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Home / Business

Is a coastal shipping rebirth on the way? New freight venture sets sail soon

By Andrea Fox
Herald business writer·NZ Herald·
13 Nov, 2021 08:00 PM10 mins to read

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A new player is on the way. Photo / 123rf

A new player is on the way. Photo / 123rf

With building industry and packaging customers "screaming" for ship freight space, new coastal shipping venture Move Oceans is already looking beyond next month's debut in domestic waters to a bigger vessel for transtasman runs.

The newly created division of NZX-listed transport company Move Logistics will soon launch a 2000 tonne roll-on, roll-off vessel to run freight services for its customers between secondary ports such as Nelson, New Plymouth and Whanganui.

The leased vessel can carry containers, trucks and bulk cargo and will arrive from Australia to be repainted in Move's colours in the next couple of weeks.

Move is the first to test the appetite for a New Zealand coastal shipping renaissance as ports and freight networks grapple with fallout from the post-Covid outbreak global container shipping boom, which has seen missed port calls, soaring costs and congestion.

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And while Move Logistics executive director Chris Dunphy says it's a very modest beginning, he's already eyeing a larger vessel currently in Europe for use on domestic and transtasman runs, and has hired former Nelson Port chief executive Martin Byrne to head the new ocean operation.

Dunphy, a former investment banker and ex-Mainfreight, says the smaller vessel - the name of which has yet to be revealed - has been chartered for a year with right of renewal.

He says Move's shipping debut is more than a bid to ease the supply chain jam for its customers.

"It's as much a positioning statement how we want to take our business forward, a commitment to looking towards a lower carbon footprint future."

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Move's dipped its toe in the water by chartering Whanganui-based vessel MV Anatoki since September for bulk cargo runs between Whanganui and Timaru. Dunphy says it will continue to use that vessel when needed.

"Everytime we do it we take heavy trucks off the road which gives us confidence to procure other tonnage.

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"A significant amount of cargo is moving currently from Nelson across the hill to Picton and then to the North Island and the other way. We want to decarbonise our supply chain and this is a modest capital means of going about it.

"We hope first that it's going to be a compelling and reasonable cost advantage to ourselves and secondly it means we can look at a bunch of things currently not moving."

An example is West Coast aggregate, once regularly moved to the North Island but no longer.

"There's a lot of opportunities for this type of service to effectively reset a whole lot of cost bases. We can see real opportunities for bulkier cargoes that otherwise just don't move into the North Island because of the Cook Strait crossing and trucks (limitations)."

Though Move was only rebranded in this name this year, its legacy in regional freight goes back to 1869 when the Hooker brothers founded a transport company in New Plymouth.

Chris Dunphy, executive director Move Logistics. Photo / Supplied
Chris Dunphy, executive director Move Logistics. Photo / Supplied

After multiple expansions and acquisitions in Manawatu, Hawke's Bay, Otago and the upper South Island, by 2014 the company's divisions had been integrated into TIL Freighting.

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In 2017 it acquired Move Logistics, enabling an expansion into warehousing, along with NZL Group and Multi Trans. A reverse listing on the NZX was completed that year.

As Move Logistics it recently completed a $40 million capital raising.

Dunphy, who bought a 6 per cent stake in Move in July, says a "modest" $2m of this will be allocated to the first maritime steps towards a modally neutral operating model.

The vessel debuting next month is chartered for under $1m a year, he says.

It is diesel powered which is not what the doctor ordered but suitable vessels are scarce these days. It's a 'step up' vessel says Dunphy and he's chartered it before in Australia so it's a known quantity, he says.

"We hope we will grow out of it but we're also hopeful to use it to grow other runs potentially Gisborne for example."

He anticipates this ship will do a couple of runs a week between the secondary ports with the opportunity for more.

"But the reality is this is not a Cook Strait service. If the weather is inclement, we won't sail.

"The bigger vessel we are working towards would be gas-powered, methanol or gas, a dual fuel vessel. There are no gas-powered vessels available so we are investigating the cost of having it retro-fitted with a gas powered engine.

"There's no point in running a 'me too' business – if we are serious about decarbonising and asking the green infrastructure fund for assistance, we should not just be talking about the number of trucks coming off the road, we should also be talking about less particulate matter into the air as well.

"It won't be cheap but it'll be worth it."

The conversion from heavy fuel oil power could cost around $2m. Dunphy says there will be more certainty about the prospect next year. The next step would be to buy a vessel then maybe do a new build.

Meanwhile, the plan is to operate both ships.

"We're very keen to get this dual-fuel vessel financed and purchased and very keen to see the green infrastructure fund (NZ Green Investment Finance) involved. New Zealand is a huge exporter of methanol and gas so it makes no sense to run vessels on the coast running on imported fuel."

