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Return of cabotage would add to costs

Tuesday, May 26th, 2004

Return of cabotage would add further to exporters and consumer costs

A return of cabotage to New Zealand's coastal shipping would lock in higher costs for consumers while penalising New Zealand manufacturers' competitiveness in Australia and further afield, the Employers & Manufacturers Association (Northern) says.

Cabotage prohibits other than locally owned ships the right to move freight on the New Zealand coast. Transport Minister Pete Hodgson is holding a meeting with some of the directly affected parties tomorrow.

"Bringing back cabotage might help preserve 100 jobs on the coast while costing the jobs of many hundreds in manufacturing and other enterprises through the supply chain," said Bruce Goldsworthy, EMA's Manager of Manufacturing Services.

"Dropping cabotage from the New Zealand coast in 1994 delivered strong gains for local producers and traders; bringing it back, or introducing subsidies on the coast would eliminate them.

"Without the three modes or transport - shipping, rail and road freight - operating in competition, some of our producers selling between the North and South Islands would become more vulnerable to competition from Australia.

"Manufacturers often find domestic markets hard to defend from across the Tasman since freight costs from Sydney and Melbourne to Christchurch are already similar to those from Auckland to Christchurch. Cabotage or subsidies would make matters worse while adding to consumer costs.

"International shippers mainly provide a north to south service

and tend to marginally price coastal freight.

"Rumours that Government plans to introduce subsidies for coastal shipping funded from road user charges would be particularly objectionable.

"None of the dire predictions made in 1994 came about when cabotage was abandoned. Coastal shipping didn't fail; the fleet stayed the same.

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

"Freight prices went down, not up, with an increase in the number of ports served and types of service provided.

"In the six year period from 1994 to 2000, the time frame for the Shipping Review :

* 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.

"These significant gains are at risk if we revert to the bad old days of protected coastal shipping."

ENDS

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