project to be delivered for Victoria under the AusLinkT program and includes approximately 4.5 kilometres of new rail tracks in and around the Port of Melbourne. Currently there is only one track into the port so only one train at a time can travel in or out. Because they have to cross Footscray Road, a busy city thoroughfare, trains are restricted to entering the port at 15 km/hr. This means Footscray Road can be blocked for up to 15 minutes at a time, causing road traffic chaos every time it happens. Under the new project, being built by Leighton Contractors, a second parallel track is being constructed that will allow trains up to 1500 metres long to enter and exit the port simultaneously without impacting road traffic. The Footscray Road bottleneck has already been solved by a double overpass that integrates with the new elevated section of Appleton Dock Road and the newly-built Customs Access Road. Both the inbound and outbound bridges of the overpass have already been opened, the city-bound sector as recently as January and the entire project is on-schedule for completion by the middle of this year. The design of the overpass will also allow: • Double stacked container trains to access the port in future; Parallel train movements in and out of the port through construction of two new rail lines; A future rail connection with Webb Dock; Future access of port precinct and internal transfer vehicles. With container volumes expected to increase fivefold in the next 30 years, the improved rail link will separate road and rail access and increase the amount of freight and the rate at it which can be carried directly to what is already the country’s biggest container port. Railways feature

priority is given to passenger trains and A new $200 million 60-hectare intermodal Work begins at because freight trains are banned completely site at Enfield will allow containers to be during the morning peak hours of 6am to moved by rail without entering the passenger last on Macarthur 9am and the evening rush from 3pm to 6pm. network. The new facilities will remove more than 300 truck movements a day from A dedicated freight line from Macarthur to Sydney’s roads, more than double the city’s to Port Botany Chullora will end all that by providing access intermodal capacity, and help achieve the for up to five freight trains per hour and 24- objective of moving 40 per cent of Sydney’s rail corridor hour access to Port Botany through southern container freight by rail. Sydney. In addition to that, work will begin in a few weeks on a $27.2 million upgrade Sydney Ports will soon begin seeking hile the Port of Melbourne’s requests for proposals for the project. It is to the Port Botany Line that will increase fast track rail access is close also seeking tenants for the empty container average train load to the port by some 40 to to completion, Sydney’s long- storage areas and the distribution and 60 containers. Wawaited equivalent, the 36-kilometre warehouse areas. Southern Sydney Freight Line will not come The purpose of this massive new investment on-line until mid 2010. is to make rail more competitive by slashing travel times, improving reliability, and But the good news is that work has begun helping to reduce the number of trucks on with most activity at the moment around our roads because each 1500 metre train is Bankstown where the main construction site equivalent to around 100 semi-trailers. is being put together. The southern freight corridor between As well as clearing the single largest Macarthur and Chullora will provide direct bottleneck on the interstate rail network, the access for freight services to Chullora, $309 million project will create 500 direct Enfield and Port Botany marshalling yards jobs and 1500 indirect jobs. It is being built and shorten the time for a train to be ready and funded by the Commonwealth-owned for re-use after a Sydney to Melbourne cycle Australian Rail Track Corporation. from 72 hours to only 48 hours, boosting Currently, freight trains face frustrating capacity at no cost to operators by 30 per delays on the Sydney network because cent.

09 REGISTER> www.amsa.gov.au/natship NOW

National Shipping Industry Conference hilton sydney new south wales, australia 3-5 june 2009

Australian Shipowners Association

March 2009 19 Railways feature FreightLink – a trophy bride waiting at the altar while suitors give her the once-over

by Archie Bayvel

John fullerton of freightlink

t’s Australia’s equivalent of Britain’s within sight and we’re working with them. Mr Kinnaird said his board had been very disappointed that the sale process had been Channel Tunnel – except it’s 60 “The business was almost sold back in thwarted. times longer and at around $2 September but fell through. billion in 2009 Australian dollars it cost John Fullerton’s current view is: “Our I “FreightLink is profitable and our earnings less than a tenth. We call it the Adelaide underlying business is very sound and we ebidta last year were $28.6 million – a to Darwin railway and it’s one of the easily generate funds to operate well but good result driven by increasing our commercial wonders of the world. we don’t quite make enough to meet our market and the growth of minerals which debt market. At a tad short of 3000 km long it’s a are probably our brightest future upside. massive railway across just about every sort “Despite that, FreightLink enjoys “Our problems relate to the fact the of country Australia has from cold rain in significant success and has a bright company has considerable debt primarily the south through scorching desert in the outlook. The sale process will soon incurred to help fund the original $1.3 centre to hot rain in the north. solve the debt problem and our whole billion construction phase of the project. People in Darwin call it the biggest and capital structure will be changed to more best thing that’s ever happened to the “All our creditors are conventional lenders comfortable levels. such as banks so refinancing will be simple Northern Territory, the visits of Nicole “The governments of South Australia, once we have found the right partners to Kidman notwithstanding. the Northern Territory and the replace some of our existing shareholders Commonwealth who contributed to Outside of Adelaide and the Territory a who want out. surprising number of people have never the construction of the railway have not heard of FreightLink, the company that “We expect the expansion stage of our been called upon to contribute any funds owns and operates the railway as a trans- business to resume in about 12 months. since we became operational. Their initial continental freight-only service. Many In the meantime we have no need to raise investment has produced an excellent confuse it with The Ghan which is a totally capital, our business is running strongly outcome for SA and the NT in the shape unrelated venture that pays to run tourists and we have serious candidates to buy the of a valuable piece of infrastructure. business and emerge from receivership.” on FreightLink’s track. “We’re aware of the recessionary storm In fact for such a pioneering and successful Back in September FreightLink’s clouds and there may be challenging times venture its main distinction is that so many chairman, Malcolm Kinnaird, said: “A ahead with falling commodity prices and people know nothing about it … except bidder who had made an offer significantly more difficult access to capital. higher than senior debt had been named as that the company is in receivership. And “The question is how deep and how long preferred bidder. Although the transaction everyone who knows that knows it’s not a will the recession be? We will be affected was approved by all shareholders and a good thing. They think it’s broke. if our freight growth is not strong enough majority of mezzanine debt holders, the and if there is a fall in commodity prices But it ain’t. Far from it; FreightLink is board could not proceed with the sale and availability of capital that causes some more like a well-endowed bride waiting at because a small group of mezzanine debt of the mining projects to be put on hold. the altar while wealthy suitors give her the holders would not consent. once-over. John Fullerton, the company’s “So far we have captured 90 per cent of the “This minority group requested that CEO, has broken a longish silence to tell available general freight on the Adelaide to senior banks make some contribution to Shipping Australia the real score. He says: Darwin corridor. Ninety per cent is a hard the mezzanine debt holders. This was not market share to beat and we have set our “Despite the receivers we’re all business acceptable to the senior banks as the offer sights on maintaining between 90 and 95 as usual. Our receivers are busy seeking from the preferred bidder was well in per cent of the trade and to rely on general buyers and we expect them to be successful excess of the senior debt.” very soon. Several serious candidates are growth of the Northern Territory economy

20 March 2009 Railways feature to increase the value of that rather than the don’t need to raise or spend more capital. along our rail corridor, we are bound to percentage. participate in the growth of the NT, and “It could be a different story for those rail in general is playing an increasing role “That growth will come from new minerals at start-up stage, however, and there in Australian transport as the preferred and energy activity and the associated are other mineral projects along the rail mode of moving freight landside. increase in population to service these corridor that may be temporarily slowed industries. because of the financial crisis but they will “Our railway’s costs are large but they’re eventually convert into customers. There’s fixed while our earnings grow by around “We have three big mineral clients – a phosphate mine in the offing and BHP’s 60 per cent every year. Our $28.6 million Territory Resources mining iron ore, OM Olympic Dam operation is set to expand in 07-08 was a 73 per cent rise on the Holdings producing manganese and Oz plus numerous junior miners waiting in previous year. Minerals whose copper contract with us the wings. comes into play in a few weeks. But the “We know we’ll be able to come through big miners have everything in position and “There are plenty of growth opportunities everything in good shape.” Fortescue comes out tops of private rail lines

