Supply Chain On Brink Of Overload Says National Road Carriers

Thursday, 19 November 2020, 4:34 pm
Press Release: National Road Carriers

The New Zealand supply chain is on the brink of overload and it looks like the upcoming peak imports season may push it over the edge says National Road Carriers Association (NRC) CEO David Aitken.

“Worldwide supply chains are in disarray,” says Mr Aitken. “The current pandemic affects everything, and the transport and logistics sector is in the thick of it. Bigger and better resourced countries have higher levels of critical infrastructure to cope with this, but it does not take much to bring New Zealand Inc. to its knees. Shipping companies and ports across the country are already struggling to keep up with consumer demand and the worst is yet to come.”

Mr Aitken says the problems have been brought about by a combination of factors including booming exports from North Asia and not enough vessels, industrial action across the Tasman causing shipping delays of up to eight weeks, COVID-19 and Ports of Auckland and Port of Tauranga facing some major challenges of their own. With berth schedules currently suspended at Ports of Auckland, not to mention the introduction of automation and staff shortages, and more vessels docking at Ports of Tauranga, receival and delivery times are constantly changing at both ports with little or no notice.

Mr Aitken also says airfreight schedules are not what they once were. “There are few passenger planes arriving with freight in their holds. The airfreight that does arrive is much more expensive. That urgent part you needed from the warehouse in Singapore is not available now. It will be shipped by sea and arrive in six weeks. If you need it in a hurry for Christmas, then you should have ordered it in October.

“Consumers and producers cannot count on getting what they want when they were used to having it. Not planning ahead will have consequences because the stock not ordered early will not be available on time.”

He says the transport sector is bearing the brunt of these issues and is facing big challenges. Road transport is the one thing that binds the whole machine together but operators are struggling with lost capacity, poor productivity and combined truck and administration costs.

“If it were not for the trucking industry, the Ports would close within days. By association, so would rail, and container depots because with no throughput the shipping lines would soon bypass New Zealand altogether. Importers and exporters would suffer terribly and so would the economy.

“The road transport industry is carrying and supporting the whole supply chain and working alongside sea, air and rail freight to keep the country moving. If you’ve got it, a truck delivered it.”

Mr Aitken says the supply chain industry – the Ports, the empty container yards and the freight industry – need to work together to understand each other’s issues and communicate better.

“There needs to be clarity around roles and responsibilities and we need to stop blaming each other, which brings about the increased costs to the carrier when it’s no one sector’s fault. Communication needs to improve and, when there is an issue, we need to identify it quickly and talk to the people who know how to fix it. Better alert systems need to be put in place.

“Unfortunately instead of working in with the road transport industry, the Ports and empty container yards are adding costs and constraints like reducing the free time for containers in their yards, adding penalties for non-delivery and increasing vehicle booking system (VBS) costs all when we need to reduce the pressure on the supply-chain. These network providers need to talk to the carriers who keep them afloat and engage some very simple but very effective measures.

“Currently all the costs fall on the carriers and that will filter down to the consumer because the carrier cannot wear those mounting costs any longer. This will make New Zealand less competitive on a global scale and, with failing imports on the horizon, a lack of co-operation between supply chain sector parties will be to blame when the system overloads and stops completely.”

Port of Tauranga says no cruise ships for two years will cost economy $100m

Port of Tauranga doesn’t expect cruise ships to visit for the next two summers.
DOMINICO ZAPATA/STUFFPort of Tauranga doesn’t expect cruise ships to visit for the next two summers.

Port of Tauranga is not expecting any cruise ship visits for the next two summers, leaving a $100 million hole in the regional economy.

The cruise season traditionally runs from October to April, but border closures in March because of to Covid-19 have cancelled ship visits indefinitely.

“Despite the premature and sudden end to the summer cruise ship season due to Covid-19, we still hosted a total of 106 passenger vessels, just 10 fewer than last season,” chief executive Mark Cairns told the port company’s annual meeting on Friday.

“However, we are not budgeting for any cruise ship visits this summer or even the following. Whilst this doesn’t represent a significant amount of marine revenue for the port, it is around $100m of cash receipts that will not be going into the regional economy.”

Tauranga is New Zealand’s biggest shipping hub, moving goods to and from other ports around the country, and its wider business has been hurt by a slowdown in shipping because of Covid-19. Profit dropped 10 per cent last year, after cracking $100m the previous year, as the pandemic curtailed ship visits and reduced volumes moving through the port.

