Shipping’s Big Bang Sends Two Global Industries Spinning

Two weeks ago, the vast majority of the world’s ships were forced to change the fuel they use. Some big winners — and potential losers — are starting to emerge from what was a historic switch for the world’s oil refining and maritime industries.

Regulations began on Jan. 1 forcing vessels to sharply reduce emissions of sulfur oxides from burning so-called bunker fuel. If successful, the rules could turn out to be the single-biggest, globally mandated improvement to air quality ever. The pollutant is blamed for worsening human health conditions like cardiovascular disease and asthma, and causing acid rain.

But the cost of the new fuel has skyrocketed to the point where it recently surpassed diesel and gasoline in Singapore, Asia’s oil-trading hub. The dynamic adds to the cost of transporting goods and raw materials — a potential impediment to global supply chains since fuel represents the maritime industry’s single-biggest expense.

IMO fuel surpasses gasoline and diesel

“The cost of world trade is rising when the bunker costs go up,” said Peter Sand, chief shipping analyst at BIMCO, a trade group for many of the world’s vessel operators. Even if the hike will be largely invisible to end consumers, it’s important to owners, some of whom may end up in financial difficulty if fuel prices stay high, he said.

IMO 2020, as the rule is known, is a global sulfur cap on marine fuel of 0.5%, down from 3.5% in most parts of the world. The Jan. 1 start date was set back in October 2016.

The price surge points to significant support for those refineries that make the new product. Likewise, some shipowners are making fortunes because they invested in kit allowing them to burn the old sulfur-rich variety, which is several hundred dollars a ton cheaper.

Ship Shape

Before the rules took effect, some shipowners plowed billions of dollars into exhaust-gas cleaning systems that prevent the sulfur from being released into the air. The equipment allows their vessels to keep using the old fuel without breaking the rules.

Those who invested appear to be gleaning a competitive advantage because the discount for the old fuel is so big.

Supertankers hauling 2 million barrels earned about $20,000 a day more so far this year if they were fitted with scrubbers, according to data from Clarkson Research Services Ltd., a unit of the world’s largest shipbroker. That’s about $7 million a year in savings if the current market were to continue.

Scrubber investments could pay off in less than a year, according to Richard Matthews, head of research at E.A. Gibson Shipbrokers Ltd.

Rates for the oil tankers are very high by historical standards, meaning even those without are doing well.

However, where it may become more of an issue is in freight markets that are weak. For example, giant iron-ore carrying Capesizes bulkers built in 2010 earned about $4,000 a day so far this year. That’s not enough to even cover operating costs including crewing and repairs. The same carriers fitted with scrubbers earned about $10,000 a day more than that. Not great, but a level they can survive at.

If the current market doesn’t improve, those lower earnings might eventually discourage some ship operators from transporting cargoes, something that would help the owners of vessels that do have scrubbers.

Sand, from BIMCO, says that there could even be loan defaults if the price of compliant fuel doesn’t drop.

Refineries Diverge

For oil refiners, IMO 2020 has transformed marine fuel from essentially a waste material sold at a discount to crude into one of the industry’s most valuable products. What’s widely now seen as the dominant new propellant — very low-sulfur fuel oil, or VLSFO — is about twice the price of the old material in Singapore and Rotterdam. A similar trend is playing out for marine gasoil, the other main clean-fuel shippers can use to comply with IMO 2020.

The main new fuel’s high price is in some ways hard to explain. In theory, it shouldn’t be more expensive than products like gasoline and diesel because it’s easier to make.

Today’s sky-high prices are the result of both the refining and shipping sectors wanting the other to invest in making it, said Alan Gelder, vice president for refining and chemicals, at Wood Mackenzie Ltd., an energy consultant.

There have also been fuel availability issues at some ports around the world, as well as a shortage of barges to deliver, according to Melissa Williams, a marine fuel sales and marketing manager at Royal Dutch Shell Plc.

Standard Club, a marine and energy insurer, said Tuesday that it’s been notified of concerns about a lack of compliant fuel at some ports, without identifying which ones.

“The impact on refiners isn’t the same across the board,” said Mark Williams, principal refining analyst at Wood Mackenzie. Refiners in the U.S. Gulf coast which can process high-sulfur fuel oil — the old propellant that has become much cheaper since the switch — are doing very well, he said. But any refiners that lack upgrading equipment and process sulfur-rich crudes will be feeling squeezed.

More broadly, refiners are having to rethink their whole approach to fuel production as other margins are pulled around by the IMO 2020 effect. Low-sulfur feedstocks like vacuum gasoil and straight-run fuel oil that, among other things, can be used to make the new product, have shot up in value relative to crude. If large volumes get diverted to the maritime market, more traditional outputs like gasoline, that can also be made from them, could tighten.

The diesel market, meanwhile, has largely shrugged off the IMO 2020 boost many were expecting. Warm weather across the globe is partly to blame, along with recent downward revisions to oil demand growth forecasts, said Steve Sawyer, director of refining at FGE. The result is VLSFO rising above diesel in Singapore, a “bizarre” pricing dynamic, he said.

Looking forward, Sawyer expects VLSFO to remain at a premium to crude as long the crude oil price remains in a $60-70 a barrel range.