he private networks running from with each locomotive costing more than the Pilbara’s mining tenements to $6 million. Specialised computer software their ports of Port Hedland and and communications powered by solar DampierT attract substantial professional technology control train movements, warn admiration. There are three of them with about unsafe conditions and weigh the ore BHP Billiton’s probably being the largest, cars as they pass by. Rio Tinto’s being not far behind while BHP Billiton’s iron ore rail system is one Fortescue’s is the smallest and most recent. of the most technologically advanced and All have quite a bit of form when it comes efficient in the world, delivering ore to to protecting their home turf. Newcomer port in specific volumes and sequences Fortescue’s founder Andrew Forrest had for blending into final products. All train rather hoped to share their rails but on movements are managed from a traffic Fortescue founder being rebuffed not only laid his own rail control centre at Port Hedland. Andrew Forrest and bought his own wagons but built his Following approval of its Rapid Growth own port berths as well. Today Fortescue Project No. 5 which targets 255 mtpa, the is generously offering to share its new line company is reported to be doubling its rail with anyone who wants it - for a charge, J system is operated by three GE Dash 9 track to the port. of course – and Atlas Iron Ore has already locomotives hauling 150 ore cars. signed up to share the port. Rio Tinto’s rail network serves the Fortescue’s benchmarks are that Hamersley and Robe areas where mines BHP Billiton Iron Ore operates around 12 during 2007-2008 it took delivery of 15 have names that sound as if they’re loaded and 12 unloaded trains every day of locomotives and 816 wagons equipped right out of a fairytale: Paraburdoo, the year. There are two separate single-track with electronically-controlled air brakes Yandicoogina, Nammuldi, Marandoo lines; one running from Port Hedland to that allow long and heavy trains to operate and West Angeles. A round trip to Yandi is the Newman area; and the other running almost 900 km and uses 20,100 litres of fuel. at higher speeds with improved safety and between Port Hedland and the Yarrie mine. fuel economy. Trains from these places are up to 2.4 km The 426-kilometre railway line from long; each have a gross mass of 29,800 When it came to building the system, Newman is one of Australia’s longest tonnes and carry 24,000 tonnes of iron earthworks were completed in March 2008, privately-owned railways. It services the ore. Those from Mesa J have a gross mass of track laying was complete a month later mines - with spur lines to Mt Whaleback; some 20,000 tonnes and carry 15,600 tonnes. when the first train transported its first ore Orebodies 18, 23, 25 and 29; Jimblebar; 185 km from Cloudbreak to Port Hedland Yandi and Area C – with the longest and Altogether ore is railed from seven rail where it was automatically unloaded and heaviest trains in the world. places to three dumps at Dampier and two at Cape Lambert, the new port slightly to conveyed to the stockpile at Fortescue’s A typical train will have six own Herb Elliott Port. 6000-horsepower locomotives pulling more the north. than 26,000 tonnes of ore. Most trains The current schedule is 11-13 trains a day The 260 km railroad has been constructed are 208 cars, each carrying approximately from Hamersley, 3-4 trains a day from West using specially profiled concrete sleepers 125 tonnes of ore. The trains are up to Angeles and 4-5 trains a day from Mesa J. and a continually welded rail to ensure the 3.75 kilometres long and the journey from A target delivery of 220 mtpa will mean track can carry 200-wagon trains of up to Newman to Port Hedland takes about 28 trains per day, one being unloaded every 30,000 tonnes. eight hours. 50 minutes and a train movement on the The initial rail fleet of 816 rail cars and 15 The 208-kilometre rail line from Yarrie network every 25 minutes. GE locomotives form 2.5 kilometre long has smaller trains with single locomotives Trainspotters may be interested to know trains, each hauled by two GE Dash 9 pulling as many as 90 ore cars. the Hamersley and West Angeles system 4400CW diesel locomotives, and stands as The company’s 114 locomotives and almost is operated by two GE Dash 9 locomotives a new world benchmark for heavy haulage 4000 ore cars represent a major investment hauling 230 ore cars while the Robe-Mesa rolling stock.

March 2009 21 Environment by Mary Ann van Bodegraven, director, Greenhouse Gas Solutions

Shipping and greenhouse: The game is on but who knows the rules?

There is little doubt that compared to the National Greenhouse and Energy Meanwhile the White Paper seems to alternative forms of transport – road, air Reporting Scheme. This scheme started propose more questions for the shipping and rail – shipping is a less greenhouse in July last year and the first round of industry than answers and there is much intensive option. This fact alone, however, reporting is due by the end of October detail yet to be negotiated between the will not protect shipping from the raft this year. Shipping companies may be government and stakeholders. of domestic and international measures required to report under this scheme if One of the more significant developments which are being introduced to limit their company-wide greenhouse emissions in the White Paper is that although greenhouse emissions. exceed 50,000 tonnes per annum or if they the CPRS will not include vessels on have a single facility (ship, terminal etc.) These measures will include new standards international voyages, domestic cargo and which exceeds emissions of 25,000 tonnes for ship construction and propulsion, passengers carried on international vessels per annum. The data from this scheme will greenhouse reporting regimes, together will be covered. This ensures, in theory, underpin the proposed national emissions with carbon taxes or carbon trading that all shipping that carries domestic trading scheme known as the Carbon schemes. Increasingly these measures cargo will face an equivalent carbon cost. Pollution Reduction Scheme (CPRS). will be mandatory rather than voluntary, The challenge here is that ships may be requiring compliance with government travelling with both international and legislation and regulations and imposing Devil in the detail domestic cargo and passengers, and therefore their fuel consumption, and stiff penalties for non-compliance. The CPRS is due to commence 1 July associated emissions, may vary depending Staying up-to-date with these 2010 and the government is working on on the total load. Any calculation of a developments and proactively engaging a tight timetable to get all aspects of the domestic emissions profile for a journey with governments regarding the design of scheme bedded down by this date. The needs to be a pro-rata calculation. these measures will be the key challenge White Paper for the CPRS was published for shipping over the next five years. late last year and provides the general Shipping also needs to ensure that it is not outline of how the scheme will work. disadvantaged by proposed “transitional assistance” to road transport in the form In broad terms, the CPRS will be a “cap Local vs. global solutions of a CPRS fuel tax credit for heavy road and trade” scheme whereby emitters of The current status of almost all greenhouse transport businesses for the first year of the greenhouse gases are required to have a reduction schemes is “in development” scheme. Presumably the government will permit for every tonne of greenhouse gas with regional or country-based schemes not want to jeopardise the competitiveness they emit. A limit is set on the number of springing up alongside proposed of the domestic shipping industry given available permits, and these permits, with international initiatives. This means global that it is a lower emissions option for some exceptions, will need to be purchased shipping will potentially be hit with freight. via auctions. This will effectively place a multiple compliance regimes. price on carbon and therefore result in In order to ensure efficient coverage the The situation is further complicated by a financial incentive for companies to CPRS will apply most of the obligations the fact that the current UN sanctioned reduce their emissions over time. A general for purchasing permits to upstream global agreement on emissions, which was impact of a price on carbon will be an suppliers of fuel but there will be a agreed to in Kyoto, is due to finish at the increase in fuel and energy prices. mechanism whereby fuels used by large end of 2012, and we have as yet, no clear downstream emitters can be tracked. The Draft legislation is due in late February, idea what will replace it. At the end of this Obligation Transfer Number (OTN) will but the final legislation will not be seen year the global community will be meeting be a mechanism which allows fuel to be until mid this year and it will be in in Copenhagen to resolve the detail of tracked from the top of the supply chain to this legislation and the accompanying “Kyoto Mk II”. The significance of this is direct emitters, preventing double counting regulations that much of the detail that international shipping is likely to face and avoiding gaps in coverage of the of the scheme will become apparent. multiple compliance regimes for at least CPRS. This will be particularly relevant for Furthermore, detail on the scheme limits, four or more years. shipping companies who are purchasing i.e. the “caps” on emissions, which will fuel in Australia for use in international Meanwhile, in Australia, the Federal impact the pricing of permits (and the voyages or for storage. Government has introduced mandatory flow-on increase in energy prices) will reporting of emissions for large fuel not be available until early 2010 after the Companies will need to apply to the and energy users and generators under Copenhagen negotiations. regulator of the CPRS for an OTN and

22 March 2009 Environment

quote this number when purchasing fuel The even greater issue of possible Stochniol – the International Maritime from an upstream supplier. The upstream participation in emissions trading schemes Emissions Reduction Scheme (IMERS). supplier then is not liable for emissions and the role the IMO may play in crafting The basic plan behind IMERS is that from entities that have quoted an OTN. such schemes has also been left largely a levy would be introduced when ships The obligation to provide a permit for unresolved. In July this year the IMO will (from any country) purchase fuel. The these emissions has been effectively be meeting with an objective to finalise levy would need to be paid within three transferred. “a coherent and comprehensive regime months and if it was not paid there would to control GHG emissions from ships be a fine applied and the ship owners The larger question though may be engaged in international trade”. This would be denied access to participating how compliance with the CPRS by plan will then be presented to the United ports. The levy would be collected centrally international shipping will be monitored Nations conference on climate change in and would by-pass international coffers. and enforced. Increasingly a truly effective Copenhagen in December. There would be a sliding scale of levies CPRS will need to be supported by an depending on the purpose of the voyage, international regime for tracking emissions One of the issues facing the IMO is that with container ships being charged the from ships. over 75 per cent of the world’s merchant greater fee and ships carrying food being fleet is registered in countries which are charged the smaller fee. Although IMERS Finding an international classed as “developing” by the Kyoto is focusing on cargo ships, the scheme Protocol. These countries are not currently coverage could presumably be extended to solution obliged to meet emissions targets or passenger ships. participate in carbon markets. The success The International Maritime Organisation of a global shipping scheme to limit IMERS proposes that the bulk of the (IMO) has been focused on providing emissions therefore depends on being able funds (projected to be over $6 billion technical standards for ship emissions annually) would be used for climate to include ships from these countries in an and guidelines on energy efficient design action projects in developing countries, equitable way. and operations. However questions about thus ensuring that there was an incentive whether these technical measures should A potential solution to this problem has for developing countries to agree to be voluntary or mandatory have not been been proposed by a separate organisation participate. IMERS has been presented resolved. that has been established by Dr Andre to recent meetings of the UN Framework

An unusual view of Nobbys and the entrance to the port of Newcastle March 2009 23 Environment

Convention on Climate Change, the a global plan that incorporates shipping the CPRS were still being exchanged European Parliament and the UK and aviation emissions. If Copenhagen at a healthy price of AU$21 a tonne. Parliament and has received cautious fails to provide this, the EU will most Following the various announcements interest and support. likely proceed with including shipping in regarding the inquiry into the CPRS the its own scheme. carbon price has fallen and few contracts Airlines and shipping: are being written. Overseas, the situation Uncomfortable bedfellows The CPRS: Keeping the is similar, as uncertainty regarding goal-posts moving? negotiations in Copenhagen and the Whilst the maritime industry is overall impact of the global financial crisis endeavouring to quickly devise a global At the time of writing there have been takes hold. scheme that gets support at Copenhagen, some unusual developments regarding other groups are moving forward with the CPRS. On 12 January Treasurer Clearly the next 12 months will be critical requirements for aviation and shipping to Wayne Swan announced an inquiry by for clarifying the exact nature of global be included in regional schemes such as the House of Representatives Economic and local measures to curb emissions and the European Emissions Trading Scheme. Committee into whether or not an the shipping industry needs to be playing The real problem here is, of course, the very emissions trading scheme was the optimal a proactive role in these developments. high contribution of the aviation industry way to reduce greenhouse gas emissions. The goal posts may be moving, and the to global emissions. Shipping therefore may One week later the inquiry was cancelled. rules have yet to be clarified, but we know be drawn into the net that is currently being Both announcements only add to the that the game is on and that the stakes are constructed for aviation emissions. uncertainty surrounding the scheme. The high. CPRS has a planned launch date in under A directive incorporating aviation 18 months and there is little doubt that Mary Ann van Bodegraven is a founder into the EU emissions trading scheme business and finance analysts are feeling and director of Greenhouse Gas Solutions entered into force on 2 February, obliging increasingly uneasy about the proposed Pty Limited, an Australian company with a member states to put in place appropriate scheme. This uneasiness is being reflected global outlook. legislation within a year, with a targeted in current carbon prices. start date of 2012. Whilst shipping is not Further information can be obtained from covered in this directive, the EU is pushing In the first week of February, future www.greenhousegassolutions.com or phoning for the Copenhagen UN meeting to devise contracts for sale of carbon permits under 0413 622 152.