“It would certainly be an understatement to describe 2020 as a tumultuous year,” Cairns said.PauseMuteCurrent Time 0:00/Duration 3:08Loaded: 15.97% FullscreenJASON DORDAY/STUFFLabour’s finance spokesman Grant Robertson talks to business owners at an Auckland Business Chamber event.

Despite the “Herculean efforts” of the company’s staff who continued as essential workers during lockdown and even set a new record for moving containers on a single vessel, Covid-19 had inevitably impacted the port’s cargo volumes and financial results last year, he said.

“We are confident of growth over the long-term at the port, and our ability to retain and grow market share,” he said.

“The outlook for the 2021 financial year has, however, presented a few short-term headwinds. Covid makes it extremely difficult to forecast future trade flows.”

In the first quarter of the new financial year, from July 1 to September 30, the port made an after-tax profit of $21.5m, little changed from $21.7m last year, Cairns said.

Based on the first-quarter performance, Cairns said he expected full-year profit of between $86m and $93m. That compares with a $90m profit last year.

Port of Tauranga chief executive Mark Cairns presided over his last annual meeting ahead of his retirement.
IAIN MCGREGOR/STUFFPort of Tauranga chief executive Mark Cairns presided over his last annual meeting ahead of his retirement.

“Port of Tauranga is a long-run infrastructure company and we will continue to pursue capacity expansion and greater efficiencies, to avoid the bottlenecks and congestion currently being experienced in the Upper North Island supply chain,” he said.

“We believe we are well-placed to weather whatever the Covid-19 storm throws at us next.”

Cairns was presiding over his last annual meeting of the company, having previously announced his intention to retire at the end of this financial year, after 15 years with the port.

In the first quarter, the port handled nearly 6.4 million tonnes of cargo, a 5 per cent drop from last year, while containerised cargo fell 8 per cent.

Imports were the same as the first quarter last year, but exports fell 8 per cent.

Log exports were performing in line with forecasts of 6.2 million tonnes for the full year, but remain vulnerable to variable international demand, he said.

Dairy product exports dropped about 12 per cent from last year, which Cairns attributed to seasonal variations. Kiwifruit exports increased 9 per cent.

Port of Tauranga shares fell 1.5 per cent on Friday to $7.24, and have dropped 7.4 per cent this year.

Coronavirus: Ports ‘won’t change position’ on foreign crew COVID-19 rules, despite Health Minister’s request

The Health Minister has moved to plug a gap in New Zealand’s COVID-19 response system, with all foreign ship crew coming in or out the country will now face mandatory testing. 

However, the country’s two biggest ports, Auckland and Tauranga, already have that and more – making the Minister’s announcement largely redundant. 

Hundreds of foreign seafarers have flown into New Zealand and boarded ships without being tested – but that will no longer be allowed. 

“Today, I’m announcing that we will be introducing mandatory testing for all workers that will be transferring onto or off a ship through New Zealand,” Chris Hipkins said at a press conference on Friday.

Foreign crews transfers – or crew swaps – happen so seafarers, who’ve made the often weeks-long journey to New Zealand on a ship, can then fly out and return to their homes overseas. 

The rule change follows a border failure which saw an Auckland engineer catch COVID-19. 

The most likely source was untested foreign crew, who’d flown into Auckland and boarded the bulk carrier, Sofrana Surville, in Taranaki – the same ship the engineer was working on. 

But the Minister’s announcement will actually have little effect, as the country’s two biggest ports have already said that it will be mandatory for all foreign crew to undergo 14 days in isolation and produce double negative tests before they board any ship. 

“We would prefer that the ports didn’t go and set up their own arrangements and set their own rules,” Hipkins said.

But those arrangements are already in place. 

“We’re not going to change our position on this,” Matt Ball, Ports of Auckland spokesperson, told Newshub. “We think it’s really important to protect our staff.”

The Minister doesn’t want foreign crew to isolate for 14 days, saying he doesn’t want to disrupt cargo ship operations.

“If we said that every ship coming into New Zealand had to float offshore for 14 days, they simply wouldn’t come,” Hipkins explained.

But Ball says that’s simply not the case, and not how it works. He says all it means is that shipping agents need to plan to get crew in two weeks earlier. 

Hipkins said the measure the Ports of Auckland have put in place won’t really increase protection at all – but again, the company disagrees.