Gelder and Williams expect the VLSFO price to fall going forward, while the price of HSFO is set to rise by about 20% by the fourth quarter as more shippers fit scrubbers. The IMO transition period, meanwhile, is set to last for a couple more years, they said.

So the current price surge is just the start of a process. Refineries will need to decide if it’s worth spending the money on equipment to make new fuels, and shipping companies will have to consider buying more scrubbers.

“If you’re going to reduce the impact of these extra costs on the overall economy, there’s more investment needed,” Gelder said.

Smooth Sailing for Ships After Historic Fuel Switch

A major switch in maritime fuel aimed at reducing emissions from ships is proceeding smoothly, shipping executives say, with new blends available in most ports and operators reporting few problems adapting to the fuel.

The mandatory change began on Jan. 1, when some 60,000 oceangoing vessels were ordered by the International Maritime Organization, the United Nations’ marine regulator, to slash their sulfur emissions by more than 80%. It is the first in a series of environmental steps the maritime industry is due to take in the coming years that will alter operating costs and raise fundamental questions about how ships should be powered.

To comply with the 2016 Paris climate accord, members of the IMO have also agreed to cut greenhouse-gas emissions to half of their 2008 level by 2050. Ships now contribute up to 3% of the world’s global air pollution, a share comparable to that of a major country.

Shipping executives say the low-sulfur directive alone will add around $50 billion in new fuel costs over the next three to four years, and they say they plan to pass the expenses on to cargo customers.

Low-sulfur fuel in Singapore, one of the world’s biggest refueling hubs, was quoted this week at an average $670 a ton, 64% higher than the $409 a ton for the heavy oil, known in the maritime sector as bunker, that has long powered ships. Bunkering brokers said the price spread is at least 10% higher than shipowners originally expected, but the gap is expected to narrow over the next couple of months.

“It’s very expensive right now,” a senior broker in Singapore said. “Demand is high and many bunkering barges are still flushing the old fuel from their tanks, meaning not enough is out there and ships are held up longer to refuel.”

Fuel represents up to half of a ship’s operating expenses, and some operators will see their earnings take a hit this year as the cost is absorbed through supply chains.

“If shipping companies take on all the cost, they will collapse,” said Kitack Lim, secretary-general of the IMO, the global marine regulator that mandated the fuel switch. “But compared to the value of the cargo, price increases to consumers will be very small.”

The fears of some shipowners that there wouldn’t be enough low-sulfur fuel availability, or that it wouldn’t work well with maritime engines, so far appear to be unfounded.

“The switch went well and we haven’t experienced issues with performance or fuel availability,” said Ole Graa Jakobsen, head of fleet technology at Denmark’s A.P. Moller-Maersk A/S, the world’s largest operator of container ships by capacity. “We have lab-tested a broad range of fuel formulations to determine optimal blends for our vessels.”

Maersk’s French rival CMA CGM SA, which operates more than 500 container ships, said prices vary from port to port, with rates at big European gateways being cheaper.

“There is a wide spectrum of different blends, that may not all be available in some ports in Africa and South America” said Farid Trad, the group’s vice president for oil management. “There is high demand so fuel barges take more time now. The challenge is to get the entire supply chain to work together, from fuel suppliers to refueling barges to shipowners managing their fuel needs.”

Bunkering suppliers say new fuel supplies are short for smaller vessels doing coastal sailings on the east coast of India, the Philippine archipelago and Bangladesh.

“There was not enough preparation in India and new fuel supply is low, especially for small tankers and container ships in the east coast,” said Venkat Argawal, who runs three refueling barges at India’s Port of Chennai.

“Some are breaking the rules and run on heavy oil until supply is restored.”

One of the IMO’s biggest challenges is that member states enforce the new fuel regulations. This week, China caught two ships that were allegedly using noncompliant fuel according to the Standard P&I Club, a major maritime insurer.

“We are monitoring the situation and to date, whilst there have been some reports of tight supply of compliant fuel oil in some markets, so far we have not received reports of any significant issues,” an IMO spokeswoman said.

Some vessel operators, especially tanker owners, have chosen to limit their sulfur emissions with exhaust systems called scrubbers that trap sulfur created by fuel-burning engines.

The systems cost several million dollars, but companies using them could benefit from big operating cost savings in the next few years over carriers that are spending more for new, more expensive low-sulfur fuel.
Source: Wall Street Journal

Massive R&D needed to decarbonize deep-sea shipping beyond 2050

The goal of the International Maritime Organization (IMO) to turn the oceangoing vessel industry emissions and carbon free beyond 2050 will require a technological replacement to the dominant fossil fuel-burning engines of the world’s maritime fleet, World Shipping Council President and CEO John Butler told U.S. lawmakers of the House Coast Guard and Maritime Transportation Subcommittee on Tuesday.

While emissions- and carbon-free technologies, such as battery and hydrogen power, are already in the development stages for short-sea and ferry vessel applications, their scale is nowhere near the level to power today’s large oceangoing vessels.