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CREATING OPPORTUNITIES IN GLOBAL COMMERCE Ship agents Key changes that impact on operations

Extract from an address by Ken Fitzpatrick to the 19 November 2008 conference of the Maritime Law Association of Australia and New Zealand

any things have changed over the industry that traditionally loves paper, this a service provider not holding an MSIC years, such as communications. has probably been one of the most difficult from gate to the ship. Even crew members Overseas communications were habits to change. Whilst the electronic era signing on to ships at some port facilities Mdifficult and expensive through cable or has allowed for communications with ports, have difficulty gaining entry as taxis are not telex, so the agent and the captain tended customs, stevedores and port terminals to allowed to go through the gate. We had to make more decisions on the spot follow a paperless system, we still do not one ridiculous situation where the facility without having the luxury of the owners have one system which allows a manifest operator refused to allow the crew to take a giving instructions. Documentation was a sent by an agent to satisfy all these targets hire car to the ship and insisted they walk nightmare, especially in the liner trades with with one transmission. If anything we with their luggage about 750 metres from yards of carbon paper decorating shipping have recently stepped backwards as the the gate to the ship. The crew members offices as documents were prepared for Custom’s CMR system, which famously had no safety vests and were set loose with sailing. Manual delivery of documents to nearly brought the industry to a halt on heavy bags to walk through a working Customs, Quarantine and port authorities its introduction, does not provide the area to the ships. The fact they made it also took up valuable time. information required by other authorities. safely to the ship without being cleaned up by a forklift was something of a miracle. So what are some of the key changes both We know some port terminals have to rekey But it shows that regulation can produce in terms of operations and responsibility? manifests received from agents into their own system. Port authorities have gone in ridiculous extremes. Worst of all the These days ships spend hours in port another direction and are creating their manager of the installation was surprised we rather than days so the agent is always on own individual requirements for electronic were angry about the incident. call. reporting. Shippers are slowly migrating With the focus on health and safety The ports have moved farther away from to seaway bills which allow for better use these days compliance with the various city centres, farther from agents’ offices of the electronic interface between agents regulations can now be tricky. The and for the crew farther from civilisation and customers; however the old ocean bill traditional role of AMSA as the safety in many cases. of lading is still the weapon of choice in arbiter on the ship is being infiltrated by Communications today make life easier the bulk and break-bulk trades, thanks workplace regulators at State level, bringing for the agent with accessories such as primarily to the banks. with it more rules and regulations and mobile phones, blackberries etc. But it Port access has now become somewhat hazards for shipowner and agent in terms also makes the agent more of a prisoner problematic at most ports. Under of compliance. A slip-up of any sort could to these accessories with the need to be international port security regulations leave the agent facing fines and more on call at all times. each port must have a security plan and onerous penalties. Getting access for suppliers through port security in place to prevent unlawful In fact workplace regulators in Victoria security has become more onerous. intrusion. Agency staff attending ships all recently ruled the agent is deemed liable have to undergo a national security check for all activities on common user wharves Ports work 24 hours a day 7 days a week, (at the cost of the agency) to obtain their based on the fact the agent has to sign the old Aussie weekend is gone. maritime security identity card (MSIC). a user agreement. This effectively meant Government regulations have had a Some ports have their own security and that any breach of regulations by the significant impact on agents. OHS requirements which require a further stevedore, the trucking company or anyone The role of port authorities has changed. test and a further card to be carried by the on the wharf sheeted home to the agent. The liability risks for agents are much agent. Then finally some of the terminals We have managed to work around this greater today. themselves have their own security and difficult situation to some degree but still occupational health and safety inductions live in fear of an incident which will no There is a greater need for training of which must be completed before entry. So doubt trap all concerned into the resulting agency staff yet little practical training if something goes wrong, and for instance inquiry. The argument I have is why try to available. there is an injury at the wharf, under which make the agent, who has probably the least In terms of communications, whilst the regime do we look to resolve the matter? control over the work practices at the site, tools available to us are so often much more Gaining access for service providers can be responsible? Besides as a risk-reward ratio sophisticated I am not sure we are using equally troublesome, with the agent in many for a simple agency fee it makes no sense technology to our best advantage. In an cases having to be on call to accompany for any agent to take such a risk!

26 March 2009 Ship agents

Port liabilities for agents is a matter we have been initiated through changes in the an agent can find hard to extract from the are currently fighting on a number of US. Changes by Immigration to ship’s crew owner with the ship already in port. fronts at present. In the past few years port conditions of entry are typical of this. Recent laws involving the road transport authorities have decided to shed any form ‘chain of responsibility’ can easily entrap the of responsibility and hence lessen their We are one of only two agent who can almost unwittingly become insurance premiums by passing on their nations to require crew to involved in the process of ordering cargo liabilities to either the agent or the agent movement to and from the wharf. These and owners jointly and severally. In the good have a valid passport as days some agencies tend to undertake a old days we filled out a berth application opposed to the traditional more extensive role in the logistics chain form and that was that. Now agents are by offering through services to clients and being required to sign documents that run seaman’s book. delivering their cargo to door but in the to 20 or 30 pages which they are supposed But this has now been taken a step further process take on exposure to the inadequacies to get their principals also to agree before to mandate a crew maritime visa as well as a of the road transport operator. passport. This can be obtained electronically the ship enters port. Essentially these Quarantine is another area where there have agreements exclude the port authority from but can catch out tramp ships which fix spot cargoes, and the crew of workboats, been many changes, not the least of which any liabilities whatsoever, leaving the owner has been the ballast water regulation and and agent in the gun seat for any claims or tugs and other irregular callers. As always with regulations come penalties and proposed anti-hull fouling rules. Once again problems. This arrangement might work Australia won an International Confusion for a shipowner who makes regular calls at every crew member violating one of these regulations could result in a mandatory fine Award as the shipping community struggles the port under liner services, but I would to comply with a set of national ballast like to know how I can enforce a Taiwanese of $5000. Who gets the fine – the agent as representative of the principal? You can water rules and also a different set of rules or Turkish shipowner making a single call applicable to Victoria and possibly another to a port to read, understand and agree imagine with a crew of 15 breaching this regulation a fine of $75,000 is something set of rules for Western Australia. Hull such a document at short notice. The word fouling rules will be introduced to monitor Buckleys comes to mind. However the problem doesn’t end at the task of getting owners to agree these conditions. There are practical issues to deal with if a vessel sails from a port having left behind some sort of incident, often unknown to the agent. We had an example of that some years ago when a ship leaving a port managed to take out a marker buoy on the way. Five months later we received an invoice from the port authority for some $50,000 repair to the channel marker. We had no prior knowledge of the incident, and were fortunate that the owners were well known to us. We managed on that occasion to get their P&I representatives on the case and they worked it out with the port concerned. However had the ship been a ‘one off ’ caller we would have struggled. For ports to assume the agent must take responsibility in such instances is quite simply ridiculous. We have appealed to the various ports in Australia to at least try to standardise their port user agreements and to put them into plain simple English. Preferably we have asked for them to be posted on port websites so we can bring the information to the attention of the owner for quick referral. However in a country where we pride ourselves on having different railway gauges, different trucking regulations as you cross borders, and a myriad of differences in laws between the states, I guess that is an ambitious request. But the changes don’t end there. Regulations have placed a higher strain on all businesses over the last 20 years and agents have not been spared. Many of these, such as port Agents need to know procedures in the event of a major incident such as an oil spill. Photo: AMSA security following the September 11 attack