“All we’ve done is basically introduce for transferring crew the same measures that anyone coming into New Zealand has to go through [14 days in managed isolation],” Ball says.

“So it must be safe, because the Government’s approved it.”

Ball says it’s about providing the best possible layers of protection for their staff – but also for staff at ports in the Pacific and beyond. 

COVID-19: Exporters facing huge delays as rail restricts container numbers

Kiwi businesses looking for relief from a COVID-19 downturn are facing frustrating export delays, with some waiting more than a month to ship their products overseas. a truck that has a sign on the side of a road: Rail has restricted container numbers causing huge exporting delays.© Newshub – Rail has restricted container numbers causing huge exporting delays.

Managing director of Morey Oil South Pacific, Shelley Free, said its oil exports bound for Brisbane typically took four days to cross the ditch, but wait times were now up to 37 days. 

“Which is probably applicable to the fact that the boats have just all been fully booked,” she said. 

“I know COVID-19 is to blame for a lot of this but, if we’ve got to get our economy up and running again, it means exporting.”

COVID-19 and strikes at Australian ports have caused congestion at our ports, delaying cargo ships arrival times. Some ships have been forced to anchor off the coast of Auckland for six days before they can dock. 

A big part of the problem is on land.

Auckland’s rail facility Metroport, that sends exports to the Port of Tauranga, is so stressed, it’s told customers it can’t accept all of their cargo.

“[Rail] can’t cope with massive volume like we have now, so delays to and from the Port of Tauranga up to seven to 10 days is also affecting the supply chain quite significantly,” Custom Brokers and Freight Forwarders Federation President Chris Edwards said. 

Metroport is at full capacity, so much so it had to shut its gates last week and stop accepting all exports. 

Newshub has obtained evidence of it telling some shipping lines on Thursday that it won’t accept their exports until next week. 

Port of Tauranga, which owns Metroport, told Newshub it has put caps on container numbers to ease the pressure, but they should lift early next week. 

“We are working closely with shipping lines and KiwiRail to ensure priority cargo is transferred as quickly as possible,” a POT spokeswoman said. 

KiwiRail chief executive Greg Miller said it was experiencing a significant increase in demand to move freight, to the point where it needed to be managed carefully. 

“We are urging road transport operators and customs agents to clear their cargoes from Metroport Auckland as soon as practicable.”

Customs had received no complaints, but New Zealand Trade and Enterprise said it was monitoring the situation. 

“At this stage, we are making our exporters aware of potential port congestion issues and suggesting they work closely with freight forwarders to ensure they can get their goods out of New Zealand.” 

Covid-19 rules for ship crew: ‘It’s worse than being in prison’

A ship’s captain is describing the way crew are being treated during Covid-19 as inhumane and like being in prison.Wayne Turner is the Master of Capitaine Tasman

Captain Wayne Turner on board Capitaine Tasman. Photo: Supplied

Crews on ships coming into New Zealand ports are not allowed ashore and must wear PPE gear every time they are on deck.

This also applies to New Zealand crew.

Wayne Turner is the master of Capitaine Tasman, a container ship that sails between Mount Maunganui, Auckland, Noumea, Suva and Lautoka – making a 17-day round trip.

New Zealand, Noumea and Fiji are all countries without community transmission of the virus.

Turner said effectively the crew were in constant isolation.

“You’ve got people that are basically in prison. They can’t depart the vessel, they can’t go for a walk, get fresh air, they can’t get off the vessel.

“It needs to be managed so that people can have those basic human rights, provided that [they] take appropriate action, they need to be able to get off the vessel, stretch their legs, [get] fresh air, change of scene.

“Just the normal stuff you need for psychological wellbeing, it is worse than being in prison,” he said.

Crew were also not allowed ashore in Fiji or Noumea, so they were trapped on board, Turner said.

“We don’t get any leave at all and no visits.

“It is pretty inhumane what seafarers are having to face and for no real reason. It’s a lack of understanding on the part of the powers-that-be as to the real risks that exist, which are negligible, if at all.”

Turner said while crew must wear PPE gear at all times while on the deck in port and can be fined if they do not, stevedores coming on board to load or discharge cargo, do not have to.

“If I go on deck while in port in New Zealand, if Customs see me [not wearing PPE gear] I can be liable for a fine of up to $2000.”

He said all of the 18 crew, including himself, have their temperatures taken twice a day and it is logged.

