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Dropping Cabotage Delivers Strong Gains

Media statement
Thursday, September 11th, 2003

Dropping cabotage delivers strong gains

Dropping cabotage in 1994 from the New Zealand coast has resulted in strong gains for local producers, the Employers & Manufacturers Association (Northern) says.

Bringing back the protectionism of cabotage, or subsidies of any kind on the coast, would reverse some impressive gains, said Alasdair Thompson, EMA's chief executive.

Government's Review of Coastal Shipping completed nearly two years ago is expected later this month. The Review did not agree on the re-introduction of cabotage which prohibits other than locally owned ships the right to move freight on the New Zealand coast.

Mr Thompson said the rumours are that Government plans instead to introduce subsidies for coastal shipping from road user charges.

"If Government adopts a backdoor route like this to answer the Seamen's Union call for cabotage, the price will be further under investment in roads and less efficiency on our coast," he said.

"None of the dire predictions made in 1994 came about when cabotage was abandoned.

"Coastal shipping didn't fail; the fleet has stayed the same.

"Employment on coastal water transport didn't decline but held steady at around 1200 people.

"Freight prices went down, not up, while the number of ports served went from seven in 1994 to 11 in 2000 with an increase in the types of service provided.

"In the same six year period to 2000:

* long distance rail lead times dropped from 5 to 2 days

* road lead times reduced from 3 days to 24 hours

* reliability increased from 80% In Full-On Time to 95% In Full- On Time

* Damage decreased, especially on rail

* 'lost' freight reduced to near zero

"Bringing back cabotage would shore up less than 100 jobs while costing the jobs on land of thousands in manufacturing and other value added enterprises through out the supply chain.

"Our members say it is vital to retain all three transport modes - road, rail and coastal shipping - to ensure supply chain costs are optimised.

"Without all three modes in competition, some of our producers selling between the North and South Islands would become more vulnerable to competition from Australia.

"Our manufacturers at present find domestic markets hard to defend from Australia since freight costs from Auckland to Sydney and Melbourne, and Christchurch are similar to those from Auckland to Christchurch.

"The return of cabotage would lock in higher costs and compromise our manufacturers' competitiveness in Australia and further afield.

"New Zealand benefits from the absence of cabotage especially in the re-positioning of thousands of empty containers to the South for loading and returning north or heading to export markets.

"International shippers mainly provide a North to South service

and marginally price coastal freight though the Shipping Review determined only 3 to 7% of it goes by the international shippers."


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