March 2009 27 Ship agents

mainly the pleasure boat and luxury yacht attempt to change or modify decisions that number of areas an agency crosses in their industry (following the outbreak of stripey can adversely affect the industry. We go in to day-to-day business including, to name a few: mussel in Darwin). However this has filtered bat not just for our shipping principals but Chartering terms and conditions. into mainstream shipping which means if a also for their many customers who rely on Dangerous goods regulations. vessel arrives with some suspicious-looking ports to maintain trade. State governments, growth on her hull, she could, if it is found to always on the lookout for extra cash, have An idea of the legal implications of their be an unsavoury growth, be told to take the seen ports in recent times as wonderful actions. growth elsewhere. This would certainly warm cash cows. Normal commercial restraint All the rules and regulations relating to the hearts of the maritime law profession is unheard of when State governments set border agencies such as Immigration, and the litigation possible from this action rental increases. Increases exceeding 100 Customs, Quarantine and AMSA. would possibly rival the dreaded carnal bunt per cent per annum over a two to three Rules and procedures of port authorities disasters in fertiliser ships. year period are becoming common as they and terminals. Customs have also tried to make life more value the port land in line with the industry Specialised knowledge about the ships and difficult with new regulations relating to surrounding it. cargoes they handle. the taking of any items from ships. They The mysterious part of this is that some ports Procedures in the event of a major incident now require everything to be recorded and were actually spawned from a useless swamp e.g. oil spill, explosion etc. documented including ship’s mail, any items area, ideal because the land was not suitable sent ashore for repair (such as computers) for other purposes and ideal because the port The job is a highly responsible one requiring and anything left behind which could be area was some way from residential property. people who not only can think on their feet, classed as ship’s equipment such as beams, But once developed ports attract port-related take a high level of responsibility, be able slings etc. businesses in the same way airports attract to relate to many different kinds of people In general these days agents have to involve duty-free shops! So the value of the port land but also be prepared to work long and often themselves in government decision-making is no longer rated at swamp level; it follows unfriendly hours. wherever they can. Unlike the past where the highest rating of the industrial usage Since I started in shipping two new sets of governments built ports for the future of around it – generally light industrial. We have rules have been introduced for the carriage their respective states, today ports are built fought for a separate essential infrastructure of goods, apart of course from the Australian against guaranteed returns and often in the rating of port interface area with various Carriage of Goods by Sea Act. The old face of strong environmental opposition. State governments but the argument is not Hague Visby Rules now have company. Conversely agents also have to work hard to gaining much traction. Firstly there are the Hamburg Rules, which prevent port facility closures affecting their SAL also provides government and NGOs started with a heap of enthusiasm but principals’ interests as governments these a body to whom they can direct new ideas, have since appeared to have fallen out of days see prime port land as a bonanza to proposed new or changed legislation to gauge favour. Now we have the results of years of boost flagging government coffers. There are industry reaction. With the new Federal debate at a large number of UN meetings at also some political benefits involved in port Government taking office just a year ago, this who knows what sort of cost, a new set of closures as we saw with the demise of Port system has been given a hefty workout with rules. Known in the embryonic state as the Jackson. It is still hard to fathom why the inquiries into many government sectors that UNCITRAL Rules they have finally been best natural harbour in the world is not good are a day-to-day part of our business. In the granted the home port of Rotterdam and are enough for ships any more. early months of the Rudd government not a to be known as the Rotterdam Rules. Some One of probably the most radical changes week went past without a new review hitting wags are already referring to them as the to agency has been in the field of insurance. the desks at SAL testing our reading skills. “Rotten dam” Rules. Surely life is complicated We now need to insure for just about every Why do these background documents need enough with two sets of maritime regimes conceivable situation, knowing there are gaps to be hundreds of pages long? We are now which agents need to know, without adding in the cover we have or events we simply can’t dealing with the next phase – the reports on a third, highly complicated set of rules in the insure. Typical insurances include: those reviews! form of these Rotterdam Rules. The result $20 million public liability (required by Maintaining training of agency staff is is a typical concoction trying to capture all port authorities). becoming an increasing challenge for ship aspects of carriage over both land and sea which had to be finally agreed by too many P&I insurance of a range of events agencies. There is little formal training people each trying to plant their own stamp including negligence by staff. available to suit this task, although there on the document. What probably makes it Marine cash in transit insurance. are some courses emerging both at a local level and internationally. However much all the more frustrating is the fact that there Forwarding insurance. of the agent’s training is done ‘on the job’ is an opt-out clause in these Rules allowing Recent changes to international insurance because each port has its own idiosyncrasies so called ‘volume shippers’ to write their own laws (thanks to the HIH collapse) have taken making the task of interchanging agents at rules with shipping lines. So it is possible that away the opportunity for most agents to short notice from other states problematic. on the same ship you will potentially find half insure events in the offshore markets. The business is also starting to become of the shippers could have their own totally When it comes to managing the ranges of more specialised in terms of the ship type different agreements to those who are bound issues I have outlined that agents must deal or cargo type handled. Agents trained only by the original rules. Can you imagine the with now, it has become essential to speak in container shipping require considerable fun being the claims manager at a shipping with a common voice, and in this regard retraining for instance to handle break-bulk agency under these circumstances? Shipping Australia has provided that voice. ships. Handling hazardous cargoes requires There are also rumours that the Europeans, The efforts of a single agent do not get training in dangerous goods. Oil and gas having had their hand in the drafting of the recognition at government level, however the and chemical vessels also require specialist Rotterdam Rules, may now opt for their unity of association provided by SAL at least training for the agency operators. The ideal own separate convention. This could get very gives us a chance to air our concerns as we agent has a background understanding of a confusing!

28 March 2009 8056-NYK_Duck Meeting Brochure_Ad 12/2/09 14:55 Page 1

CONTACT: 1300 883 001 Bringing value to life. www.nykline.com.au Coastal shipping The Parliamentary Committee’s report and Australia’s shipping future by Dr Chuyang Liu, senior consultant of GHD-Meyrick

he current trend in Australian Standing Committee on Infrastructure, Ministerial Guidelines for Granting shipping is one of continuing Transport, Regional Development Licences and Permits to Engage in industry erosion, in both its and Local Government to conduct an Australia’s Domestic Shipping; registeredT and owned trading fleet and inquiry into Australia’s shipping policy The implementation of a single national in the skills pool of qualified Australian and regulation. A wide variety of policy approach to maritime safety for seafarers. This erosion has complex options were raised during the inquiry, commercial vessels; reasons, which may include globalisation, with key ones including (in decreased The introduction of an optional tonnage flag competition from open registers, sequence of numbers of times raised in the tax regime in Australia that is linked to unfair competition from sub-standard submissions): mandatory training requirements; and subsidised ships, and labour and Enhancing maritime skills base. The re-introduction of accelerated regulatory costs. For more than a decade Changing licensing requirements in depreciation arrangements; the Australian shipping industry has coastal shipping. A one year review of the Maritime Crew argued about the lack of parity of Taxation arrangements for seafarers. treatment for the shipping industry in Visa; Tightening of cabotage restrictions. both coastal and international shipping. Amendments to the Seafarers’ Creation of a second (international) Competitive neutrality in relation to the Rehabilitation and Compensation Act register. Australian freight market is needed for 1992 and the Occupational Health and coastal shipping, while the industry also Introduction of tonnage tax. Safety (Marine Industry) Act 1993; needs a more competitive environment in Re-introduction of accelerated The creation of a national port international shipping to reduce the cost depreciation. development plan to address current differentials so that they can compete more Voluntary Australian registration. and potential capacity constraints in effectively with foreign shipping. The committee examined these issues and Australia’s ports; The current Government came to office in October 2008 it put forward a series of The creation of a national maritime with a strong pro-Australian shipping recommendations in its report Rebuilding training authority and the introduction agenda. It is aware that acquiescence Australia’s Coastal Shipping Industry. The of a national training vessel; in the continued decline of Australia’s key recommendations include: A review of Section 23 AG of the Income Tax Assessment Act 1936; and maritime capability should not be taken Reform of Part VI of the Navigation as a tenable long-term national policy. In Act 1912, the Navigation (Coastal The creation of a reform implementation early 2008, Minister Anthony Albanese Trade) Regulations 2007 and the group to implement any future requested the House of Representatives Commonwealth Government reforms. The committee’s report is a positive first step for Government to endorse a revitalisation policy framework for the Australian shipping industry. As demonstrated by the past shipping reform innovations and overseas initiatives, an interventionist policy pattern is successful in rejuvenating national shipping industries. The shipping reform experiences in overseas countries also illustrate the significance of a comprehensive and progressive strategy within the context of government’s wider economic policy framework.

After more than a decade

ANL Warringa, a vessel licensed under the Navigation Act carrying both domestic and of suppression, time is international cargo of the essence to enable