“We have no contact with the external world effectively.”

Turner said as a New Zealander he had been Covid tested and isolated for the past two months. He was not able to leave the ship nor visit his Mount Maunganui home, family or friends and they could not visit him.

“Home is basically 2-3 kilometres away.”

‘The government is just not interested’

Some other crew members have not been ashore since March.

“It’s pretty inhumane to have been on board from March without having been able to step off the vessel at any stage.”

He said the most crew could do was walk around the deck while at sea and weather allowing, which was frustrating for them.

Turner is concerned about the mental health of his crew and the many others at sea.

“The kind of people that are going to survive this kind of role are well used to that, but not to this degree and I suppose that is the part that is unfair and unreasonable that we are used to being away from our families for months, but you do have the social aspects of being onboard which is walks ashore and time ashore in various ports and all of that, but not having that, it is not good for you.”

When he finally comes to sign-off the ship Turner will need to go into mandatory 14-day isolation, minus the four days at sea sailing from Lautoka, after having effectively been isolated for four months.

Turner said the plight of seafarers during Covid-19 has been ignored by the government mainly because of the small number of people and for the most part foreigners.

“The government is just not interested.”

He is also a solo yachtie and is worried about hundreds of yachts that have been refused permission to sail to New Zealand to avoid the upcoming tropical cyclone season in the Pacific.

“They are as isolated from Covid as we are and they are in areas with no Covid and yet they to cannot come down to New Zealand unless you are on a luxury yacht and you can go alongside at Queens Wharf in Auckland, which is happening currently and so it is one rule for one and a completely different rule for others,” he said.

A spokesperson for Customs says while it enforces Covid-19 restrictions on seafarers, it has no control over changing the rules, which have been set by the Ministry of Health.

The Ministry of Health said due to the ongoing global Covid-19 pandemic New Zealand’s maritime border requires the testing, isolation and quarantining of all ship’s crew on arrival into the country.

These requirements for cargo and shipping vessels are similar to many other parts of the world and the master of any ship intending to arrive in New Zealand should, before the ship arrives in New Zealand, take reasonable steps to ensure that every person on board the ship is aware of the isolation or quarantine requirements.

Due to these current Maritime Border requirements which much of the world is operating under, the Ministry of Health encourages shipping companies to review their schedules – which are often on high rotation from port to port – to allow sufficient time for crew to have time on shore once they have achieved a negative result.

Under normal circumstances, a person who arrives in New Zealand on board a ship must remain in isolation or quarantine for at least 14 days on board the ship on which they arrived in New Zealand but this includes time at sea and many cargo ships arriving into New Zealand are long-haul and therefore crew would not be required to sit at port for 14 days.

It said all crew members do need to meet the low risk indicators, including a negative test, before disembarking.

In response to the Ministry of Health, Captain Turner said the guidelines assume vessels are at sea for 14-days or more to achieve isolation. Many ships are on rotations that do not have 14-days between international ports.

Capitaine Tasman calls at Noumea, Suva, Lautoka, Tauranga and Auckland. There are no community Covid cases in New Caledonia or Fiji.

He said no crew member on Capitaine Tasman has had shore leave since March and maximum time at sea is four days so they cannot meet isolation requirements.

Captain Turner said no Covid testing is available to crew members in port except for those at the end of their contract and going home. Crew members wanting to go ashore require 14-days isolation, a Covid test and written MoH approval.

”Maximum time in port is two days, so meeting the requirements is not possible.”

”The Vessel’s crew do not go ashore at any port, so difficult to see how infection can occur,” he said.

KiwiRail wants its ferry terminal in the central city, without its competitor

September 3, 2020 – Report from RNZ by Catherine Hutton


Plans to build a multi-use ferry terminal in Wellington are in jeopardy, following KiwiRail’s insistence it wants to move into the central city beside rival Bluebridge, but won’t share facilities with them.

An estimated billion-dollar investment for new wharves in both Wellington and Picton is needed to allow KiwiRail to switch its Interislander operation to two new larger rail ferries by 2024.

Two years ago, the Future Ports Forum, comprising representatives from the Wellington Regional Council, the Wellington City Council, Centreport, the Transport Agency, KiwiRail, and Bluebridge was set up to look at where to best situate the capital’s new Cook Strait ferry terminal.

It was agreed the new site would be shared by the Interislander, which KiwiRail owns, and rival Bluebridge.

