AUSTRALIA

Our longest naval mystery SOLVEd

LNG we’re girt by gas and sea!

Wine exports up Women in shipping MY THERESE BLANK – Maersk Line Oceania. PROFILE ANTHONY JONES, Group CEO of LINX GENERAL AVERAGE Cargo Handling Group EXPLAINEd

INTROduCING - dARREN duMBLETON, Quay Shipping Autumn/winter 2018 Increase productivity Reduce incidents

orking on a vessel can be etreely high-risk, with seafarers reportedly up to . ties ore likely to suer work-related fatal inuries copared to the general shore-based workforce.

A recent study uncovered new insights into seafarer safety and wellbeing and found that looking after your crew results in less incidents and better productivity.

Manage fatigue ne in ve seafarers eperience acute and chronic fatigue. pleent a fatigue risk anageent syste to anage fatigue and ensure crew get enough sleep.

Rules and procedures Make sure rules and procedures are clear, practical and up-to-date. hen inforation is easy to understand and relevant, crew are ore likely to follow rules and procedures. ncluding seafarers in the developent of rules and procedures iproves copliance, perforance and wellbeing.

ork deands and support eafarers are reuired to uickly switch between onotonous tasks and etreely deanding tasks. uer the negative eects of these work deands by prooting positive and open interaction between crew and people in higher- level roles. As the leader, set high safety standards and show your crew that their safety is ust as iportant as operational cost.

Co-worker support Crew that have eotional support and are euipped to deal with work pressures perfor better. ploying the sae crew on the sae vessel helps by allowing the to develop support networks and enoy ob security. hese things increase wellbeing and reduce the rate of ental health issues.

he nal report Assessing the determinants and consequences of safety culture in the maritime industry is available at asa.gov.au amsa.gov.au CONTENTS AutumN / wiNter 2018 14 16

106 12

02 FROm THE bRIDGE 08 VIEWPOINT 46 the Blue Highway is ready and free to use 10 PROFILE ANtHONY JONeS, Group CeO, LiNX Cargo Handling Group 12 WOmEN IN SHIPPING mY tHereSe BLANK, Australian sales and country manager, maersk Line Oceania. 14 INTRODUCING DArreN DumBLetON, managing director, Quay Shipping Australia 16 LNG FEATURE 16 Now we’re girt by gas as well as by the sea! 20 Critical mass moment in sight 24 AUSTRALIAN WINE Global demand on the rise 28 ECONOmY Shanghai of the tiger? Doing business in China 30 bUSINESS 30 tarifs: the good, the bad, the ugly 32 what’s your exposure to FX? 34 COASTAL SHIPPING 48 54 Changing the coastal trading rules 38 LOGISTICS 38 Blockchain in the supply chain 51 FILm REVIEW 40 How blockchain can safeguard Australian food and beverage the mercy on the supply chain to China 42 Developing a national trade Community System 52 THE SCENE 46 LINER SHIPPING 54 NAVIGATION winds of change in Liner Shipping the Panama Canal 48 LEGAL/INSURANCE 56 NAVAL HISTORY General Average explained Solving the mystery of HmAS AE1 50 bORDER AGENCIES 58 ALC FORUm 2018 2018 customs compliance priorities towards a National Freight and Supply Chain Strategy

THE OFFICIAL JOURNAL OF Shipping Australia Ltd Level 1, 101 Sussex Street, Sydney NSW 2000 PO Box Q388 Sydney NSW 1230 Front Cover: P: 02 9266 9911 F: 02 9279 1471 Shell’s foating liquifed W: www.shippingaustralia.com.au natural gas (FLNG) facility PUbLICATIONS COmmITEE Chairman: Ross McAlpine Prelude on station, 475km Vice chairman: Frank Needs Executive editor: Rod Nairn north north-east of Broome Executive assistant: Sharyn Flood Feature writer: Archie Bayvel Image: Shell Australia Graphic designer: Sarah Abrahams E: [email protected]

Advertising Co-ordinator: For advertising contact Steve Moxey P: 0400 473 200 E: [email protected] PO BOX 43, Woonona NSW 2517

Shipping Australia Magazine is published for Shipping Australia Ltd by Ontime Publications Ontime Pubications. Autumn / Winter 2018 I Shipping Australia Limited 1 From the bridge

he frst part of 2018 has been a the peak shipper body. this provided historic one for liner shipping in standardisation between lines and tAustralia. the sudden withdrawal of predictability for the shipper. Now, without lines from the major Discussion Agreements DAs to limit them, the major lines can operating between Australia, New Zealand simply set their own surcharges on a global and the uSA was quickly followed by a basis and can change these surcharges similar exodus from the north Asia trade as they see ft, with no minimum notice Facilitation Agreement and the southbound periods. So much for predictability. Asia Australia Discussion Agreement. this brings us to uncharted territory with respect Let me make it clear that not all to liner shipping and leaves Australia’s Discussion Agreements have been peak exporting shipper body, the Australian abandoned. DAs remain an essential Peak Shippers Association, scratching their umbrella structure that enables a collection heads and wondering why they suddenly of smaller lines to collaborate to provide a have no carrier representative body to talk shipping service. the barriers to entry to to. providing a shipping service are very high indeed, a viable service needs reasonable Changes to this sector of the industry frequency and sufcient cargo to make it have been expected for some time, ever sustainable. that means multiple ships over since the european union removed their multiple ports, which demands a massive competition protections for shipping and capital risk. DAs can provide a means by replaced them with a vanilla favoured block which lines can share this risk and ensure exemption permitting only low market that a regular service is sustained while share consortia. Since then, a number of maintaining competition between the other regulatory regimes have done the contributing lines to prevent price gouging. lemming thing and followed blindly of the clif to weaken or remove anti-competition So where does this reduction in DA protections from shipping. Hong Kong and participation leave Shipping Australia? New Zealand are among the most recent, Shipping Australia Limited was formed and the sum of these changes have made in 2000 through the amalgamation of the an impact on the psyche of global shipping Australian Chamber of Shipping and Liner lines. the shipping industry has a lot of Shipping Services. Over the years the A sea inertia and major changes take time, but pendulum of our work efort has swung they eventually work themselves through. between liner services and shipping policy Changes to global competition protections matters. Staf levels have been continually over the past decade are at least partially adjusted to meet the work demand. in change responsible for the consolidation of the last few years, as the demand for shipping lines in recent years, though of liner services support has reduced i course there are other factors. i caution have reduced our workforce in the liner all regulators to be very careful when they services department. At the end of may, for liner consider tampering with a market that is after almost 30 years working at Shipping currently highly competitive and working Australia (and the former Liner Shipping well as “whatsoever a man soweth, that Services), Andrew Chittenden has taken shall he also reap”. Andrew Chittenden his retirement. Andrew’s reputation for provides a more comprehensive analysis expertise in liner shipping regulation is shipping widely known and respected throughout of the causes and efect of this historic change on page 46. the industry, and SAL is happy that he has agreed to continue to provide expert advice it is not coincidence that the demise when called upon. the SAL Board and his By rOD NAirN Am, CeO, of Discussion Agreements comes after Shipping Australia Limited work colleagues wish Andrew the very best the latest round of shipping industry for the next, more relaxing phase of his life. consolidation. the fve or six market His dry wit will certainly be missed around leaders are now strong enough to make the ofce. their own decisions and live by them. Perhaps the frst example of this is in global Despite these changes, Shipping Australia bunker surcharges. under a Discussion maintains the capability to support Agreement regime all the lines participating continuing Discussion Agreements, bunker in that agreement would normally negotiate calculations, regional trade statistics and their bunker base rates, indices and ongoing registration service for consortia calculation methods for surcharges with agreements under Part X. we will also

2 Shipping Australia Limited I Autumn / Winter 2018 continue to be the industry point of contact for the registrar of Liner Shipping, and provide advice and support on liner matters to our members. the policy and technical department remains unchanged and will continue to provide information, advocacy and training services to our members and the wider shipping industry as we have done for the past 18 years. On that note, Shipping Australia has commenced consultation with the ACCC over the requirements of the industry for the development of a potential class exemption to cover shipping lines. Our position has always been that Part X of the CCA already provides the appropriate level of competition protection, is low on regulatory compliance red tape and is supported by both carriers and shippers. But the future of Part X is not at issue here, that will be determined by the Government The ANMM Wooden boat festival at Darling Harbour was a ftting companion to the at some future date, not by the ACCC. the Container Exhibition still running at the museum ACCC has been tasked to develop a class exemption that best meets the needs of gas production in the national freight task supply chain. in an unprecedented sign shipping industry carriers and shippers. by including coastal shipping in the overall of consolidated opposition, Shipping we are working with them on this but an freight strategy – this will cost nothing Australia combined with the Australian essential element for shipping lines is but the political will to change the coastal Logistics Council, Australasian railway certainty and this is not so easy to provide shipping rules Association and Ports Australia to release in a self-assessment regime. • Focus on efcient and efective rail a joint media statement condemning The frst half of 2018 has also been connections between the ports and the charge. Shipping Australia will be mixed in terms of International shipping intermodal hubs, including duplication engaging vigorously with the Department of markets. the dry bulk indices have been of the Port Botany rail link, and building Agriculture on this matter. on somewhat of a roller coaster, dipping a dedicated freight rail connection from Just over a year ago SAL held a function Acacia ridge to the port of Brisbane to peaking with the Baltic Dry Bulk index to explain the new concept of blockchain, swinging between 1470 and 1000 twice • Preserve the freight corridors and port it was a real eye opener to many who had since the start of the year. in the past precincts and protect them from urban never heard of the concept. today you two weeks before going to print this index encroachment can’t get through your frst morning cofee has plummeted 400 points again. Box without blockchain being mentioned, it rates have shown similar instability with The Federal budget earlier this month did seems to be the go-to word for breakfast the Shanghai Containerized Freight index deliver on funding for the duplication of the tV and radio presenters. it seems that climbing above 870 in February, only to Port Botany rail but there was no mention Blockchain will fx supply chain integrity, drop 200 points in march before staging a of Acacia ridge to Brisbane. there were modest recovery of half of the lost ground other goods and bads in the fne print. One and distribute verifed data across in may. the arrival of a lot of new build of the goods was the announcement of networks on a need to know basis, but tonnage is starting to increase volatility and $200 million funding to provide a Satellite- how many people really understand it and those lines that provide public accounts Based Augmentation System for GPS. what it can do? in this edition we cover have announced operating losses for the Known as SBAS, this system will improve blockchain from a few angles starting with frst quarter. So, the outlook is not rosy, safety and reliability and accuracy of ship a fundamental explanation by richard lines will look carefully at their operating (and land) positioning systems which will Arrage on page 38, its application in costs and this will put more pressure on improve safety of navigation. it will also guaranteeing integrity of medicines and lines to either pull out of uneconomic support the inevitable move toward more other products by mark toohey, and its services or look for other ways out of an autonomous systems both on land and at use as the backbone to ensure trust in the industry which has been sufering from sea. development of a new trade community oversupply for more than a decade. i do in the bad category, the announcement system in Brisbane. see more consolidation coming. of an insidious new biosecurity levy At the ALC Conference in march i was A year out from elections in the New South caught the entire freight industry of encouraged by the fact that shipping wales, Victorian and Federal governments, guard. Completely unexpected, this levy and ports gained a greater proportion of has been announced with no industry it seems that preparing long-term freight the agenda than in previous years. the consultation, it is inadequately described and infrastructure strategies is the thing conference was also the frst opportunity and, certainly to this point, insufciently to do. SAL contributed to the Victorian for the newly appointed Deputy Prime justifed or accounted for (i am running out infrastructure plan last year, and in the frst minister and minster for transport and of derogatory adjectives). this new levy half of this year has also made submissions infrastructure, the Hon mike mcCormack, to the NSw Freight and Ports Strategy of $10.02 per teu or $1.00 per tonne of non-containerised cargo looks like a slush to make his frst speech in the role. the and the review of the National Freight and opposition transport spokesman mr Supply Chain Strategy. Our submissions fund for the Department of Agriculture so that they won’t have to justify their Anthony Albanese was also in good form are available on our web site but to give and i was pleased to hear him recognise you the short version we keep to some future expenditures under the existing cost recovery mechanisms. it’s plan to the need for: less regulation, bipartisanism simple, and virtually indisputable principles: be collected by the terminal operator is for long-term shipping policy stability, • make the best use of existing and latent also another costly outcome which will and coastal shipping to do more of the infrastructure and minimise greenhouse add further administrative costs to the domestic freight task.

Autumn / Winter 2018 I Shipping Australia Limited 3 if there was a global prize for newsmaker Display Systems (eCDiS). together these the presence of brown marmorated of the year there would be no argument, it have improved levels of bridge situational Stink bugs (bmSb) in container cargos would go to President Donald trump. He awareness and reduced the incidence from italy and vehicle cargos from Japan knows how to hold the news spotlight and of navigational error. the extension of this season caused substantial delays in to rock the establishment. His withdrawal reeFVtS services has ensured that there is cargo and substantial costs to shippers from the trans Pacifc Partnership was a “guardian angel” keeping a watchful eye and shipping lines. while protocols were enough to have all players scurrying to on any ship that starts to wander out of the in place for containers, it appears that the see what they could salvage, and salvage designated shipping areas. the outcome pre-embarkation fumigation had a lot of a new tPP they did. trump’s continuing of all this efort is safer shipping, ensuring holes in it and approved facilities managed quest for funding to build a border wall that commercial shipping can continue to to use a lot more fumigant gas than they with mexico is attracting a lot of local operate safely and efciently throughout ever purchased. the result is that DAwr press but on the global scene his abrupt the essential sea trade lanes of our world was not able to rely on the fumigation announcement of 25 per cent tarifs on heritage listed national park. certifcates and required inspection of steel and aluminium was seen as the containers prior to unpacking. there is more good news for maritime frst salvo in a global trade war – and in trade to come. Previous navigation the arrival of hitchhiker pests in vehicle war, everybody loses. Fortunately for consignments from Japan was far Australian producers, our Government safety depth calculations combined with shallow waters and a complicated more costly and disruptive for shipping negotiated strongly and was able to obtain companies. with a few BmSG being exemptions by calling on our long time tidal regime have necessitated a limit of 12.2 metres maximum static draught for discovered at sea and others identifed as special relationship with the uSA. China a result of fogging on arrival, a number of retaliated with tarifs on multiple products shipping navigating the torres Strait and inner Great Barrier reef, but this looks roro and PCC were refused entry to New and then there were reports of uSA Zealand and Australia with no solution cargos of sorgum bound for China, being about to change. AmSA, in partnership with OmC, implemented an underkeel identifed. this resulted in lengthy and redirected to other Asian countries to avoid costly delays, ofshore fumigations and the punitive Chinese anti-dumping duties. management system through the torres Strait in 2010 and have been collecting general aggravation. Car imports have most recently, with the world’s economies skyrocketed since the end of the BmSG scrambling for position, President trump data and improving the system ever since. Now they are at the stage of trialling season and SAL has initiated discussions tweeted it all of again and it seems that with DAwr and vehicle importers to make the short but furious war of projected tarifs deeper draught shipping through the Torres Strait and trial vessels have safely better preparations ahead of the next has been called of. read what economist season. Bernard Gresser makes of it all on page 30 navigated the passage at draughts of up we could all learn a lesson to wait until the to 12.5 metres. it may not sound like a On 12 march i was privileged to attend a smoke clears before trying to assess the lot, but for a bulk carrier, every additional special commemoration at the Australian damage. centimetre of draught equates to around National maritime museum, of the fnding 5,000 tonnes of cargo. According to the of Australia’s frst Submarine HmAS most recently, the US withdrawal from trial report, if the regular bulk ships traveling AE1, near rabaul, in Papua New Guinea. the ‘Iran Deal’ and uS re-imposed trade from weipa to Gladstone transit torres in attendance were minister for Defence, sanction on iran have left the shipping Strait at 12.5 metres draft rather than 12.2 Senator marise Payne, Chief of Navy, Vice world in confusion. Questions are being metres, then they could carry the same Admiral tim Barrett, and descendants of asked on whether other States who amount of cargo in 10 less transits per year, the 35 crew who were tragically lost. the continue to respect the ‘Deal’ can continue an operational saving of around $10 million. circumstances of the sinking and the fnal to trade with iran, or will a trade blockade trials for container vessels are scheduled resting place of AE1, which has remained a be enforced? this extends to insurance to commence soon and if similar gains are mystery for more than 100 years was fnally coverage of ships and cargo’s who risk achieved this could equate to thousands of declared solved following the successful being intercepted or impounded for failing additional containers being carried per ship search on mV Fugro Equator. the display to comply with sanctions. A number of on the torres Strait route from Singapore to at the ANmm is well worth a visit by all european countries have invested heavily east coast Australia. this is defnitely a win Australians, but for now you can read the in iran and are understandably reluctant to win outcome. story on page 56. comply with unilateral uS sanctions. the AmSA NAV18 Future of Navigation Conference was held on the Gold Coast in may. i was pleased to present on the implications of disruptive technologies on safe navigation of international shipping. i have long been a strong supporter of the work that AmSA and the Australian Hydrographic Ofce have done to continually improve the safety of navigation around the Australian coast and through the Great Barrier reef in particular. Shipping through the Great barrier Reef is far safer than it was twenty years ago, with incident rates falling from an average of 2.5 per year to only one per 3 years over that period. the last major incident was the grounding of the Shen Neng 1 in 2010. this improvement in safety is not just a coincidence. the past decade has seen the availability of electronic Navigational Charts (eNC) and the implementation of compulsory carriage of electronic Chart Navigation Coconut undergoing fnal preparations for the Golden Globe Race 2018 in Plymouth UK

4 Shipping Australia Limited I Autumn / Winter 2018 the imO mePC has now confrmed the letter to the editor timeline for the commencement of global low sulphur fuel implementation with the 0.5 per cent sulphur in fuel cap, which Dear Sir, will come into efect on 1 January 2020. Onehunga Wharf 1981, with this is something of a long shot, Adi Viti and Niuvakai alongside. SAL’s concerns that the supply of low but nothing ventured ... sulphur fuels will not meet demand have Image: Ports of Auckland now been echoed by the international the port of Onehunga, once the Chamber of Shipping chairman esben biggest secondary port in New Poulson, who is calling for global fuel Zealand, closed its doors to freight suppliers to get their preparations in order activities at the end of November “particularly for operators in tramp trades, 2016, bringing to an end roughly which call at diverse port destinations”. 180 years of shipping movements Poulson warned operators that it is vital to on the eighth biggest harbour in start making the necessary preparations the world, the manukau Harbour. for this major change, which is expected to the port is now a haven for signifcantly increase bunker prices across trawlers, particularly during the the shipping industry. Some operators albacore (hoki) season during the are moving towards ftting of scrubbers, summer months. But many’s the which will allow them to operate even with day this once exceedingly busy inadequate low sulphur fuel availability but wharf is now bereft of any activity there has been a signifcant shift towards whatsoever. the use of LNG as a clean bunker fuel. to keep alive the memory of Our feature in this edition looks at this terrifc wee port, i’ve set LNG from the point of view of Australian up a tribute website, www. producers just as Australia becomes the ultimatenzsoccer.com/Onehunga, world’s number one LNG producer, and which boasts a whole host of from the shipping industry perspective as photos and information about the LNG as a bunker fuel approaches critical many ships which have tied up mass. the iCS has gone even further alongside over the years - oh, how i wish those bollards could talk, because and, in promoting shipping as the clean the tales, i’m sure, would be abundant! transport industry of the future, considers which is the reason for this letter. i’m eager for the site to become as that even LNG is only a stepping stone to a comprehensive and defnitive a record of shipping at the port of Onehunga new generation of zero emission fuels such as possible, the idea being to gather as much information and stories about as hydrogen fuel cells or ammonia-based the port and its servants (ships and crew), so the role it has played in New energy. Zealand’s history isn’t lost to future generations. Among a wealth of other articles, you to this end, i’m keen to receive contributions, be they written or will fnd a flm review of The Mercy, a photographic, from any readers who may have lived on the shores of the Hollywood production recounting the manukau and taken pictures of the ships passing by, or who may have desperate attempt of Donald Crowhurst worked on those very vessels on their way in and out of Onehunga and to be the frst and fastest to sail single across that sometimes feral beast, which is the manukau Bar. handed non-stop and unassisted around Submissions can be made via the website, with contributions certain to be the world in the Golden Globe race, fully acknowledged, as a visit to the website can confrm. i look forward to 1968. i would not be a spoiler to say receiving yours. that he failed; the honours went to robin Knox Johnson in his yacht Suhaili. Now, thanks, 50 years on, a commemorative Golden Jeremy ruane Globe 2018 race is being held, limited www.ultimatenzsoccer.com/Onehunga - a tribute to shipping at the to the same technologies available to the port of Onehunga original sailors. A feature on mark Sinclair and his 34 foot yacht Coconut, one of two Australian entries was included in SAL Spring/Summer 2017 magazine. i am delighted to joining Coconut on 14 June for the invitation race from Falmouth, uK to Les Sables d’Olonne, France, ahead of the start of the solo Golden Globe on 1 July. Check out the next Spring/Summer edition for an update. As we go to print i am pleased to congratulate Craig Carmody (formerly of Svitzer Australia) on his appointment as CeO Port of Newcastle and Nicolai Noes, a former SAL director and CeO of maersk Australia, who has returned from Singapore to take the helm at Svitzer Australia. Onehunga Wharf 2018

Autumn / Winter 2018 I Shipping Australia Limited 5 ADVertOriAL

Keeping our sea trade in safe hands

the ports of our island nation are our trade gateways to the world and it’s world-class port and marine services that are the key to keeping this blue highway running, says Grant Gilfllan, CeO of Port Authority of New South wales.

