by Robert Barwick
Published in The New Citizen, February 2002, reprinted in April 2006 edition. Download a PDF version of this section.
Australia needs a shipping industry!
We are an island-continent, with a coastline of 19,320 kilometres. In the year 2000, the Australian economy exported
$101.295 billion worth of rural produce, resources and manufactured goods, and imported $112.445 billion worth of consumer,
capital and other goods. The total sea freight bill on this external trade was $11.9 billion, $9 billion of which was spent on foreign
ships operating in Australia. (See Figure 1, below.) This added $3 billion to Australia’s current account deficit,
9% of the total deficit. Yet, incredibly, Australia has virtually no shipping industry. Major shipbuilding in the area of cargo vessels
and bulk carriers has been defunct for more than 20 years. Worse, the nation’s ship-owning and ship-operating industry has
been allowed to collapse to minuscule proportions: the fleet of commercial Australian flag ships is down to 59 vessels in total, out of
a total world market of upwards of 30,000 vessels.
The Australian shipping industry
has declined rapidly over the
past 20 years, because Government
policy has been purposely rigged
to favour cheaper foreign shipping.
As Captain William (Bill) Bolitho,
a legendary Australian maritime
figure who was chairman of the
Australian National Line (ANL)
from 1989 to 1994, and Chairman
of the Australian Shipping Commission
from 1984 to 1989, explained
the decline to the New Citizen on January 21, 2002, “It’s almost entirely
because of government policy
over the past fifteen years, that
has favoured the importation of
foreign vessels and foreign crews,
untaxed and unregulated. The Australian
government hasn’t, for
many years, put any support behind
either its shipbuilding, or
shipping industries.”
Large steel cargo shipbuilding
(known as “metal bashing”)
ceased in Australia in 1978, when
BHP closed its Whyalla shipyard.
Until then, Australia had produced
a wide range of vessels, including
bulk carriers up to 85,000 tonnes
dead weight, roll-on, roll-off vessels
and ships for the coastal and
international trade.1 But when the
Government subsidy for shipbuilding,
the Shipbuilding Bounty (a
percentage of the construction cost
paid for by the Government), was
rolled back, Australia’s high wages
and living standards, like Europe’s,
became uncompetitive in
shipbuilding, first with Japan, and
then, in turn, with South Korea,
Taiwan, China and the Philippines.
As a “mature” technology, large
bulk carrier shipbuilding isn’t hard
to replicate, Bolitho explained, and
lower-wage nations have a competitive
edge.
While the decline in shipbuilding
can be partially explained as
a global phenomenon, Australian
Government policy deliberately
disadvantages Australia’s shipping
industry. The Australian Shipowners
Association reports no less
than ten pieces of federal legislation
that, one way or another, impose
costs on Australian ship operators
that are not imposed on
foreign operators. For instance,
Australian flag ships (ships registered
in Australia) are regulated
under occupational health and
safety and other laws that make
ship operating safe. Foreign ships
are predominantly unregulated
and are issued special permits by
the Australian Government to
operate on Australian routes, without
complying with Australian
award wages and safety regulations.
Furthermore, Australian operators
and crew pay tax, whereas a very
large proportion of foreign vessels
either enjoy tax breaks that most
major shipping countries provide
(unlike Australia), or they operate
out of tax havens like Panama and
Liberia. Panamanian-registered vessels
carried 37.5% of Australia’s international
maritime trade in 1999/2000, followed by Liberia at 8.5%.
The lack of Government finance
also disadvantages Australia’s ship
operators: like most international
industries, the shipping industry is
driven entirely by finance. Without
cheap Government credits, Australian
operators can’t buy their vessels
cheap enough to be competitive.
Deputy Prime Minister and Transport
Minister John Anderson brazenly
admitted to this policy of deliberately
disadvantaging the nation’s
shipping industry in a speech to a
Melbourne dinner in December
1999, when he announced that
“Australia is a shipper nation [exporter]
and not a shipping nation
[carrier],” and that no incentives
would be provided by the Coalition
Government. In the words of
Capt. Bolitho: “The Australian government
has set out on a policy of
using other countries’ tax breaks to
fund their own shipping industry.
It’s in terms of finance and government
incentives that the heart of the
problem lies. Australia doesn’t want
a shipping industry. It says, ‘If we
can get it cheaper somewhere else,
let’s do it’.”