The latest report from interested stakeholders, released in April, recommended Kaiwharawhara where the Interislander ferries currently dock.

Regional Council (GWRC) chairperson Daran Ponter said KiwiRail left the forum before the final report was released because they did not agree with the location.

“Because they were on the working group they had an understanding of where that report was going to land in terms of its recommendation, they clearly didn’t agree with Kaiwharawhara as the preferred recommendation and they pulled out in advance. Not helpful, but it’s an interesting way of doing business.”

KiwiRail chief executive Greg Miller denied leaving the forum, and said releasing the report did not make sense.

“What you are talking about is, ‘did we agree in the forum?’ and the fact is we didn’t agree in the forum, so we’d said no we don’t think that’s the best outcome and we made that very clear,” Miller said.

“Then you’d have to ask yourself, what was the benefit of the Future Ports Forum that couldn’t agree, when the two customers – Bluebridge and KiwiRail – couldn’t agree with the provider, that’s more the point.”

tructural engineers say the Kaiwharawhara site can be built to cope with earthquakes but geotech scientists are less sure.

Miller said it was the geotech report that made KiwiRail stop and think.

“Is this the best location on the port to put new ferries and a new terminal that is rail served? There’s also the motorway upgrade and the location on the port for future transport, which has always been a challenge at Kaiwharawhara, with road and rail location and for the passengers arriving from overseas and domestically, getting access to the Kaiwharawhara site,” he said.

Estimates for building new ferry terminals in both Picton and Wellington are vague – ranging somewhere between half a billion and a billion dollars.

Miller said the huge costs of having to remediate the site could not be ignored. “You can engineer your way out of many things, but what we’re told by the engineers is that the cost of mitigation is extremely high, so there is a cost component to this that you cannot ignore.”

KiwiRail prefers its new terminal to be at Kings Wharf, beside Bluebridge’s existing spot, and closer to downtown Wellington.

But GWRC chairperson Daran Ponter said while KiwiRail had zeroed in on the seismic issues at Kaiwharawhara, Kings Wharf also had problems.

Ponter said the 2016 Kaikōura earthquake showed how fragile the port was. The port received more than $600 million – the second biggest insurance payout in New Zealand’s history – for the damage suffered in that quake.

“Kings Wharf sits midway between the container terminal and the new BNZ centre, both of which were taken out in the November 2016 Kaikōura earthquake. So it would appear wherever you locate yourself around the Centreport site, you are potentially still open to being challenged by an earthquake.”

And documents suggest the lengths KiwiRail is prepared to go to get the site. An email seen by RNZ from their group general counsel, Jonathan Earl, to KiwRail managers in May raised the possibility of using the Public Works Act to secure it.

Ponter said that would be unprecedented and would effectively mean seizing land from regional ratepayers.

“Clearly KiwiRail are an acquiring authority under the Public Works Act, but Centreport itself is a public works. Because you can’t just use the Public Works Act because you like an option more than you like another. You’ve got to give good grounds for the option or for your preference.”

Miller denied that was an option they were pursuing.

“Well the Public Works Act is there to be used to acquire if we need to, and as I said to you we haven’t put in any time, effort into that because I do believe the relationship commercially long term is better to be resolved that way and that’s the way we’re going.”

Centreport is now preparing a third assessment report for a new site, but Miller said he was not keen to share a facility with Bluebridge at Kings Wharf because KiwiRail needed a single-use terminal.

“We needed a rail link span. We have far greater volumes of trucks and cars and passengers that we move, so we probably needed a greater area and how do you divvy up the cost in a single user terminal for that with a competitor?”

Ponter said regardless of KiwiRail’s preferences, ultimately the port company had to accommodate both operators.

In a statement, Bluebridge said it was aware of KiwiRail’s recent proposal to build another wharf adjacent to its site at Kings Wharf, and had provided feedback.

The report is due in the next two months.

In June, the State Owned Enterprises Minister Winston Peters told regional councils he wanted the forum to reconvene and find a solution.

Mandatory Covid-19 testing of all ports staff reined in to only ‘high risk’ contacts

Listen

The government has backtracked on plans to urgently test every single person who had come into the Ports of Auckland for Covid-19.

Last week the Ministry of Health issued a mandatory testing order for all workers at the Auckland and Tauranga ports as part of its border blitz.

It had hoped to get all of those workers tested by midnight last night, but only managed to get about a fraction swabbed – 3485 workers as at 1pm today.