“We have to keep in mind that the scale is different for the transoceanic, larger international vessel sector than it is for the short-sea sector,” Butler said. “We can’t make the mistake that batteries work for ferries and we just need a bigger battery [for oceangoing ships].”

Maersk (OTCMKTS: AMKBY) is currently testing a 40-foot container-size battery on board one of its container ships, Lee Kindberg, the carrier’s North American head of environment and sustainability, told the House subcommittee.

Kindberg said the battery will not provide power for ship propulsion but will be tested for potential onboard power uses, such as shipboard lighting, electric pumps and refrigerated containers.

However, she said Maersk has committed to “net-zero carbon emissions” for its worldwide operations by 2050 and is currently retrofitting vessels with new technologies and testing “carbon-neutral” biofuels, such as those made from cooking oil and an ethanol made from the byproducts of agriculture, paper and wood products manufacturing.

“The transformation from low- to zero-carbon emissions is an energy transformation, not just a vessel modification,” Kindberg said. She added that it will require not only massive industry and government investments in new vessel propulsion systems development but also shoreside-support energy production and infrastructure.

In 2018, the IMO, a United Nations body of which the U.S. is a member, adopted a resolution that called for a 40% increase in overall fleet efficiency compared to 2008 by 2030 and then a 50% reduction in absolute greenhouse gas emissions by 2050, with emissions being reduced to zero or near zero within ocean shipping beyond the half-century mark.

Butler told the House subcommittee members that it is possible for the ocean shipping industry to achieve the IMO’s 2030 goal.

“A highly competitive liner shipping market, fuel price increases associated with the IMO 2020 marine fuel sulfur cap regulation and increasing societal and customer requirements to reduce emissions provide vessel operators with powerful incentives to make their operations as efficient as possible,” he said in his testimony.

However, to achieve the organization’s 2050 goal and beyond will require a substantial, globally funded and driven research and development effort, Butler said.

On Nov. 18, the World Shipping Council and seven other shipping organizations proposed that the 174-member IMO establish a $5 billion to $6 billion research and development effort over the next 10 to 12 years to identify fuels and related technologies to aggressively achieve the IMO’s decarbonization goals for the global ocean shipping industry. The International Maritime Research and Development Board (IMRB) would be funded by a mandatory contribution based on each ton of fuel burned, Butler said.

“Because oceangoing vessels are long-lived assets (20-25 years), we must move as quickly as possible to develop and deploy low-carbon and zero-carbon propulsion systems and fuels to avoid stranded assets and delays in implementing next-generation technologies,” he said.
Source: Freight Waves

Shipping companies propose crash program to reduce CO2

in International Shipping News 30/12/2019

A group of eight trade organizations that collectively represent 90% of the world’s merchant fleet have proposed a collaborative shipping research and development program to help eliminate CO2 emissions from international shipping.

Their plan includes funding the program with $5 billion over a 10-year period.

The shipowner groups said they are seeking to accelerate the development of commercially viable zero-carbon emission ships by the early 2030s.

The groups making the proposal include organizations that represent a broad base of shipping companies – BIMCO and the International Chamber of Shipping – as well as groups that represent particular sectors of the shipping industry: the World Shipping Council, which represents the container liner industry; Cruise Lines International Association; Interferry; Intercargo, which represents dry bulk carriers; Intertanko, which represents tanker operators; and the International Parcel Tankers Association.

In a joint press release, the groups note “international maritime transport carries around 90% of global trade and is currently responsible for approximately 2% of the world’s anthropogenic CO2 emissions. To achieve the Paris Agreement’s climate change goals, rapid decarbonisation is vital – also for international shipping.”

They note the United Nations International Maritime Organization (IMO) agreed in 2018 to target an absolute cut in the sector’s total greenhouse gas emissions of at least 50% by 2050, regardless of trade growth, with full decarbonisation shortly after.

“The 2050 target will require a carbon efficiency improvement of up to 90%, which is incompatible with a continued long-term use of fossil fuels by commercial shipping,” the shipping groups said.

“Meeting the IMO’s GHG reduction goals will require the deployment of new zero-carbon technologies and propulsion systems, such as green hydrogen and ammonia, fuel cells, batteries and synthetic fuels produced from renewable energy sources. These do not yet exist in a form or scale that can be applied to large commercial ships, especially those engaged in transoceanic voyages and which are currently dependent on fossil fuels.”

The eight organizations have proposed establishing an International Maritime Research and Development Board (IMRB), a non-governmental research and development organisation that would be overseen by the countries belonging to the IMO and financed with a mandatory contribution of $2 per tonne of marine fuel purchased for consumption by shipping companies worldwide. That would bring in about $5 billion over 10 years.

“Additional stakeholders’ participation is welcomed,” they added.

In a proposal to the IMO, the industry group set out details for governance and funding of the program, which they say can be put in place by 2023 via amendments to the existing IMO Convention for the Prevention of Pollution from Ships (MARPOL).  

They said the plan will be discussed by governments in London at the next meeting of the IMO Marine Environment Protection Committee in March 2020.
Source: FreightWaves

Cabinet ministers want more homework done on port relocation

Shane Jones is keen to avoid too many more lengthy reports but acknowledges it’s a once-in-a-generation project and widespread buy-in is important. Photo: RNZ / Richard Tindiller.

