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Dominance From Down Under

The Australian shipping industry is experiencing turmoil as the release of a report from federal government-commissioned task force Shipping Reform Group has moved major reforms, intended to prune shipping costs by $116 million a year, a step closer to being realized. The report recommends that cabotage be phased out during an 18-month period, allowing foreign vessels to compete with Australian ships carrying domestic cargo along the Australian coast. The task force proposals also call for Australian ships to be allowed to employ cheaper foreign crews, a move that, if pursued, will likely be met with strong resistance from the maritime union. Seafarers on Australia's coastal shipping routes would also be made to work 31 weeks a year, not the present 27. In return for compliance, and to help it adjust, the shipping industry would be offered tax incentives.

Austal's 196.8-ft. (60-m) Auto Express high-capacity catamaran for Turkey's Istanbul Deniz Otobusleri.

Both the foremost union body in Australia, the ACTU, and the Maritime Union of Australia, have rejected the report.

According to Transport Minister John Sharp, who anticipates a rapid decline in Australia's shipping industry if reforms are not made, cargo rates for Australian ships were almost one-third higher than for foreign ships.

The report has also flagged a second shipping register to encourage more ships to register under the Australian flag. Both Australian and foreign crews could use the second register, which would be controlled by Australian managers, masters and chief engineers, that would offer tax incentives and more flexible labor arrangements than the existing register. But if the Australian crew failed to deliver cost savings, ships would be permitted to hire foreign crews.

The report, put together by business and industry leaders, indicated reform could cut costs by more than 25 percent. Using foreign crews could save a company substantial revenues, as Australian ships reportedly cost $1.55 million a year more to operate than other OECD countries, primarily due to crew costs. Whether these reforms are implemented or not remains to be seen. In the meantime, Australian maritime companies are proceeding with business as usual.




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