Swire Shipping hauls anchor in Tasmania, with forestry looking to northern export solution

The operator of southern Tasmania’s only direct freight service has announced it is pulling out of the state in two weeks, forcing customers to transport goods to northern ports by road or rail.

Singapore-based company Swire Shipping has been operating out of Hobart every nine days since 2015, but are stopping the service due to charter and bunker costs making the service “commercially unviable”.

The end of the service is expected to seriously affect the forestry sector, with one industry leader saying “a number of communities would be holding their collective breath knowing this will have a significant impact”.

“This has been a very difficult decision to take,” Swire Shipping general manager Jeremy Sutton said.

“We would like to thank the Tasmanian business community, our valued customers, staff and service providers for their support over the last two years.”

There have been troubling signs about the viability of the freight route since 2016, with Swire operating at less than a third of its capacity.

Chief executive of the Tasmanian Chamber of Commerce and Industry (TCCI) Michael Bailey said rumblings had become known to him in recent months.

“It’s a run that is problematic for an international freight line with increasing fuel costs and the like, so we had heard for some time that there was an economic issue for Swire with this run out of Hobart,” he said.

Mr Bailey said the biggest loser from the move was the southern Tasmanian forest industry, which had been using Swire’s service to export to international markets.

“We know that for our Southern forest industries, this is a really important way of getting their residues into a profitable market, so this is a problem,” he said.

“There’s really no other option but for the southern industries to freight their products now north. We know the impact that has on their bottom line, and that’s going to be a problem for them.”

“I can imagine today there would be a number of communities that would be holding their collective breath knowing this will have a significant impact to their local industries.”

Troubled seas since launching

Forest Industries Association of Tasmania chief executive Craig Jones said the decision would be “a problem for the Swire’s customers who are using that and then also the customers for the wood overseas”.

The issue of transporting freight out of Southern Tasmania has been ongoing since 2014 when Swire Shipping first arrived in the state.

 

The arrival of Swire Shipping in Tasmania in 2014 was the fulfillment of a Liberal election promise to reinstate an international shipping service, following the exit of Agility Shipping in 2011.

Swire, a subsidiary of China Navigation, offered “fixed-day fortnightly” freight services with two multi-purpose vessels between Australian and New Zealand ports.

But before it had commenced its operations, Swire said the Federal Government’s decision to extend the Tasmanian Freight Equalisation Scheme (TFES) to include international export freight bound for Melbourne had “materially changed” the $33 million Memorandum of Understanding between the Tasmanian Government and Swire Shipping signed in November, after the Liberals came to power in March.

At the time, Swire said the “current environment” meant the “the economic case for a direct international service linking Tasmania to global markets is no longer sustainable”.

State deal ‘gazumped’ by Feds

The 2015 collapse of the deal was explained by then-infrastructure minister Rene Hidding as a case of the federal government having “gazumped” their state Liberal counterparts, with the Government saying it would stand by the deal.

In October of that year, the company announced they would commence the service between Tasmania and the mainland without State Government assistance.

Mr Bailey said the continuing back-and-forth pointed to the need for a more permanent freight solution.

“We’ve always known though in Tasmania that international ships from Tasmania probably aren’t going to be a long-term solution for our state. We know we need to focus on our freight line to places like Melbourne which can offer solutions right around the world from that one port,” he said.

Mr Jones said the Tasmanian timber industry was sustainable into the future, but was in need of proper coordination.

“It’s another illustration of the issue around residues in the southern forestry estate. Unless we find a manageable solution for that, it’s always going to be difficult,” he said.

Government seeking alternative solutions

A State Government spokesperson said logs could still be exported from Hobart through bulk shipments, and the loss of Swire would only affect containerised shipping.

She said the Government would work with Swire customers to discuss the impact and alternative freight solutions and had engaged Evan Rolley to examine all forest residue options as a priority.

But Labor’s shadow minister David O’Byrne said forestry companies that relied on the Swire service to ship their product to Melbourne would be significantly affected.

“It will mean they have significant extra costs to get their product to the northern ports or they’ll need to seek another exporter to move their products,” he said.

“This is another example of the Government being asleep at the wheel at not working with the forestry industry to get a resolution.”

Image Credit: Swire Shipping

This article was published as part of my employment with the ABC. It was published on 28th August 2018 and is available here: http://www.abc.net.au/news/2018-08-28/swire-shipping-to-pull-out-of-tasmania/10173720 

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