Cabinet ministers have ordered more work to be done on the Northport proposal, to report back to Cabinet mid next year.

It’s officially released the report of the working group set up to consider the best configuration for the upper North Island ports, which came back with a strong recommendation to progressively move Auckland’s freight operations to Northland.

The Transport Ministry will now do more work on funding and financing options, governance and commercial considerations, land use planning and a range of other factors.

(Read the full report: PDF 1.4MB)

The Cabinet paper released alongside the report said the “key issue” for ministers was “whether the the potential gain… is sufficient to justify the significant Crown seed investment and possible need for regulatory and legislative intervention”.

Using the latter approach, it said, would result in “significant levers to use given the implications for private property rights”.

The working group made its one recommendations after considering eight scenarios – Cabinet ministers also want the ministry to also take another look at those scenarios.

(Read the full report: PDF 1.1MB)

The paper noted the “limited share of decision making rights” held by the Crown if it comes to relocating ports, and the importance of getting key stakeholders such as the Ports of Auckland and the Auckland Council on board.

“We advocate early and open engagement with the owners of the current upper North Island ports…and the Port Companies” to build consensus, the paper said.

The current owners are “cornerstone partners whose agreement and cooperation in any decision will be a requirement of making progress”.

It acknowledged engagement with those parties had been “limited to date…we anticipate aligning the partners will take some time to achieve”.

The ministry will also work with the newly formed Infrastructure Commission to help with the analysis.

Associate Transport Minister and chief cheerleader Shane Jones said he was “pleased” his Cabinet colleagues have “recognised the merit of this report and have agreed to move forward with this work”.

“I expect this analysis to consider environmental effects, including on New Zealand’s overall greenhouse gas emissions, and consideration of government infrastructure investments in roads and rail, for example, building a rail spur to Marsden Point,” he said.

“Nobody is keen on spending too much longer developing lengthy reports but this is a once-in-a-generation project and widespread buy-in is important, as is the need to make the best decisions for the long-term prosperity of our supply chain.”

It remained his view that Northport was “the most sensible relocation option” but he accepted this “is a whole-of-government decision”.

The working group has estimated the cost of the Northport proposal at around $10 billion.

Cabinet expects a report back by May next year. The report has a budget of $2 million.

Goff says compensation essential

Auckland’s Mayor Phil Goff says the city’s residents will need compensation when the port is eventually relocated.

Goff said a newly released working group report on the Northport proposal suggests Auckland is left with the land rather than being bought out.

He said residents have invested over $600m in the port and should be treated as shareholders.

“They need to get some sort of compensation if that asset were to get taken off them and that’s basically what Treasury and the Ministry of Transport have pointed towards,” Goff said.

“This isn’t the wild west, you can’t go around nationalising things and saying: ‘well, just be grateful we’ve left you the land even if we’ve taken the value of the company off it’.”

Goff said he was pleased Cabinet ministers have ordered more work to be done on the Northport proposal.

“What we wanted was evidence driven, robust and independent of any vested interest group report saying how it should happen and where it should go to,” he said.

‘Pie in the sky’ – Bridges

National’s leader Simon Bridges said the $10b price would be a big hit on the government’s books.

“If they make this decision they won’t have a single bean left from their infrastructure spend up; they can only spend this borrowed money once.”

And he questioned the government’s ability to make Northport a reality.

“These guys can’t deliver, they are unrealistic, they’re pie in the sky, they come up with a lot of stuff. They’re always short on the implementation and the delivery – this thing is fraught with issues.”

Northport wants to talk to two other ports

Northport said it is ready to meet with Ports of Auckland and Port of Tauranga to discuss the future of freight for the North Island.

In a statement, its chairman Murray Jagger said a newly released working group report on the Northport proposal gives it confidence to talk about the potential opportunities.

Mr Jagger said the three ports need to digest the ramifications of the report and discuss the situation together.

“Northport has a very clear vision of the role it can play in the economic growth of Northland, Auckland and New Zealand,” he said.

“Significant growth is possible here. We have been clear for many years that we stand ready to assist in any way we can to support Auckland’s growth and the aspirations that Aucklanders have for their waterfront.”

Mr Jagger said he hoped to convene a meeting of the chairs of all three ports involved – Northport, Port of Tauranga and Ports of Auckland.

“We need to digest the ramifications of what we’ve seen and heard today, and flesh out a win-win-win situation not just for our three communities, but for all of New Zealand,” he said.

“We then need to seek the input of tangata whenua, our wider communities, and business and civic leadership before bringing these suggestions to government.”

Ports of Auckland has declined an interview with RNZ.

KiwiRail investment through Land Transport fund: government proposal ‘historic’ – chief exec

The government is moving to fast-track billions in funding for rail investments in a change that is being hailed as historic.

Freight Train, Reid McNaught

A new style of funding will allow KiwiRail to plan for long-term investments, the state owned enterprise’s chief executive says. Photo: KiwiRail

The state-owned enterprise’s funding is usually approved annually by the Crown, but the government yesterday released a draft rail plan that will prioritise new trains, tracks and bridges across the country by funding KiwiRail’s budget through the National Land Transport Fund.