Australia is an island nation. we’re and passenger ships, we’ll need of ship’s bridges, complete with surrounded by the sea and our ports world-class port and marine services control panels and communication are Australia’s trading gateway to to ensure the marine supply chain equipment. the world. Around 99 per cent of keeps on running efciently. Overseeing safety our international import and export Safe, reliable and efcient port trade by weight is carried by sea, Our pilotage service is backed with services representing about three quarters of the assistance of our VtS teams its value. Port Authority of New South wales who provide a continuous service works to ensure the safe, reliable increased world trade and double- to monitor the safe and efcient and efcient movement of cargo and digit growth in our cruise ship market, movement of vessels in our ports. passenger vessels through our ports means our ports and harbours remain we are continually refning our of Sydney Harbour, Port Botany, Port critical to our growing economy. procedures and, in Sydney, the Kembla, Newcastle Harbour, Port of However, while international sea VtS has recently been certifed in eden and Port of Yamba. freight makes the most of our port accordance with the guidelines set infrastructure, only 15 per cent of to ensure we continue to supply safe, out by imO resolution A.857 (20). Australia’s domestic freight is taken efcient and sustainable, world-class this initiated a review of the current by sea. this discrepancy has port and marine services, we look to procedures, documentation, continually improve our services to seen increasing support over recent practices and processes of the VtS commercial shipping coming into our years for coastal shipping reforms and involved the development of a ports. that will develop the domestic project framework and gap analysis, maritime trade. each year, Port Authority of New followed by a complete reworking of South wales’ marine pilots and cutter documentation. with over 70 ports around Australia, (vessel) crew perform over 10,000 there is potential for a blue highway the VtS team have also collaborated pilot transfers across our ports to that connects our industrial, with pilots to provide ‘shared’ help bring cargo ships, tankers agricultural and commercial centres. reference points for vessel and cruise ships safely to berth. Advocates for taking domestic freight movements such as abort points and in 2016/17, our marine operations of our roads and rail and onto the trafc clearances, adding another teams completed 4357 pilot transfers sea say that this network will be an level of risk assessment to vessels’ to and from commercial ships in economic boon to regional Australia safe harbour transit. Sydney Harbour and Port Botany and will reinvigorate the Australian alone – an average of 12 per day. Further to this, the Sydney VtS maritime industry. team carried out a complete Our marine pilots are master mariners Supporters say that the blue highway review of emergency preparedness and we work to continually refne and provides the most sustainable and and procedures. this work is improve their skills. the pilot teams cost efective method of transporting strengthened by the regular inter- undertake regular of-site training in freight across the country, while the agency emergency drills we hold state-of-the-art simulation exercises Australian Government’s commitment across our ports to bolster our at the SmartShip Australia facility to shipping reform will ensure that skills and our ability to respond to in Queensland and the maritime safe, secure and efcient coastal emergencies. Simulation Centre at the university of shipping remains part of Australia’s tasmania. these world-class centres Australia’s marine supply chain is one national transport system. allow our marine pilots to hone of our key national assets, and Port And to support this blue highway and their pilotage skills using computer- Authority of New South wales is here the ongoing growth in world trade generated waterways and full replicas to make sure it’s in safe hands.

6 Shipping Australia Limited I Autumn / Winter 2018 Delivering safe, efien an ssainale rllass r an arine servies www.portauthoritynsw.com.au

Autumn / Winter 2018 I Shipping Australia Limited 7 the Blue Highway is ready viewpointand free to use By miKe GALLACHer, CeO, Ports Australia

ustralia needs to use its ports 10 years, with funding dedicated to road, ahead and the limitations of the current and shipping domestically, just as rail and airports. freight transport mix. we have to be much as it does internationally. smarter. A the blue highway doesn’t need to be Strategically we have ports spread right built, expanded or maintained. it is free, Australia has the highest growth rate of around this country, they can lift more and it already connects all our major any major OeCD country, growing at a than any other logistics network we have, cities and many of our regional centres. steady 1.6 per cent per annum, with our and shipping is not constrained in the population expanding from 24 million way other freight transport options are. Analysis conducted for the inquiry into to 30 million by 2030. Our capital cities the National Freight and Supply Chain are home to 69.3 per cent of the entire Australia’s supply chain should not be Priorities suggests that while the freight population - this number will increase to a struggle between the diferent modes task is projected to double in the next almost 75 per cent in the next 40 years. of transport. it is about being smart, it 20 years, even with extra investment, is about understanding the strengths of Australian transport infrastructure will As this population rises, so does each mode and using them appropriately be hard pressed to meet this demand demand. we know through the to meet the incoming freight tsunami, without including the ports. Government’s National Freight and and tame the geographical vastness that Supply Chain Priorities Discussion Paper Furthermore, the New South wales is Australia. the volume of freight going that the total road freight task in all Government estimates that a 1 per cent in and out of the country is going to be capital cities is forecast to increase by increase in freight efciency could save the same whatever we do internally. the 2.33 per cent per annum; from 40 billion the national economy $1.5 billion. question is how are we going to meet tonne kilometres back in 2008 to 66.60 it? this is why i am such a supporter this country will continue to grow billion tonne kilometres, within the next of reforms to coastal shipping. to use whether we are prepared or not. State 12 years. our ports and sea-lanes to support the and Federal governments are taking there is currently a bill in the Senate terrestrial mode of freight. i can see so steps to understand and lead this growth. intended to address some of the many untapped benefts in using the blue my question to them is how can we use challenges in the current legislation. highway to its potential. our over 80 ports strategically located whilst Ports Australia welcomes these right around our country to their full that balance is combining the fexibility minor adjustments to the current regime, potential, to the beneft of the country? of our roads, the connectivity of our we believe there is an opportunity for railways and the capacity of our ports. which is why Ports Australia has wider reform. commissioned Deloitte to help us Governments around the nation are it is my frm belief that embracing the understand exactly the role our ports can investing billions into road and rail to use of our nation’s coastal sea routes play in the domestic shipping mix. relieve congestion, improve road safety by reforming coastal shipping, is not a outcomes, connect inland regional there is a freight tsunami heading our maybe but a must for Australia’s future. communities directly with capital cities way and this country is not yet ready to through the blue highway, we can to improve quality of life and freight meet it. the inquiry in to the National deliver sustainability for existing cities, efciencies, and invest in the nation’s Freight and Supply Chain Priorities grow existing regional areas, handle economic growth. the Commonwealth released its report recently which more freight and save billions in the alone is investing $75 billion in the next highlighted the signifcant freight task process.

Disclaimer: Readers are advised that Shipping Australia Limited and the Publisher cannot be held responsible for the accuracy of statements made in advertising and editorial, nor the quality of the 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. While every reasonable effort has been taken to ensure the accuracy of the information contained in this publication, the publisher takes no responsibility for those relying on the information. The Authors, Publisher and Shipping Australia Limited disclaim all responsibility for any loss or damage suffered by readers or third parties in connection with the information contained in this publication. Nothing in this publication should be construed as personal or professional advice and should be read as general information only. Warranty and Indemnity: ADVERTISERS and/or advertising agencies upon and by lodging material with the Publisher Ontime Publications for publication or authorising or approving of the publication of any material indemnify 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 competition or trade practices, royalties or violation of rights or privacy regulations and that its publication will not give rise to any rights against or liabilities in the Publisher, its servants or agents and in particular, that nothing therein is capable of being misleading or deceptive or otherwise in breach of Part V of the Competition and Consumer Act, 2010 (Cth).

8 Shipping Australia Limited I Autumn / Winter 2018 viewpoint

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We take care of your cargo – no matter what, where, how much or how often you ship with us. And we bring ‘the personal touch’ to container shipping, with frst-class, localised customer service and the unmatched cargo expertise on which we’ve built our reputation.

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www.hamburgsud-line.com Autumn / Winter 2018 I Shipping Australia Limited 9 profile

ANTHONY JONES, Group CEO of LINX Cargo Handling Group

How an 18 year old gardener became wharfe royalty with an empire of 3800 employees

By ArCHie BAYVeL

Anthony Jones is as close to being wharfe royalty as one can get without having been called a “lumper”, a term that disappeared soon after waterside workers no longer had to wrestle barrels and crates by hand from the delivery truck to their niche in the hold.

He is a fourth-generation waterside the frst question is: “Did he ever as a hands-on lumper. But until worker following in the footsteps of actually work on a wharf?” to which recently he’d never heard the word. his late father Steve Jones, better the answer has to be “Bloody oath.” By 1999 when he joined Patrick it known as “Jonesey” and famous for Anthony is a strongly built, athletic- was as a “stevedore” and the old his lifetime services to the Sydney looking man of medium height who term had passed into history; the shipping industry, and his grandfather could well be a former footballer. waterside had been gentrifed! Sid Jones, and his great-grandfather But he isn’t and one wonders if his before him. physique comes from gruelling times Second question is, “How did he get

10 Shipping Australia Limited I Autumn / Winter 2018 from there by the age of 38 to being CeO of a group with 3800 employees?” read on for his blow-by-blow account of that journey. who owns what … “when i left Heathcote High School my frst job was as a landscape gardener,” the LiNX Cargo Care Group is 67 per cent owned by Brookfeld infrastructure he says, “but my elder brother, was Partners (part of a massive Canadian conglomerate) and 11 per cent by each working at Patrick and when he told me of British Columbia investment management Corporation, Qatar investment how much he was earning, i was out at Authority, and Singaporean Government investment corporation. its group Port Botany the next day. companies are Linx itself, Autocare Services, C3 Limited (a New Zealand “Due to an industrial dispute the previous stevedoring and forestry business), and Geelong Port. the group has recently year, getting a job there was relatively taken the lease and operating rights over the enfeld intermodal terminal and easy because Patrick’s had made a lot of Jones says: “we plan signifcantly grow metro freight trains and move freight staf redundant and were seeking casual from road on to rail, helping to decongest Sydney roads” employees. “i had two interviews, a medical, then had to wait two months before being “my calendar on a normal day looks like us because i am away from home so told i had a job. About 20 other people a game of tetras; it’s full of meetings and often,“ he says. “Katie, is a teacher by began their training at the same time, responding to emails, studying overseas many of whom still work at Port Botany. profession but is currently doing our investment opportunities and growing while i’m sure my family lineage must family’s most important job which is our business. A major part of my day have helped me, it was never mentioned. raising the kids. is also supporting the decisions of our “the entry level position was as a G2 group CeOs and stakeholder managers. “we met in Colorado where we were wharfe and our main duties were lashing both exchange students. i was 19 and “Growing up through this business has containers to the deck to prevent them she was 16. we live at woronora, so the given me a lot of operational experience. falling overboard in rough seas. From a role of doing things i’ve moved fruit hasn’t fallen very far from the tree. “then i trained as an itV driver, to one where my job is to deliver strong “when i’m not overseas or interstate i transporting containers from the rail head diligent governance and execution of travel to North Sydney for work by car or to the straddle grids and rtG area. After strategy. by train. i get to the ofce by 9 or 9.30. that came training on heavy forklifts and “we now have our own culture, broken if i’ve taken the train i’ve read my emails driving the straddles. away from our history with Patrick and and answered many of them by the “thanks to a strong background in Asciano. time i get in. i get home when my diary computing – i’d studied three-unit “i think of myself as being humanistic. permits. computing in high school - i was next my dad was a union delegate during the trained in the admin functions of receival “the diversity of this business port’s days on Hickson road’s so-called and Delivery (r&D), processing the mad mile and someone described him is one of the big attractions of paperwork of inbound and outbound ‘way back then as practising Hr before containers to the wharf. my job. One day i’ll be talking Hr was invented by always asking plantation trees, next day i’ll “After that i was trained as a straddle himself how in a certain circumstance he tower monitor, overseeing yard would want to be treated. be looking at newly imported operations and working with the straddle cars, yet another day i might “i share that philosophy and Jonesey’s operators to maintain smooth operations. legacy to me is my belief that he made a be watching coiled steel being “with this admin training i moved to diference on the waterfront as well as on loaded. clerical functions in the rail operations; our lives. then after three years of stevedoring i left “And we’re very proud of our investment “that includes our interest in and moved to Patrick rail. it was a back in Geelong Port, the premier bulk port encouraging women to work in our step in salary but it was a monday-Friday in Victoria, and i work closely with Brett industry. it’s one thing attracting job and stretched my brain. winter, its CeO.” women into the workplace but it’s really “Patrick had begun to branch out from important that you attend to them once Anthony is one of three brothers. One, terminals into the logistics business they’re here. Nathan, is operations manager with and had purchased Pacifc National, “we need to look to them for diversity of Hutcheson at Port Botany and the other, so in 2002 i moved to melbourne as its mind as well as of gender, otherwise one matthew, is an animation cartoonist. operations manager. just gets clones of what we already have. “when the flm Peter rabbit came out “i stayed with Pacifc National for 12 “we need a safe space where women recently all the family went to its premier years as operations manager, New South can challenge our mindset and bring in and we stayed to the bitter end to make wales manager, and general manager of diferent suggestions and energy.” sure we saw his name on the credits,” its bulk business. But Anthony’s life isn’t all work. He and Anthony says. “From there i moved to being general his wife Katie have three sons and a manager of Patrick until 2016 when i it’s all a very long way from his daughter. He describes getting them became group CeO of LiNX Cargo Care grandfather and great grandfather, both breakfast and ready for school as a big Group. After Asciano disappeared i’ve of whom would have been only too part of his early mornings. been busy creating the Linx brand and acutely aware of what it meant to have its new look. “it’s an important time of the day for been “a lumper”.

Autumn / Winter 2018 I Shipping Australia Limited 11 women in shipping mY THERESE bLANK, Australian sales and country manager of maersk Line Oceania. it’s a long way to eskilstuna it’s a long way to go … (to the tune of tipperary)

By ArCHie BAYVeL

early most mornings you can fnd my (pronounce it “me”) Blank pushing her pram through Sydney’s Haymarket; another single mother on her way to work in the nearby CBD, her baby daughter maja is on her way to day-care, almost next door to the maersk ofce.

“i keep the pram in my ofce,” she says. “maersk has an innovative maternity policy that creates a lot of engagement with women. At maersk you can have a career path as well as a baby. “i really value time with maja. Her day-care opens at 8am and is very close, so i am at my desk by 8.10. i collect her at 5.30 and we wheel home for dinner. She is only 18 months old, so when she goes back to sleep i get my homework done. “Our apartment is small, only 70 square metres including the balcony, but it’s very comfortable and convenient to the ofce and to swings, which maja loves. “i keep a notebook next to my bed. “there are plenty of women in shipping, and maersk has many female leaders who are role models in a male-dominated industry. if by 400 people from nine diferent “i stayed there for four years before you raise your hand you get an countries, and i learnt how people moving to myanmar for my second opportunity. from diferent cultures think. overseas posting.” “i was interested in international “At frst i worked in Gothenburg, in it was all a long way from trade, so when i left university i joined Sweden, which was then maersk’s maersk and learned that the company regional ofce for Scandinavia, eskilstuna, the small town was my family. i was attracted by the Baltics and russia. in 2008, two west of Stockholm where she fact that it was an international leader. years after joining the company i had and her older brother and “when i went on its management the opportunity to go to Auckland, sister were brought up and to training course in Copenhagen as a capacity manager with (called m.i.S.e – maersk international responsibility for New Zealand and which she tries to return every Shipping education) it was attended Pacifc island services. two years on holiday.

12 Shipping Australia Limited I Autumn / Winter 2018 “my mother and father are both “At the time uS and eu sanctions on the Bay of Bengal 25 kilometres retired now,” she says, “but my were yet to be eased and myanmar south of Yangon. Feeder vessels mother was a preschool teacher, was quite a diferent business take freight from there up the Yangon always encouraging us to play environment. it goes without saying river to myanmar industrial Port in outdoors and my father was in that it was also a quite diferent social the city centre. business. He is highly competitive environment to anything i’d seen miP handles 400,000teu a year – and always encouraged me to strive before. about 40 per cent of the country’s to improve in everything i do. “All very diferent from europe, with container throughput – and feeder “today my sister manages a local a lot of time spent ironing banknotes vessels also take exports down river library and my brother is a real-estate because in a drive to stamp out to Singapore, malaysia, thailand and agent. forgeries old or crumpled notes were China. no longer recognised as currency. “i’d learnt to speak english According to the Australian Bureau of “most of my time was spent in Statistics, myanmar was Australia’s by the time i was nine and networking with government major containerised wheat market in Spanish by eleven. After i left representatives, investors and people the second half of 2017, with 179,929 school i went to university at within the shipping and logistics tonnes. Vietnam runs second and upsala and went to Spain or industry. i also had the opportunity to malaysia third, with some 130,00 and France every year working in travel around the country and explore 108,00 tonnes respectively. diferent parts of myanmar. hotels, restaurants and bars. “there was always discussion it was a great way to practice “the experience changed me as a during my time about dredging the person – the people were so kind and river between thilawa and Yangon the local language and get to friendly. when i frst arrived there but feedback i received was that know people and cultures. was no internet, no mobiles but by dredging would risk erosion of the the time i left everybody had them.” riverbank,” my says. “i also spent a year at the university of Barcelona in an exchange “i stayed in myanmar from 2012 – “Once we had established our programme as part of my business 2014 as country representative for company in myanmar i moved back and economics degree. i studied maersk Line and mCC transport. i to New Zealand to be closer to my fnance and marketing courses in was responsible for establishing fancé. i worked there as manager Spanish and completed my bachelor maersk Line myanmar and on of the key client team until i came to degree at Barcelona before returning completion of that task my title Australia in July last year. to uppsala to complete my masters.“ changed to country manager. “i’m 37 now and part of a global So by the time she reached New “then i went back to Auckland and mission to improve efciency in our Zealand, my had covered a lot of my previous role as a senior trade industry. maersk launched a new ground; it was also a time when manager. product last year called remote maersk was preparing for change in Container management. And all “After a couple of months i was sent the South Seas. while the company’s 270,000 maersk refeers have it back to myanmar again and stayed regional headquarters was, and still installed. on a permanent assignment for is, in Hong Kong, its Oceania group just over a year-and-a-half. my job “rCm is a game changer for our was split into two clusters. was to set up maersk’s own agency industry. its internal sensors gather Australia, PNG, and the Solomon there. we became the frst foreign important data on the cargo inside islands was one cluster and New company to open a fully-owned ofce the box, while a GPS device marks its Zealand plus the remaining Pacifc in Yangon. physical location. islands was the other. today they are “things had changed completely “it allows you to monitor conditions merged as the company’s Oceanic when i arrived back. it was inside your container from the Cluster, with its head ofce in completely new. the country was moment your goods are locked Auckland. opening up, foreigners were suddenly inside, until delivery at their fnal But that was all in the future for welcome and many very big garment destination. manufacturers had moved there from my. First she had to adapt to New “it’s saving itself millions of dollars. China, to take advantage of cheaper Zealand’s free and easy business And no other shipping line has it. style after the more formal ways of labour. A lot of new projects opening. Scandinavia. So if you’re walking around the “export trade was growing – Haymarket of an early morning keep “New Zealanders have a much garments, food such as pulses and a look-out for my. She’s a lot taller softer relationship with each other; rice, and imports were also on the than most Australian women and will more gossip, more sharing details of increase – and containerised wheat be moving fast! She’s on a global their personal life,” she says. “And from Australia and steel from China, mission, remember! Australians are more of the same. was being imported.” Scandinavians are less willing to • My, and baby Maja, join a group Bulk grain ships can’t reach of elite women to be profled in this discuss their personal life at work. Yangon because of draft magazine, who include Melinda “After four years in New Zealand i restrictions on the irrawaddy Pavey, Minister for Freight and Ports; was sent to myanmar for a 3-month river. Anne Sherry, of Carnival cruises; secondment to assess the business Wendy Cheah, of APL; Gloria Choy, opportunities in the country and they call at thilawa, a deep river port of DP’s Terminal 8 in Hong Kong; and establish maersk’s strategy. owned by Hutchison Port Holdings, Marika Calfas, of NSW Ports.

