King Island shipping crisis calls for halt to freight rate increases


THE CHANGE of Prime Minister in the Australian state of Tasmania at the start of April has given King Islanders some hope that their long-running maritime nightmare will finally come to an end.

“Jeremy Rockliff is a righteous person and a friend of King Island,” said a prominent island rancher. RCD of the new prime minister. Mr. Rockliff hails from the northwest coast of Tasmania, whose ports (Burnie, Devonport and Stanley) traditionally serve King Island.

Others are not so confident. The change in management prompted King Island Mayor Julie Arnold to write to the new premier to draw his attention to “considerable concern in King Island’s business community” about a further change in the service of sea ​​transport to the island, which led to a sharp increase in transport costs.

Decisions made over many decades by Tasmania’s state governments, successive transport ministers and state-owned TasPorts have led to the current situation where King Island’s big business, along with its farm exporters and of kelp, are under increasing financial pressure due to ever-increasing costs due to inefficient and unpredictable shipping services.

The two ships serving King Island are John Duganoperated by Bass Island Line, owned by TasPorts, and King’s Islander operated by the Eastern Shipping Line, which itself is controlled by – and mostly satisfied – the demands of meat processor Greenham Group. The two vessels provide the island with around 90% of its imported goods and services and virtually its exports. The exporters will soon be joined, if all goes according to plan, by Group 6 Metals, which is seeking to revive the island’s Dolphin tungsten mine which closed at a time of low metal prices in 1990.

The latest shock to business and people on the island, and the final straw according to prominent island figures, was the decision of Bass Island Line, the island’s main shipping service provider, to shut down its direct service between the island and Victoria in March. BIL said the decision was made to cut costs, after BIL lost $4.2 million in fiscal 2021. Mayor Arnold, in his letter, said the change would not had produced only “very high costs and significant delays”. These delays can be up to two to three weeks, she wrote.

Instead of shipping directly between the King Island Port of Grassy on the east coast of the island and Geelong or Port Melbourne, since March livestock, building materials, fuel, vehicles and groceries must all to be transported via Devonport on the north west coast of Tasmania. BIL states on its website that it offers a “seamless” transhipment service to and from Victoria via Devonport using the SeaRoad service. The Tasmanian government (through TasPorts) has just spent $2.4 million to upgrade the Devonport facility to transport and offload cargo to allow the vessel to use Devonport. However, King Island exporters and importers must now pay a “ramp setup fee” adding an additional $38 per pallet when shipping through the port.

King Island Shipping Group chairman Greg Morris believes the decision to halt the direct service from Victoria has added 25-30 per cent to freight costs, and this is on top of other factors leading to steep price increases fuel and building materials. The increase is hitting some of King Island’s major companies hard, particularly Canadian group Saputo, which owns King Island Dairy, and is also worrying Group 6 Metals in its work on the Dolphin mine. Saputo estimates that its transportation costs will increase by $50,000 this year and Group 6 is considering an increase of $150,000 over its initial budget. The entire dairy sector on the island is in a delicate balance with one of its largest holdings just coming on the market and the number of farms dropping to just six.

Mayor Arnold said in his letter, “a major member of the maritime group [would see a] $100,000 per year minimum increase” and 28% increase in high-analysis fertilizers, fuel for groceries and bakery items by 22% minimum, Victoria fuel supply by 59%, and a quote for a agricultural bales (considered on width) to be shipped to King Island up 63% in freight cost. Petrol on the island typically costs $2.44 a litre, well above the $1.90 to $2 it costs on the Tasmanian mainland.

By cutting the direct service to Victoria, BIL hopes to save $2.4 million a year by disbanding one of its two crews.

The decision to cut costs has fueled concerns at King Island that the government and TasPorts will again try to find another operator for the BIL service, or even sell it off.

Even before this latest freight cost shock, King Island businesses were frustrated with the unreliability of the BIL vessel, the John Dugan, which had sat idle in a Malaysian shipyard for years and was designed to ship fuel in much calmer waters than Bass Strait. Purchased by the Tasmanian government, it required extensive repairs and entered service in May 2018. One angry user described the vessel as “just a barge struggling in Bass Strait conditions”. The King Islanders say one of the reasons for the loss of BIL last year was the fact that the John Dugan couldn’t sail for days at a time because Bass Strait was too choppy for that.

Another pointed out that the government had, since acquiring the vessel, always referred to it as an “interim vessel”, but stopped calling it that in December.

Mayor Arnold, with support from the island’s King Island Shipping Group, said in his letter:

“It is absolutely vital that a three-month respite be given to these proposed rate increases to allow for further consideration of this substantial change not only in rates but also in the service the island can expect. We ask that you sincerely consider this request.

Whether the government’s TasPorts maintains control of the main service, BIL, or sells it off, the operator will need some sort of government assistance, according to Morris.

TasPorts, by the way, paid a $4.6 million dividend to the state government last year, despite a loss on the King Island run.

Things for TasPorts can’t be so bad.

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