Fast Boat to China: Australian-Made High-Speed Shipping
The one bright spot on the Australian
shipping scene has been
the development of a vigorous
niche industry building small, specialised
vessels, particularly high-speed
catamarans. Two Australian
companies, WA’s Austal Ships, and
Tasmania’s Incat are world leaders
in high-speed shipping technology,
and have set the standard in
the development and production
of high-speed catamarans and other
fast ferries for the international
market. Incat has held the Hales
Trophy for the fastest transatlantic
crossing for the last three years, its Cat-Link V crossing in just 2 days,
20 hours and 9 minutes at an average
speed of 41.284 knots (nautical
miles per hour; 76.5 km/h or
47.5 mph). 2 Austal’s Villum
Clausen holds the record for the
longest distance travelled by a
commercial passenger ship in 24
hours—1063 nautical miles.
The export of these catamarans
has been a successful business for
both companies; however, a recent
decline in the demand for larger
fast ferries has affected the shipbuilding
industry. For example, a
vessel sold by Incat in January
2002 was its first sale for 14
months. In the face of the onrushing
global economic depression,
the risk is that the further development
of these great Australian companies
could be stifled. On the other
hand, if LaRouche’s New Bretton
Woods/Eurasian Land-Bridge
global economic recovery plan is
adopted, and Australia in that context
adopts a national development
perspective, then Australia’s export
industries will soar, and along with
them demand for these high-speed
catamarans.
The immense potential for these
high-speed catamarans is in fast
freight to Asia, right on Australia’s
doorstep. Industry sources report
that both the Northern Territory
and Queensland governments
have canvassed the possibilities of
fast freight into Asia, and the concept
is seen as strong and workable.
The immediate application of
that technology would rapidly accelerate
the development of the
“Top End” of Australia. According
to Prof. Lance Endersbee, who has
studied fast freight potential into
Asia as part of his “Asian Express”
high-speed rail concept, a fast
freight service into Jakarta, Singapore
and Kuala Lumpur would create
a demand for high-value Australian
produce, particularly in
fresh fruit and vegetables. The
fledgling exotic fruit industries
around Darwin, of Kakadu plums,
peanuts, mangoes, paw paws, and
figs, that are being developed already
using expensive air freight,
would be able to expand into large
industries for northern WA, the NT,
and northern Queensland, supplying
the massive Asian market.
Both Austal and Incat have developed
their largely vehicle/passenger
catamarans into fast freight
carriers. Their existing fast freight
designs could transport five to
eight times the tonnage of a jumbo
jet at a rate of around 40 knots.
At that rate, freight would be
shipped from Darwin to Singapore
in just two and a half days!
Singapore is 1887 nautical miles
from Darwin, and Jakarta is about
1400. Incat’s Evolution series of
high-speed freight catamarans,
which are between 98 metres and
112 metres long, could make the
Singapore trip in 53 hours at an
average rate of 36 knots. These are
1100 tonne vessels that would
have to carry 350 tonnes of fuel to
make the trip non-stop, leaving
between 400 tonnes and 600
tonnes for freight. At 600 tonnes
of deadweight (i.e. the weight of
the freight), they will operate at 40-
45 knots. The vehicle deck provides
a total of 3528 square metres
of cargo space, or 589 truck lane
metres, plus 698 square metres for
palletised cargo forward. Adjustable
mezzanine decks that can be
raised and lowered have been developed
which offer even more
space, and which can be adjusted
to transport cars and live cattle.
Furthermore, the possibility exists
for curtained-off chiller zones that
can provide varying temperatures
in different sections of the deck, to
meet the varying requirements of
the different produce, without the need for freezers.
Austal’s range of fast freighters
include 95m to 116m catamaran
“platforms” that have been developed
for high-speed transport of
containers, trucks, trailers, pallets
and aircraft containers. As with Incat’s
craft, the shallow draft and
high manoeuvrability of these vessels
means they require little in the
way of port infrastructure. They
offer double the speed and therefore
half the travel time of conventional
vessels, and their freight cost
per kg is up to 80% lower than air
freight. Pictured are the Ro-Con
(roll-on and container, Ro-Ro
(roll-on, roll-off), and Ro-Pax (roll-on
and passenger) in Austal’s Auto
Express range.
In the future, when combined
with Prof. Endersbee’s Asian Express
from Melbourne to Darwin that will be able to transport produce
from the southern states to
Darwin in just 24 hours, this fast
freight technology could transform
the present tyranny-of-distance
industries of Victoria, South Australia
and Tasmania (which are
high-bulk and low-value) into
high-value, profitable export industries
of fresh fruit and vegetables.