Autumn / Winter 2018 I Shipping Australia Limited 13 introducing DARREN DUmbLETON, managing director, Quay Shipping Australia the cheerful footy-playing larrikin who kept asking: ‘what’s my next step’

By ArCHie BAYVeL

Darren is prowling the complimentary business lounge of the Pullman Hotel, at the airport end of O’riorden Street, casing the place like a snifer dog for the free drinks and nibbles promised in its brochure.

He needn’t have worried ‘cos it turns out to be a sumptuous At that end of Sydney town it comes as a pleasant surprise fve-star pad delivering on all points of all its stars. Darren is for those with recent memories of the area being a run- staying there because he discovered it was heaps cheaper down, low rent part of the airport environs. and better (more snifer-dog work) than where he used to stay. So even at frst sight there’s a lot of vitality coming out of Darren Dumbleton. Settled into the free beer and peanuts, one asks for the story of his life and he doesn’t even take a deep breath before launching into his tale. it’s a vigorous yarn about a young man who was always set to enjoy his work and threw his full weight into the job, yet at the appropriate time always asked himself, “what‘s my next step?” it’s a story that should inspire young people: it’s the chronicle of how a cheerful kid with maybe just a hint of sporty larrikin, rose to found his own prosperous multi- faceted shipping agency. He was brought up in Altona North, what he calls a working- class suburb of melbourne, where his dad was a warehouse manager with Nestles while mum was a typist, so both parents worked. He has one elder brother, a building consultant. went to school at St Pauls College where he played footy and cricket. “i’m still basking in the glory of richmond Football Club, the tigers, premiership win in 2017,” he says and has the photo to prove it. Darren left school one November, immediately after his HSCC. it was a time when interest rates were 17.5 per cent so it seemed a good time to accept his frst job ofer, from the State Bank of Victoria. But that job didn’t start until February which left him a lot of time to knock about with friends who were already earning money; so when he saw an ad in the paper for a job with Hong Kong island Shipping he got it, began work immediately, and loved it. Darren with the prized premiership cup

14 Shipping Australia Limited I Autumn / Winter 2018 “it was like an apprenticeship to the shipping industry,” he Publiship, which specialised in shipping and warehousing recalls. “there were only six people in the ofce, my desk books. it fourishes to this day. was equipped with a phone and an ashtray. No fax, no computers. “these were stressful years. Stretching, and stretching, and stretching. we opened an ofce “A perfect learning ground and i learned the business from the ground up. went to my frst vessel on Day 3, met in New Zealand, i moved back to melbourne, everyone in the pub and got a real feel for the industry. developing our business in Asia, opening “Also, i found a teacher who let me do some sales work agencies, developing our market in Hong Kong, and i liked that. Keith mills was his name. He taught me which had become very important to us. the basics in all things shipping - export documentation, “eventually CH robinson, an American company, ofered bookings, imports, container control, ships attendance and to buy us out but the deal fell through. i heard recently husbandry. i’ve been in shipping ever since. that another company, APC, ended up paying $320 million “But i got restless after about three years and began for the business! my tenure with the company had, alas, wondering: where-to next? i was still living at home and ended 10 years ago. began looking around. “A lot was going on at that time. we were in a frame of “i found a job with a much bigger company, Contships uS mind to sell the ACA business. i had moved to live on and european service. And they gave me a company car. the Gold Coast in 2005 and was thinking of launching an agency business of my own. “After about a year i wanted to travel and applied for six weeks’ leave. it was 1989 and i was 21. they refused to “i’d become a little tired of melbourne and was looking to give it to me so i left. move out of the city to greener pastures, you could say a tree change, somewhere close enough to commute to work “that was the year i found real life with mSC, plus lifelong and get to the footy (being a mad tiger) and Flemington friendships with Kevin Clarke and George Pantazouglou! race course. “mSC had just been launched in Australia and i “we had a young daughter and where trying for another, was gung-ho and so were they. ‘Go and get the life’s priorities where changing. i wanted to leave cargo’ was their motto, so i set of like a tiger williamstown but wife did not. we were at stalemate. and got it. Lots of people were saying mSC “then round that time, 2003, i had to do a two-week would never make it. But they were wrong; just sabbatical to our Brisbane ofce that turned into fve look at them today. weeks. i based my wife and three-year-old on the Gold Coast. we were on short weekly holiday rentals and were “Being a sales rep didn’t stop me playing footie at the twice booted out of our accommodations due to school weekends. One Sunday i got my nose fattened and holidays. we ended up in a house at Sanctuary Cove. concussion as well. George said: ‘You can’t go out looking “upon returning to melbourne i asked my wife how she like that’ but i talked him round and all was more or less felt about moving to the Gold Coast and to my surprise well. - after not getting her to move 50 kilometres away from “then two weeks later i came to work on crutches and williamstown - she said, “Yes”. George said, ‘You can’t go out looking like that’. this time he meant it and he let me know he was not pleased. “i convinced my then business partners that the move would be good for business and by “’How much does football pay you?’ he asked. my answer made it clear that if i lost my job footie couldn’t pay the February 2004 we had sold up, bought a house rent, so it was ‘Goodbye footy.’ and moved lock stock and barrel. Best decision we ever made. “mSC gave me my head to impact the market, so we took on the market. i was always pushing myself and it was like “what happened next was complicated because the working in another world – entertaining, client promotions, people who wanted to take us over couldn’t come up with and so-on. the money; they could aford only half the price we wanted. eventually i sold my shares to my partners and they sold “then mSC entered the cruise market with the Achille them to the new bidders. Lauro and we took a group of clients on a cruise. my frst and an experience in itself. One of our guests bailed out at “then i launched Quay. Sinotrans was our frst major our frst port of call. principal and we recently celebrated our 10-year relationship. we’re also agents for Pacifc Forum Line, “Despite all the excitement i stayed with mSC for only three Yangtze Navigation, and are the Australian representative years. i enjoyed it but had become more businesslike and of the world wide Shipping Agencies Association. felt i needed new challenges, a job on my own terms. “what about my wife? i make the money and Louise “But what to do? i couldn’t work for another shipping spends it! Only joking. i could never have done what i was company ‘cos they’d just be wanting to steal mSC’s ideas. doing without someone at home. we have a loving and So i joined Circle Freight, an American airfreight forwarder. open relationship with our two children, who attend a semi- “i joined them on the same day as Kym Frearson, and we posh co-ed rugby-playing school. became the dynamic new team. A great friendship was “when i’m not travelling you fnd me most days in the born and we stayed close mates until his shock passing Brisbane ofce. Although i do like to work from home on in August 2016. At that time Kym was working for me in wednesdays.” Brisbane at Quay Shipping Australia. “Hobbies? i play golf of 22”. Long pause, then, “And i “the company was growing and another partner joined don’t mind a bit of reading.” us. i became a partner and we diversifed by opening

Autumn / Winter 2018 I Shipping Australia Limited 15 feature

Sort of! Now we’re girt But shift our thinking to the global picture and the answer is “quite a lot”. Our rise to gas fame comes almost entirely from a handful of by GAS as well vast new ocean platforms and the continued high performance of existing gas producers, such as the recently completed $54 as by the SEA! billion Gorgon project, of the west Australian coast. Before the new wells came on-line BY A SPeCiAL COrreSPONDeNt Australia’s standing was a lowly ninth the world and a long way behind the uSA, russia, and even Borat’s home state of Kazakhstan. it’s ofcial: the stuf is everywhere under our oceans and by this time next year we’ll be the world’s biggest exporter of gas, the step-up will bring extra $billions to the national economy but exactly as a basket of huge new projects nears completion. how many is a mystery at this stage – and likely to stay that way However, according to the only until the uS assumes the mantle because there are 11 major ofshore Department of industry, the title is in the mid-2020s. operators involving some 40 local likely to be short-lived as uS exports and international partners or their But what is the relevance of Australia ramp up over the following years. ofshoots. becoming the leading gas exporter? it says Australia is likely to overtake when it comes down to thee and me, Qatar is currently the world’s largest Qatar as the biggest gas exporter the answer is “Not much”. exporter of natural gas, with an

16 Shipping Australia Limited I Autumn / Winter 2018 LNG Tanker Pacifc Breeze arrives to load the frst cargo from INPEX Ichthys LNG plant in Darwin. Image: Tauri Minogue photography

estimated 74 million tonnes this year. But our LNG export volumes are forecast to reach 77 million tonnes How our LNG industry per annum in 2018–19, up from 52 million tonnes in 2016–17. Gas will then become the second biggest looks in the big picture Australian resources export by dollar value. in every community where we operate our economic contribution is accepted as the these higher volumes will be driven lifeblood of the regional economy. But this is not the narrative we see in capital- by increased production at Gorgon city-centric commentary. it was not the narrative at the Batman by-election – and and completion of three LNG projects it is not the narrative in Facebook, instagram or Snapchat feeds. the further we go under construction — wheatstone, from our areas of operation, the more challenges we face to our aspirations. So, a ichthys and Prelude in our far north- question we must answer is: why is there such a gulf in perception from the regional west. areas where we operate to the commentators and activists of the inner city who Prelude is the world’s biggest ship, rely on our products? i will ofer two observations. the frst is that all too often we more of a barge really, which is have been unwilling to be part of the conversation on the issues that really matter anchored ofshore and pumps and to Australians. And the second is that, when we have engaged, we have chosen processes gas before loading it to comfortable rather than challenging conversations … Ms Zoe Yujnovich, chairman, tanker ships alongside. Shell Australia Pty Ltd’ opening the 2018 APPEA conference in Adelaide. these rising export volumes mean natural gas is set to become the second biggest Australian resource decline in iron ore, Australia’s biggest increase to average $9.0 a gigajoule export by dollar value, overtaking export, as a result of reduced in 2018–19. Conversely, spot prices metallurgical coal. Chinese demand. in Asia are expected to decline as that increase will help pick up the the ofcial report says that: “the fob buyers unwind gas stockpiles for the slack from a projected $10 billion price of Australian LNG is forecast to winter months.

Autumn / Winter 2018 I Shipping Australia Limited 17 Longer term, the report quotes the international energy Agency, which forecasts that the uS and Qatar will update on the overtake Australia by 2025 due to our lack of a major second-wave of production. renewables … “LNG shipments from the united States are projected to reach 86 million tonnes in 2025 and 115 million tonnes with solar power believed by many to eventually replace gas and coal for power in 2040,” the report says. generation, a world resources industry report ranks Australia 17th for its solar potential. that may well be so, but to have any serious grasp on the future of our LNG A solar farm to power all of Australia would cover about 6270 square kilometres, industry we must frst improve our about 0.1 per cent of the country. knowledge of its present position. wind turbines, the other renewable power source, are also increasing in size, the vast GOrGON operation with the Australian wind Alliance forecasting that ofshore turbines could soon be as tall as the 300 metre eifel tower. the largest turbines currently stand 220 is as good a place as any to metres. begin. it is one of the world’s largest LNG projects and the largest single resource project in product. they will create 60,000+ Ostensibly, it was shelved because of direct and indirect full-time equivalent cost but there was unrelenting pressure Australia’s history. jobs, and pay $69 billion in direct and misrepresentation by groups Located on Barrow island, of western taxation to the Federal Government. ranging from environmentalists through Australia, it produces millions of believers in traditional magic, to tonnes of gas for export as well as the glamour news from our aborigines who said it would interfere having a domestic gas plant to supply far north has to be the arrival with their annual wild plum harvest. western Australia. the Gorgon Project from its South Korean shipyard in fact the decision seems wise on will remain an important pillar of the of the $14 billion PreLuDe, a quite diferent count. As recent Australian economy for decades to and little-publicised court cases come as it continues to meet global the world’s biggest foating structure, at its mooring site in have proved, a handful of boozed up demand for cleaner-burning fuel. construction workers can cause havoc; the frst gas ship departed Barrow the Browse Basin. 10,000 of them would surely have island on 21 march, 2016, and Shell gave the go-ahead on the 3.6 pushed poor little Broome to the sinful domestic gas supply began nine million tonnes a year LNG project more death continually predicted for it these months later. than six years ago and expects Prelude past 200 years. everything about Gorgon is massive, – the progress of which is being closely whatever ... the Browse project and its including its impact on the Australian watched worldwide – to contribute estimated $1+billion-a-year royalties to economy. to cash fows this year as its partner, the government have now sunk below woodside Petroleum, develops it. the horizon. However, the project’s ACiL Allen Consulting‘s research says three leases were renewed in 2015 and that at peak construction, the project the Prelude replaces an earlier plan run through to mid-2020 and they say directly employed more than 10,000 for a giant $80 billion onshore plant at one should never say “Never!” workers and from 2009 to 2040, its James Price Point, a few miles outside benefts are estimated as adding $440 the quaint Brigadoon-style township of the leases are said to contain billion to Australia’s gross domestic Broome. contingent resources of 15.4 trillion cubic feet of dry gas and 453 million barrels of oil condensate. And then there’s wHeAtStONe, a recently completed LNG onshore plant at the Ashburton North Strategic industrial Area, 12 kilometres west of Onslow, western Australia’s cyclone town of 500 inhabitants. it’s the largest ofshore gas-processing platform ever installed in Australia, with a topside weight of about 37,000 metric tons. But with such a small population it doesn’t take much to make news in Onslow, so when a $246,000-a-year rigger, Jake Clarkin, had a major blue with his missus, other guests at the Wheatstone onshore facility in 2017, at full operational capacity it will contribute over 13 MMboe of Woodside’s annual LNG and domestic gas production Onslow motel complained and Jake

18 Shipping Australia Limited I Autumn / Winter 2018 was a goner. He claimed unfair dismissal, and the Fair work Commission agreed, ordering him to be reinstated, with two month’s pay docked. A storm in a teacup but it whipped up waves of media interest that revealed almost 30 other contractors have been kicked of the $45 billion wheatstone site in the past year, for violence, drunkenness, theft, harassment and damage. You have to visited Onslow only once to understand why 246 grand may not spell happiness for everyone. if a single gas project can attract such disorder one wonders what the total hooliganism adds up to across the remote-area industry.

Finally, we have iCHtHYS (it means North West Shelf North Rankin Complex has a daily production capacity of up “fsh”), another gas project coming to 66,000 tonnes of dry gas and 6,000 tonnes of condensate from the North on-line at a good time to push our Rankin and Perseus felds (Image: Woodside) drive for world leadership. its fnal cost of $51.6 billion is expected to produce 8.9 million tonnes of LNG and 1.6 mtPA of LPG. the playgrounds its gas feld is in the timor Sea and connected to its liquifcation plant at Blaydin Point, on Darwin Harbour, by an and the players 890-kilometre pipeline. inpex Corporation, the project’s Japanese owner, says frst production was WESTERN AUSTRALIA 12 kilometres west of Onslow, on scheduled to commence about now. western Australia’s Pilbara coast. The North-West Shelf: Our frst A joint venture between Australian ichthys is the second-last of Australia’s LNG project began in 1989, is also subsidiaries of Chevron (64.14 wave of new gas projects to come on line the biggest, comprising four ofshore percent), Kuwait Foreign Petroleum followed only by the foating Prelude. platforms and more than 50 wells connecting to onshore facilities at exploration), woodside, Kyushu All this public focus on gas may well seal Karratha, about 1500 kilometres north electric, and Pe wheatstone Pty Ltd. governments accepting closure of the of Perth. the venture also owns seven NORTHERN TERRITORY massive uS-owned Liddell coal-powered LNG carriers managed individually electricity generator in New South wales. by those partners with shipping Ichthys: 860 kilometres ofshore. main it was the closure of Hazelwood, a similar businesses such as BP Shipping. main owners inpex and total. plant in Victoria, that deprived South shareholders are woodside, BHP- Darwin LNG: Gas comes from the Australia, and much of Victoria, of fall- Billiton, BP, Chevron, Shell, mimi. back power when its renewable sources timor Sea to Darwin’s port area. failed and gas was locked into export-only The Gorgon Project on Barrow Shareholders: ConocoPhillips, inpex, contracts. island, around 60 kilometres of eNi, Santos, tokyo electric, tokyo Gas. western Australia’s north-west coast. Arrangements are now said to be in place its production includes supplying QUEENSLAND for LNG-generated reserves to be available western Australia domestic gas. major Australia Pacifc: Biggest of for such emergencies. shareholders are Chevron, exxon mobil Gladstone’s three coal seam gas and Shell. the situation has sparked some clamour exporters on Curtis island. main for local coal seam gas wells to be Pluto: woodside proposes a pipeline shareholders are Origin energy, established in New South wales and to connect Pluto to the North-west ConocoPhillips, Sinopac. Victoria, which are currently No Gas Shelf project’s Karratha gas plant. Queensland Curtis LNG: On zones. Supporters of this expansion of the Preparations have also begun to industry say the gas ban is based on false deliver gas into the Dampier-to- Gladstone’s Curtis island. world’s frst information. Bunbury pipeline. western Australia coal seam LNG project. Shareholders: has a gas reservation policy that 15 BG Group, CNOOC. while not going so far as to say per cent of some felds’ production is fracking is good for us, they are Gladstone LNG: As with Curtis available to its domestic market. major island’s other two gas producers, it adamant that it will do no harm shareholders are woodside, Kansai processes gas from Queensland’s electric, tokyo Gas. and, therefore, be good for them! inland coalfelds. Partners are: Santos, Stay tuned... Wheatstone: Just into production. Petronas, total, and Kogas.