Move will contract a third party to manage and crew the first vessel. It will operate to Move's schedule and the company will be involved the selection of crew, most likely Kiwis, Dunphy says.

The operation will require about 10 crew including the master.

They may take a bit of finding, says Maritime Union secretary Craig Harrison.

"Sourcing crew is hard to do, and we'd love to help them. People have come back from overseas who hold tickets. We have a database. We'd give them a selection of names, we wouldn't force people on them."

Harrison has been vocal this year about the need to revive coastal shipping and welcomes Move's venture.

Dunphy says the company's yet to talk to the union.

"I think we will have a much more constructive discussion when we unveil the ship and can bring them on board in a manner which shows we are very clear about trying to build something here.
"Don't smother us with demands and costs – work with us."

Harrison: "We wouldn't do that – we wouldn't stitch them up that way."

However he said Move must realise crew are skilled and it would have to pay market rates to get them.

The competition has also welcomed Move's maritime debut.

Brodie Stevens, country manager Pacifica Shipping. Photo / Supplied
Brodie Stevens, country manager Pacifica Shipping. Photo / Supplied

Pacifica Shipping, owned by international company Swire, operates New Zealand's only dedicated coastal shipping container vessel, the Moana Chief.

Pacifica's New Zealand head Brodie Stevens has also been calling for more coastal shipping and says "it's great people are looking to use the blue highway".

"We are passionate about the development of coastal shipping – we see a very bright future for it. It's good others see it too. We have aspirations to increase our capacity on the coast and we are actively investigating (opportunities)."

Coastal shipping has three big pluses, says Stevens.

It is sustainable, being a transport mode with lower carbon emissions; it builds supply chain resilience for when road access fails because of some calamity like the Kaikoura earthquake; and it promotes safety, taking trucks off the road.

The big question, says Stevens, is why given the supply chain crisis, the Government isn't providing more funding for coastal shipping development?

The Move shipping venture, which comes as the company imports New Zealand's first hydrogen-powered trucks, isn't receiving any subsidies.

And while the local sector is heartened that at last the Beehive has paid some attention to coastal shipping by allocating $45m for a focus on it in the latest Government policy statement on land transport, that sum has already been whittled down to $30m in the next three years by transport agency Waka Kotahi NZTA.

Sector watchers are also still waiting to hear how the money is to be used – and when.

The Herald asked Waka Kotahi.

The agency responded that as coastal shipping was a new activity class in the transport plan, it had asked independent consultants Pacific Marine Management to provide it with advice, to inform an investment approach.

The views of sector stakeholders had been sought and the initial report would be released this month.

The investment objectives were to reduce the sector's greenhouse gas emissions, enhance its resilience and improve the domestic sector's competitiveness, the agency said.

It had identified four areas for targeting investments in coastal shipping:

• New or enhanced domestic services – proposals could include new container services and new bulk services or increased frequencies and additional ships for existing container and bulk services;

• Reducing sector emissions – proposals could include testing emerging technologies for decarbonising domestic shipping;

• New or enhanced inter-modal links – proposals could include new inter-modal links or improvements to existing inter-modal links, such as track works or road access improvements; and

• New or enhanced maritime infrastructure – proposals could include shore power connections at ports, new (small) regional ports, and expanding of existing ports.

Waka Kotahi said it was developing guidance for the sector, including information on how to develop proposals and apply for funding. It expected to issue this guidance and open expressions of interest early next year, along with a final report from the consultants.

Meanwhile, Move's Dunphy says the company will be asking regional councils in the provinces it aims to service, what they can do to support their local ports with infrastructure for roll on-roll-off services. Move's vessels won't require special container handling facilities at ports.

For now the big question for New Zealand importers and exporters is will ventures like Move Oceans help lower their soaring shipping costs?

And given coastal shipping has all but disappeared in New Zealand because as Dunphy says, "it all got too hard and too expensive", what are the chances of a sustainable revival?

Dunphy is blunt.

"The answer is of course, the more scale you get, the lower cost you can achieve.

"We believe there is an opportunity to meet demand but …. we can't be in a situation of being beaten up by the cooks and stewards (unionists) of old, or selling a dollar for 80c. We've got to be conscious and transparent around the costs of service and very open about what we need to continue to operate and make money.

"Coming in with a 2000 tonne vessel doesn't move the dial that much. But at least it enables us to prove the concept and to work constructively to get scale.

"We don't expect to be shooting the lights out for a couple of years but we are committed to getting it started and driving it as an enterprise within what is already a significant freight logistics company."

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