While there has been widespread acclaim for the Federal Government’s decision to upgrade the Tasmanian Freight Equalisation Scheme to include goods destined for export, we all await the detail of the decision before we can begin to understand its full ramifications.
Tasmanian producers of export goods, whether they be rolls of newsprint bound for India or frozen lamb carcasses bound for Egypt, have not had their freight covered by the freight equalisation arrangements.
So, for instance, Tasmanian Quality Meats at Cressy has had a distinct freight disadvantage against a competitor in Ballarat when it comes to the cost of getting a refrigerated container (reefer) of lamb to Melbourne to put it onto a ship or plane bound for overseas markets.
“We have to pay to get an empty reefer sent from Melbourne to Cressy so that we can fill it with lamb and then ship it back across the strait so it can be transferred for export,” TQM’s John Talbot told me.
“That costs us $3960 per reefer, a cost we have had to meet ourselves. We send about 80 reefers a year so we are out of pocket by $320,000 before we start.”
What TQM has to discern is how the new subsidy of $700 per container is to be applied. Will it apply to 20-foot and 40-foot containers at the same rate? How much of that $3960 will qualify for a subsidy? If it is $700, full stop, TQM can expect a subsidy of about $56,000 to offset that $320,000 cost.
Norske Skog has welcomed the changes to the TFES, but it also awaits the detail. On the face of it, it will get $700 per container of newsprint if it ships via a mainland port (which is what it does).
What happens if it is exported directly from Bell Bay via the proposed Swire Shipping service or the Mediterranean Shipping Company, which operates a fortnightly service between Bell Bay, Sydney, Brisbane, Noumea and New Zealand?
Norske Skog’s Arnold Willems also awaits clarification though it is unlikely to affect them since they have 10 overseas destinations and shipping out of Melbourne rather than Bell Bay gives them a greater range of shipping lines from which to choose.
Logic suggests that the TFES subsidy will not apply to goods shipped directly overseas from Tasmanian ports because it defies the principle of freight equalisation, which seeks to compensate for the disadvantage of Tasmania having no road link with the mainland.
What is the future of Swire Shipping? We look forward to Swire’s analysis of the business case for the proposed service.
Of real concern to all shippers is the Victorian Government’s decision to impose an 800 per cent increase in shippers’ rentals at the Port of Melbourne, clearly done to boost the value of the business, which is being privatised.
An eight-fold increase will lead to inevitable and substantial freight charge increases for Tasmanians. The domestic TFES, the existing scheme, is uncapped and, presumably, shippers will get compensation for any handling charges that increase in Melbourne.
But 800 per cent?
TFGA President Wayne Johnston