Autumn / Winter 2018 I Shipping Australia Limited 19 feature

LNG: critical mass moment in sight

By JOHN PAGNi*

it seems fnally that the most development. it achieved its frst the CGm CmA is a breakthrough, environmentally friendly fossil fuel is million-ton mark last march. as it is worth Au$1.6 billion, and is about to take the quantum leap of faith, getting the LNG world excited about State giant Gazprom opened a small from being pushed by regulations, to breaking barriers in the conservative production unit at Pskov in 2016 and general acceptance in the maritime maritime world. Group CeO rodolphe now makes 3 million tonnes there world, as production projects come on- Saadé, said, “we have made the bold annually, but its main plant Sakhalin stream. Non-carrier shipping seems to decision to equip our future vessels ii can produce nearly 10 million tons. have seen the green light at the end of with a technology frmly focused on Plans for 10 million-ton units in the the funnel. environmental protection. Baltic and Vladivostok are progressing. Not long ago, liquefed natural gas when all three Yamal trains are running, “By choosing LNG, CmA CGm (LNG) was thought to be too expensive it will have an output of 16.5 million confrms its ambition to be a leading for the shipping world, save for tons annually. force by being a pioneer in innovative LNG tankers that had started using and eco-responsible technologies.” Down the slipway its boil-of gas (BOG) in dual fuel it is Greece’s Arista Shipping that has engines. Sulphur emission Control Although most LNG is used ashore, signed the Loi for LNG Kamsarmax Areas (SeCAs) in northern europe and signals indicate a growing trend 84,000dwt bulkers for its Forward North America, with an emission limit appearing in non-carrier shipping. maritime arm under its Project Forward. of 0.1 per cent S, meant using LG or “2017 saw relatively active no-carrier Other landmarks include the world’s deciding between scrubbers, marine LNG tonnage orders. About 35 vessels frst LNG bulker for South Korea’s ilshin gas or diesel oil (mGO/mDO), selective were ordered, bringing the current Logistics of 50,000Dwt and an LNG catalytic converters (SCr) or low, or orderbook to around 125,” comments tug for Japan’s mOL. LNG fuelled feet ultra-low sulphur heavy fuel oil (LSHFO/ eero Vanaale, principal consultant, orderbooks look healthy - but from a uLSHFO). LNG Business Development, at leading low base, observes Vanaale. Dutch engineering design consultancy the LNG export market, dominated royal Haskoning DHV. “the policy push is there, so the by Qatar, is now under the strong move towards cutting emissions is challenge of Australia, with russia and “while in previous years, the very strong and clear to the maritime others about to enter the market too. development of LNG fuelled vessels industry,” states Vanaale. Shippers Currently, Qatar, Australia, malaysia, were dominated by passenger vessels have clearly got the message, as in Nigeria and indonesia have nearly and, to a lesser extent, tankers, 2017 addition to the imO global 0.5 per cent 80 per cent of global LNG exports. witnessed a debate between the S limit, was the recent agreement to while Qatar’s output has remained largest container lines on the future fuel cut all ship emissions by 50 per cent by fat at about 80 million metric tonnes, choice. 2050, based on 2008’s fgures. Australia, Angola, uSA and egypt “Perhaps the most signifcant order witnessed year-on-year growth of 27 According to royal Haskoning DHV, was for nine uLCCs by CmA CGm of the current LNG carrier feet consists of per cent, 52 per cent, 354 per cent and 22,000 teu. So far in 2018, two frm 538 ships, made up of 462 carriers, 36 378 per cent in 2017. (source: iHS) orders have been placed, both are small-scale vessels, 29 FrSus, 7 FSus in 2017, the frst shipment from cruise ships for Carnival Corporation. and 4 FLNGs. Non-carriers using LNG Yamal LNG left russia’s north, with But ordering could accelerate through as a fuel total 119, with another 125 on a lot more to follow, as the project the year as there are a number of order. in addition, 114 are classed as in the inhospitable Arctic has seen a projects under discussion, including ‘LNG ready’ operating or on order. consortium of russia’s Novatek, Shell, one for up to twenty LNG-fuelled bunkering, ships and solutions total and China National Petroleum Kamsarmax bulkers for delivery Corporation, sink $27 billion into its between 2020-2023.” while rotterdam’s Gate and

20 Shipping Australia Limited I Autumn / Winter 2018 costs involving billions, 80 per cent of capacity must normally be pre-sold to attract fnancing. A similar model is needed for maritime transport. “From shipowners’ perspective, it is the global emissions cap that is pushing them to comply with regulations. the marketplace discussion is whether to go with LNG or other emission-cutting technologies. So if customers want to be seen to be green, the Pr component becomes signifcant.” the issue he says is with LNG bunker network for container lines in europe. “underpinned by all stakeholders, if shippers guarantee a vessel is employed - that is good. it makes LNG shipbuilding fnance-attractive because, for the fnanciers, there is real Viking Grace: this LNG-Fuelled ferry is the frst passenger ship in the world equipped employment for those ships.” with a rotor sail for wind-assisted propulsion “the higher initial CAPeX is then ofset by the duration of the deal between Zeebrugge’s Fluxys have led europe’s loss of 400 teus in order to ft the owners and customers. the port LNG import charge by building large 18,000m³ tanks, located forward. discount is important too, as it makes hubs for re-distribution, the Baltic Alternative stand-by fuel storage will be the investment more bankable.” has focused on small to medium-size 4,000m³, but the vessels are designed terminals, but with non-carrier vessels to make the Asia-europe/uSA voyages So all LNG fuelled ships are built as recipients too. using gas-only. against the certainty of employment. “None have so far been built Finland’s Viking Grace cruise ferry, “the LNG prices in the key Far eastern speculatively, there is always the need coast guard ship Turva and icebreaker markets are around uS$8-10/million for revenue – otherwise capital will be Polaris, are all re-fuelled by truck from Btu, much lower than the $15-plus cautious: a vessel’s competitiveness in its frst LNG terminal in Pori. tallink mark a few years ago, making LNG fuel a marketplace will be generally lower of estonia’s fast ferry Megastar gets more competitive. the LNG market due to higher break-even” reasons its LNG in both Helsinki, but mainly growth at the moment is very much Vanaale. tallinn, by road from Pskov in russia. supply-driven and is expected to tasmanian company’s Searoad Mersey remain a buyer’s market until 2022- “therefore partners willing to pay a ii also refuels by truck – but drives the 2024, when the global LNG supply will premium for green values makes it whole tanker aboard, which acts as constrain or be insufcient to meet happen. Owners will build LNG ships, the ship’s fuel tank until replaced by demand, unless more production they want to break into that space, but another unit. capacity will be commissioned.” must fnd those partners.” Other terminals are scheduled to open “A number of projects are in the “But they are being squeezed by around the Baltic coastline in addition pipeline. we wait to see more FiDs regulations – soon global, but facing to those now operating. to encourage (fnal investment decisions) on LNG old school commercial reality of green values most ports ofer discounts capacity and where it will be coming competing in the marketplace for for those vessels that use green from in future. there are a number of cargo.” fuels. the eu too encourages LNG projects in the uSA in development, Containerships CeO mikki-matti by fnancially supporting construction including brownfeld ones: Lake Koskinen, sort of concurs, “Our new of LNG terminals, infrastructure and Charles and Golden Pass Products, four LNG short-sea ships are the result ships. as well as greenfelds Driftwood or of consultations with our customers, Dolphin LNG. Outside the uSA, there Costs and benefts - now and in the who want to see how we can cut are advanced projects in mozambique future transport pollution.” and russia. Qatar will increase its “LNG fuel choice comes at a price. output. in principle, the majors are So not only has the Finnish shipper Highly specialised equipment, moving towards adding capacity, but invested Au$167 million in the cryogenics, the larger tank space no FiDs yet.” 1380teu ships, but also in trucks required all add to the CAPeX, that use LNG too, ofering a complete New LNG business model compared with the conventional green transport solution co-fnanced bunkering,” informs Vanaale. Production plants require 5-7 years under the eu GreenDoor2LNG of before commercial output starts after the Connecting europe Facility, part Consequently, “As LNG’s energy- an FiD, which is preceded by pre-Feed of Brussels’ motorways of the Sea intensity is lower than fuel oil, so more and FeeD (Front end engineering programme. the vessels will ply in the liquid volume is needed on board, and Design), explains Vanaale, who Baltic and North Seas, plus Channel causing transport costs unit to go up.” has covered shipping markets for eCA, when they all start operations this was admitted by CmA CGm. its eight years and LNG specifcally this year when delivered from China. decision to burn LNG will result in a since 2013. But due to the enormous Bunkering will be at Gate or Fluxys.

Autumn / Winter 2018 I Shipping Australia Limited 21 that progress, feels Vanaale. environmental benefts are zero emissions main beneft. But perhaps better crew training and ship maintenance are perks too. “Dealing with cryogenic equipment is more hi- tech than normal bunkers. For deep- sea carriers it will take time before a sufcient international pool of qualifed crew to deal with LNG is created. Better maintained ships should impact on OPeX, but whether it will be signifcantly higher than now is unknown, as it does not really exist,” sums up Vanaale. A report by Bmi research recently talked up the LNG tanker market in the next 2-3 years, despite falling orders but LNG charter rates have risen accordingly. “Spot rates will likely fall in the coming months, nevertheless we expect rates to remain robust, supported by continued Finland’s Polaris, the world’s frst and only LNG icebreaker growth in liquefaction capacity and strong rise in demand for LNG,” said brokerage Clarksons. Similarly, Finnish dry bulk shipper, eSL main european LNG hubs will be the turkey has emerged as a big consumer Shipping, made the decision to have two main sources. if needed though, a ship and is now home to the world’s largest 25,600Dwt LNG ships built that will also can call at one of the terminals in the FrSu mOL’s Challenger. Cruise arrive this year, costing Au$96 million. Baltic or be refuelled by truck. companies are willing to bet on the company delivers raw materials markets passengers paying for a cleaner ship. to power stations and heavy industry Last June AIDAperla became the frst in around the Baltic. LNG carriers are in a good place for the world with LNG dual fuel engines and the foreseeable future, with the top “when design of the two began, we had will have sister AIDAprima in December. fve global consumers all in Asia: in mind the long-term competitiveness China, taiwan, Korea, Japan and india. “Because we care about the of the company, to provide visibility Although global LNG volumes grew 12 environment, we are investing in new to our clients and with them, to cut per cent in 2017, Asia’s rocketed 72 per technology for our new ships, as transportation emissions,” revealed eSL cent. Australia is expected to overtake well as the existing feet,” Hansjörg Shipping CeO mikki Koskinen. Qatar this year as world number one, Kunze, AiDA’s VP, Communications & “the LNG price is relatively stable and it with the uSA expanding fast. Sustainability told Shipping Australia. cuts our overall environmental footprint.” Despite America’s anti-environmental Carnival has ordered eight LNG ships, “Green values are important to our image, in reality the opposite is true. while rival rCCL’s icon-class will use customers. with LNG we meet their “the uSA ofshore industry has been both LNG and fuel cells in the battle requirements and exceed current and using LNG for some time. it is also of environmental one-upmanship, to expected rules and limits on NOx, SOx, currently the only market where regular infuence customers’ hearts and minds. CO2 and ppm,” justifes Kari-Pekka LNG fuelled container services operate. However, LNG’s profle is on the rise and Laaksonen, CeO of Containerships, North America has led shipowners its general acceptance and deployment adding that many ports give discounts orderbook for LNG fuelled ships in recent at sea are now on the radar and not for LNG ships. Port of tallinn CeO Valdo years,” Vanaale claims. below the horizon anymore. Kalm, revealed that in its case, the fgure “Bunkering facilities are located in is 4 per cent. LNG versus HFO Florida, from where those container ships eSL Shipping will be bunkered by an depart.” SOx cut by 99 per cent agreement with Skangas, a Finnish- this will also be the supplier for cruise NOx cut by 85 per cent Norwegian LNG producer and distributor. ships in the near future, as both Carnival in January, it christened the world’s frst Particles per million cut by 99 per cent and rCCL have ordered large vessels Super 1A ice class LNG carrier, Coral that will operate from Florida and in CO2 cut by 25 per cent EnergICE, joining its two other ships. europe too. “the global LNG bunkering Forward Ships quotes imO 2020 price “the market is in a growing phase - one network is growing in Singapore, Korea estimates that at a LNG price of uS$11/ ship at a time. we pick up LNG wherever and the Gulf. Hubs like Singapore are million Btu will result in savings of the price is good, not only from our developing to cater for very large ships,” uS$1.3 million per ship per year, over low Norwegian production unit. But we are continues Vanaale. sulphur fuel oil, and even uS$256,000 selling more than the production of Lysil’s over a ship using HFO with scrubbers. Although it is still unclear what will capacity of 300,000 tonnes a year,” says happen to the existing feet, as *JOHN PAGNI is a freelance tommi mattila, Skangas sales director. retroftting is a non-starter, in the long- photographer, journalist and Containerships will bunker wherever the term the industry is moving towards zero correspondent, based in the Helsinki price on ofer is best, but either of the emissions. LNG is one of the solutions in Area, Finland

22 Shipping Australia Limited I Autumn / Winter 2018 Autumn / Winter 2018 I Shipping Australia Limited 23 australian wine

Global demand on the rise

By ANDreAS CLArK, chief executive ofcer, wine Australia

Australian wine exports continued to average value of bottled exports, to litre. grow in the 12 months to march 2018, a record $5.74 per litre. Bulk wine exports to China (including Hong increasing by 16 per cent to reach exports’ average value per litre also Kong and macau) increased by 51 $2.65 billion – the highest level in a rose by 8 per cent to $1.05 per litre – per cent for the year to march 2018 decade – with volumes increasing the highest level since 2009. to reach $1.04 billion, the frst time a to 844 million litres or 93.78 million the high quality of Australian wine, single market has topped the billion- nine litre case equivalents (9Les), plus historically low Northern dollar mark. according wine Australia data. Hemisphere harvests, have driven the growth in exports to China has that amounts to signifcant shipping the demand for Australian wine, with been driven by a number of factors, trafc with 462 million litres shipped the total value of bulk wine exports including greater acceptance of in bulk containers, an increase of 10 growing by 19 per cent to $486 wine as an at home and with food per cent, and 374 million litres (41.56 million. consumption beverage rather than million 9 Les) shipped in bottles, exports to every country in Australia’s just a prestigious gift. this trend is that’s over 34,000 containers in top ten bulk wine destinations being driven by younger consumers, bottled exports alone. recorded an increase in average so is expected to continue. the good news for the Australian wine value, especially Germany, the Australian wine exports to China community is that, with value growing largest importer of wine in the world, have also beneftted from changes to more quickly than volume, there’s where average values for bulk wine tarifs under the China–Australia Free been a corresponding increase in the increased by 20 per cent to $1.05 per trade Agreement, which are making Australian wines more competitive Average value of bulk wine to top ten bulk wine destinations - 2017 and 2018 against wines from France, italy and (AUD per litre FOb) Spain that are on higher tarifs. A further change to tarifs due next January, taking Chinese tarifs on Australian wine to zero, will put the nation on an equal footing with Chile, another major exporter to China. mainland China has now overtaken the uSA to become Australia’s second largest export market by volume. Pleasing, there was very strong growth at all price points as imported wine is increasingly consumed by middle-class drinkers and seen as suitable for consumption at informal gatherings and while relaxing at home. exports to Northeast Asia continued their record-breaking run, growing by 46 per cent to $1.12 billion.

24 Shipping Australia Limited I Autumn / Winter 2018 Value growth by region by $1 million (or 25 per cent) to $5 (million AUD FOb) million. there is further upside in the uSA for Australian wines. while Australia holds a 28 per cent share of imported wine sales below uS$10 per bottle, Australia holds only 4 per cent of imported wine sales at uS$10 per bottle and above (international wine Global demand and Spirit record, 2016). this premium wine market in the uSA is growing. By 2020, it is estimated that the uSA market will need an extra 27 million cases of premium wine to meet demand. with on the rise production constraints in California and Chile, signifcant reductions in production in France, italy and Spain in 2017 for the second year, and vintages fuctuating wildly, Australia is well-placed to increase its supply of premium wine to the uSA market. Furthermore, Australian wines Other regions that experienced USA resonate with the uS wine consumer growth included: while the commercial end of the uSA and perceptions continue to improve. • europe, by 5 per cent to $596 market declined slightly, contributing According to wine intelligence million to the drop in volume, there has been research, those who think Australia strong growth in premium wines makes expensive/fne wines grew 21 • Oceania, by 7 per cent to $93 refecting the premiumisation trend per cent since 2010. million, and in the uSA. Australian exports to the Canada • middle east, by 30 per cent to $28 uSA at $10 per litre and above, grew million. by 2 per cent to $44 million. the export value to Canada during the biggest contributor of absolute value period was stable at $193 million. exports to North America continued in this part of the market was the However, volume increased by 6 their recent decline in value, $30–49.99 segment, which increased per cent to 66 million litres, causing decreasing by 5 per cent to $633 million. One of the factors driving this decrease is the decline of bottle exports to the uSA, due to changes in business practices for some exporters that are now exporting in bulk containers and bottling in market. the top fve markets by value were: • China, including Hong Kong and macau, (39 per cent of export value) • united States of America (17 per cent) • united Kingdom (14 per cent) • Canada (7 per cent), and • New Zealand (3 per cent). the top fve markets by volume were: • united Kingdom (29 per cent of export volume) • China, including Hong Kong and macau (21 per cent) • united States of America (20 per cent) • Canada (8 per cent), and • Germany (5 per cent).

Autumn / Winter 2018 I Shipping Australia Limited 25 bulk share of export volumes

average value to decline by 6 per has increased from 32 per cent to 44 of smaller bases included Shiraz/ cent to $2.90 per litre. the main per cent in the last year. red wine mourvѐdre (up 9 per cent to $32 factor behind these movements was exports also grew strongly to the million), Pinot Noir (up 5 per cent to the increase in bulk and alternative uK, up 10 per cent in value to $227 $31 million) and Shiraz/Viognier (up packaging exports, at the same million. 11 per cent to $9 million). time as a decline in bottled exports. exports of white wine increased by 4 the top fve label claims for white exports in bulk containers increased wine also recorded growth: by 26 per cent to $38 million and per cent to $566 million, accounting for 21 per cent of total exports, alternative packaging increased • No variety label claim (dry white, compared with a 76 per cent share by 825 per cent from $161,000 to sweet white, etc.) grew by 11 per for reds. Driving the overall increase $1.5 million, while bottled exports cent to $234 million decreased by 6 per cent to $152 in the value of white shipments were million. exports to the uK and mainland • Chardonnay grew by 1 per cent to China, increasing by 8 per cent ($10 $177 million United Kingdom million) and 40 per cent ($9 million) • Sauvignon Blanc grew by 16 per respectively. while there is still anxiety in the uK cent to $43 million surrounding Brexit, there are positive For red wine, the top fve label claims • Pinot Grigio grew by 2 per cent to signs that exports to Australia’s recorded growth: largest export destination by volume, $31 million, and • Shiraz grew by 16 per cent to are starting to turn around after more • Pinot Gris grew by 7 per cent to $609 million than two years of decline. exports in $21 million. the 12 months to march increased by • No variety label claim (red blend, Other white varieties/blends to record 9 per cent in value to $373 million and dry red etc.) grew by 25 per cent to growth of smaller bases included 8 per cent in volume to 241 million $406 million litres. Average value increased by 1 riesling (up 10 per cent to $20 per cent to $1.55 per litre. • Cabernet Sauvignon grew by 25 million), Semillon/Chardonnay (up 7 per cent to $357 million per cent to $6 million) and Semillon/ Bottled exports increased by 5 per Sauvignon Blanc (up 21 per cent to • Shiraz/Cabernet Sauvignon grew cent to $183 million and bulk exports $6 million). by 14 per cent to $190 million. by 39 per cent to $191 million, and red wine exported in bulk containers • Cabernet Sauvignon/Shiraz grew Wine styles increased by 24 per cent to $295 by 40 per cent to $114 million. Australian red wine continues to grow million, while white increased by 12 in popularity, with exports increasing the strong growth rate in Cabernet per cent to $190 million. Bulk red by 20 per cent in value to exceed Sauvignon/Shiraz exports led to the wine exports were driven by $2 billion for the frst time since category overtaking merlot, which demand from the uK, China, and 2007. this growth is mainly driven has been more popular historically. Germany, while white wine was by demand for premium Australian However, merlot exports still grew driven by demand from Canada, red wine in mainland China, where by 7 per cent to $111 million. Other the Netherlands, Germany and the the share of total red wine exports red varieties/blends to record growth uSA.

26 Shipping Australia Limited I Autumn / Winter 2018 Increase productivity Reduce incidents

orking on a vessel can be etreely high-risk, with seafarers reportedly up to . ties ore likely to suer work-related fatal inuries copared to the general shore-based workforce.

A recent study uncovered new insights into seafarer safety and wellbeing and found that looking after your crew results in less incidents and better productivity.

Manage fatigue ne in ve seafarers eperience acute and chronic fatigue. pleent a fatigue risk anageent syste to anage fatigue and ensure crew get enough sleep.

Rules and procedures Make sure rules and procedures are clear, practical and up-to-date. hen inforation is easy to understand and relevant, crew are ore likely to follow rules and procedures. ncluding seafarers in the developent of rules and procedures iproves copliance, perforance and wellbeing.

ork deands and support eafarers are reuired to uickly switch between onotonous tasks and etreely deanding tasks. uer the negative eects of these work deands by prooting positive and open interaction between crew and people in higher- level roles. As the leader, set high safety standards and show your crew that their safety is ust as iportant as operational cost.