The previous order had covered anyone who had come into contact with the port since 21 July – that was more than 5000 people from 800 organisations at the Ports of Auckland alone.

The current order has been narrowed to focus on higher risk workers, such as those dealing directly with ships and ship workers, and anyone with symptoms to be tested.

The Road Transport Forum had opposed the testing of truck drivers saying they came into contact with hardly anyone at the borders, and Ports of Auckland spokesman Matt Ball agreed that it made sense to reign in the testing.

“The scale of the previous order was huge and probably not necessary, given the low and pretty much zero risk for people like truck drivers.”

He said the ministry had now come to grips with how the supply chain at the ports worked and how many people actually interacted with the ports.

Ball said the ports had been asking for testing since April and the government had been slow to respond.

Ongoing testing will now continue at the Ports of Auckland and the Tauranga Port, and Health Minister Chris Hipkins said it was also being rolled out at other ports around the country.

The government still doesn’t know what the source of the latest Covid cluster in Auckland is.

The first case is believed to be a worker at the Americold facility who displayed symptoms on 31 July.

Testing at the borders will continue as health authorities work to figure out any gaps.

Hipkins said he would be issuing two public health orders by the end of the week – one formalising the testing regime for air crew and the other formalising routine testing moving forward.

Covid-19 testing to take place at all ports in New Zealand

After months of urging that ports should be treated like airports for Covid-19 security, New Zealand port companies have been stunned to receive an order from director general of health Ashley Bloomfield for all maritime border staff to be tested for the virus in the next three days.

The ports, through the port companies chief executives group, along with maritime unions, say they have been asking the Ministry of Health since the end of the first lockdown for sea borders to be treated like aviation borders.

Bloomfield’s letter, sent today, said the ministry would work with regional DHBs to provide testing on site “as a matter of urgency”.

“Testing is for all people who work ports around New Zealand who might potentially come into contact with ships’ crew … ” the letter said.

For New Zealand’s biggest port at Tauranga, the order means around 2000 staff and workers must be tested by close of business on Monday.

Ports chief executives’ group spokesman Charles Finny said as recently as two weeks ago the maritime sector had been urging health authorities to test at ports, without success.

A test station has this week been set up at Ports of Auckland. A spokesman said the company had been “dead keen” to see it but the time it has taken for action was frustrating.

Port of Tauranga chief executive Mark Cairns said he had been asking for Covid security at the port to be strengthened since April.

Finny understood from port chief executives he had spoken to on Friday that DHBs intended to set up testing systems at ports over the weekend and on Monday.

“We said months ago that ports should be treated like airports.”

Bloomfield’s letter said along with the new testing requirements, border-based employees needed to continue to take daily health checks.

“Thank you again for the important work you are doing to strengthen practices and to increase vigilance at the maritime border, in order to protect your employees and our community from Covid-19,” it concludes.

Beirut explosion casts harsh light on international shipping rules

Murky story of a ship called the Rhosus, which began life as a Japanese dredger

Andrew North – August 10, 2020 18:00 JST – Nikkei Asian Review

Boris Prokoshev, right, captain of the cargo vessel Rhosus, and boatswain Boris Musinchak, pose next to a freight hold loaded with ammonium nitrate in the port of Beirut, in a summer 2014 photograph.    © Reuters

Andrew North has reported widely from across the Middle East, South Asia, and Central Asia. He is a regular commentator on Asian affairs.

This is the story of a ship that was built in Japan in 1986.

Named the “Daifuku Maru No. 8,” maritime records show that it began life as a humble dredger, scooping up mud and rock from Japanese shipping lanes so that bigger craft wouldn’t hit the bottom. Then, in 2002, it was sold to South Korea and renamed. So began a journey around the world, during which the ship’s name, owner and the flag flying from its mast changed every few years.

What are known as “flags of convenience” (FoCs) provide a legal way for a shipping company from one country to reduce costs down by “renting” the flag of another country that has lighter labor rules and lower taxes. Many of these flags are run by smaller, and often poorer countries, ranging from Liberia to North Korea, even landlocked Mongolia and Bolivia. It earns these states valuable revenue, but it also provides a way for unscrupulous owners to conceal their identities while running substandard and polluting ships, as well as dodging the law and cheating their crews.