30 March 2009 the shipping industry to An Australian second recover, renew and expand register is essential to In order to accelerate the introduction implement many of the of the reform measures proposed, the recommendations in the committee’s shipping reform policy report need to be categorised into different measures groups based on: a) different timing Lihir Chief. Photo: Swire Shipping The importance of a second register to the required for their implementation; b) success of the national shipping reform the policy options are within the sole meet certain requirements, such as those has not been recognised in the committee’s jurisdiction of the Federal Government, or on ship safety/security and seafarers. report. One reason for this lack of the shared responsibilities between Federal These vessels are then entitled to a series attention is the focus of the report, which and State governments. of favourable measures including the was on the coastal shipping instead of on flexibility of mixed crew, certain tax Those options that can be implemented the integral picture of Australian shipping. concessions and reduced fees/charges. relatively quickly and involving only At least at the early stage of shipping Apart from engaging in international Federal responsibility shall then be reform, an Australian second register is the voyage, vessels under the second register prioritised. These include, inter alia, prerequisite of implementing many of the may also participate in coastal shipping the review of the Navigation Act 1912 shipping reform measures. This is because a under certain circumstances, such as when and the issues of permits/licences second register is the most feasible vehicle there are not sufficient Australian vessels (Recommendations 2, 3 & 7), as well to achieve the combination of: under the first register. as Section 23 AG of the Income Tax Maintaining national registration (and Assessment Act 1936 (Recommendation possibly national flag as well), and 13). Reducing operating costs (especially An appropriate fiscal crew cost), thus enhancing the environment competitiveness of the shipping industry. The synergy of an An appropriate fiscal environment is integrated policy approach It has been indicated that, combined with an important element in retaining a other policy measures, a second register is robust shipping industry, which, in turn, Instead of piecemeal measures or isolated an effective mechanism to slow down the underpins the achievement of other policy preferential treatment, the complexity de-flagging of the national trading fleet objectives such as an Australian second of the shipping industry demands a and enhance the growth of the national register, enhancing the maritime skills base, comprehensive policy approach to address shipping industry. and the increase in maritime and related the inter-relationships between the policy employment. This is why many overseas The successful experience overseas with measures and the policy objectives they shipping nations have in the past decade a second register has suggested strong are designed to achieve. The synergy of an modified their fiscal regime in order to grounds for the establishment of an integrated policy package encompassing attract and retain shipping investment. fiscal, regulatory and industrial relation Australian second register, which provides measures is therefore crucial to the success opportunities for the alleviation of tax A number of approaches are increasingly of the shipping policy reform. burdens and nationality requirements for adopted in overseas countries, in particular, seafarers. In addition, it has also shown the introduction of tonnage tax regimes, While the committee’s inquiry puts its that a second register is a very positive accelerated depreciation arrangements focus on Australian coastal shipping, contributor to the building up of maritime and seafarers’ income tax. These are also both domestic and international sectors clusters. The location of the second register the key measures recommended in the of Australian shipping are highly relevant often helps it to become the centre for committee’s report. Moreover, several other to this discussion. If the benefits of a the whole package of maritime-related policy measures put forward to the inquiry revitalised Australian shipping industry activities. are also worth considering, for example, are to be fully realised, it is essential the reinstating of ship’s capital grants Typically a second register system offers that the international sector be part of and the reconsideration of the royalty some of the following arrangements: the discussion as well as the coastal. The withholding tax for chartered vessels. The addition of the international sector to Reduced nationality requirements for latter measure is especially relevant during the discussion will make revitalisation of the crew. the current time of economic difficulties, Australian shipping in all its forms more Freedom to negotiate wages. when chartering vessels may provide effective and more permanent. Minimum taxation on foreign ship a more economical option compared The significance of an integrated policy owners. with purchasing or building vessels. context embracing both domestic and Minimum registration fees. Furthermore, overseas’ practices have international sectors is made necessary also In some cases the company is allowed demonstrated the effectiveness of other by the fact that many policy options (such to be incorporated overseas with a fiscal supportive measures, ranging from as the tonnage tax regime) apply to both representative in the country. roll-over relief to measures for reducing sectors - although with different levels crew costs and subsidies related to national Vessels flying the Australian flag are of relevance. It would be arbitrary and security. These options should be put entitled to register under the second artificial to isolate the two sectors. into consideration as well during the register regime on condition that they forthcoming shipping policy review.

March 2009 31 Coastal shipping New Zealand’s new coastal feeder service: A sign of things to come Rod Grout

ordinating sea freight movements through determined to change. a hub-and-spoke system directly linking After persistent lobbying by the New the major ports of Auckland, Tauranga, Zealand Shipping Federation, legislators Lyttelton and Otago. last year produced a Sea Change strategy “Ours is the only vessel, thus far, able to aimed at restoring the health of coastal provide such a scheduled service up and shipping. down the east coast.” Now enshrined in official transport policy, The four ports, which handle over 90 per this initiative is designed to cut road cent of the country’s trade volumes, are congestion, lift transport efficiency and visited weekly by Pacifica’s latest coastal reduce the impact of carbon emissions on acquisition – the 700 coastal container the environment. vessel Spirit of Endurance. A new sea freight development unit The newly built ship started in November has been formed to promote the coastal last year and offers freight owners a two mode and encourage more producers, to three-day fixed schedule between either manufacturers and processors to consider of the North Island ports and their South moving goods by sea. Island counterparts. The policy particularly focuses on long Using each port’s container terminal distance freight between main centres, cranes, the vessel has rapid turnarounds including domestic goods as well as trans- and can move up to 1000 loaded 20-foot shipments for overseas connections. containers, including 240 reefer boxes, on Mr Grout says these steps are similar to its weekly return schedule. short sea shipping policies adopted in “Much of this freight includes goods recent years by European, North American trans-shipped domestically for and Asian countries. international customers, either on export “As a nation we have been slow off the or import legs,” Mr Grout said. mark, but it is becoming increasingly clear “Without this coastal feeder service, cargo that coastal vessels should be a primary would be moving long distances at greater long distance mode of transport. cost via land transport, or waiting for “This is especially so for New Zealand, transit on an overseas ship. given its long coastline relative to land area Spirit of new weekly coastal feeder service “What exporters and importers are looking and the fact it is serviced by more than a Endurance linking New Zealand’s ‘big four’ for now is greater cost efficiency coupled dozen ports capable of handling regular discharges ports is gaining support from with certainty of shipments, because they volumes of coastal trade. containers at cargo shippers seeking cost efficiencies can’t afford delays and associated costs. Lyttelton A “What has been missing is the stimulus in the current economic downturn, says “Unless there is an absolute need for just- of government-led directives to make sea operator Pacifica Shipping. in-time delivery by road, they are better off freight a more attractive option for major Pacifica chief executive, Rod Grout, said consigning long distance cargo by coastal transport user groups.” the three-month old service has stimulated vessel, directly from seaport to seaport.” The new transport policy also recognises interest from exporters, importers, local Until last November, however, shippers the trend towards larger overseas vessels producers and international shipping lines in New Zealand’s main centres had little calling at fewer ports and less often, and their agents. choice but to use land-based transport requiring more cargo to be re-positioned “The recession is making all shippers modes for freight connections. within the domestic market. increasingly cost-conscious and they are The main port of Auckland, as well as It points out that as freight volumes are looking at every way possible to reduce Tauranga and Dunedin, lacked any general expected to double in the next 25 years, supply chain overheads,” Mr Grout said. cargo domestic shipping services at all – a the trend towards a few large hub ports “One way to achieve savings is by co- situation the previous government was servicing bigger ships will put huge

32 March 2009 Coastal shipping pressure on under-resourced road and rail at one or two major ports will force port times less polluting than heavy vehicles on a systems. rationalisation sooner or later, but port tonne per kilometre basis. companies should be acting now in their Hence the goal for lifting coastal shipping’s Mr Grout says the current recession may have share of total volumes by a factor of nearly regions’ long term interests to stimulate sea cargo growth, he said. taken the spotlight off environmental concerns four in the next three decades, a challenge the for the moment, but the basic problem industry is very capable of meeting, Mr Grout “They need to balance their investments in big remains. said. new inland ports, for example, with improved “The key to achieving this hinges on how wharfside equipment and storage facilities for “As with large subsidies on infrastructure serious future governments will be in ensuring handling growing volumes of coastal cargo in costs, transport users have yet to pay for a reasonably level competitive field for local the future. damage to the environment caused by operators investing in new coastal ship “For every dollar being spent on freight excessive CO2 emissions. services. transfer depots to serve road and rail “The previous government’s emissions “If heavy state subsidies continue to be applied connections, there is hardly any being trading scheme is under review by the present to road and rail operations, as they have for committed to portside improvements and this regime, and we hope the outcome is user- has got to change.” the past 20 years, the transfer of cargo to sea pays accountability in terms of each mode’s will be slow and difficult to maintain. Another priority in the ‘Sea Change’ strategy pollution rating. “Nor will it be encouraged unless port points to the need to substantially reduce New “The time is overdue for transport users to companies change their historically parochial Zealand’s transport carbon footprint, which benefit from freight rates reflecting the true attitudes and actively support growth in accounts for 40 per cent of all CO2 emissions. cost imposition of their transport decisions. coastal trade under the umbrella of an It recognises big gains can be made by expanding hub-and-spoke network.” diverting long haul freight from road to “Only when this process starts to happen will The concentration of international services coastal ships, which are shown to be seven coastal shipping’s recovery be fully assured.”

Exactly how it should do this has not been spelled out, but the ‘Sea Sea Change a spur Change’ document has given the industry a kick-start with a $36 million special fund. for coastal growth This is to be allocated for approved coastal shipping ventures over A nearly four-fold growth in freight capacity by 2040 is targeted for the next four years and the process has already started with $2 coastal shipping in New Zealand’s revised transport strategy. million just distributed. Prompted by the previous Labour government’s ‘Sea Change’ The newly-constituted NZ Transport Agency received 19 initiative, the goal is to have 30 per cent of all internal freight applications, approving just seven, deferring five and rejecting seven. carried by sea within three decades. It is expected up to $16 million will be available in the next tranche of Currently coastal vessels account for around 15 per cent of volumes, funds to be allocated around the middle of this year. a figure shared by domestic ships and international ships transiting Most of this is likely to be applied to new coastal services operating the coast. outside the confines of the short Cook Strait crossing, and all the The transport strategy projects New Zealand freight volumes to associated equipment, personnel and systems needed to go with more than double between now and 2040, putting extreme pressure them. on already stretched road and rail infrastructure. After many years of battling on a playing field tilted heavily against It says in order to assist supply chain efficiency and economic it, the coastal industry has been handed something of a life-line. development, the coastal sector will need to move 3.7 times more While nowhere near the hundreds of millions of public dollars freight than it does now. being spent on road and rail, it is a long overdue fillip nevertheless.

Vessel cuts carbon by 60,000 tonnes Based on road and rail’s share of long distance freight between the

Pacifica Shipping’s new 130-metre coastal ship ‘Spirit of Endurance’ main centres, total savings would amount to 60,000 tonnes of CO2 is capable of slashing carbon emissions by 60,000 tonnes a year, per year. according to the company. Pacifica says the scale of this reduction clearly shows the importance For every tonne of freight moved 1000 kilometres - the distance of sea freight, not only for the environment but also for the

between Auckland and Canterbury - it produces 14 kg of CO2, economy in fuel savings. compared to 92 kg for a heavy truck and 23 kg for a rail locomotive. “If a single vessel makes such a difference, how much more a fleet of The vessel is capable of moving up to 1000 20-tonne containers a half a dozen ships would achieve,” a spokesperson said. week over this distance on its east coast service. The new ship meets the latest engine and air pollution prevention This means that 20,000 tonnes diverted from road to sea freight compliance tests issued under the International Convention for would cut carbon emissions by 1500 tonnes per week. Prevention of Pollution From Ships.