Co-worker support Crew that have eotional support and are euipped to deal with work pressures perfor better. ploying the sae crew on the sae vessel helps by allowing the to develop support networks and enoy ob security. hese things increase wellbeing and reduce the rate of ental health issues.

he nal report Assessing the determinants and consequences of safety culture in the maritime industry is available at asa.gov.au

amsa.gov.au Autumn / Winter 2018 I Shipping Australia Limited 27 economy

Shanghai of the tiger? Doing business in China

By tim HArCOurt*

In this story by The Airport Economist, Tim 1978. it’s only the 76th largest on a per education institutes work hand in glove visits Shanghai, the jewel of the modern capita basis, but given it has more people on research and Development (r&D) and Chinese miracle but a city with a rich than any other country on the planet – innovation. cosmopolitan history as a vibrant centre of teeming with 1.3 billion citizens - that’s a international trade and commerce. pretty impressive efort. But what about small business in China? Small and medium sized enterprises (Smes) Shanghai has always been China’s Chinese economic expansion has slowed have a good story to tell. in Australia’s international city. As you walk around from rapid double-digit growth a few years case, there are over 6,200 Smes exporting modern Shanghai today you see the foreign ago, to a more sustainable 6.5 per cent a goods to China alone, plus another 6,300 neighbourhoods like the French concession year. But now China is undergoing a huge who go through Hong Kong into the area, and in the roaring ‘20s most foreign transition. it’s moving being a “nation of mainland, and the majority are successful. countries had embassies here (and shippers” to a “nation of shoppers” – going in fact, more Smes have lost money in the Australia had its frst trade Commissioner from export led development to domestic uSA than China. As the old saying goes in Asia here in Shanghai). the thriving consumption and investment. – “whilst you might avoid China for fear of cosmopolitan business scene in Shanghai Demographics are also changing. rapid losing your shirt but then lose your pants in also included a successful Jewish urbanisation has created a string of America!” community, with one famous member being massive ‘second tier’ or ‘third tier’ cities of Vidal Sassoon, the original owner of the Yes China is a massive market but when 10 million people-plus, like Qingdao, Jian, famous Peace Hotel on the Bund. you break it down by city, region and Chengdu, Chongqing and wuhan… and industry, it is manageable with the right world war ii and the Cultural revolution they’re all creating business opportunities advice and help on the ground. And it’s threw the country into disarray and as well. these cities need infrastructure been a commercially successful market for depressed the economy. in the late like airports, roads and railway stations for small players as well as the big guns. So 1970’s, Deng Xiaoping took over as China’s the fast trains that propel people and goods unofcial leader and began an open door across the countryside. And their emerging play your cards right and like me you’ll be policy. His reforms transformed China into middle class consumers want designer saying, ‘thanks China’, in years to come. a market economy, reignited foreign trade goods, electronics, quality health care, and Here are tim’s tips for China: and sparked the growth that’s got China even an overseas education. on track to become the world’s largest 1. Don’t assume 1.3 billion consumers will But despite it’s overwhelming size, economy. do it for you. China is a competitive place businesses from Singapore to Seoul, and and Niche is the new Black Deng also negotiated the handover terms of as far fung as Sao Paulo and Santiago, and Hong Kong and macau, and came up with Sydney are ‘hugging the panda’ and trying 2. try the second tier cities like Qingdao, the one country, two systems approach to score a piece of the Chinese action … Jian, and Chengdu – it’s not all about we see in those two cities. under Deng’s and it’s not as hard as you may think. Shanghai and Beijing reforms, Shanghai took centre stage as one For example, Australian health supplements 3. Get good legal and accounting advice of China’s key economic zones… and grew company Blackmores uses its partnership about joint ventures and ‘Wofes’ – wholly into the mega metropolis it is today. these with Alibaba to sell its product on t-mall, as days Shanghai is home to the country’s owned foreign enterprises China has a sophisticated online consumer main stock exchange, headquarters of market. ANZ Bank has managed to set up 4. use the Government badge and many leading global companies and the branches all over Greater China – including the chambers of commerce– embassy Shanghai Free trade Zone. the second tier and third tier cities, and the connections are respected in China and the And weren’t Deng’s reforms so Government of South Australia has forged chambers also play an important role. spectacularly successful! China became a sister province relationship with the the world’s second largest economy in Government of Shandong to ensure that 2010 after growing at three times the global South Australian barley is used in tsingtao *Tim Harcourt is the JW Neville Fellow in average since Deng Xiaoping opened up beer, Penfolds wines grace Chinese dining Economics at UNSW Business School and the closed planned economic system in tables and the provinces agriculture and author of The Airport Economist

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Autumnwww. / Winteriss 2018-shipping.com I Shipping Australia Limited 29 business

tarifs: the good, the bad, the ugly

By BerNArD GreSSer, director, infnitas Assets management Limited

Over the few months of 2018, it has been hard to avoid the term tarifs. uS President trump has made it clear to the world. whether it is justifed or not, tarifs are back. in a pure economic sense, tarifs are a wasteful way to protect domestic industries. in the 21st century, tarifs are a weapon in a politician’s arsenal when playing geo-political games. Let’s look at the recent spat that trump instigated with the announcements of tarifs to be applied to steel and aluminium. the original announcement was that all imports of steel into the uS would rhetoric was genuinely wide of the parties would not be subject to the attract a 25 per cent tarif and that all target. tarifs. exempted nations included, aluminium would attract a 10 per cent Brazil, mexico, Canada, Australia, tarif. the rhetoric that went with the the fact is that compared to other South Korea and Japan. that is, announcement was that this measure uS trading partners, China doesn’t pretty much all the steel that the uS was aimed squarely at China. export relatively much steel to the imports. when you look at the pie chart of uS uS. After the initial announcement, in a certain way, the uS steel tarif steel imports, you can see that the the uS announced that certain announcement was a “claytons” tarif announcement, as it didn’t impact China. An interesting fact was that one of the biggest losers out of the deal was russia, but for some reason that got little or no attention. Next on the US tarif agenda was motor vehicles the announcement to increase tarifs on Chinese made cars sounded like a bargaining tool more than anything. As you can see from the table below, Chinese tarifs on cars coming into the country was 25 per cent, whereas the uS had a tarif of only 2.5 per cent. the uS rhetoric was that China needed to even the playing feld. However, when you look at the raw data, it was again a case of “what playing feld”?

30 Shipping Australia Limited I Autumn / Winter 2018 As of 2017, the uS exported less than 400,000 motor vehicles to China. For the same period, China didn’t even tarifs: the good, make the top twenty list of motor vehicle exporting countries for the entire world. to put it more simply, the uS exported next to no cars to the bad, the ugly China, and China pretty much used all the motor vehicles it produced domestically, or to the region at the very furthest. Once again, a tarif announcement that had no real impact. showing Australian beef exports to thing producers want to run the risk the post script to all this was that Japan. of is the Japanese using “snap back” China announced it would cut tarifs provisions. what is key with these statistics - the on motor vehicles from 25 per cent to year on year growth numbers. if As you see, tarifs are a framework 2.5 per cent. why wouldn’t they? it growth runs ahead of 17 per cent to be managed. most countries would have negligible impact anyway. year on year, Japan has “snap back” participate in these trade related games. more often than not, once The US isn’t the only country to provisions. even though Australia you get through the political rhetoric, play the tarif game has a free trade agreement with Japan, Australian frozen beef still there is not much more to them. Japan does exactly the same with the attracts a 27.2 per cent tarif. this is that is, no-one would be as ill- beef market. Below is a table from why the industry manages its exports, advised to put a tarif on something meat & Livestock Australia (mLA) as with tarifs already so high, the last that really matters.

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Autumn / Winter 2018 I Shipping Australia Limited 31 business

what’s your exposure to FX?

By PAuL BettANY, Foreign exchange partner, Collison & Co.

Foreign exchange and how it impacts companies with currency exposure in the new global environment

Foreign exchange impacts, any and establish the ‘currency position’ and Trade and geo-political infuence all, companies that have exposure it is from this base you can evaluate Global trade wars have hit the to foreign currencies. most entities the FX risk and how much you want headlines, as the uS seeks involved in the shipping industry, to mitigate. Variables that must to address the massive trade along the supply chain, are therefore be considered are the economy, imbalances, which have created exposed to currencies and the price currency fuctuations, business huge trade defcits for the uS. the fuctuations. international trade, demand/supply etc. etc. taking no trump administration has come up by defnition, (the sale/purchase of ‘cover’, is one end of the spectrum, with bilateral and reciprocal trade goods and services over international while covering all FX exposure is policies, which they are currently borders) is serviced by the supply complete ‘cover’ and eliminates all negotiating. trade agreements are chain. this includes bankers, risk. insurers, customs and freight being renegotiated within NAFtA providers, shippers, couriers, airlines, The global economy and the (uS-Canada-mexico), China and the Port Authorities and government impact on currencies eu. these trade agreements are inherently connected to geo-political authorities/regulators. Along the line, the global economy has a direct events and used as a bargaining most of these service industries, are impact on currencies. the uS exposed to FX risk. Proft margins chip. this has been the ‘carrot and has become a ‘growth economy’, have become slimmer and tighter, stick’ (trade agreements v sanctions) with rising infation and interest in most sectors, so protecting these approach to negotiations, with rates. this has driven the Federal margins is crucial. A small currency regards to North Korea, China, iran reserve to tighten monetary policy fuctuation, between invoice and etc. etc. Global trade is great for (raising interest rates and reducing payment, can wipe out the proft of a trade dependent nations, such as bond-buying Quantitative easing transaction. it is therefore important Australia, so progress on the Sino-uS programmes). this has been after to manage FX risk. agreement, is crucial to Australia, as a an extended period of ‘Qe’, as a commodity exporting nation. managing FX Risk result of ‘post-GFC’ economics. to manage FX risk we must begin Still mired in the old economic, Summary static cycle, are most of the other with establishing net FX currency Global events, on a geo-political developed nations. this is clearly positions through cash-fows, over level, are tied directly to trade and illustrated by their respective Central a defned period (e.g. uSD fows economic prosperity. over the fnancial year). Projected Bank policies. the rBA, Bank of FX cash-fows, over a specifed england, eCB and rBNZ all wallow Companies must be aware of all the period of time, gives the exact and in the ‘post-GFC’ monetary cycle, risks to their business on a macro overall exposure of a business. it of extreme stimulation. record low level, down to the micro environment also projects foreign currency defcit/ interest rates attract little investment, in which they operate. Currency surplus during that specifed period. thus undermining the associated fuctuations are a constant and ever- Currency Forward Contracts (CFC), currencies. Higher interest rates present risk, which can easily be Currency Swaps and Currency support a stronger currency. this managed. it is the amount of risk that Options are all FX tools that can be has been obvious in the currency a company is prepared to take and employed to mitigate risk and smooth behaviour of the AuD, GBP, eur and the tools employed to achieve this, outfows. Cash-fow projections NZD, in sharp contrast to the uSD! that defne action.

32 Shipping Australia Limited I Autumn / Winter 2018 what’s your exposure to FX?

Autumn / Winter 2018 I Shipping Australia Limited 33 coastal shipping

Changing the coastal trading rules

By mAttHew wHittLe, Shipping Australia Limited

On 6 November 2017 the meanwhile, the rules by which Commission’s Agriculture review, rules governing competition cargo is shipped around the 2016) Australian coast, the Coastal trading • ‘Cabotage restrictions on coastal in Australia changed (revitalising Australian Shipping) shipping should be removed’ presenting liner shipping the Act 2012, will mark six years on 1 (Competition Policy review/the July 2018. During this time the work opportunity to revitalise coastal Harper review, 2015) trading. the potential of this done in the national freight task has amendment to the Competition continued to accelerate, with the • ‘Coastal shipping regulations movement of freight on roads and are undermining the incomes and and Consumer Act (CCA) rail rising to the highest ever levels jobs of many onshore businesses 2010 is for international liner and the shipping of non-bulk cargo and workers’ (industry innovation shipping to cooperatively declining to the lowest level in a and Competitiveness Agenda, provide services around the decade. Commonwealth of Australia, 2014) coast for non-bulk cargo. this is an unbelievable • ‘more efcient coastal shipping the establishment of a services could help lift Australia’s development considering competitiveness and lower prices for ‘class exemption’ for liner the social, economic and consumers’ (Australian Competition shipping promises to raise environmental agenda for and Consumer Commission, 2014) the level of competition in the more than a decade has been • ‘Cabotage rules that preserve freight market and to deliver to improve transport safety, freight routes from one Australian port signifcant benefts to the increase energy efciency and to another for Australian-fagged ships Australian community. are efectively industry assistance, reduce emissions. Shipping is increasing costs and reducing the safest and lowest energy competition’ (towards responsible and carbon-intensive mode of Government, National Committee of transporting freight, so this is Audit, Parliament of Australia, 2014) not an outcome the community • ‘Australian cabotage can directly would expect. beneft local shipowners and maritime workers, [but] it does so at the All Australians interested in the current expense of the wider community’ state of the national freight task would (Joint Australian and New Zealand be perplexed as to why their elected Productivity Commissions, 2012). representatives have not been able to implement the recommendations For compelling national transport of numerous independent, credible safety, economic and environmental and authoritative voices, who have reasons, Australia needs a strong and identifed that the rules are not growing coastal shipping trade. this would provide: working and need to change. Let’s quote a few: • increased separation of the freight and passenger transport networks • ‘the Australian Government should amend coastal shipping laws • improved efciency of the to substantially reduce barriers to international supply chain and a entry for foreign vessels’ (Productivity reduction in the cost of infrastructure

34 Shipping Australia Limited I Autumn / Winter 2018 construction and maintenance the following examples are some of international supply chains. Not only the reasons claimed for referring the would this increase the efciency of the • A reduction of carbon emissions Government’s proposed Coastal trading international supply chain and improve and the energy intensity involved in Act changes to the Senate rural and the nation’s trading competitiveness, performing the work of the national regional Afairs and transport Legislation concentrating investment in port freight task. Committee. For convenience, the claims connectivity (the maritime supply A compelling analysis of the economic are accompanied by responses citing chain) would signifcantly reduce the beneft was presented in the 2016 objective and authoritative references. infrastructure resources required to Australian industry report. modelling construct and maintain the national • Whether Australia should throw of industry changes from a 5 per cent freight task. open its coast in a manner not reduction in transport costs showed matched by comparable developed • Environmental factors arising from results for cross-industry benefts of $5.6 nations throwing open the Australian coast Changing the coastal billion in reduced costs, $971 million of (including possible Reef impacts) added value, and the creation of 6,658 the united Nations Conference on trade full-time equivalent jobs.1 and Development counsels that when the Great Barrier reef marine Park comparing national cabotage policies, Authority noted in its Great Barrier reef the current rules discourage any trading rules the relevant country to compare with Outlook report 2014, that ‘shipping strategic consideration of coastal should be the one which will compete for through the region [Great Barrier reef] shipping’s contribution to the national transhipment cargo. For Australia, this provides a range of social and economic freight task, and this information gap has is New Zealand. As commentators have benefts to catchment communities and been flled with ideological and irrelevant observed, “New Zealand’s cabotage the nation’. the report rates the threat arguments which are preventing an laws are in contrast to the bureaucratic posed by shipping as a medium level objective assessment of its potential. and infexible laws that shippers and localised risk that is being addressed it is just not acceptable that such an carriers presently endure in Australia”.2 by proactive management, such as important institution as the National in efect, the rules are enhancing the extending the vessel trafc service to the transport Commission is able to limit its competitiveness of transhipment southern boundary of the region in 2011. sphere of activity to land transport and services in New Zealand and putting in fact, the rate of shipping incidents has to exclude shipping, which it concedes Australia’s ports at a disadvantage and, reduced from 2.5 per year to one every is a close substitute, from consideration as a consequence, are jeopardising three years. within a national transport productivity Australia’s trading competitiveness and framework. the report identifes ten very high risks ultimately our standard of living. that pose a region-wide threat to the those opposed to changing the rules do • Economic factors arising from reef, four of which have climate change so for varying reasons. throwing open the Australian coast as the infuencing factor. Changing the For the rail freight sector, the reasons are rules to encourage greater utilisation of ‘when Labor took ofce, Australia was commercial. the Freight on rail Group coastal shipping will help to mitigate this 20th amongst OeCD nations in terms of in 2015, opposed changing the rules as it factor by reducing emissions intensity of infrastructure investment as a proportion would ‘damage the domestic land freight the national freight task. of GDP. when Labor left ofce, Australia industry through a loss of revenue and a was frst’.3 • National security factors arising reduction in the capacity of the rail freight from throwing open the coast industry to invest in infrastructure’, and in An assessment of the outcome of 2017 because ‘on the east west corridor, Australia’s infrastructure investments this same concern was raised and sea rates are already around 40 per cent is presented by the world refuted during the 2015/16 Senate cheaper than their rail competitor’. economic Forum’s 2014–15 Global committee inquiry into the increasing Competitiveness report, which ranked use of foreign shipping, when frst AmSA For the political classes who are the quality of Australia’s supply chain provided testimony that they knew the opposed to changing the rules, the infrastructure, namely railroads, ports registered owner of every ship that reasons are ideological. the requirement and roads, at 32nd, 38th and 43rd, sails into our ports, and later the Ofce to align with a preconceived framework respectively. of transport Security stated that they prevents consideration of the real had no concerns about their security opportunities and challenges of the the fact is that Australia is a big compliance regime centred around the national freight task. No objective country with a low population density international ship security certifcate. assessment of the social, economic (the only continent lower is Antarctica) and environmental benefts of utilising and 85 per cent of the population lives Despite the evidence presented to the coastal shipping is entertained. instead, within 50 kilometres of the coastline. committee, their ideological opposition archaic, irrelevant and false arguments Considering these disappointing concluded along partisan lines that ‘For are replayed over and over. with their rankings, it is obvious that out-spending sound economic, environmental and ideology crashing against the modest all other nations will not necessarily national security reasons, Australia needs changes currently being proposed to the provide the competitive supply chain a strong and growing merchant feet of failing rules, the defenders have resorted infrastructure. But changing the rules its own. Our long term national interest to fearmongering that any amendments to promote coastal shipping would demands nothing less… Accordingly we will have the efect of ‘throwing open the enable the reallocation of infrastructure recommend the Bill be opposed in its Australian coast’. investment to integrate the domestic and entirety.’4

1https://industry.gov.au/Ofce-of-the-Chief-economist/Publications/Australianindustryreport/assets/Australian-industry-report-2016.pdf 2thompson m and Cockrell J (2015). Cabotage in New Zealand and Australia: A world of diference between neighbours? insight and Knowledge. 3http://anthonyalbanese.com.au/ministerial-statement-infrastructure 4rural and regional Afairs and transport Legislation Committee, Coastal trading (revitalising Australian Shipping) Amendment Bill 2017 [Provisions] Dissenting report by Labor Senators Sterle and mcCarthy, December 2017

Autumn / Winter 2018 I Shipping Australia Limited 35 while the unions will support any the power of the maritime unions is Container line collaboration, enabled opposition to changing the rules for signifcantly diminished. through a class exemption for coastal trading, their reasons are not coastal shipping, has the potential to The rules have changed, to potentially commercial or ideological. if ‘growing revolutionise the national freight task revolutionise how non-bulk cargo is the national feet’ was not just an traded on the coast for non-bulk goods. utilising coastal ideological objective, then historically shipping to integrate the domestic low charter rates for bulk vessels and A recent change to the rules governing and international supply chains will the monopoly trade protection provided competition in Australia has left the door signifcantly reduce freight costs, by the rules would make a very safe open for Shipping Australia to propose a resulting in an increased demand for commercial investment for a $5B pragmatic approach to revitalise coastal the development of port-connecting maritime industry superannuation fund. trading that will also encourage a more infrastructure. Along with Australia’s the true motive for opposing changes resilient and efcient international renewed trade competitiveness, to the rules, especially when it comes to supply chain. the opportunity for liner this will bring a more sustainable coastal shipping of non-bulk goods, is shipping to cooperate in the provision and resilient freight network with political expediency. of coastal shipping for non-bulk goods reduced operational, environmental arose on 6 November 2017, when and maintenance costs. A further Ports are the vital link in the Australian the Competition and Consumer Act beneft is a safer transport network economy within which container (CCA) 2010 was amended to give the which maximises the separation of the stevedoring wharves are a bottleneck ACCC the power to provide a ‘class freight task from public and private in the supply chain that can limit the exemption’. By applying a similar passengers. availability of the non-bulk goods. approach to the Discussion Agreements As the container supply chain is permissible in international trades, SAL So, some of the rules that impact the increasingly being used for international proposes to seek a class exemption movement of non-bulk goods have freight any threat by the unions to that enables liner shipping to operate changed. However, the collaboration disrupt this link predominately impacts cooperatively in coastal trading. of liner shipping service under a class imported shipments of non-bulk goods exemption cannot deliver the social, such as foreign electrical goods, ofce One criticism of coastal shipping’s economic and environmental benefts furniture and clothing etc. except when competitiveness with rail is that on it own. it needs a paradigm shift by this disruption impacts the delivery of it does not provide a comparable shippers. it will take time to build the imported medical equipment the general level of service availability. But this confdence in this supply chain before public are not directly inconvenienced or limitation can be overcome if shipping perturbed. Given Australians’ love of an is considered collectively as multiple the modal shift to the coastal shipping underdog story it is not surprising that container ship services are physically blue highway permeates throughout a signifcant segment of the community available on a daily basis. if you the national transport industry. while is habitually sympathetic to striking consider Sydney, Australia’s most some land transport sector self-interests workers without any consideration. populous city, the analysis of voyage will resist the impending revolution, schedules shows that almost all individuals and operations in the supply this calculation of public sentiment container ships departing Port Botany chain who could consider this call to changes however if coastal shipping will next call at another Australian action, should refect on the famous is included in the equation. Any illegal city port. the potential freight- words spoken by John F. Kennedy at withdrawal of labour at a container carrying capacity presented by these his inauguration, “Ask not what your wharf which disrupts the domestic coastal voyages can be calculated country can do for you, ask what you supply chain has political grassroots by considering the number of empty can do for your country”. consequences. Deprived of staple containers exported from Sydney. in food and other routinely available the 2016 fnancial year almost 700,000 most of us live within 50 kilometres consumables the public becomes teus of containers were exported of the sea, why not utilise the blue intensely interested in the unions’ empty, with almost all of these carried highway to move our freight, rather demands and any frivolous claims from Sydney to, or via, another than pouring $ billions into building and are brought under intensifed scrutiny. Australian port. this represents un- maintaining roads and rail infrastructure Public sympathy is no longer on side, utilised carrying capacity equivalent to and unnecessarily risking more lives by political pressure mounts, measures to six of the longest non-bulk cargo trains mixing passengers and freight in the ensure the freeing up of the bottleneck per day, or more than 600 B-double ever more congested land transport are demanded and imposed, and trucks per day. melee.