KiwiRail Group chief executive Greg Miller.

Greg Miller Photo: Supplied / KiwiRail

KiwiRail chief executive Greg Miller said this would allow the company to plan for long-term investments – including upgrades to national freight rail and passenger rail in Wellington and Auckland – rather than relying on year-to-year funding from the Budget.

“This is an historic change in the way rail is treated in New Zealand,” he said.

“Each year we go cap in hand to the government for capital projects to develop our nationwide rail network of 3500 kilometres and as you can appreciate with the inclemency we’ve just seen in the South Island, our network was cut off in three parts of the South Island and it takes capital to fix that.”

Flooding across paddocks.

Recent flooding in the South Island that cut the rail network in three places requires the kind of money for repairs that may be more readily available in a new style of funding, the state owned enteprise’s chief executive says. Photo: Supplied/Peter Lyttle

He is hopeful the plan will make the state-owned enterprise more independent.

Other priorities under the draft plan include a new train control centre for Auckland, replacing the two interislander ferries and ageing rail locomotives and wagons. Safety at level crossings, where two people died last week after being hit by trains in Auckland, will also be improved.

The plan is subject to feedback and changes and the government will need to pass the associated Land Transport Legislation Bill, which has its first reading before parliament next week.

Transport Minister Phil Twyford said upgraded rail would boost productivity, and reduce road congestion and net greenhouse gas emissions.

Dave Morgan, flamboyant and newsworthy union leader

Karl du Fresne, Dec 07 2019

Dave Morgan, pictured on his retirement as national secretary of the Maritime Union in 2003.
MAARTEN HOLL/STUFF Dave Morgan, pictured on his retirement as national secretary of the Maritime Union in 2003.

David John (Dave) Morgan, trade unionist; b Adelaide, South Australia, May 29, 1940; d Masterton, November 5, 2019

Dave Morgan was one of the last of a generation of New Zealand trade union leaders who were once household names.

His death at the age of 79 recalled a time when industrial disputes were constantly in the headlines and union leaders such as Morgan, Pat Kelly, Bill Andersen, Ken Douglas, Blue Kennedy and Con Devitt were publicly branded as wreckers and agitators. 

Of that coterie of formidable unionists, only Douglas – now 84 – survives. 

For 30 years, the Australian-born Morgan led a union that was synonymous in the public mind – not always fairly – with disruption to shipping, most notoriously on the Cook Strait ferries.  

As president of the Seamen’s Union, which became the Seafarers’ Union after a 1989 merger with the smaller but equally stroppy Cooks and Stewards Union, he was a newsworthy figure.

He was also, by trade union standards, an unusually flamboyant one, noted for his collection of stylish hats and colourful ties. Known in union circles as The Hat, he had a sense of style that set him apart in a line of work not normally associated with sartorial elegance. 

Asked about his celebrated collection of headwear, he once said his motive was purely pragmatic. “I would have thought it was pretty self-evident – I’m as bald as a badger.”

Public attitudes to the Seamen’s Union were summed up in a North and South article in 1990 by David McLoughlin, who wrote: “They’re widely seen as the mob which stops the Cook Strait ferries in the middle of seemingly every holiday … enormously powerful, featherbedded, working only half the year if they’re unlucky, overpaid, flown to their jobs from wherever in the country they choose to live”.

Dave "The Hat" Morgan and Seamen's Union colleagues occupying the Shipping Corporation's boardroom in Wellington in 1988.
ROSS GIBLIN/STUFF Dave “The Hat” Morgan and Seamen’s Union colleagues occupying the Shipping Corporation’s boardroom in Wellington in 1988.

It was certainly true that the two major maritime unions, the seamen and the watersiders, wielded unusual power in an economy almost wholly dependent on shipborne trade. That power was magnified by the seamen’s ability to shut down commerce between the North and South islands.

It was also true that the shipping industry had a history of harsh working conditions, anachronistic employment practices and combative relationships with shipping companies dating back to the 19th century. All this contributed to a tough and uncompromisingly militant union culture.  

Yet shipping employers who dealt with Morgan respected him as an honest negotiator and liked him personally. That was evident from heartfelt and moving tributes paid to him privately after his death from cancer.

He was easy to like: amiable and quietly spoken (although a stirring orator when the occasion required it), with a distinctive raspy voice and a bone-dry sense of humour. But you knew there was a steely core there somewhere. There had to be, to maintain control over a union whose fractious members could be just as challenging to deal with as the bosses.

In a newspaper story marking Morgan’s retirement 16 years ago, Pacifica Transport chief executive Rod Grout said Morgan would fight tooth and nail for his members, but added that “you knew where you stood with him”. And he gave Morgan much of the credit for promoting shipping industry reforms that helped end the disruption of Cook Strait ferry sailings.  

Morgan was admired internationally. Following his death, messages of sympathy flowed in from around the world – evidence of his involvement in causes such as the campaign against apartheid, and of his assistance to unionists in Third World countries where he would have clandestine meetings with local activists forced to live like fugitives under authoritarian regimes. 