Between 2005 and 2007, the Japanese-built ship was passed between two Hong Kong companies who called it the “Zheng Long” but flagged it to Belize and then Panama, the tiny Central American state that has nearly 9,000 ships sailing under its flag. That’s around 16% of global shipping tonnage, more than any other country.

Once notorious for its lax rules, Panama now keeps closer tabs on who can fly its colors. So it was telling that when a Panamanian company bought the ship and converted it into a cargo freighter, it was reflagged to the Black Sea nation of Georgia — another country known for running a low-cost FoC regime.

There were still more identity changes to come. First, a Cyprus-based Russian business owner bought the freighter. But when it was sent to pick up a shipment from the Georgian port of Batumi in 2013, the Georgian flag had been replaced with the colors of Moldova, a country with no seaside coast but a reputation at the time for allowing its flag to be used for smuggling by Iranian vessels.

Showing its age, the now 30-year old ship had defects that included a hole in its hull requiring water to be pumped out to stop it sinking, but it set sail nonetheless. When the Russian owner didn’t pay wages, the crew walked out, forcing him to find another crew before sending the vessel out to Beirut to earn extra cash by taking on heavy machinery. When the ship’s decks buckled under the weight, inspectors were alerted and it was declared “unseaworthy.”

The former Japanese dredger was by then named the “Rhosus,” which the world now knows as the ship that carried the 2,700 tons of Georgian-made ammonium nitrate that exploded in Beirut port on August 4 with such deadly effect.A former Japanese dredger named the “Rhosus,” carried the 2,700 tons of Georgian-made ammonium nitrate that exploded in Beirut port on August 4, killing up to 158 people, and injuring more than 6,000.    © Reuters

In the aftermath of the disaster, the focus has rightly been on the failings of Lebanon’s dysfunctional government, as the explosive cargo was its responsibility once offloaded. But the murky story of the Rhosus also raises questions as to why an international system almost designed to avoid accountability is allowed to continue.

The International Transport Workers’ Federation (ITF) has been campaigning for an end to FoCs for decades. It lists 35 countries running flags of convenience, blaming the practice for low wages and abusive conditions among merchant navies, as well as the “floating coffins” on the world’s seas.

Some maritime experts argue that the story of the Rhosus shows that controls worked because the ship was eventually stopped in Beirut. According to Natasha Brown, spokesperson for the International Maritime Organization, the UN’s shipping regulation body, more and better inspections have led to a decline in serious incidents in the last seven years.

Japan, the US and Europe all operate a system of white, gray and black lists to classify flags by their record, with frequent inspections for poorer performers. “That makes it more difficult for an owner to keep using a blacklisted flag,” argues Luc Smulders, Secretary-General of the Paris MoU, the organization that oversees European inspections.

But such measures still don’t go far enough. Blacklisting doesn’t stop a ship from sailing, and there are plenty of ports beyond the reach of organized inspectors. Groups such as the ITF say that until there is a “genuine link between the flag a ship flies and the nationality or residence of its owners,” abuses will continue.

Moldova is a case in point. Seven years after the Moldovan-flagged Rhosus was stopped in Beirut, the country is on the official flag performance blacklist. But it continues to run a lightly-regulated shipping registry for all comers. You can do it all online with no mention of any physical checks. (The country’s ship registration agency did not respond to several requests for comment.)

With all that has since emerged about the Rhosus and its past, many have wondered how it was ever allowed to sail with so much explosive material on board. But as things stand, there is little to stop another ship with a shady past from setting sail today.

Firth of Thames best home for a new port for 100-plus years: Auckland Business Chamber (and Cubic agrees)

The suggestion of the Firth of Thames is a
The suggestion of the Firth of Thames is a “brave, big call”. Photo/ Google

By: Andrea Fox Herald business writer andrea.fox@nzme.co.nz

Just when you thought not another report could be wrung out of Auckland’s port future debate, the Auckland Business Chamber is urging all Kiwis to completely “re-imagine” a port for 100-150 years – and it’s pick is in the Firth of Thames.

After staying pretty quiet during a flurry of reports over shifting the Auckland port, the chamber is launching its own take, “A Port for the Future”, which invites the community to use an accepted timeline that the existing port will do for another 25 or so years, to carefully plan another to last more than another century.

And for port observers feeling reported-out, Chamber chief executive Michael Barnett assures “this is not another report”.

“It is an effort by the chamber to get people to re-imagine where a port might be and what would be the best for New Zealand and New Zealand business – not a competition between Auckland and North or Tauranga but an informed discussion of what could be.”