Total Number of Container Ship Port Calls (1 July 2016 - 30 June 2017) * Au Port Brisbane Sydney Melbourne Adelaide Fremantle All Ports FY 2016 942 1,095 1,090 430 507 4,064 Per/day 2.6 3.0 3.0 1.2 1.4 11.1

Port Botany Containers Exported Empty* 1 July 2016 - 30 June 2017 (TEU) 692,984 A modal equivalent carry capacity of: TEU / day 1,899 Trains (150 FEU) / day 6 FUE / day 949 B-double truck (1.5 FEU) /day 633 *BITRE 2017, Waterline 61, Statistical Report.

36 Shipping Australia Limited I Autumn / Winter 2018 Australian Marine Surveys

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Autumn / Winter 2018 I Shipping Australia Limited 37 logistics

Blockchain in the supply chain

By riCHArD ArrAGe, special counsel, Colin Biggers & Paisley

it is the technology which underpins newly validated transaction, is is referred to as a “block”. And the the peer-to-peer, open-sourced, then distributed to all participants, larger string of transactions is called a cryptographic currency Bitcoin (and replacing all previous record books. “chain”. Hence, Blockchain. Get it? others) and now, fnally, it is on the in reality, this process of verifcation lips of supply chain participants all And who is making use of this and validation is achieved via a very over the world. technology in the supply chain? sophisticated method of grouping when Blockchain frst emerged, transactions into blocks, hashing maersk Line, for starters. the world’s late in 2008, almost all of the public and timestamping, akin say to digital largest container shipping line is on attention (both positive and negative) notarisation, and algorithmic puzzle a digital transformation drive, and was on Bitcoin, rather than its solving, but let’s not get bogged down Blockchain appears to be central to underlying technology. Now, we are here. its plans. told the technology itself has the it is sufcient to say, for present potential to be truly transformative in conjunction with iBm, maersk purposes, that the cryptographic in almost every industry; “more Line is testing (and, at the time of process of adding new transactions disruptive than electricity”, even! writing, is close to issuing a Beta builds on all previous transactions version for) the management of the the purpose of this short article is in the chain, in a way which makes not to provide a technically perfect the record book truly unique and paper trail (through digitisation via description of the Blockchain practically impossible to unwind and the Blockchain) across the entire technology, but to provide a simple rebuild or reverse. efectively, the supply chain process. with equal (perhaps oversimplifed) explanation record book becomes a permanent and trustworthy access to the (now) of some of the concepts behind a (well, at least for as long as the digitised chain, maersk Line has public (as opposed to, you guessed Blockchain exists) and “incorruptible taken the view that the documentary it, private) Blockchain. technology source of truth”. that is why steps required for, say, the transit purists look away now. Blockchain is said to be so “secure”. of fresh fowers from Kenya to So what is it? it is “decentralised” because the Holland could be signifcantly platform is not stored in a central reduced, leading to cost savings and to put it simply, it is a secure, location (say, on a server), the efciency improvements. maersk decentralised and distributed ledger. access to which is shared by many Line estimates it can save $2 readers should think of the “ledger” people. instead, there are potentially billion annually by automating the as a giant database or record book. thousands of copies of this shared documentation process in this way. the “distributed” part just means that record book all over the world, stored the record book is distributed among on home computers and business maersk Line has also partnered many participants, each of whom hold servers alike. A master version exists with microsoft, eY and a number a copy. nowhere, and everywhere at the of insurers to develop a Blockchain same time. it is neither owned nor platform specifcally for the marine each time a transaction is said to controlled by anyone, but by everyone insurance market, to be implemented have occurred, the participants that has a copy. in order to “hack” it, from January 2018. the platform each seek to verify the transaction fraudsters would need to control more independently, before the will be used to capture information than half of the chain’s participants transaction can be validly logged regarding identities, shipments, simultaneously. by the consensus of the remaining liability and risks and to ensure participants (that is, by at least half in the most basic of terms then, each transparency across the ecosystem, of the participants). the updated chronological change on this secure, including for clients, brokers and record book, now including the decentralised and distributed ledger insurers among others, and

38 Shipping Australia Limited I Autumn / Winter 2018 integrating this information with full supply chain traceability, as is another pilot project launched or marine insurance contracts. well as executing the settlement announcement made in relation to the of commodities by matching title testing, adoption or implementation in the trade fnance space, CBA transfer to payment in a single of the Blockchain technology in some and wells Fargo undertook a proof transaction. Needless to say, for novel way. of concept exercise last year Australian producers, being able to to demonstrate the capacity of No doubt readers will have noted, demonstrate proof of provenance via Blockchain technology, and the however, the representational spread a secure platform is a most promising internet of things, to give efect of these use cases. Among the usual and welcome application of the to an international sale of goods technologists and futurists, those technology. involving bales of cotton moving pursuing the Blockchain agenda from texas to China. the concept Finally, in the ports space, the Port of encompass exporters, marine mirrored a letter of credit scenario, on Antwerp has launched a pilot project insurers, container shipping lines, a private distributed ledger involving focussed on logistics automation to port terminals, and the trade fnance the contracting parties and their streamline terminal operations, by sector. respective banks. there was also speeding up interactions between Although at this stage, there is no a real-time, physical supply chain port customers (which the Port says defned aggregation of the various trigger based on the geographic involves over 30 diferent parties, projects, it ought to be obvious location of the goods in question, for with an average of 200 interactions that each successful test or pilot the passing of title and the release of between them). By using Blockchain project takes another bite-sized payment. Although only a proof of for the transfer of data, there is an chunk out of the supply chain and concept exercise, it demonstrates an obvious efciency improvement leads to a further understanding ability for supply chain participants in the elimination of unnecessary and acceptance of the technology. to move away from a focus on intermediaries and interactions Once that acceptance leads to (more documents (as with letters of credit) (whether by phone, fax or email), fulsome) adoption, the network to a secure, transparent and digitised along with cost savings in the efect is likely to take hold within the solution using the Blockchain elimination of paperwork. Assuming industry, and it is open to envisage a technology. the trial proves successful, the port secure, decentralised, more efcient has plans to implement the system by and (partially) automated supply in the export sector, CBH Group, the the end of 2017. chain, making use of distributed western Australian grain growers’ ledger technology. cooperative, has collaborated these use cases from within the with a Sydney-based start-up in a supply chain are by no means Here comes the Blockchain wave of Blockchain pilot project to provide exhaustive. it seems every day there “disruption”. ready or not.

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Autumn / Winter 2018 I Shipping Australia Limited 39 logistics

How blockchain can safeguard Australian food and beverage on the supply chain to China

By mArK tOOHeY*

Australian products have a China is currently Australia’s Australia is the second largest reputation among Chinese largest partner in both imports exporter of wine to China, and a large and exports, signifying a strong amount of wine exports have already consumers for being natural, economic partnership between the been counterfeited. safe and manufactured to the two countries. moreover, Australia is China’s CCtV has reported in 2014 China’s sixth largest supplier of food, highest quality standards. that 50 percent of wine sold in China with exports valued at A$5.3 billion in could be fake. that reputation however 2016. Premium Australian wine label is being threatened by Chinese consumers are said to be Penfold’s Grange has been a counterfeiters who replicate most attracted to Australian products prominent target with fake ‘Benfolds’ as they ofer assurance of food safety, Australian goods sold in wine bottles closely resembling the China, and developments in higher quality, and better nutritional value, among other preferences. original. the packaging and labelling blockchain technology ofers the counterfeiting of these goods, of these bottles are the same, with the a new solution to combat this especially of food, that consumers only diference being the stealth ‘B’ in its title. problem. know and trust, is not only life threatening but is detrimental to the in march 2018, police in central China brands of the Australian food and seized more than 50,000 bottles of wine industry. fake Penfolds - top-shelf wine in what A large scale problem is reported by the Australian Financial review to be “one of the biggest Counterfeiting wine is lucrative hauls of counterfeit liquor”. business in China, with increasingly sophisticated methods used to this followed more than 14,000 replicate well-known and respected bottles of counterfeit Penfolds wine brands. being seized by police in Shanghai, in November 2017, following complaints intellectual Property lawyer Stephen from treasury wine estates to Stern of Corrs Chambers westgarth, Alibaba that some of its retailers were who has acted on behalf of a number charging “extraordinarily low prices”. of Australian exporters whose products have been counterfeited in these hauls come as premium China, has said it is very big business. Australian brands step up eforts to stamp out copycats in one of its “You are not dealing with ma biggest markets. and Pa organisations. You in another example, Blackmore are dealing with large scale wagyu Beef a Victorian, a high commercial factories that use quality wagyu beef with monthly common equipment that can international exports, pulled out of its Chinese export agreements after cost some tens of thousands discovering that its beef, which is of dollars to manufacture the sold at a premium price, was being counterfeit product,” he said. counterfeited.

40 Shipping Australia Limited I Autumn / Winter 2018 Although the meat was vacuum technology. it means that only one supply chain and iot devices on the sealed in a cryovac bag with a plastic item with a unique serialised iD can blockchain is the best way to do this. insert with the company’s logo and ever be sold, ensuring quality and Some examples of iot devices brand name printed on it with a authenticity. this feature destroys used for food safety include: mobile unique code, it had still been heavily the standard business model of handhelds that scan pallets and counterfeited. counterfeiters. capture geo-data, temperature David Blackmore, the producer of they usually take a genuine item and humidity sensors that capture the beef, spoke about his decision and make a vast number of exact real-time transportation data, and to protect his brand’s integrity replicas of the item (including any bacterial sensors that analyse the frst rather than continuing to sell attached codes or identifers). their soil. products, even with the huge market well-practiced skills make it awkward, Furthermore, advanced labelling share loss. if not impossible, to distinguish and packaging solutions can between a genuine or fake item. “we’ve got more demand for our take chemical fngerprints, detect product than we can meet; rather the ‘no double spend’ capability of decaying meat, monitor bacterial than damage the brand, we would blockchain means once the genuine growth and other changes. pull out of China.” item is sold, the fake copies have Power to consumers no commercial value, as consumers Hauling products, hunting down can use the free tBSx3 app to check Blockchain technology also factories and pulling out of proftable the validity of the item they are unleashes the power for an even markets cannot be the only way considering buying. greater chain reaction to take place to stop counterfeit products from — a “trickle up” efect between landing in the hands of consumers. with blockchain technology consumers and businesses. A blockchain approach any participant can contribute the opportunity for each genuine A blockchain approach solves to and access the ledger, item to be checked before it is the problem of trust in goods on but never tamper with it. purchased empowers and protects the supply chain via end-to-end Businesses across the entire consumers at the end of the supply transparency and traceability. supply chain are encouraged chain. the best practise in keeping track of to collaborate and share with greater transparency and records of goods in the supply chain data in order to improve awareness of a product’s origin, is to get rid of the need to use paper transparency and stamp out buyers will be more conscious of their all together. purchasing power and its impact at a counterfeiters. global level. Blockchain technology is the digitisation of supply chain records, A consortium with freight forwarders, this engagement will encourage with all participants, from producers, stevedores, ports, shippers and 3PL’s local manufacturers to participate in distributors, suppliers and retailers, on a true blockchain platform that ethical, Fair trade business practice. sharing and contributing their track provides 100 per cent transparency On the fipside, it will also make and trace data to a shared ledger. and traceability will be the ideal counterfeiters rethink their current solution to protect items on the global business model. Digitisation of records also facilitates supply chain. further efciency and cost reductions then, hopefully, people in China who in procedures, especially if the digital blockchain for food safety look to buy Australian products can format is a smart contract that is the roll out of Blockchain technology trust that what they are buying and based on immutable data in the on the food supply chain is also consuming is genuine and healthy. blockchain. crucial for the future of food safety because it will help companies with blockchain technology, closely track every item on the supply every single item for chain and check that their products sale can be assigned a are of the highest quality, before it cryptographically unique reaches their consumers. identifer at the start of the the Sanitary transportation rule in the food value chain at the farms, uS implemented by the Food Drug growers and processors. & Administration (FDA) Food Safety modernization Act (FSmA) which this unique, strongly establishes requirements designed to encrypted code can then protect foods on their journey from farm to table, requires blockchain be entered into the shared technology to execute. data ledger and the entire life journey of a product - from the rule is designed to minimize risk during transportation that could production to consumers compromise the safety of food and - can be accessed on the beverages, from failing to properly blockchain archive. refrigerate food to inadequately cleaning vehicles between loads. * Mark Toohey is the Founder and in addition, the concept of “no CEO of TBSx3 and lecturer on digital double spending” is one of the most the rule requires the collection currency regulation for the University compelling features of blockchain of many data points across the of Nicosia.

Autumn / Winter 2018 I Shipping Australia Limited 41 logistics

Developing a national trade Community System

By BeN LANNAN, partner, international trade, PwC Australia, CAmerON HALL, head of Strategy and innovation, Port of Brisbane Pty Ltd, and BrYAN CLArK, director, trade and international Afairs, Australian Chamber of Commerce and industry

An Australian consortium is Community System’ which links key underpinning the costs identifed are building a trade Community supply chain information and ensures a range of factors which include: trust in that information by using ● Varying levels of integration and System for Australia that blockchain technology. provides signifcant efciency digitisation across international supply The problem chains, which constrain the efcient and productivity improvements fow of goods and information for users through increased Businesses and their international visibility, connectivity and supply chains are becoming ● Conficting commercial increasingly complex. to drive new interests, which create inefciencies interoperability. efciency gains, there is a need across the whole supply chain for industry leaders to develop ● the predominant use of manual mechanisms which facilitate the transactions to communicate motivated by concerns over integration and interoperability of across supply chains Australia’s sliding position in the commercial operators across the world Bank’s trading Across supply chain and logistics sector. ● entrenched legacy systems with Borders rankings, the Australian limited integration, which constrain through our research, we have Chamber of Commerce and visibility, and restrict innovation industry, Port of Brisbane and identifed a range of costs, which PricewaterhouseCoopers Australia if addressed, will deliver signifcant ● excessive levels of double (PwC) have formed a partnership and value for Australian international handling of information and data between parties have completed the proof of concept businesses that will dramatically improve the performance of phase of the project in Brisbane, with ● Signifcant red tape, which international trade. At present, the further design commencing. can restrict and delay the fuid current inefciency across Australian movement of goods and services Our vision is to bring Australian supply chains occurring through lack international trade to the 21st of visibility, can create up to $450 in the increasing volume of trade that century - by removing complexity and cost per container. this represents in hits Australia’s borders corresponds overcoming prevailing inefciencies excess of $1 billion in value, lost due with equal pressure on both ports and in the supply chain, through a ‘trade to inefcient supply chain processes. border authorities to process, screen

42 Shipping Australia Limited I Autumn / Winter 2018 and clear goods into the Australian An open, secure and trusted data Why a TCS? economy. to reduce this pressure on sharing platform the port, whether sea or air - is the frst both the public and private sector, we and last point of domestic contact in intend to transform the way supply chain • the data is owned and governed by the international supply chain. it is also participants interact. its creator the point at which all signifcant supply Our proposal • the platform is operated chain participants converge. there is an abundance of information created we propose to build on the work already independently of established supply before the border, at the port and behind done to evaluate the feasibility of a chain interests the border, which when integrated, national trade Community System (tCS) Easy to integrate and start using becomes more meaningful and of in Australia. greater importance to government and • it augments, not replaces, the to that end, we have developed a proof downstream supply chain stakeholders of concept (‘PoC’) tCS digital application systems that are already part of and service providers. suitable for demonstration purposes. Australia’s supply chains Our decision to pursue the adoption of a the tCS PoC is the frst stage in building • users access directly through a web tCS is motivated by a desire to improve an end-to-end supply chain that will Australian trade competitiveness by digitise the fow of trading information, portal or indirectly through their existing improving the connectivity facilitated improve connectivity for supply chain systems through Port Community Systems into a participants, and reduce supply chain Low to no cost to participate platform that fosters increased visibility costs. trust and traceability will be beyond the port. By including air freight enabled in the platform through the • the platform does not make money and air cargo into our tCS platform, deployment of blockchain and a range of from charging users to access data we hope to provide comprehensive other technologies. about the goods they are managing coverage to all corners of the supply the next ‘Pilot’ phase will involve chain, and to address the prevailing • the platform’s revenue comes from building out the platform to handle live inefciencies that characterise Australia’s the productivity and service innovations data, and run in parallel with real supply current supply chain processes. chains of selected partner organisations that the data unleashes As a precursor to a Single window to validate and refne the benefts, costs Visibility that delivers velocity and mechanism, we believe that a shared and risks of building the platform to efciency platform where all participants can input, national level. share, amend and ingest relevant supply in building the tCS platform, we • the platform will enable goods to chain information in a harmonised, have established four guiding design fow through the supply chain more secure and trusted neutral environment principles, which lay at the centre of our quickly and manage avoidable costs and will provide signifcant productivity gains approach. fees for Australia’s international businesses.

Autumn / Winter 2018 I Shipping Australia Limited 43 Port of Brisbane, Queensland’s premier multi cargo port

How a TCS can beneft Australia the primary benefts Australia would derive from a national tCS are the efciencies borne from access to accurate, timely and traceable supply chain data, improving the fow of goods from producers through ports and across borders and into consumers hands. this will result in: ● reduced costs and improved efciency across the supply chain by eliminating paperwork and reducing double handling ● increased visibility of container location and status. Greater visibility along the supply chain, coupled with ● increased trade and economic key project stakeholders. growth. According to ausdigital. micro level benefts, like container What does success look like stock management improvements, org - reduced invoice errors and should see a fall in the costs of subsequent rekeying through an Our future vision is to create a tCS, container feet management in electronic platform could provide the which can facilitate the secure Australia (NiCtA, 2014) Australian economy, as a whole, with linking of data between all supply enhanced national productivity of $20 chain participants and between ● more efcient ship to shore and billion per annum. other supply chain platforms that yard planning, with streamlined are developing across the globe to Who we are engaging customs processing build an ecosystem which drives ● Better communication and the consortium partners have, and productivity and service innovation. will continue to consult with core transparency between supply chains Following our PoC Showcase event, participants in the supply chain, and government agencies the pilot phase will follow and will including: importers and exporters, allow us and users of the tCS, to see ● Faster fow of goods and stevedores, shipping lines and frsthand the extensive benefts that increased volume through Australia’s Government, to ensure that the PoC will come from the platform. ports. this is essential given the and subsequent pilot phase, are projected growth in containerised robust and cater to a broad set of if you are interested in fnding out trade forecast to come into Australia users. the PoC was an intensive 8 more, or would like to join us on in the coming years (Bitre report week process, which culminated in a this journey, visit 138, 2014) showcase event in late may with our tradecommunitysystem.com.au

44 Shipping Australia Limited I Autumn / Winter 2018 newcastle container terminal

The Port of Newcastle has developed a concept for a container terminal that will provide a new, east coast supply chain alternative.

NOW.