Much of the disruption caused by the Seamen’s Union was political rather than industrial. Morgan was instrumental in initiating a long-standing trade ban against Chile after the 1973 military coup that overthrew the elected socialist leader Salvador Allende, and he was proud of the union’s role in opposing a visit to New Zealand by the nuclear-powered warship the USS Truxtun.

Seamen's Union members protesting at Port Taranaki in 1983. Strikes among maritime workers used to be common before the upheavals of the late 1980.
ARCHIVE Seamen’s Union members protesting at Port Taranaki in 1983. Strikes among maritime workers used to be common before the upheavals of the late 1980.

It was clear from Morgan’s funeral in Masterton’s Copthorne Solway Park Hotel that respect for him spanned ideological lines across the Left. Former Labour Party deputy leader and Cabinet minister Annette King, an old friend, flew from Canberra, where she is now New Zealand’s high commissioner, to deliver a eulogy. Justice Minister Andrew Little – himself a former union leader, though of a more moderate persuasion than Morgan – also attended.

The 260 mourners were treated to a verbal tour-de-force by the Australian unionist Paddy Crumlin, president of the International Transport Workers’ Federation, who delivered a spirited and often humorous 20-minute off-the-cuff oration, barely pausing for breath, on socialist values and the virtues of working-class solidarity.

Born in Adelaide, Morgan was one of three siblings in a Catholic family. He was taught by nuns of the Sacred Heart order, whom he recalled with some fondness, and later by the Marist Brothers, whose brutal discipline engendered less affection.

It was said at his funeral that he once considered entering the priesthood, but after going to sea at 16 as a deckhand on the BHP-owned Iron Monarch, Morgan discovered another belief system that resonated more powerfully with him. By the age of 18 he was a member of the Australian Communist Party. He remained a committed socialist until the end, although in later life he disavowed any party alignment. 

In a 1998 radio interview with Brian Edwards, Morgan recalled being radicalised during late-night debates in the ship’s mess-room. The Iron Monarch had a crew of 24, of whom five or six were communists. 

Morgan was captivated by the ideological dynamics of his working environment. Communism, he explained to Edwards, held out the hope of a better life. That was a widely held view among his union peers in the 1950s and 60s, and it persisted despite evidence of appalling repression under communist regimes.

Morgan told Edwards that, while he was no apologist for the denial of human rights, he refused to condemn communism because of mistakes or excesses by leaders such as Joseph Stalin.

Bill "Pincher" Martin, Morgan's predecssor at the Seamen's Union, in 1971.
THE DOMINION Bill “Pincher” Martin, Morgan’s predecssor at the Seamen’s Union, in 1971.

In 1963, by then an able seaman, Morgan moved to New Zealand to join the Union Steamship Company and promptly made the acquaintance of kindred spirit Pat Kelly, a feisty fellow Marxist, and his wife Cath. 

The Kellys’ son Max recalled at Morgan’s funeral that the two men met for the first time in the public bar of a Wellington hotel; he wasn’t sure whether it was the Terminus or the Post Office (both long gone). Between drinks, Pat Kelly would sell copies of the New Zealand Communist Party paper the People’s Voice.

The two became firm friends, confidantes and drinking mates, although Morgan, an enthusiastic boozer in his younger days, would renounce alcohol and cigarettes after a life-changing car accident at Paekākāriki in the early 1980s. 

The two men’s families also bonded closely, sharing holidays in the Kellys’ bach, an old Railways house, at Ohakune. Max Kelly recalled that the man the public knew as the leader of angry protest marches would play the clown at the Kelly children’s birthday parties. He was a mentor to Kelly’s sister Helen, who became president of the Council of Trade Unions before succumbing to cancer in 2016. 

After Pat Kelly’s death in 2004, Morgan placed an In Memoriam notice in The Dominion Post on his anniversary every year, in which he paid tribute to his former comrade and commented wryly on his deficiencies as a racing tipster. Both liked a punt on the horses.

In 1970, Morgan met Margaret “Maggie” Lee, a school dental nurse, while on an anti-Vietnam protest march in Auckland. By that time he had come ashore to take up an appointment as the union’s Lyttelton branch secretary. The two were married the following year and would later adopt a daughter, Jenny Katene. 

In the words of Annette King, Dave and Maggie Morgan made a formidable team, “fearless and committed”. For years they lived in a union-owned house in Austin St, Mt Victoria, which served as a social gathering place for the Left, and for which they paid $26 a week in rent – a fact exposed in 1989 by an angry chief Labour Court judge, Tom Goddard. 

In a withering judgment provoked by the union’s refusal to comply with an injunction ordering ferry crews back to work during an illegal strike, Goddard ordered sequestrators to seize the union’s assets – and for good measure, opened its finances to public scrutiny.

Goddard calculated that a true market rent for the Austin St house, which by accident or design was painted pink, would be at least $200 a week. But as McLoughlin pointed out in North and South, it was hardly a luxurious property – and this was long before Mt Victoria was gentrified. 

The family later moved to Masterton – ironically, almost as far from the sea as it’s possible to get in New Zealand – where Morgan lived a quiet life as the devoted patriarch of his whānau. 