Barnett said the chamber represents the voice of Auckland business without bias, and in this neutral position has stepped back to analyse all the discussion around the relocation of the port from Waitemata Harbour.

“The chamber … now realises that the issue is not just an Auckland problem, but is one that, if done correctly, will bring benefits right across New Zealand.”

The chamber had concluded the existing port was fully sustainable for another 25 to 30 years and that a solution is required beyond that. To provide a port solution beyond the generation after next required vision and a willingness to go beyond the familiar.

Ports of Auckland has 25-30 years of life left in it, says Auckland Business Chamber. Photo / Michael Craig
Ports of Auckland has 25-30 years of life left in it, says Auckland Business Chamber. Photo / Michael Craig

The chamber’s offering makes a case for a man-made island ship exchange terminal in the Firth of Thames, connected by broad gauge rail to a container terminal facility in the vicinity of Pokeno/Meremere.

The island terminal would be “a whole-of-New Zealand” terminal servicing large foreign trade ships handling all import and export containers. The report does not discuss costs but points to several overseas examples to underline there is nothing in the paper that is not tried and proven elsewhere in the world.

“What is running out (for the existing port) is social licence and that’s what’s motivating us to try to accelerate the debate and re-imagine what a port could look like”, Barnett told the Herald.

“What’s been uncomfortable has been the apparent political nature of the discussion so far, it tends to have been personality-driven from the north – almost an anti-Auckland thing. Yet this isn’t about either of those things, it’s about a nation down in the South Pacific dependent on its ability to import and export.

“We need something for the next 100 years and the people of New Zealand should make that choice. It’s not up to a politician or a government.

“(So far) we have re-imagined the port simply by saying ‘let’s pick up Auckland port and take it north (to Northport)’. I’m saying we can do it another way.”

The chamber will widely distribute its paper within the freight, transport and shipping sector and invite comment and discussion directly to the chamber.

The chamber’s analysis concluded there would always be a need for a port in Auckland – “just not as we know it”.

Auckland Business Chamber chief executive Michael Barnett.
Auckland Business Chamber chief executive Michael Barnett.

Social licence issues arising at New Zealand ports were “but the tip of the iceberg and demonstrate that the focus being purely on relocation of the Port of Auckland is extremely narrow and has the potential to lead to a flawed conclusion”, said the paper.

“Ports of Auckland is clearly approaching a sunset phase, however, it is the chamber’s view that the present facility will be capable of handling existing throughput plus growth for several years to come … (but) it is inevitable and acknowledged by the chamber, that the port’s container facilities will be shifted from the present location to another site.”

The paper said volume growth and investment required at the Port of Tauranga, along with “other issues starting to emerge” made it “pretty safe to assume that the Tauranga terminal will also be looking for a new location in future”. In four weeks the Tauranga port handled as many containers as Wellington’s port in a year.

Current modelling showed that with the construction of the future city of Drury South, the Auckland-Hamilton-Tauranga triangle would encompass four of New Zealand’s six largest cities.

Over the next 30 years the population in the area between greater Auckland and Taupo was forecast to grow by 7.8 per cent a year. During this time the rest of New Zealand’s population was predicted to grow by 2 per cent a year and by 3.6 per cent north of Auckland.

The option of developing a new port at Manukau Harbour raised in earlier reports was indeed an option when considered just in the context of Auckland, the paper said.

“However it is not compatible with the chamber’s objective of providing a future solution that will benefit NZ Inc. Throughout … the chamber has avoided introducing untested or yet to be implemented technology as will be required to overcome the hazardous conditions presented by the Manukau Harbour entrance.”

The Firth of Thames had been looked at in studies over the past 25 years.

“Unfortunately the concept appears to be too far out of the mainstream for people to understand, especially as it has only been viewed as a solution solely for Auckland and suggest constructions methods based on the traditional.”

The paper details modern construction methods used overseas.

Barnett concedes the chamber’s suggestion of the Firth of Thames is a “brave, big call” given the environmental, wildlife and iwi concerns that are likely to be raised against it.

But with time on New Zealand’s side for consultation, research, innovation and planning, problems could be properly addressed and hopefully overcome.

Barnett, a veteran of port group discussions over the years, worked with ports consultant Tony Boyle to produce the paper. The project cost did not exceed $10,000, he said.

“But I like to think it is rich in intention.”