+61 2 4908 8200 www.portofnewcastle.com.au [email protected] linkedin/portofnewcastle

Autumn / Winter 2018 I Shipping Australia Limited 45 liner shipping

winds of change in Liner Shipping

By ANDrew CHitteNDeN, Shipping Australia Limited

in January, the trade Facilitation Agreement (tFA) and the trade Facilitation Group (tFG) Discussion Agreements were terminated. this follows soon after the termination of the Australia and New Zealand – united States (ANZuSDA) Discussion Agreement at the end of December 2017. this represents a monumental change to liner shipping in Australia. the decision to terminate these selected discussion agreements (not consortia agreements) is signifcant given that conferences/DAs serving the uSA, North east and South east Asia markets have existed for many decades, so we are moving into a new era for those trades. the core reason for the decision to terminate these agreements is their declining membership, caused particularly by industry consolidation that impacted upon their market infuence and the perceived value of membership. in December ’17, the number of members had declined to only 3 for both ANZuSDA and tFA and 2 for tFG, which clearly brought into question their efectiveness. various trade lanes, and therefore see less and underpinned by agreed minimum the reasons for the declining value in DA’s. levels of service negotiable with APSA. Additionally, new discussion agreements memberships of the DAs that led to this • A third and signifcant reason is the may be created should some of the point are a bit more difcult to pinpoint; repeated threat over a number of years, above uncertainties be clarifed and trade there are a number of factors: by the ACCC in particular, to remove the conditions show this to be benefcial to protections of Part X. this has caused • One factor is the increasing attention the industry. uncertainty in the industry and lines may by national competition regulators on liner Newcastle Stevedores, through its extensive service provider well have withdrawn from the DAs now there is still a lot going on in liner shipping Our mission is to shipping activities globally. rightly or rather than hold on until the rug is pulled policy and despite the current withdrawals relationships and sub-contractor management plan can provide wrongly, this had created the impression provide the best from under them, so to speak. Lines from DAs, shipping lines are still strongly that members of discussion agreements clients with a total logistics package, and is happy to arrange the stevedoring have seen the withdrawal of competition supportive of retention of Part X of the are more likely to be targeted for anti- protections for Discussion Agreements CCA. Shipping Australia commenced complete door to door movement of project freight. services in Australia, competitive investigation. Consequently, in other jurisdictions (most recently New negotiations with the ACCC at the end by offering thorough a number of them have made global Zealand in mid-2017). of may over the content of a potential When you combine Newcastle’s hugely diverse range of facilities efficiency and policy decisions to withdraw from all block exemption for liner shipping in the immediate future the termination with our levels of service, competence and experience, we believe bankable reliability, discussion agreements. that the ACCC is now empowered to of these agreements is not expected to at very competitive provide under the legislative changes you will find a genuinely competitive option for all your imports and • Another is the growing size of have an impact upon capacity or sailings passed towards the end of last year. As prices. individual lines, through the recent spate to the uSA, North east Asia or South exports through the Eastern Sea Board. such, more will follow on developments of mergers and acquisitions. the larger east Asia, where the services of the concerning this momentous event shipping corporations are less dependent various consortia will continue unafected on the cooperation of other lines in the afecting Liner Shipping.

Newcastle Stevedores 130 Young Street, Carrington NSW 2294 l PO BOX 190, CARRINGTON NSW 2294 46 Shipping Australia Limited I Autumn / Winter 2018 Ph Main: +61 2 4978 7100 l Mobile: +61 412 680 001 l Email: [email protected] winds of change in Liner Shipping

Newcastle Stevedores, through its extensive service provider Our mission is to relationships and sub-contractor management plan can provide provide the best clients with a total logistics package, and is happy to arrange the stevedoring complete door to door movement of project freight. services in Australia, by offering thorough When you combine Newcastle’s hugely diverse range of facilities efficiency and with our levels of service, competence and experience, we believe bankable reliability, you will find a genuinely competitive option for all your imports and at very competitive exports through the Eastern Sea Board. prices.

Newcastle Stevedores 130 Young Street, Carrington NSW 2294 l PO BOX 190, CARRINGTON NSW 2294 Ph Main: +61 2 4978 7100 l Mobile: +61 412 680 001 l Email:Autumn [email protected] / Winter 2018 I Shipping Australia Limited 47 legal / insurance

General Average explained

By PereGriNe StOrrS-FOX, risk management director, tt Club

Following the tragic casualty What is GA and how does it work? Security of Maersk Honam it is timely, A GA event is defned in the York- in order to ensure that payment will particularly for shippers and Antwerp rules, as “when, and only be received, the Adjuster requires freight forwarders, to cover when, any extra ordinary sacrifce each party interested in the voyage to provide a GA bond as security. Since the dynamics and risks or expenditure is intentionally and reasonably made or incurred this is done at the outset, before associated with General for the common safety for the the full value of the sacrifce and Average. while the concept purpose of preserving from peril expenditure is known, the Adjuster of General Average (GA) is the property involved in a common will necessarily estimate. A GA bond is a promise to pay whatever widely recognised and as maritime adventure”. A GA sacrifce might be jettisoning cargo to contribution is assessed, backed old as maritime transport enable a grounded ship to refoat. up by a GA guarantee from a bank or insurance company. Alongside itself, it is also a commonly employment of salvage tugs where this, the Adjuster will request landed misunderstood process. this the ship sufers an engine breakdown values of carrying equipment, and would be GA expenditure. principle of maritime law bills of lading and commercial governs the process by which whilst the combined cargo value invoices detailing CiF (Cost insurance all stakeholders in a particular will often proportionally hold greater and freight) values for cargo, in order voyage share losses resulting value than the ship itself, it is the to work out the contributions for all master technically who generally interested parties. from actions taken in an declares GA; inevitably, the master is emergency. “the Average Adjuster requires each the one directly handling the “event” party interested in the voyage to that is threatening the ‘’maritime provide a GA bond as security” adventure’’. Consequently, the ship interests appoint the “Average GA bond and guarantee Adjuster”, who thereafter operates documentation is distributed by independently and on behalf of all the Adjuster to all known interested parties. the Adjuster will compile the parties. where a freight forwarder/ NVOC (Non-vessel operating total value of the allowable sacrifce carrier) is identifed on the ocean and expenditure, and establish the bill of lading, it is likely that this total value of the assets of all the documentation, efectively intended interested parties that has been for cargo interests, will be received; saved. Such assets include not just it should be forwarded to the cargo the ship and cargo, but also bunkers interests at the earliest opportunity. it and stores, as well as containers and is recommended a proof of postage/ related equipment. email receipt is retained, in the event Contributory values are calculated of future dispute. Commercially, it against the net value of all the can prove benefcial for the forwarder/ assets at the termination of the NVOC to maintain close contact with voyage. the GA contributions from the cargo customers to ensure the each stakeholder together provide requirements are understood, and the sufcient funds to cover the total necessary documentation completed and returned. value of the sacrifce or expenditure. this process, inevitably, takes a long Of course, the client of the freight time, typically several years. forwarder/NVOC may no longer be

48 Shipping Australia Limited I Autumn / Winter 2018 Image: Indian Coast Guard the cargo owner, under the terms until satisfactory security has been to all interested parties, against of the sale contract, and therefore submitted. their respective GA Bonds and the documents will need passing Guarantees. All parties are legally “only cargo and equipment for which on to his customer – the buyer or obliged to pay the adjustment GA bonds and guarantees have been consignee. accordingly, thus concluding the received will be released” process. in the 21st century, where Impact of cargo insurance Intermediaries should take care cargo ships are capable of carrying where the cargo is insured, standard in excess of 21,000 teu, some For groupage/LCL (less than marine policies should cover the argue for the replacement of GA container load) movements, where as overly complex and disruptive. costs of GA contributions and the several cargo interests are required insurer will take over dealing with the Nevertheless, GA currently exists – to submit documentation, the stakeholders need to understand it Adjuster. where a consignment is freight forwarder/NVOC needs to in order to manage the situation and uninsured, or the Adjuster is uncertain exercise care. until all cargo is set realistic expectations, including about the security being presented, secured, the container will not be promoting insurance cover, especially a contributory cash deposit will be released. work with the Adjuster for cargo all risks. requested. Such cash deposits are to identify outstanding guarantees; held in escrow – no disbursements this not just ensures that all cargo can be made from the account interests fulfl their obligations in without the written consent of the a timely fashion but also protects Average Adjuster. this serves as commercial relationships. Some a reminder of the importance from freight forwarder/NVOC insurers may the cargo interests’ perspective, to be willing to provide guarantees in ensure adequate cargo insurance is these circumstances, facilitating the in place to cover any given shipment. release of the remainder of the cargo, without being concerned here about on an undertaking that the unsecured places of refuge or the logistics of on- cargo is similarly held under the terms carriage to the contracted destination of the NVOC bill of lading. port, only cargo and equipment for Concluding comments which GA bonds and guarantees have been received will be released; the Adjuster will ultimately conclude * This is a lightly edited version of bills of lading permit the carrier to the calculations and formally issue an article Peregrine Storrs-Fox, frst hold a lien over all cargo the General Average Statement published in TT Talk

Autumn / Winter 2018 I Shipping Australia Limited 49 border agencies

2018 customs compliance priorities

By KAYLeNe ZAKHArOFF, assistant commissioner, ABF Strategic Border Command

the Australian Border Force (ABF) is receive at the time or through analysis of of 10 per cent in import charges at the an operationally independent, frontline information, incidents and behaviours, but border. body in the newly created Home our overall approach of risk assessing all while we will continue to work with Afairs portfolio. working alongside importations and prioritising intervention trusted traders to help ensure their us in the portfolio are our colleagues against highest threats remains the same. from the Department of Home Afairs, supply chain security remains strong, our while we’ll focus broadly on supply chain Australian Federal Police, Australian focus continues to be on trade that is not integrity, this year, all customs licences Crime intelligence Commission, and accredited and poses an unknown risk. the Australian transaction reports and will be ready for renewal, so we’ll be checking that our licensees are compliant increased compliance by industry, brokers Analysis Centre. the Australian Security and the whole supply chain facilitates intelligence Organisation will also form with their licence conditions and continue to be eligible to hold their licence. we legitimate trade, ensures a level playing part of the portfolio following the passage feld for industry, and contributes to the of legislation. have increased resources allocated to this important task. protection of Australia’s border. As we the ABF is and will remain Australia’s progress this important work in 2018, we customs service, with trade facilitation a Our continued focus on regulated and will continue to work closely with industry key priority. Keeping trade facilitation and restricted goods aims to protect the to achieve better outcomes for you and traditional customs functions together, Australian community from items that the Australian community as a whole. alongside Australia’s national security pose a risk—preventing the importation of illicit frearms and weapon parts, asbestos we acknowledge there is more we can do agencies, has enhanced our ability to to improve the ways we work together. identify and focus our eforts on those and illicit tobacco, alongside emerging For example, we are currently assisting consignments and people who represent threats in prohibited substances such as with the Commonwealth Ombudsman’s the highest risk. this, in turn, has meant opioid drugs. own motion investigation into our use we are able to ensure the seamless in relation to the protection against of legislated powers under the Customs facilitation of legitimate people and economic harm, we will be looking Act 1901 in relation to the processing goods, particularly with record numbers carefully at revenue evasion through of inbound containerised sea cargo. of trade and travellers crossing the border misclassifcation, undervaluation and we have welcomed the opportunity to last year and projected to continue into non-declaration of goods; false claims for demonstrate our operational processes 2018. GSt exemptions; or improper application in relation to trade and goods border throughout 2018, we will continue to for preferential treatment under free facilitation and intervention, and look work closely with industry to facilitate trade agreements or duty refunds and forward to the fndings of the review. trade and reduce illegitimate and non- concessions. compliant imports and exports. the ABF it is a shared responsibility to protect the Businesses that have worked closely border and facilitate legitimate trade with will identify and address non-compliance with us to become trusted traders will issues and undertake education and minimal intervention. in the near term, continue to reap tangible benefts as we will look to how our processes can enforcement action where necessary, we welcome new mutual recognition to improve voluntary compliance. we be further streamlined and how voluntary Arrangements, and adopt their encourage businesses to codify their compliance can be more readily achieved suggestions for improvements to the compliance processes and to take so that interventions are minimised. in programme. Last year we signed an advantage of the benefts of becoming a the longer term, initiatives within the exciting arrangement with China, which trusted trader. expansive trade modernisation agenda gives trusted traders a competitive edge will deliver higher levels of automation the ABF will maintain its intelligence- with better access and speed to market. and pre-importation compliance that will led, risk-based approach to the broad we also launched consolidated cargo greatly enhance facilitation and strengthen spectrum of non-compliance across clearance reporting, which allows trusted border protection measures. supply chain integrity, regulated and trader importers to lodge a single import restricted goods, and economic harm. declaration for consolidated cargo for all For more information visit www. throughout the year, particular areas of sea cargo types and for air cargo, which homeafairs.gov.au or contact focus may arise based on intelligence we is already saving businesses an average [email protected].

50 Shipping Australia Limited I Autumn / Winter 2018 film review the rise and fall of a want-to-be around the world sailor

tHe merCY, Starring Colin Firth and rachel weisz – directed by James marsh

in this emotional and moving true As the frst competitors return to the story, Crowhurst, empathetically Atlantic, and the race approaches played by Colin Firth, is a technology its conclusion, the success of innovator and romantic idealist. in Crowhurst’s deception crescendos relentlessly pursuing his quest his mental turmoil, and director to be the frst and fastest to sail James marsh depicts his plea for single-handed non-stop around the mercy as he slips into the deep. world, he risks everything he holds dear, including his business and Teignmouth Electron was found adrift (unbeknown to his wife), his family in the Atlantic some eight months home, to raise the funds to build after setting sail. two sets of logs a new concept 12 metre trimaran, on the chart table showed that Teignmouth Electron. Pressed for Crowhurst never sailed further than time to meet the race start window, the South Atlantic Ocean. Crowhurst his trimaran was not seaworthy by deceived loved ones, his sponsors the time of Crowhurst’s scheduled and the public. He falsifed his departure. Feeling unprepared and position reports, foated around the uncertain, Crowhurst, who is unable Atlantic and ultimately, fnds himself to withdraw without facing fnancial in checkmate and can never return ruin and national shame, set sail from to land. the port of teignmouth in Devon, after a very public and stoically emotional A gripping, emotional and confronting the mystery surrounding the farewell to his wife (rachel weisz) and movie that shows how easily a dream 1968 voyage of amateur sailor three children. can become a nightmare. A simple deal for media exposure and fnancial and struggling businessman At sea, things quickly get even Donald Crowhurst, who support, can lead to destruction. it is worse, and realising that his a wake-up call for all those who are attempted to sail single- leaking trimaran would not contemplating that enticing deal with handedly around the world weather the Southern Ocean, the devil. to win £5,000 in the Sunday Crowhurst is faced with the Post script: Amazingly, during his times Golden Globe race, choice of dying at sea or voyage, Crowhurst even went ashore remains. facing public humiliation and in Argentina and, with no passport, this cinematic depiction exposes fnancial ruin. with neither was interrogated by ofcials, but the factors that drive Crowhurst into this wasn’t reported to the uK. option tenable, Crowhurst a series of logical but questionable what Crowhurst achieved in 1968 decisions that inevitably lead him to hatches a plan; he stays near is no longer imaginable today. with unbearable internal confict, with no the coast of South America the 2018 Golden Globe race re- place to escape except… the mercy. for 8 months, whilst falsely enactment commencing on 1 July, all this is an incredulous story and reporting his progress around the contestants will have to sail the captivating emotional rollercoaster, long way around. which will keep you in your seat until the globe, all the time battling the credits fade. with his mental state. - SHARYN FLOOD

Autumn / Winter 2018 I Shipping Australia Limited 51 the scene

SAL QLD Golf Day Following an absolute downpour which made the course unplayable on the 18th April, most players backed up on the 8th may for a rescheduled assault on the wynnum Golf Course. Fabulous weather was provided with 104 lining ES Randle and MCC Marine team: The SAL Cup was again won by the team up for a number of trophies. from CS Leasing: Daniel Hauser, Dennis Verity Colwell, Nick Bradley, Geof Cumsing, Jamie Edwards and Lionel Edwards Dufeld and Chris Holman SAL is appreciative of the ongoing industry support for this annual event and especially so this year when unavoidable costs, especially QUbE takes the honours at SAL New South Wales Golf Day for golf cart hire, were incurred for the ‘washed the annual SAL New Southwales Golf Day, held at the Coast Golf Club out’ day. Ofers were gratefully accepted from on wednesday 28 February, was a great success. with perfect weather Anderson Hughes, K Line and Svitzer who and a good attendance, there was some excellent play and players combined to alleviate much of that expenditure.’ were rewarded with spectacular views of the coast and ocean. the SAL Cup was again won by the team from CS Leasing Images: SVITZER A big congratulations to the QuBe team, headed up by Damian wilson who, despite being the lowest handicap team (18), fnished the day as our 2018 winners. their class had them coming in 14 under the card, with 48.1 points, nine strokes ahead of the second and third placed teams, who were Patrick (Brad morgan) with 51.1 points and DP world (Ben moke) with 53.4 points. i’m sure that it will be a tough contest again next year! the longest drive was won by Johan Franzen (13th hole) from Hamburg Sud, and the nearest the pin prizes were won by Andrew thompson from Patrick (4th hole) and michael Cubby from Qube (8th hole). the day was topped of with a sumptuous bufet and drinks at the 19th hole. many thanks to the team at the Coast Course and our fabulous hole sponsors, whose generous support made a great day possible – Asiaworld Shipping, evergreen Line, DP world, Patrick, QuBe Logistics, Smit Lamnalco and Svitzer. Michael Cubby, Michael Jones, Dan Williams and Damian Wilson

Simon52 Gardiner,Shipping Ian AustraliaWestley, LimitedGeof Greenwood I Autumn / Winter Tony2018 Cousins, Dale Arnott, Alistair Sullivan Stephen Westfeld, Ross Powell, and Johann Franzen and Rod Nairn Bryan Dean and John Karamanis SAL Victoria Golf Day Shipping Australia’s Victoria annual golf challenge for the Phil Kelly OAm trophy, saw a feld of 16 teams get around the waterford Valley Golf Course on a day ofering spectacular Autumn conditions. the assembly of the industry’s fnest competitors battling it out eventually saw team ANCrA Australia, led by Laurens de Jonge, take frst place, closely followed by Priority Cargoes, A team. Despite concern the stevedoring sector would again be on the podium, this proved no lay down misere, with form eluding the players represented. Grateful thanks to Svitzer for their gold sponsorship of the event, and to Port of melbourne for providing quality golf bags to the frst prize winners. we additionally would like to acknowledge the 22 silver sponsors, who all contributed into making this an outstanding event, and to waterford Valley management, who raised the catering standard. Finally, the course has been rebooked for wednesday 3 April 2019. Put this in your diary!

Winners of the Phil Kelly OAM Trophy, Team ANCRA Australia: Laurens de Jonge, Mustafa Songur, Mathew Hodgkiss and Jason Connor

SAL Parliamentary Lunch On tuesday, 8 may 2018, SAL’s New South wales State Committee held its luncheon at New South wales Parliament House in Sydney. the main sponsors of the event were NSw Ports. the event was attended by approximately 200 shipping industry stakeholders, including the Deputy Leader of the Opposition, michael Daley. regrettably the portfolio minister melinda Pavey was unable to attend as she was required to be in her electorate for Government business with the Premier. However, the attendees were delighted to have the Honourable Bronwyn (Bronnie) taylor - member of the The Hon Bronywn Taylor MLC Legislative Council and Parliamentary Secretary to the Deputy Premier and Southern New South wales to speak on the minister’s behalf. Freight and port development was the favour of the speech and the importance of the freight industry as the core of the State’s economy was acknowledged. the development of the port of eden as a cruise destination was recognised as a beneft to the region, which has been facing social disadvantage and unemployment issues for some time. the investment in a wharf extension at the port to accommodate larger cruise vessels has lifted the morale of the entire community. in customary fashion the luncheon concluded with the drawing of prizes, sponsored by the Port Authority of New South wales.

Tony Cousins, Port Authority New South Doyle Cook and David Barnsdall, Ken Fitzpatrick, Asiaworld; StuartAutumn McFarlane / Winter 2018 I ShippingWales; JamesAustralia Mather, Limited Svitzer53 Port Kembla Gateway and Brian Lovell, AFIF and Sunil Dhowan, WWL navigation the Panama Canal

By teD SimmONS OAm

the Suez Canal and the Panama Canal have captured the imagination of countries and people ever since man began to travel outside his home, and ships ventured into foreign waters in search of cargo and new territory.