He retired as national secretary of the union in 2003, three decades after stepping into shoes previously occupied by Bill “Pincher” Martin and, before Martin, the feared union strong man Fintan Patrick Walsh. In his last weeks, he joked that he wanted to be buried next to Walsh in Karori Cemetery, but with a taller headstone. 

Under Morgan’s leadership, the seamen were part of a hard core of Left-wing blue-collar unions – along with others representing meat workers, boilermakers, watersiders and truck drivers – that regarded themselves as upholding traditions of militancy, solidarity and class consciousness.

But with the economic upheavals of the 1980s, some old union alliances began to unravel. Morgan found himself at odds with his former friend and fellow communist Ken Douglas as the movement bitterly split over how best to maintain union strength and cohesion in the face of deregulation, globalisation, job losses and legislative changes that were seen as tilting the industrial playing field in favour of employers. 

By the time he retired, Morgan had observed not only a drastic decline in union power, but also the disintegration of the Soviet-led communist bloc from which he and many of his peers had drawn ideological inspiration.

But the socialist flame burned brightly to the end. His death notice finished with the union slogan “Solidarity Forever” – and at his funeral, mourners sang The Internationale, the anthem of the socialist Left. 

He left instructions for his ashes to be scattered at sea off Wellington Heads.

Sources: Stuff archives, Nga Taonga Sound and Vision, North and South, Maggie Morgan, Max Kelly, Annette King, Chris Eichbaum.

Stuff

Nation ‘$1b poorer’ if port leaves Auckland

With a working group’s third report on Port of Auckland’s future not available to the public, others are pushing ahead with their own analysis, Dileepa Fonseka reports.

A third port study will go before a Cabinet committee on Wednesday but on Tuesday Finance Minister Grant Robertson gave a clear indication it wouldn’t be enough on its own to persuade him to support moving Auckland’s port to Northland.

“The report’s a useful contribution, but as I’ve said to you previously, I’ve got further questions I want answered.”

“This is a massive, massive move we’re talking about here. So you know, we’ll go through the process, but we haven’t made a decision to do it.”

Meanwhile another report into the future of Auckland’s port has been released. 

The NZEIR report calculates New Zealand would be $1b poorer if the Port of Auckland’s functions were taken up by either Northport or Tauranga. 

“Auckland is both the largest source of import demand in New Zealand, and the largest concentration of commercial activity,” says the report.

“An equally profitable port elsewhere, employing the same number of people, would have a similar direct effect on its local economy, but its wider economic effect would depend on how efficiently their customers’ exports and imports moved from the port to their doors.”

The use of diesel trains to transport goods from Northport to Auckland would emit 121,461 tonnes of carbon dioxide into the atmosphere every year. 

“Longer and more frequent road or rail trips would be required to bring imports to their ultimate destination or to the port for exporting.”

Most of the costs of relocating the port would be borne by Auckland in terms of reduced consumption, higher prices, and longer wait times for freight. 

People and businesses in New Zealand’s largest city would see the cost of their imports go up by $549m if port operations moved to Northland or $626m if port operations moved to Tauranga, the report says. 

But the rest of the country would see the cost of their imports go down if the port’s business was taken up by Port of Tauranga or Northport.

Economist Laurence Kubiak, who authored the report, said this was because other ports, like Centreport in Wellington for example, would import more and goods would have to travel a shorter distance to get to consumers in those areas. 

Anticipating the report’s release 

Both Infrastructure Minister Shane Jones and Upper North Island Supply working group chair Wayne Brown told Newsroom last week they were looking forward to a possible release of the full report this week after Cabinet deliberations.

After details of the report leaked, Auckland’s Mayor Phil Goff has bristled at its reported suggestion POAL could be taken off Auckland Council with only waterfront space as compensation, and Jones has called POAL CEO Tony Gibson a “recreant” – cowardly renegade – after details emerged that Jones warned Gibson not to put his head in a “political noose” by going up against NZ First on the port issue. 

Others have expressed concern at the mode shift that would be required from shippers of freight – who have been favouring trucks in greater numbers – in order to make a Northport option work. 

Supporters have lined up behind moving the port from its current location in Central Auckland too. 

RNZ reported former Prime Ministers John Key and Helen Clark were backing a “Waterfront 2029” to get rid of POAL and The New Zealand Herald reported National MP Nikki Kaye had expressed a preference for moving the port but wanted to explore a number of options including the Firth of Thames.

NZ to join international maritime convention to reduce ship emissions

Wednesday, 4 December, 2019 – 14:55

New Zealand will sign up to new international maritime regulations to reduce ship emissions and lift air quality around ports and harbours, Associate Transport Minister Julie Anne Genter announced today.

Subject to completion of the Parliamentary treaty examination process, New Zealand will sign up to Annex VI of MARPOL, an International Maritime convention for the prevention of pollution from ships.

“Joining this convention will improve the health and environmental impact of shipping emissions, particularly around our port communities.

“It will give Maritime NZ the power to inspect foreign ships for compliance with new emission standards and take enforcement action if necessary.

“Signing up will also ensure New Zealand has a seat at the table as new global greenhouse gas emission maritime regulations are negotiated over the next few years.