As these industries expand,
they will drive a rapid expansion
of the fleet of fast freight vessels.
In the future, hundreds of fast
freight ships could make daily runs
from Darwin and other northern
ports in Queensland and WA, to
Jakarta and its sister ports in Indonesia,
and Singapore and beyond,
brimming with Australian-grown
fruits, vegetables, meat, dairy products,
and manufactured goods.
The Government holds the key.
Prof. Endersbee insists that the establishment
of fast freight runs
from Darwin to Asia can begin immediately,
and does not have to
wait until the Asian Express is completed.
With the existing industries
in Australia’s top end, including
the large live cattle export to Asia,
and the existing road transport
technology of B-double and B-triple
trucks capable of 100 km/h that
can deliver southern states’ goods
to Darwin in a short time, the elements
of a successful fast freight
industry are ready to be exploited.
According to Prof. Endersbee,
“The sensible way to commence
fast freight would be for the Australian
Government to underwrite
the line, by buying fast freight vessels
from both Incat and Austal, to
avoid picking winners, and start
operating the service. The service
will create demand. When the market
develops, the Government
would probably be able to sell
those ships for two or three times
the purchase price. It’s an investment.”
Economic Necessity, Political Will
Australia’s geographic location
and economic plight both cry
out for a strong Australian shipping
industry. With Government
support in the form of cheap financing
and tax breaks, combined with
regulation of foreign vessels, Australia
can once again enjoy a booming
shipping industry, saving itself
the present $10 billion per year in
freight costs, an amount which will
soar as global economic recovery
gets underway.
Australia has a successful track
record in running Government
shipping lines, through the experience
of both the 1920s Commonwealth
Shipping Line, and the
1957 to 1998 Australian National
Line. The impetus to found both CSL and ANL came because Australian
industry was acutely disadvantaged
because of a lack of shipping
capacity. However, both lines
were sabotaged by a political ideology
that opposed Government
involvement in industry, which in
fact led it to support foreign, private
shipping interests (see history
of ANL, next article). In 2002, history
is repeating itself, and Australian
industry is once again disadvantaged
by the lack of Australian shipping
capacity. For an island-nation,
a robust, technologically advancing
shipping industry is part of the
urgently-required infrastructure for
sovereignty. Let us, then, dump the
present, costly “free market” absurdity,
and get on with the job!
Footnotes
1. Roll-on roll-off is where cargo is
driven up a ramp onto a boat and stored,
usually by a forklift or a similarly manoeuvrable
vehicle. When first developed
in the 1950s, it was a revolution on
conventional ship-loading, where cargo
would be lifted up and put down in a
hold, and then taken and stored. Roll-on
roll-off was more capital intensive
than conventional methods, because the
ramps were expensive, but in terms of
operating costs, and turnaround times, it
was far more efficient. It was eventually
largely replaced in bulk freight carrying
by the container freight revolution, but
it still has its applications.
2. The standard for a nautical mile is
the Earth’s equator. Each of the 360 degrees
of the earth’s equator can be further
divided into 60 minutes. Each
minute of arc is one nautical mile. Therefore
the distance around the earth is 360
x 60, or 21,600 nautical miles. This is
the standard measurement used by all
nations for air and sea travel. Converted
from standard measurements, a nautical
mile is 1.852 kilometres, or 1.1508 miles.
Incat’s Evolution series of fast
freighters. Evolution One 12, above, carries passengers and trucks. Evolution
One 12f, below, carries roll-on, roll-off freight. Both travel at up to 45
knots.
“Can-do” Shipping—the Australian National Line
Once upon a time, Australia did
have a Government-supported
national shipping line, first with
the Commonwealth Shipping Line
in the 1920s, and then with the
1957-1998 Australian National
Line (ANL). Both were established
out of the bitter experience of getting
caught in world wars without
an adequate national shipping capacity.
Prior to World War I, colonial
Australia was totally dependent
upon Britain for shipping, and Britain
was the destination for most of
our exports. However, during
World War I, Britain’s fear of German
u-boats caused it to stop shipping
to Australia, and to take the
much shorter and safer route to
South America for trade instead.
Then, in 1915, Australia raised a
bumper wheat crop, but had no
means to transport it anywhere.