March 2009 33 Break bulk cargo by Alan McDermid What does break bulk have in common with climate change and windmills?

andwiched uncomfortably between What if it doesn’t rain for another three plant will start producing 250,000 litres the glittering mega-cruise liners, years? Could a city the size of Sydney of potable water every day starting in the mammoth bulk carriers, the actually run out of water? The controversial the summer of 2009-2010 using 140 lego-likeS container ships and the ugly- decision to tap into that endless supply megawatts of wind-generated power. duckling pure car carriers are those special of water right on Sydney’s doorstep – the but largely unseen ships that carry just Pacific Ocean - was taken by the NSW Situated across Lake George and visible about everything that the others do not Government, and for the same reasons by from the Federal Highway, each of these - the break bulk vessels. They may not be the WA and Victorian governments, to mysterious, almost silent sentinels have sexy but they are vital to the Australian build a desalination plant. three blades each 43.8 metres long, a economy. generator hub weighing 19 tonnes and The NSW decision was controversial Climate change is on everyone’s lips and because, the critics argued, the very change a nacelle (generator assembly) weighing there are the sceptics who believe that in climate that ushered the decision to 75 tonnes. They were built in India and the global climate changes are simply one build the desalination plant would use discharged at the AAT berth in Port of the many cycles of nature that have electricity from coal-fired power stations Kembla using a 260-tonne shore crane occurred for eons. Be patient, they claim, that release countless tonnes of carbon onto special over-length, low-loader trucks and things will revert to more normal dioxide into the atmosphere adding to the for transport to the Bungendore site. A patterns. In the meantime, cities like greenhouse effect that caused the water number of specialist heavy lift and project Sydney keep expanding, putting greater and shortage in the first place! cargo carriers including the Beluga Group greater pressure on infrastructure – roads, Thank goodness our state masters are and Spliethoff have brought windmills schools, public transport, electricity, water, up with the game. In parallel with the to Australia for this and other wind gas and the list goes on. desalination plant rapidly taking form on generation projects. After three years of minimal rainfall (often the shore of Botany Bay at Kurnell is a It is through special projects like this that in the wrong places) Sydney’s potable water new wind farm – the Capital Wind Farm the critical value of break bulk shipping to supplies dwindled towards 30 per cent - with 67 wind turbines being built at Australia is demonstrated. The members of capacity by late 2007 and the alarm bells Bungendore to supply the plant with 100 Shipping Australia that are agents for break in the corridors of power started to ring. per cent renewable energy. The desalination bulk carrying vessels have agreed that the sector deserves a much better deal and are taking steps to raise the profile and address the many infrastructure deficiencies, unfair pricing policies and other factors that impede the sector around the country. Shipping Australia has commissioned a study into the sector that will draw together, possibly for the first time in Australia, a comprehensive portrayal of the ships, ports, cargoes, facilities, costs, and operational problems as well as an indication of its value to our nation that is the break bulk sector. Be warned! The timid kitten that has been break bulk shipping is changing its spots and growing muscles. So what do break bulk shipping, climate change and windmills have in common? Break bulk: A windmill blade The answer: the inventive will of humans to survive change and build a better future.

34 March 2009 break bulk cargo

Australia’s leading marine supplier, servicing the industry for over 85 years

Just some of our major clients include...

T: +61 (08) 9432 8888 I F: +61 (08) 9430 4019 I E: [email protected] Head Office 178 Marine Terrace, South Fremantle, Western Australia 6162 I Branches in Port Hedland, Karratha and Darwin www.sealanes.com.auMarch 2009 35 Containerisation

40th anniversary of international containerisation to Australia and the world by David Baker, former director of P&O Containers and past president of the Australian Chamber of Shipping

his is the 40th anniversary of in the US and who had noted how labour venture if successful would create maritime long haul international sea intensive conventional shipping operations history in the best interests of service transportation of containers. It all were. His notion was to put trailers directly providers and service users alike. started through necessity combined with onto ships and thus remove some of the T During the second half of 1965 four the vision of some far-thinking people that labour-intensive tasks and associated costly British shipowners, P&OSN Co., Ocean maritime history was made by Overseas delays. McLean experimented with roll Transport and Trading, Furness Withy Containers Ltd when the 1138 teu on/roll off systems and with converted and British and Commonwealth agreed container ship Encounter Bay sailed from tankers with cell guides to carry containers. to form a consortium to be known as Europe to Australia in March 1969. In the late 1950s McLean had established Overseas Containers Ltd (OCL) to container freight carrying services around During the 1960s the cost of operating do a detailed feasibility study on the the US coast extending to Puerto Rico international shipping services to and introduction of a container service between (Sea Land); as well Matson commenced a from Australia was becoming of increasing Europe and Australia with purpose-built closed circuit service between the US West concern to overseas shipowners. Ship cellular container ships. In September Coast and Hawaii, and Grace Line had productivity/round voyage time was low; 1965 two senior shipping executives in small coastal services in South America. some ships spent up to six weeks on the Sydney, R.W. (Ron) Eaton, manager UK/ Australian coast through the practice of In the 1960s a number of British Continental Services at Birt and Company calling at ports to discharge imports and shipowners (notably P&O, Ocean (agents for Federal Steam Navigation Co./ then returning to ports around the coast Transport, and New Zealand Shipping New Zealand Shipping Co. as well as the to load exports. To put this in perspective Company) were conducting high level Swedish Australia Line), and A.W. (Bill) conventional ships of the day typically had discussions into the feasibility of the Page, general manager of Shaw Savill in cargo capacity of up to 500,000 cubic feet, introduction of cellular containers services Australia were summoned to London to about 500 teu. into international trades, including discuss ‘containerisation’. Australia. The real concern was that whilst Operating costs both fixed and variable On their return from London, Eaton and containerisation seemed to work with the including stevedoring were increasing. This Page were charged with assembling a team short haul trades based in the US with was exacerbated by waterfront industrial in Australia to conduct a feasibility study relatively small volumes and converted stoppages at both ends of the Australia/ into the Australian end of the service. A tankers to carry containers, would it work United Kingdom service. It was becoming small team of six started work in February with longer international trades with increasingly difficult for shipowners to 1966 and besides Eaton and Page included purpose-built rather than converted ships. provide the necessary services and make an David Baker and Bill Guest. operating surplus. Forecasts showed that Of particular concern was that the So what had to be done to effect change? unless something was done, unless there Europe/Australia trade, a long thin was some change in providing shipping trade with heavy volume demanding Firstly it needed to be recognised how services at a lesser cost the result inevitably a regular and frequent service, also many conventional ships this new service would be ongoing increases in freight rates required the capability to successfully would replace. Not easy to determine beyond what the traffic could bear. This transport refrigerated and chilled cargoes because of the way in which conventional would be in no one’s interests neither the from Australia to the UK. There was no shipping worked without scheduled shipowners nor, importantly, Australia’s template on which to measure feasibility. regular services which containerisation importers and exporters. Long haul international containerisation would provide. But on a rule of thumb with purpose-built ships would be a bold basis six container ships each 1130 teu British shipowners were aware of US move; it would be a high-risk venture as it with rvt 84 days, thus 4.3 round voyages developments by Malcom McLean who had never been attempted before. Such a per annum would provide capacity of was regarded as the most successful trucker

