Business group calls for deregulation of coastal shipping as business costs skyrocket

The Business Council of Australia is calling for coastal shipping to be deregulated, as the cost of shipping services has skyrocketed and administrative burdens have increased in the past two years.

In a submission to the Productivity Commission Inquiry into Tasmanian Shipping and Freight, the BCA says since new laws were introduced in 2012, the cost of shipping services, including routes to Tasmania, have jumped by as much as 63%.

The BCA is now pushing the Coalition to undo the former Labor government’s changes.

“Deregulation of coastal shipping that reduces unnecessary red tape and removes undue restrictions on competition is needed to lift the competitiveness of the sector, reduce costs on business and grow opportunities for new investment and employment,” the BCA says.

The 2012 legislation saw a three-tiered licensing system introduced which gave preferential treatment to Australian general licence holders over foreign vessels on a temporary licence.

The 2012 laws also made it a requirement that crews on foreign ships in Australian waters be paid local wages when carrying cargo between Australian ports.

The BCA argues this legislation resulted in a less competitive coastal shipping sector because Australian ships and crews supplying shipping services were shielded from competition from foreign vessels operating temporarily.

The changes also caused increased shipping costs for Australian businesses. Tonnage rates between Tasmania and Queensland increased from $18.20 a tonne in 2011 to $29.70 in 2012. Demurrage (compensation costs for delaying a ship during unloading or loading) fees also jumped from $14,000 in 2011 to $35,000 in 2012.

In response to the increased costs, the BCA proposed a number of changes to the legislation including easing the licencing laws, cutting excessive red tape and reducing information requirements on forms.

“Coastal shipping offers an important freight service for Australian value adding industries, especially for Tasmanian businesses that do not have a land-based transport alternative,” the BCA says.

“This Productivity Commission review should recommend practical steps the Australian government can take to deregulate Australia’s coastal shipping market so that business input costs can be lowered and to support opportunities for investment and jobs in Tasmania and other regional parts of Australia.”

The BCA’s submission also says some companies saw freight charges increase by up to $3000 a day for travel up and down the east coast of Australia in 2012 and one Tasmanian business, Bell Bay Aluminium, had an additional $4 million added to its costs.

Businesses also reported additional administrative time of up to 1000 hours a year to comply with the new legislation.