Prime Minister William Hughes
travelled to London and purchased
six steamers, which became
Australia’s first national shipping
company, the Commonwealth
Shipping Line (CSL). CSL continued
until 1929, when Australia’s
Anglophile, treacherous Prime
Minister, Lord Stanley Melbourne
Bruce, sold it to a group of British
shipowners. These private shipowners
promptly shut CSL down,
forcing Australia to once again rely
on Britain for its shipping.
Ten years later, history repeated
itself. Upon the declaration of
World War II, Australia was unable
to get its product to market (as it
turned out it wasn’t just freighters
Britain was unable to provide—
its oft-promised Navy wasn’t sent
to defend Singapore on Australia’s
behalf, either). The Government’s
response was to establish another
national shipping company, the
Australian Shipping Board (ASB).
In 1957, the ASB became ANL,
and for the next 41 years, until it
was sold off in 1998, transported
freight for Australian industry. Furthermore,
it did so very profitably,
especially when supported by proindustry
political leaders.
ANL eventually fell victim to
two ideological shifts in Australia:
1) the post-industrial society
that emerged out of the 1960s
rock-drug-sex counterculture,
which saw many industries dismantled,
including Australia’s nuclear
and machine-tool industries,
beginning in the late 1960s, and
2) the Mont Pelerin Society “revolution”
of economic rationalism
and globalisation that accompanied
Bob Hawke’s rise to power,
with his agenda of privatisation
and deregulation. In its day, however,
ANL served Australia admirably,
and is a shining example of
what Australia could achieve with
a strong commitment to a shipping
industry.
The story of the early, successful
days of ANL is told in Chapter
14 of Capt. John Williams’ fascinating
autobiography, So Ends
This Day. Capt. Williams was ANL’s
founding chairman, and led it for
its first 15 years. Williams was a
Welsh-born seafarer of many years
experience, whom the Menzies
Government’s Minister for Shipping
and Transport, Senator Shane
Paltridge, approached to head up
its new venture to establish a government-
owned shipping line on a
commercial basis.
Williams’ recollection of Sen. Paltridge’s opening directive for
the operation of ANL perfectly
captures the spirit in which ANL
was launched: “Without further
palaver, I was told the fleet was to
be run as a private enterprise show:
that we would be expected to provide
an adequate and efficient service,
including the less payable
trades; that we need not look for
any Government help or favour, the
reverse in fact; that the writtendown
value of the ships was fifteen
million pounds; that we would
be given that sum to buy them from
the Board plus £500,000 working
capital and no more; and, that if
we could not make a go of it, to
Hell with the lot of us. Then, as a
final shot, he said that he wanted
me to run the Line as if I had my
own funds at risk and that if we
paid a dividend of 6% on its capital
and kept anything extra to build
up the business it would be alright
with him—‘But just give us the
money, Mister’.”
And they did. With a board comprised
of experts in matters relating
to shipping, industry and business, ANL began turning an immediate
profit. In its first four and a
half months’ trading to June 30,
1957, ANL made a profit of
£1,139,296, and paid a dividend
of £433,064 to the Government.
Williams wrote: “I had much pleasure
in taking the cheque to Shane
Paltridge with the remark, ‘Sir, here
is the money!’.” ...
The timing of the establishment
of ANL proved very fortunate, because
at that time the price of secondhand
ships was “astonishingly”
high. The ANL board immediately
sold all of the “dogs” of the
old ASB fleet, and made sufficient
money to buy newer and better
ships. For example, they were able
to sell one 10,000 ton vessel for
£650,000, that a few years earlier
had been worth just £200,000!
ANL was able to procure a fleet of
10,000-ton vessels of the “Lake
Class”, that were mainly put into
operation carrying iron ore for
BHP between Whyalla and Port
Kembla, for the lowest iron ore
rates on a ton-mile basis of anywhere
in the western world.
However, far from being the result
of just good fortune, ANL’s
success must be mainly attributed
to plain hard work and creativity.
In 1959, faced with rising freight
prices, Williams recruited an engineer
and the chairman of the Victorian
Grain Elevators Board to
help him devise and patent a pressbutton
wheat discharging system
comprised of screw conveyors and
a form of bulldozer blade that deposited
wheat onto a belt and into
a silo at a rate of 250 tons per hour.
The invention never broke down,
it turned the ship it was designed
for into the best profit earner in the
fleet, and it reduced the freight rate
by 20%. But, when it was first tried
out, there was an initial fault, that
forced Williams, the chairman of
the company, to personally shovel
wheat all night to overcome it.
