Fence coastal shipping for locals says group

By PAM GRAHAM

Pacifica Transport's decision this week to cut a vessel from its fleet has invigorated those who say unfair competition in coastal shipping is affecting all transport operators.

The lobby group says foreign vessels, often flagged in tax havens, are undercutting local coastal shippers, trucking firms and Tranz Rail by charging marginal costs for carrying domestic freight.

Cabotage, the reservation of domestic shipping for locally controlled, crewed and flagged vessels, was removed in New Zealand in 1994.

"I don't want to be seen to be hunting for another regulated market but I just think the playing field needs to be levelled," said Don Braid, of transport and logistics company Mainfreight.

Transport Minister Paul Swain said in March that only 7 per cent of coastal cargo was picked up by foreign ships and the number of New Zealand-operated vessels - about 20 - had remained steady since 1990.

He had asked for evidence of marginal pricing.

"If the cabotage policy were to be re-considered, the implications for coastal freight rates would be the real issue, as competition has kept coastal freight rates under control, and any return to former freight rates could have real consequences for exporters and regional economies," he said.

Pacifica Transport chief executive Rod Grout said he had provided evidence of marginal costing and he believed the 7 per cent figure was too low.

"The question I pose is: are our importers and exporters subsidising international companies' coastal movements?

"You tell me what the difference is between manufacturers dumping imports and some of these overseas companies dumping capacity into our market."

He is pulling the Spirit of Vision from the company's four-vessel fleet from next Tuesday, with the loss of 22 jobs, blaming competition from overseas ships working tax-free.

Skeggs Group tried to sell Pacifica, which includes a freight-forwarding, warehouse, distribution and cool-storage business, this year to focus on fishing and food businesses.

"No one came up with the right money," said Grout. Toll Holdings, the Australian firm eyeing Tranz Rail, had looked at the business.

Braid said coastal shippers offered a more reliable service than international lines.

"In my view the demise of the coastal shipping services is also some of the reason for the demise of Tranz Rail."

Maritime Union head Dave Morgan, who was a member of a shipping industry review with Grout, said the union was renewing a campaign to reinstate cabotage.

The Labour Party, when in opposition, had opposed its removal.

"Strangely enough, they could see very, very clearly then that this would be a threat to the whole transport infrastructure. Now in Government they can't seem to see that."

Morgan said Mainfreight had lost domestic distribution contracts from aluminium manufacturer Comalco to an international shipper.

Swain has promised to respond formally to the review this month, though next month now looks more likely.

His policy options include imposing a tonnage tax on domestic freight carried by foreign ships, reimposing cabotage or creating a second register that confers tax advantages on locally owned or run ships.