36 March 2009 Containerisation

29,000 teu per annum (leaving aside any Discussions were also held with the CSIRO scepticism. deadweight restrictions), or in conventional on cargo care matters particularly in relation On top of all that were the internal ship terms 29 million cubic feet. The size of to perishable commodities. conventional ships varied, with the larger matters. Systems, computers (themselves We had to deal with the statutory authorities NZSCo ships having a cargo capacity of only developing in the late 1960s), office – HM Customs, Quarantine (Plant and in excess of 700,000 cubic feet to smaller procedures, staff establishment structures and Animal), Department of Primary Industry, ones around 400,000 cubic feet. Average associated job descriptions, communications, port authorities, banks, etc. All of these conventional ship size say 500,000 cubic feet. etc. dealings had to start with a clean sheet of Thus the original OCL container service paper because there was no precedent – All of what had to be done was committed to would replace 58 conventional sailings many historically everything stopped at the wharf, a critical path analysis against which progress of which had extended voyage times on the but here was this concept taking everything was regularly reviewed and the critical path Australian coast, so it was probable that the inland. Most statutory authorities established tasks added to and/or amended as necessary. six original OCL ships replaced up to 25 special areas with a single point of entry to conventional ships. It was an extraordinary achievement that handle the development of containerisation so much was done from February 1966 The concept had to be promoted and which facilitated the task immensely. One starting with those original six people to have sold. Right from those very early days we of the most important breakthroughs was to everything ready for the arrival of Encounter were involved in preaching the gospel of convince HM Customs that the container Bay on her maiden voyage to start the service containerisation not only to the immediate (but not its contents) was part of the ship in Australia in March/April 1969. That three marketplace but through business groups which therefore would make it exempt of such as Rotary, Chambers of Commerce duty – this took some time and a lot of year period was exciting, it had its highs and and the like as well as addressing countless convincing - thankfully. its lows, it had its joys and disappointments, business seminars. What was this it had its successes and its frustrations, it There was all the technical side of it – the containerisation? What was ‘‘through was high pressure and to think about it all terminals, the depots, the cranes, the transport”? We used to use a catch phrase again is quite daunting. But for all of that, containers and all that went with it including of ‘Bourke to Birmingham’ to demonstrate for all of the intensity, it was fun and it site choice, planning, local council approval through transport, i.e. put your goods into developed wonderful camaraderie between etc. Inland transport was also part of the a container in Bourke and it would remain all those involved whether in Australia or the process including the design of the original intact until opened by the receiver in UK because we were all working towards a skeletal trailers with twist locks to carry the Birmingham. Terrifying as it was at the start common goal and we were all keen to learn containers by road as well as appointing a to have to go and give these talks it was in one from the other to ensure the success of road transport contractor. Again there were fact a good discipline because the continuing the venture. many roadshows to explain these aspects. research necessary to ensure the presentations Encounter Bay arrived in Fremantle on were always up to date commensurate with There were the industrial aspects. This new 28 March 1966, Sydney on 3 April and developments ensured we were well-educated method of cargo handling would have major Melbourne on 8 April. International on the venture. Sceptics there were many, but impact on trades unions and especially maritime history had been made. Encounter there was also great interest and the question so because of the extension of the service and answer sessions were always challenging inland. This resulted in significant discussion Bay was soon followed by a further five sister but enjoyable. and negotiation with the ACTU and the ships – Flinders Bay, Botany Bay, Moreton individual unions involved. Bay, Discovery Bay, and Jervis Bay – and these We had to determine the size of the task, six ships were planned to operate on an 84 i.e. the cargo flows. But not just on a There were all the commercial aspects, day round voyage and provide a fortnightly wharf to wharf basis as with conventional nonetheleast the freighting policy. This also service. shipping. Here with this new concept of required a completely fresh approach because containerisation the ship (by way of the historically freight rates covered only the sea Shortly after OCL commenced its service container) would go inland to final cargo leg, wharf apron to wharf apron. Not only with six 1138 teu ships (including 304 destination or place of cargo origin. So it was would the freight rate have to include some reefer slots) another British consortium, a matter of learning and understanding all shore cost elements previously paid separately Associated Container Transportation (ACT) about road and rail transport and how the by cargo owners to port authorities etc, it also commenced a service with three similar sized actual sea cargo related to those modes, and had to be completely transparent to be able purpose-built ships; in 1971 ANL joined how in future containers would move the to demonstrate that the freight cost was no the ACT consortium with a fourth ship. In cargo inland by road and rail. This also had more than conventional shipping, which was 1970, the continental lines (Hapag Lloyd, to take into account the ability of shippers’ an important plank in selling the concept. So Nedlloyd, Messageries Maritime and Lloyd and consignees’ premises to be able to handle a Basic Service Rate evolved which included Triestino) also commenced a container containers and to advise what they would elements for sea freight and port charges, service between Europe and Australia with need to do to be able to take advantage of and as well the old conventional tariff was five ships and were represented by Seabridge this new way of cargo handling. simplified to significantly reduce the number Australia. of entries. We had to develop cargo packing modules Other major trades to and from Australia for the various commodities to ensure best As the work progressed we got to the including Japan and USA subsequently possible container utilisation. This included exciting stage of doing container experiments developed container services. wool dumps for wool and cold stores for on conventional ships. These were ‘live’ meat, dairy produce and fruit (apples, pears consignments to test all the material Long haul international containerisation and citrus). Besides doing this in conjunction handling aspects including the ability as we know it today all flowed from that with exporters and cold stores etc, we also of importers’ and exporters’ facilities to initiative by those who in 1965 agreed to consulted with the materials handling handle containers. This was a real pointy commit to the feasibility study which resulted section of the Commonwealth Scientific and end initiative as more often than not it was in the successful establishment of the pioneer, Industrial Research Organisation (CSIRO). the break point necessary to remove the Overseas Containers Ltd. Containerisation

The ubiquitous box by Dale Crisp

to handle 35-foot containers in holds Kooringa began operations between It’s easily forgotten that 40 and on deck, serviced by on-board Melbourne and Fremantle on 14 June years ago containers were gantry cranes. McLean calculated that 1964, a coastal voyage of course but one just one of several new loading loose cargo on a medium-sized of 1686 nautical miles nevertheless. After freighter cost US$5.83 per ton; the cost 119 round voyages the ship was withdrawn cargo handling methods of loading Ideal-X was 15.8 cents per ton. and, coincidentally, the very day Encounter vying for international The compelling case for containers was Bay was arriving in Fremantle Kooringa underway. was landing its deck gantries at Mitsui in trade. But for a long while containerisation Japan as part of a conversion to handle the When OCL’s Encounter Bay debuted in remained a particularly American pursuit, 20’ x 8’ x 8’ container size mandated by the Australia at Fremantle on 29 March 1969 championed by McLean’s Sea-Land International Standards Organisation in containers were already a well-established Service (US coastal and Puerto Rico 1966. part of the local transport scene, trades), Matson Lines (US-Hawaii) and The modified Kooringa, now with revised though their penetration of the nation’s US Lines (with Sea-Land, US-Europe). capacity (for what we now know only too international trades was relatively modest. A limited number of boxes were also well as teu) of 272 international containers, Containerisation as a commercial concept moving across the Pacific to Japan, and arrived in Brisbane on 4 June 1969 – the is now widely acknowledged to have begun there were sprinklings in other trades, first cellular container ship to enter the with US visionary Malcolm McLean and usually awkwardly lashed as deck cargo on port and first user of its container terminal. his conversion in 1956 of a T-2 tanker conventional cargo ships. It joined ASP’s new, Whyalla-built, to carry, initially, specially-constructed Paradoxically, the use of containers in 398 teu sisters Kanimbla and Manoora aluminium containers on a spar deck. Australia developed almost as a by-product to provide a weekly Brisbane-Sydney- The Ideal-X­ operated between Newark of the introduction of roll-on-roll-off Melbourne-Fremantle service which, and Houston and was so successful that services. The Australian National Line in part, provided feeder services for the before year’s end, McLean had converted introduced the ro-ro cargo passenger fledgling international operations. six C-2 freighters ferry Princess of Tasmania to Devonport- ANL’s highly successful experience with Melbourne service in 1959, and followed coastal ro-ro services led it to propose the with the all-cargo ro-ro Bass Trader in same format for the first of its planned 1961. A mainstay of these Tasmanian overseas container services. In 1967 it services was trailer-hauled 14-ton steel formulated the pioneering Eastern Searoad containers and flats, which were also Service with Kawasaki Kisen Kaisha (‘K’ shipped by a converted general cargo Line) of Japan and each placed orders with ship, South Esk, fitted for unit loads and Kawasaki Heavy Industries for 14,000 equipped with three deck cranes. vehicle deck vessels that would use shore Use of the container in our domestic ramps. In effect these were ro-ros with trades was growing. In 1964 Associated a wide stern door and capacity for 396 Steamships Pty Ltd (McIlwraith teu within the ship and a further 164 teu McEacharn 60 per cent, The Adelaide on deck. Australian Enterprise arrived in Steamship Co. 40 per cent) took delivery Sydney on its first call on 10 September of Kooringa, the world’s first purpose- 1969; on the same day, ANL’s first fully designed and constructed cellular container cellular containership, the 1130 teu ship. Built by the State Dockyard at Australian Endeavour, arrived in Fremantle Newcastle Kooringa could carry 320 of at the end of its first southbound voyage in ASP’s own containers, which came in the ACT(A)/ANL Europe service, a direct six different types including reefers and rival to OCL. collapsible car crates and all configured Over the next two years ANL would around ‘standard’ dimensions of 16.8” x 8’6” introduce the unique container/bulk x 8’, a size determined by road regulations hybrid Darwin Trader to coastal trades The Kooringa within Australian states. and deploy the fully cellular Echuca on

38 March 2009 Containerisation

Bass Strait. While the deepsea ro-ro limited by the need for dedicated facilities, financial trouble and sold out to Farrell; proved successful, when ANL and partners decided to build large ro-ros equipped tellingly, its remaining LASH vessels were upgraded ESS in 1976 and revamped the with their own stern ramps. These ships soon converted to pure container ships. South-East Asian trade in 1977 (ANRO), could theoretically use any berth, and Ultimately, these challenges did little to the new purpose-built ro-ros had much ScanAustral’s Australian port coverage was slow the relentless march of the container. greater container capacity and deck guides extensive when the first generation 1319 By 1987 ESS had converted to full for boxes. teu ship Tricolor arrived in 1972. containerships, and ANRO followed in While all this was going on, others in ScanAustral’s inauguration was greatly 1997. Fully cellular vessels took over Australian international trades were not so assisted by another deep-sea ro-ro venture the Pacific in 1989 and displaced con- sure about containers. The Scandinavian of Rederei A/B Transatlatic, the Pacific ros on CGM’s round-the-world service carriers Wilhelmsen Lines, Rederei Australia Direct Line in the trade between the following year. In a rare reversal A/B Transatlantic and Det Osiatiske Australia and West Coast North America. Wilhelmsen, the greatest adherent to the Kompaniet (the East Asiatic Company) Transatlantic’s partners were ACT and con-ro formula, converted the container of Copenhagen had introduced their ANL (in partnership with Elders) and each deck space of its vessels to vehicle garages ‘Skandia’ ships to the European routes. provided a con-ro, Paralla, Dilkara and in 2004. The trio believed their advanced design Allunga, the prototypes of Tricolor. Thus in But this was the proverbial drop in the of cargo liners was ideal for Australian the early 1970s ANL was operating a pure ocean: 50 years after Malcolm McLean’s cargoes: double hatches gave unrestricted container ship and two versions of con-ros, access to holds, the ‘tween decks were one shore-dependent and the other self- first experiment it was estimated that the flush to allow forklift operation, and the sustaining, in international trades. equivalent of 300 million teu were crossing the oceans every year. ships’ many electric cranes could handle Meanwhile, a third modus operandi was everything from individual pallets to 20- challenging the container on Australia’s It’s unlikely the originators of the container foot containers. The vessels didn’t need global links: the US-conceived lighter envisaged their contraptions loading bulk expensive shoreside terminals and were, in aboard ship – LASH. Although grain, softwood logs, scrap metal or any of a many respects, the ultimate expression of Columbus Line and later Farrell Lines myriad other cargoes now routinely carried. the conventional cargo ship. were introducing container-friendly and Then again, they were thinking outside the Unfortunately, by the time Skandias such then pure container ships on the US East box. as Torrens, Taronga, Woollahra, Talarah and Coast-Australia route, San Francisco-based Footnote: MSC Daniela is currently Atrevida were delivered in the late 1960s Pacific Far East Lines brought its massive the world’s biggest boxboat by declared the march of the container was apparent LASH ships Philippine Bear, China Bear capacity. It’s sobering to consider that and the fleet was quickly lengthened with and Golden Bear to Australia from the at 13,800 teu this one ship can lift more the addition of a purely cellular hold. But West Coast in 1973. The LASH ships than the equivalent of every containership that turned out to be an interim measure. each carried 49 lighters and up to 400 serving Australia in 1969, in a single load. In 1969 the lines formed the ScanAustral containers, loaded and discharged by on- consortium and, reasoning that the cellular board gantries (over the stern in the case *Dale Crisp is a Melbourne-based specialist ships of OCL and ACT(A)/ANL were of the barges). Alas by 1975 PFEL was in maritime writer.