On June 30, 1959, ANL paid a
dividend of £985,507, despite falling
trade. In the two years since it
had been founded, ANL had paid
out £8,694,382 in company taxes
plus £2,394,447 in dividends to
the Treasury, “real money then,”
commented Williams. That’s £11
million paid back to the Government
on its initial investment of
£15.5 million, in two and a half
years! By 1962, ANL’s annual report
noted that funds invested in
ships had increased by £12,170,722
upon the initial £15 million investment
to £27,853,383 without calling
on the Government for additional
funds. This capital increase
of nearly £13 million in five years
was achieved despite ANL being
denied the right to act as their own
agents or handle their own stevedoring,
both heavy outgoings
when carried out externally. In addition,
the entire ANL fleet was
limited to no more than 300,000
tons to help protect the private sector
against competition from a
Government entity.
ANL pioneered roll-on, roll-off
(ro-ro) freight in Australia, which
was a big technological leap over
the conventional cargo handling
of the day. Whereas conventional
cargo ships lifted the cargo up and
lowered it into the hold of the ship,
ro-ro loaded cargo on wheels,
which was driven up a ramp into
the ship; although more capital
intensive, because the ramps were
expensive, in terms of operating
costs and turnaround times, ro-ro
was a revolution in cargo handling
in those days before container
freight. Indeed, ANL’s ro-ro capacity
was so good it was competitive
with the new container freight revolution
in shipping in the 1960s,
long after container freight was
established. With this technological
and commercial edge, ANL established
a relationship with the
Kawasaki company in Japan that
allowed for a very profitable Japan-
Australia freight route employing
three ships.
Based upon its profitable ro-ro
technology, which allowed it to
pay high wages to its union workforce,
the ANL enjoyed productive,
amicable relations with James
Healy and his Waterside Workers
Federation, “without an argument
for twelve years,” as Williams reported.
And the peace in the docks
was mirrored by the peace in the
boardroom. Long after retiring,
Williams was reminiscing with another
board member from the period,
Dudley Williams, about their
15 years together, and Dudley Williams
reminded him that on not
one occasion had any issue been
the subject of a vote, “such was
the cohesion and cooperation
amongst us.”
But, there was not always peace
on the political front, with the
Government. After Sen. Paltridge
moved on to another portfolio,
ANL came under the direction of
first Sir Hubert Opperman and then
Sir Gordon Freeth as Ministers for
Transport and Shipping. Williams
reports that both men were as helpful
as Sen. Paltridge had been.
Then, in 1968, Freeth was replaced
by National Party MP Ian Sinclair,
forebodingly nicknamed “Sinkers”.
Williams reports that Sinclair
began a systematic campaign of
“bureaucratic meddling” in the
running of the company, and that
he bluntly informed the ANL board
that they should see themselves as
what he called a “Political Instrument”
and not an independent
shipping company. This was a dramatic
shift away from policy governing
the previous twelve years
of successful operation, and at one
point the tension between ANL
and Sinkers got so bad that National
Party leader John “Black Jack”
McEwen was forced to intervene
on ANL’s side. Williams reports
that subsequently, the “Political
Instrument” campaign faded into
the background, but not long afterward
Williams retired after 15
years of spectacular operational
success as chairman of ANL. “We
retired fully content,” he wrote.
In 1994, PM Paul Keating’s federal
Transport Minister Laurie
Brereton lambasted ANL as a “basket
case with negative net worth”
that “could not be given away”.
The facts of this were hotly disputed
at the time by Capt. Bolitho,
and the attempted privatisation
didn’t proceed. However, in 1998,
the line that “could not be given
away” was indeed sold, by Keating’s
fellow privatisers, the Liberal/
National Coalition. The parts of
ANL were sold for $200 million,
proving Bolitho correct, and exposing
Brereton’s and the ALP’s
claims as lies.
Talking to the New Citizen,
Capt. Bolitho predicted that the
wheel will turn, and that once again
Australia will have no choice but
to re-establish a Government shipping
line. “It’s been my view for
many years that you can’t leave
yourself entirely at the mercy of
the market,” he warned. “The free
market will always cut your throat
in the end if it can. You really need
some form of counterbalance yourself,
even if only to keep them honest.
So Australia really does need
its own shipping line—there’s no
question about it. It’s an island
nation.”