But distance and time made it difcult for these intrepid sailors, particularly being forced to travel around the Cape of Good Hope at the bottom of South Africa, to gain entry to the Pacifc and similarly, around Cape Horn at the bottom of South America. in 1513, Spanish explorer Vasco de Balboa became the frst european to discover that the isthmus of Panama was just a slim land bridge separating the Atlantic and Pacifc oceans. Balboa’s discovery sparked a search for a natural waterway linking the two oceans. in 1534, after no such passage across the isthmus had been found, Charles V, the Holy roman emperor, ordered a survey to determine if one could be built, but the surveyors eventually decided that construction of a ship canal was impossible. in the centuries that followed and with the growth of modernisation and engineering techniques, the Panama Canal has joined the Suez as one of the world’s great waterways, visited by millions of tourists, and providing shipping companies with a major link between the Atlantic and Pacifc Miafores lower locks, looking north - November 1912 oceans. the Canal is mostly used by ships destined On average, it takes a ship 8 to 10 hours 2010, the bulk carrier Fortune Plum or originating from east coast American to pass through the canal, where a system became the one millionth vessel to cross ports and every vessel must pay a toll of locks raises each ship 28 metres above the waterway since it frst opened in 1914. based on its size and cargo volume. sea level. A specially trained canal pilot Already there have been more than 3000 tolls for the largest ships can be about replaces the ship’s captain to guide transits through the expanded locks. $450,000 and today some $1.8 billion in tolls is collected annually. August 15, 1914 each vessel through the waterway. the On such an occasion earlier in 2017, i was marked the 100th anniversary of the ofcial Panamax locks are 34 metres wide, 305 a passenger on the Cunard liner Queen opening of the Panama Canal with the metres long and were designed to handle Elizabeth when it made its transit of the passage of the SS Ancon in a full transit, the ships of yesteryear, while the expanded Canal, with stops at Fort Lauderdle (miami), from the Atlantic to the Pacifc Ocean. in Neopanamax locks now take ships up Curaca (Antilles), Cartagena (Columbia), today’s terms, it now means a vessel sailing to 51.25 metre beam and 366.5 metres Huatulco (mexico) and Cabo San Lucas between New York and California is able to long and are able to handle cargo vessels (mexico). it was fascinating to watch the bypass the long journey around the tip of carrying 14,000 20-foot containers, as well machinery assisting the Queen Elizabeth South America and trim nearly 8,000 miles as large cruise vessels - nearly three times as it made its way through the locks, and from its voyage. the previous maximum. On 4 September to get a frst-hand look at work on the new

54 Shipping Australia Limited I Autumn / Winter 2018 In March 2018 the 3000th ship transited the new Panama Canal locks lock. the Canal covers a distance of 82 who developed egypt’s Suez Canal, began kilometres in which it could construct a kilometres and the locks are clearly visible digging a canal across Panama. the canal. to the passengers during the daytime project was plagued by poor planning, Control of the Canal created tensions crossing. when the Canal was frst built, engineering problems and tropical diseases between Panama and the uSA and in the locks could easily accommodate the that killed thousands of workers. the De 1964, Panamanians rioted after being vessels but with bigger ships now cruising, Lesseps-led company went bankrupt in prevented from fying their nation’s fag next as well as huge container ships, it was 1889. At the time, the French had sunk to an American fag in the Cana Zone. in found the locks could not accommodate more than $260 million into the canal the larger vessels. 1977, President Jimmy Carter and General venture and excavated more than 53 million Omar torrijos of Panama, signed treaties, to overcome this problem, a new 6.1 cubic metres of earth. and control of the canal was transferred kilometre Pacifc Access Channel was built the united States, throughout the 1800’s, peacefully to Panama in December 1999. almost parallel to the existing channels. it had wanted a canal linking the Atlantic and the Panama Canal is the result of human was the largest infrastructure project in the Pacifc oceans for economic and military waterway since the original construction ingenuity, courage and perseverance, in reasons and had considered Nicaragua a began. work started on the $5.25 billion the attempts by many people of diferent better option, until convinced otherwise. plan on 3 September 2007, to add a third cultures to create a monument which in 1902, the uS Congress authorised lane to accommodate the larger vessels, others had deemed impossible. it is purchase of the French assets but which would double the capacity of the indeed, a wonder of the world. Columbia refused to ratify the agreement, waterway. the design and construction of * This is an edited and updated version of the third set of locks consist of a new lock with the result that Panama staged a revolt and declared its independence. the text originally published in ‘Freemason’, complex at the Pacifc and Atlantic oceans, June 2017 the deepening and widening of Gatum the subsequent treaty gave America the Lake, deepening of Culebra Cut, a flling right to a zone of more than 1,200 square All images: Panama Canal Authority and emptying system and rolling gates. And as the Canal continued to attract attention, other ventures began to take place, and on 12 October 1962 the inauguration was held of the bridge of the Americas, the frst bridge opened to the public over the Panama Canal. in may 1953, the Canal began operating 24 hours a day, with 16 February a gala day, when the Canal was chosen as one of the Seven wonders of the modern world by the American Society of Civil engineers. with its opening, the Panama Canal has transformed world trade by reducing time, costs and distance between continents and now connects 144 routes, reaching 1,700 ports in 160 countries, and its construction and operation is a result of human ingenuity and regular innovation History records, a serious attempt to create a canal in the area wasn’t made until 1881 when a French company headed by Ferdinand de Lesseps, a former diplomat Expanded locks now take ships to 51.25 metres beam

Autumn / Winter 2018 I Shipping Australia Limited 55 naval history

HmAS AE1: Our longest Naval mystery – SOLVeD!

By A SPeCiAL COrreSPONDeNt

the discovery of the HmA Submarine AE1 it possible to get the sonars close to the on 20 December 2017, ended a century- seabed and search more efciently. it’s no old mystery that has plagued the royal coincidence that so many age old maritime Australian Navy, families of the men lost mysteries have been solved and historic and war historians, since its disappearance wrecks found since the turn of the century. somewhere of the PNG coast near rabaul, after failing to return from a mission in From 2012 onward, the driving force the vicinity of Duke of York islands, on 14 behind the search was rear Admiral Peter September 1914. Briggs AO, CSC, rAN rtd and the not- for-proft company he established for the Over the years there have been many purpose, Find AE1 Ltd. in 2014 a search theories and many searches. the royal by minehunter HmAS Yarra found likely Australian Navy’s Australian Hydrographic Ofce maintained an interest in fnding contact but it was later found to be a group the AE1 and prepared a plot of AE1’s last of boulders. mission and last sightings. Commander with fnancial support from the Submarine John Foster rAN, pursued the search institute of Australia and coordination by diligently during his time in Navy and the volunteers of Find AE1 Limited, an personally in retirement. Survey ships initial multibeam search was conducted were routinely tasked to sound an area, or in 2015 but no contacts were deemed tow a magnetometer or side scan sonar likely. it was clear that to fnd such a across a likely location. even Jacques small object in a search area containing Cousteau was enlisted to undertake an ad hoc search. But their equipment didn’t suit complex seabed features, higher resolution the task. Finding something on the seabed equipment would be required. Finding the in deep water requires special equipment suitable survey vessel at an afordable cost that has only been reasonably available was the next challenge. Additional funding for the last two decades. Advances in provided by the Australian Government, technology have developed high resolution Australian National maritime Foundation, multibeam sounders and synthetic aperture and Silentworld Foundation, enabled the sonar. Autonomous vehicles have made eforts to continue. Sonar image of AE1 on the seabed

Photo mosaic of AE1 created from 6000 images

56 Shipping Australia Limited I Autumn / Winter 2018 already begun the process of dislodging the fn, we believe that the resultant whiplash efect caused or completed dislodgement of the fn and caused it to tilt forward onto the partially collapsed forward casing. they also recommend that an internal examination would add little value to the conclusions. A recommendation no doubt reinforced by the fact that the submarine is the fnal resting place of its 35 crewmen and deserves the sanctity as a grave site. All parties agree that the protection of the site is paramount. A joint operation by the PNG and Australian governments is likely Fugro Equator to implement this protection. As something tangible and closer to in September 2017, Fugro advised they the investigations concluded that it is most home, the Submarine institute of Australia would undertake a fxed price contract with likely: commissioned war artist robert macrae a suitably equipped ship in the vicinity and • AE1 was probably already submerged to compose a painting to commemorate could supply a fully equipped Hugin 1000 or in the process of diving when the the sailors who lost their lives in the autonomous underwater vehicle (AuV) accident occurred. sinking of Australia’s frst submarine and and a remote camera vehicle, which were tell the story of its discovery. the painting perfect for the task. the search began on • the submarine experienced a depth was presented to the Australian National excursion and exceeded its crush depth, 18 December 2017 utilising the equipment maritime museum where it will be seen by leading to the implosion of the hull forward and expertise of the 14 person survey generations to come. Find AE1 will transfer of the fn in the control room area and over the rights of their images to the Australian crew aboard mV Fugro Equator, plus the forward torpedo area. representatives from the rAN, ANmm and National maritime museum on completion Find AE1. • the fooded submarine sank rapidly to of the project, to share the story. the bottom, probably landing on its keel, On 19 December, analysis of the multibeam with a moderate bow-down angle, since this story of HmAS AE1 is a story that echo sounder data from the frst AuV dive the torpedo tube is relatively intact. deserves to be heard, it has waited a very revealed a contact with similar dimensions long time to be told. the team concluded that from there: to AE1 close to the search datum, but it * thanks to Find AE1 Ltd and the Australian was inconclusive. the AuV was deployed • it then pitched forward, to strike the National maritime museum for the source seabed with its bow. again to examine the site more closely. material for this article “report on Finding then on the morning of 20 December, • it is possible that the implosion had the men of the AE1” – January 2018. a drop camera was used to examine the contact and photographic evidence confrmed the long-awaited discovery of the AE1. How did this submarine, with 35 crew aboard, end up in its fnal resting place in 300 metres of water, to the east of mioko island, in the Duke of York Group? to help solve this question Fugro gathered 6000 images of the site and merged them into a mosaic overview of the wreck. Speculation as to the cause of the sinking was then able to begin with some degree of accuracy. Or so it was expected... it quickly became apparent that damage to the submarine’s hull during the sinking, combined with possible post-sinking events and corrosion over many years, would make establishing the initial cause much more difcult. Conclusions reached by the team conducting the analysis, which are supported by the Defence Science and technology Group, agree that the loss appears to be as the result of a diving accident, whilst on its return course to The (yet unfnished) commemorative painting by artist Robert McRae, telling rabaul. the story of the AE1, her crew, her loss and her discovery

Autumn / Winter 2018 I Shipping Australia Limited 57 alc forum 2018 towards a National Freight and Supply Chain Strategy

By A SPeCiAL COrreSPONDeNt

meeting the growing freight task and regional Development; and roy efciently and safely needs a van den Berg, intermodal transport specialist (the Netherlands). the Hon dynamic and efective blueprint melinda Pavey, minister for roads, Australia’s freight logistics and supply maritime and Freight (NSw) gave the chain specialists gathered for the opening keynote address. annual ALC Forum at royal randwick minister Pavey spoke of the importance racecourse, in Sydney, between march of Government supporting industry. 6 and 8, 2018. Building on the work done at last year’s forum to establish ‘All governments, including my own, the required content of the Strategy, have two critical, and interwoven, roles the focus this year was developing in supporting the freight industry. the the National Freight and Supply Chain frst is through infrastructure delivery. Strategy, building on the Australian the second is regulation, and more Logistic Councils major submission to accurately, appropriate regulation rather the inquiry into National Freight and than over regulation. Supply Chain Priorities - Freight Doesn’t Vote. ‘One key to that is to collaborate with other States, territories and the Australia’s peak national logistics Commonwealth to make that regulation industry body, the Australian Logistics as consistent as possible. And to plan Council (ALC) works with Government for the nation’s future through a shared at all levels, to ensure it considers national strategy. the needs of the logistics industry in its investment and policy decisions, ‘For all industries, the other important representing the major Australian element is certainty; and providing logistics supply chain customers, certainty around that regulation and New South Wales Minister for Roads, Maritime providers, infrastructure owners and infrastructure delivery. and Freight, Melinda Pavey MLA, presents the opening address suppliers. ‘the NSw Freight and Ports Strategy established the direction of freight ALC chairman, ian murray and through investment in the New South planning in New South wales and managing director, michael Kilgarif, wales freight network, she continued, provided that certainty for industry. sought active industry participation ‘the Commonwealth has committed in discussions over the course of the ‘the Council of Australian Governments $9.3 billion to the 13 individual projects forum, in order that the outcomes truly has recognised that harmonised making up inland rail. refect the industry’s diverse nature. national laws and regulation are in the ‘inland rail will create a 1,700 kilometre Among this year’s speakers were: nation’s interest. Consistent laws are express freight line from Victoria to marika Calfas, chief executive ofcer, easier to follow, to implement ...and to Queensland, right through the heart of NSw Ports; maurice James, managing enforce. New South wales, and with efcient director, Qube Holdings; Clare Gardiner- ‘the New South wales Government has linkages to our three major ports.’ Barnes, transport for NSw; Ken worked closely with the Commonwealth morrison, chief executive, Property and other jurisdictions, to establish She concluded by saying, ‘the number Council of Australia; Paul Scurrah, four national transport regulators: the one priority is to strengthen freight managing director and chief executive National transport Commission, the industry and government partnerships. ofcer, DP world Australia and Geof Australian maritime Safety Authority, By working together, we’ll arrive at a Crowe, chief executive ofcer, Port of the Ofce of the National rail Safety better outcome, sooner.’ Newcastle. regulator, and the National Heavy Challenges confronting the industry Keynote speakers were the Hon Vehicle regulator. these last two Anthony Albanese mP, Shadow minister are particularly relevant to freight and Session topics over the two-day forum, for infrastructure, transport, Cities logistics.’ included:

58 Shipping Australia Limited I Autumn / Winter 2018 • Planning freight friendly cities, synergies between State and port strategies, • Driving productivity and enhancing competition, • CBD freight delivery and e-commerce, • How rail can share the growing freight task, • making logistics infrastructure an investment priority, • the increasing role of intermodal terminals, • using technology to enhance efciency and safety, and • Diversity, inclusion and culture in the Intermodal Terminals Panel: Session chair, Michelle Reynolds; CEO, InterlinkSQ; Ken Keith industry. OAM, Mayor, Parkes Shire Council; Paul Scurrah, managing director and CEO, DP World Australia; Anthony Jones, CEO, LINX Cargo Care Group; Roy van den Berg, intermodal marika Calfas (NSw Ports) commented, transport specialist and Maurice James, managing director, Qube Holdings these ‘lead directly to the cost. the cost of what we buy, and the cost of issue of how to ensure it delivers the western Sydney Airport; $370 million what businesses pay for their goods’. right outcomes for our industry and for moorebank intermodal; and the economy. $9.1 billion the Federal Government ‘this is a once in a generation is investing into inland rail, while opportunity for us in the industry, ‘industry’s challenge now is to maintain delivering over 510 major road and rail to identify those priorities – that is momentum and build community projects across Australia, to future- absolutely critical for our industry,’ support, so we can achieve the policy proof the national land transport added maurice James (Qube). reforms Australia requires to meet a network. growing freight task,’ mr Kilgarif said. Active participation of industry is crucial ‘in rail we have announced a $10 to ensure that these priorities are clearly in his frst major address to the industry, billion national rail programme, which understood by Governments, in all the Hon michael mcCormack mP, will deliver major enhancement to the industries, across all parts of Australia. Deputy Prime minister and minister for national freight rail network in addition infrastructure and transport, noted, ALC’s michael Kilgarif, noted, ‘the to the inland rail. ‘Your businesses form part of the fabric outcomes from our discussions will that holds together our economy, and in ‘Across the north of Australia, we are be crucial in shaping the development doing so collectively contribute almost investing $100 million in the Beef roads of the Strategy, as we move beyond 10 per cent to Gross Domestic Product Program, targeting upgrades to key examining what it needs to contain, and provide over one million jobs. the transport corridors. and consider the more complex Coalition Government is focused on Shadow minister for infrastructure, delivering the infrastructure you need to transport, Cities and regional be successful.’ Development, the Hon Anthony with the national freight task set to Albanese mP, agreed that ‘investing double over the next 20 years, mr in good infrastructure generates mcCormack is expecting the priorities long-term economic and jobs growth, identifed at the forum ‘will be key lifts productivity, creates inclusive to the development of a strategy’ communities, builds a low carbon to be considered at the transport future, enables businesses to grow, and and infrastructure Council meeting gives our exporters a competitive edge. in November this year, to clearly ‘in 2018, an efective infrastructure outline themes ...around integration, policy is fundamental to an efective measurement, planning ahead, delivery economic policy, an efective housing and communication. afordability policy and an efective ‘through the 2017–18 Budget, the environmental policy. Government committed over $75 billion ‘if we are to maximise its economic, in transport infrastructure over ten years social and environmental dividends, to 2026–27. infrastructure policy has to be got right – and that starts with a genuine ‘On average we are spending $7.2 commitment to a long-term strategy billion per year, as opposed to an based on an objective, evidence- annual average of $6.5 billion for based assessment of the nation’s the last four years of the Labor infrastructure needs.’ Government.’ Achieving the Strategy mr mcCormack outlined the important contributions to logistics and supply Opportunities identifed at the forum, Deputy Prime Minister and Minister for Transport chains, which will be made by the necessary to ensure the ultimate and Infrastrusture, Michael McCormack MP with Coalition Government, through key efectiveness of the National Supply SAL CEO Rod Nairn investments like: the $5.3 billion for Chain Strategy, include:

Autumn / Winter 2018 I Shipping Australia Limited 59 chains for businesses, households and Following the forum, momentum consumer prices, and communicating continues honestly about the challenges Commenting on the release of the associated with a growing population. 2018 infrastructure Priority List this will help protect the social licence launched by infrastructure Australia freight networks require to operate chair, Julieanne Alroe, on 27 march efectively; 2018, ALC managing director, michael • Promoting far greater use of Kilgarif, stressed that this ‘comes at a technology to improve safety and crucial moment, as the Commonwealth efciency across all modes of freight continues to develop the National transport; Freight and Supply Chain Strategy – an initiative which is again included as a • investing in rail infrastructure that high priority initiative on this year’s list. will help Australia meet a rapidly- growing freight task, including inland ‘An export-driven economy like rail, short-haul rail from ports to Australia must do everything possible intermodal facilities and encouraging to eliminate capacity constraints in the separation of freight and passenger our freight networks if we wish to rail; succeed in an increasingly competitive global market. Accordingly, ALC urges • ensuring regulatory frameworks governments to pay particular attention are being prepared now to account to key freight-related initiatives iA has for technological evolution, including identifed in this year’s list.’ the introduction of Connected and Anthony Albanese MP outlines his transport Autonomous Vehicles (CAVs) and more ALC has also applauded a major priorities widespread use of Artifcial intelligence new report released on 26 April, (Ai) within the industry; by infrastructure Partnerships • Developing a clear set of industry Australia(iPA), which helps to highlight benchmarks and/or key performance • working to enhance the diversity many of the challenges confronting indicators (KPis) that will allow of the industry by improving workplace Australia’s freight networks. industry, governments and regulators culture, promoting the benefts of a to better identify which aspects of career in freight logistics, identifying the ‘Fixing Freight: establishing Freight the supply chain are performing well, sector’s future leaders, and ensuring Performance in Australia, supports determine those which are experiencing skills training programmes are preparing ALC’s long-held view that Australia difculties, and permit the development and equipping the current and future must do more to capture data about of efective policy responses; industry workforce with the skills the operation and performance of our needed in a 21st century economy; and supply chains,’ said mr Kilgarif. • Continuing to encourage governments at all levels to ensure • recognising that the National it is pleasing that this report from iPA planning systems properly account for Freight and Supply Chain Strategy supports these ideas by recommending freight movement, particularly in CBD can only succeed with active the establishment of an independent and inner-urban areas; cooperation from industry and all statutory body with the mandate and tiers of government, which will require resources to close the data gap. this • Pursuing the adoption of a holistic continuing industry consultation and should be a key focus for the National and consistent National Corridor involvement in its ongoing development. Freight and Supply Chain Strategy.’ Protection Strategy that will protect critical freight infrastructure and employment lands from the impact of urban encroachment, particularly around ports and airports • encouraging the collection of more and better data about freight movement, to help guide investment decisions about freight infrastructure and more efectively measure the performance of our freight networks; • Removing legislative and regulatory barriers that needlessly prevent opportunities for data- sharing that can enhance the efciency, safety and visibility of our supply chains, whilst still protecting commercial and user privacy; • Providing certainty for investors by encouraging governments across all jurisdictions to develop a transparent, independent and long-term approach to prioritising infrastructure investment that lasts NFSC Panel: Session chair, Michael Kilgarif, managing director, Australian Logistics Council; well beyond election cycles; Pip Spence, deputy secretary, Department of Infrastructure, Regional Development and Cities; Expert Panel members National Freight and Supply Chain Inquiry: Maurice James, • Building community awareness Qube Holdings; Marika Calfas, CEO, NSW Ports; NIcole Lockwood, principal, Lockwood of the importance of efcient supply Advisary, board member, and Philip Davies, CEO, Infrastructure Australia

60 Shipping Australia Limited I Autumn / Winter 2018 Delivering safe, efien an ssainale rllass r an arine servies www.portauthoritynsw.com.au