MSC Daniela undergoing sea trials ProfileSignal

within their area of influence, to address Recent policy developments the acute shortage of seafarers. Drewry Shipping Consultants have assessed the current shortfall of officers in the global and industry updates shipping fleet to be around 34,000.

On 29 January labour did not turn up for SAL concerned at SAL CEO honour the morning shift at Port Botany’s Patrick announced on Australia Day terminal because, it is understood, there Newcastle Port’s slow ship was a dispute with Patrick Auto Bulk Following 28 years in leadership positions proposal and General Division in Brisbane. SAL in the shipping industry, Llew Russell deplored the massive disruption that it SAL has joined other stakeholders in received an award of a Member in the caused. For more see our press release on expressing concern at the long queues General Division of the Order of Australia www.shippingaustralia.com.au. off Newcastle waiting to load coal. (AM) on Australia Day this year. The However, a proposal by the Newcastle honour was received for ‘service to the Port Corporation to request vessels to shipping and transport logistics industries, SAL concerned slow down and only to arrive in the port’s to the development and promotion of government has changed trade opportunities and to professional precincts close to the scheduled loading associations’. SAL members and friends direction on carbon time is not, in SAL’s view, the solution. congratulated Llew on what they believed Unless the coal exporters can renegotiate to be a well deserved honour and for his pollution reduction their contracts with buyers, then there is part, Llew commented that in many ways In the carbon pollution reduction green unlikely to be a significant improvement. it was a team award because of the strong paper, international shipping carrying SAL remains keen to explore all options support during his career he had received domestic cargoes under coastal shipping that may lead to sustainable long-term from his family, work colleagues and permits were to be excluded. However, solutions. For more information see our in the white paper released in December, friends. press release on www.shippingaustralia. international vessels carrying domestic com.au. Shipping industry supports cargo were to be included in the scheme. Unless such a scheme is very carefully Victorian fire appeal designed, it could drive cargo more Container ships grow even Shipping Australia is proud of the way the onto road transport which would have larger members of the Victorian State Committee detrimental environmental impacts A new record has been achieved with have provided relief to the victims of the compared to sea transport. However, SAL devastating fires that ravaged Victoria last is keen to work with the government on the introduction of the 13,800 teu MSC February. Our members provided general the design of a system that will achieve Daniela in the main East-West trades. This 20 and 40-foot containers as well as mutually beneficial effects. For more see is one of eight such vessels being built by refrigerated containers to provide urgent our press release on www.shippingaustralia. Samsung Heavy Industries in South Korea. storage facilities in fire-affected areas. com.au. The bridge housing has been brought Cartage and generators were supplied forward so that the engine room area is by others and this was in addition to the SAL delighted imprisoned aft, which means higher stack heights of shipping company and personal financial seafarers released on bail containers can be achieved behind the contributions by those in the maritime bridge. She has seven main cargo holds SAL was pleased that the Korean Supreme industry to support our fellow Australians and deck connections for 1000 40-foot Court granted bail in mid-January to two in their time of dire need. To you all - a job refrigerated containers. In keeping with the well done! foreign merchant ship officers imprisoned on 10 December 2008 for not doing latest regulations, the vessel’s fuel tanks are fitted inside a protected area beneath the Congestion at Port Botany enough to prevent a massive oil spill after their vessel was holed by a drifting crane deck house. The Patrick terminal experienced serious barge owned by Samsung Industries. This congestion in the last quarter of 2008 and action provides a further disincentive to Port of Brisbane launches in January 2009. The divisional manager follow a career at sea but SAL was hopeful of Patrick Container Ports, Doug Schultz that a similarly positive outcome would new careers website said in a statement issued on 21 January result from the hearing of the appeal, in In response to the skills shortages in that commissioning of the rail mounted due course, before the Supreme Court. For the industry, www.portcareers.com.au gantries at the terminal had taken longer more information see our press release on was launched in January to promote than expected due to complex technical www.shippingaustralia.com.au. the diversity and sustainability of jobs issues. However, he was confident that they would be available to assist straddle import available at the Port of Brisbane. The delivery to road in the near future as well Global campaign launched corporation, customers and industry have as providing increased rail capacity. SAL to promote seafaring careers joined together to create a one stop shop for potential job seekers. A link to the has commented that the long truck queues The International Maritime Organisation SAL website has been established to assist outside the terminal were not acceptable launched in 2008 a campaign to persuade and all possible short-term remedies all stakeholders to take specific actions, potential recruits investigating potential needed to be explored. jobs on that site as well.

40 March 2009 Sourcing and securing the The quality service ImpEx Personnel services of high calibre, new is committed to providing our valued staff to join your company can clients is maintained by abiding by the be hard, we know! highest ethical standards and we pride ourselves on continually providing Why not look at engaging innovative and cutting edge recruitment the services of Australia’s practices, thus ensuring our clients leading industry specialised receive the most advanced recruitment recruitment service provider: product available. ImpEx Personnel? We make ImpEx Personnel’s tradition of it our business to provide you employing our Recruitment consultants with long term recruitment from within your industry, assists in solutions. ensuring your recruitment experience with ImpEx Personnel achieves your For nearly 10 years, ImpEx desired outcome! Our consultants really Personnel has been providing know what you are looking for! quality recruitment solutions Due to our position within the Industry, to the entire International ImpEx Personnel have an impressive Shipping, Freight & Logistics list of quality candidates actively looking Industry such as: for that positive career move that will benefit both you and them!

Shipping Importing Exporting Trading Freight Forwarding Customs Warehousing Logistics ImpEx Personnel have offices strategically Transport located around Australia so please don’t hesitate Supply Chain in either calling your local ImpEx Personnel Representative on 1300 85 85 15 or email: [email protected]

www.impexpersonnel.com.au Shipping Australia - 2009 training schedule

Introduction to the maritime industry- two day course

Brisbane 13/14 May, 2/3 September Special courses - Reefer

Sydney 27/28 May, 9/10 September cargo handling Courses have already been scheduled from Canberra 24/25 June, 4/5 November the first quarter of 2009 for Brisbane, Sydney, Melbourne 3/4 June, 23/24 September Fremantle and Melbourne.

Adelaide 25/26 March Adelaide 27 March

Fremantle 1/2 April, 8/9 July, 7/8 October Fremantle 3 April

Fee schedule Discount available for individual members of Young Shipping Australia. For details of the course content Two day One day please visit out website www.shippingaustralia.com.au course course where the course registration form can be downloaded. $550 per $350 per Special discounted rates are available for group SAL members person + person + bookings. SAL will be pleased to deliver any of these GST GST courses in-house and if required adjust the content to more closely fit company requirements. For registration $650 per $450 per and further information please contact the SAL Training Non members person + person + Manager, Robert Dick, phone 02 9266 9916, fax GST GST 02 9268 0230 or email [email protected]

Australian Institute of Export - 2009 course schedule Course Location Date Export procedures and documentation Sydney 13-14 Aug Parramatta 5-7 May, 27-29 Oct Melbourne 24-26 Mar, 9-11 Jun, 13-15 Oct Adelaide 24-26 Mar, 15-17 Sep Perth 18-20 May, 26-28 Oct Brisbane 24-26 Mar, 28-30 Jul Online export procedures and documentation Available all locations Commence anytime Import procedures and documentation Sydney 8-9 Sep Melbourne 4-5 May, 25-26 Aug Adelaide 28-29 Jul Perth 30-31 March, 3-4 Aug Brisbane 28-29 Apr, 8-9 Sep Understanding documentary credits Sydney 26 May, 25 Nov Melbourne 16 Jun, 17 Nov Adelaide 23 Jul Perth 24 Mar, 12 Aug Brisbane 13 May International trade law and intellectual property Sydney 27 July Melbourne 28 July

Contact the Australian Institute of Export for more information [email protected], 1300 361 526, www.export.org.au Shipping Australia - 2009 training schedule Letters to the editor

I have just been reading your epic article on the Pilbara and the North West (November 2008). Most interesting and comprehensive. The magazine equivalent of ‘Australia’! My wife and I spent a few weeks up there mid-year and thoroughly enjoyed it. We covered much the same territory which would be part of the reason we liked your piece so much. It deserves a much wider audience. Maybe Tourism Australia could take it up in some way. Mr Valder is a former president of the Liberal Party and chairman of ASX Anyway well done and keep up the good work in 2009.

John Valder

Send letters to: The editor Shipping Australia Limited PO Box Q388 Sydney NSW 1230 We welcome letters to the editor and hope that readers will comment in the future, not only on articles in this edition or previous editions, but also topics readers would like to see covered in the future.

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