“The convention’s regulations limiting sulphur emissions from shipping are due to come into force on 1 January 2020. However, as the previous government did not initiate the process of signing up to this convention, there will be a longer lead in time before these regulations apply to domestic ships.

“The treaty examination process means that New Zealand would sign up to Annex VI in late 2021. Stricter limits on sulphur limits would then apply to domestic ships from early 2022. This gives our shipping and fishing industries sufficient time to prepare for the new regulations,” said Julie Anne Genter.

Background

The IMO convention, MARPOL Annex VI, regulates atmospheric emissions from ships. It will also be the platform for new IMO measures to reduce greenhouse gas emissions from ships, which are expected to be ready in 2023.

The most significant regulatory impact of Annex VI will be new sulphur limits on marine fuel. The current sulphur limit of 3.5% by mass for marine fuels will drop to 0.5% when new Annex VI regulations take effect globally on 1 January 2020. Compliance can be achieved by using low sulphur fuel or fitting an exhaust cleaning system known as a ‘scrubber’ to reduce emissions to a level equivalent to those from low sulphur fuel.

All ships ‘flagged’ to Annex VI party states visiting New Zealand will have to comply with the new regulations from that date. Similarly, New Zealand-flagged ships travelling to states that are party to Annex VI will also have to comply.

Almost 100 countries representing 97 percent of global freight capacity are already signatories to the convention. Subject to the parliamentary treaty examination process, and legislation changes necessary to implement the convention, New Zealand is expected to accede to Annex VI in late 2021. Ships operating only in domestic waters will have until early 2022 to comply, as Annex VI would come into force for New Zealand three months after accession.

Andrew Dickens: Ports of Auckland debate misses the point

Andrew Dickens, Publish Date Wed, 27 Nov 2019, 9:49AM

Photo / NZ Herald
Photo / NZ Herald

Moving the Ports of Auckland is a no-brainer, it’s just a pity that all the discussion so far has no brain and based on the wrong things.

On Tuesday Northland Regional Council’s new chairwoman Penny Smart said relocating Auckland’s port to Northport at Marsden Point will bring strong economic benefit for the region.

No kidding Sherlock. If we just upped the port to Northland then Northland will win even if the idea is a total economic disaster for New Zealand Inc and the entire import/export sector. It also reeks of the limited thinking that all we have to do is just up the port and move it.

This followed the launch of a social media campaign on Monday which gathered the support of Helen Clark and John Key. Mr Key said it was a sensible idea to move the port to Northland while Ms Clark wombled on about the waterfront for the people. Trevor Mallard hopped on the bus as well

If I was a bitchy man I’d say that Mr Key lives in the suburb beside the port, Ms Clark lives beside a football stadium she like to see on the waterfront and Mr Mallard is the guy who first thought of the stadium on the port land. Of course they want it gone. None of their statements were enough to convince me to move to Marsden.

Then we get Mayor Phil Goff on Tuesday saying he wants the Port moved so the people of Auckland can get access to the waterfront. Again not good enough a reason.

Then we’ve got all the people who chant the waterfront should not be a carpark due to the used car import business. Which is true but the least of New Zealand’s problem with this port. The hub of the problem lies to the East of the cars with a port whose size and scale dwarfs the import of 250,000 cars a year.

The Fergusson Container Terminal is Australasia’s third biggest. Reclamation began in the 60s and it cranked up in the 70s. It’s hit expansion capacity in just 50 years. Someone then should’ve known better. It’s a 4 lane Harbour Bridge scenario all over again.

The container port handles 60% of New Zealand’s imports and 40% of its exports. Half of our economy is tied up in that expanse of concrete and as the country grows it’s capacity relatively shrinks. So much so that the Port will be at full capacity in just a few years.

There’s only one reason why we have to move the Port. It’s TOO SMALL. When it’s full half our economy will start to fail. Why do I hear no-one talking about that?

The Northport cheerleaders are doing a terrible job. Slyly ignoring the costs other than just building some wharves and a spur line. Ignoring the transition costs on road and rail links and inland ports and cross Auckland freight avenues.  Ignoring the infrastructure construction capacity constraints. 

Ignoring Whangarei’s capacity to absorb the growth.

Auckland’s port affects a third of the city’s economy. 600 people are employed directly but 200,000 other jobs are directly tied to the port.

Ready for those people to move north, Whangarei?  Got the houses, schools and health care facilities? And the water and waste infrastructure?

Meanwhile Auckland, are you ready to lose this bedrock of your economy?

The only people who have made any sense in this whole thing so far are Steven Joyce and the Government who realise this is a holistic, nationally critical decision with implications for every part of our economy and our infrastructure and our national investment for the next half a century and beyond.

This whole thing is way above the pay grade of some local body politicians, anyone from New Zealand First who have too much skin in the game, same for CEOs of port companies, activists and former politician’s who want to meddle.

Meanwhile what would I start doing tomorrow?

For me the first thing to do is to get a dedicated rail line from the port to the inland facility in Wiri to get as many containers and cars off the wharves as soon as possible to extend the port’s life while we make a transition.

But here’s the thing on that. The only route is Hobson Bay. The home of the Remuera Nimby.

This is a monumental cock up 60 years in the making.