It’s not yet clear whether Waka Kotahi will be able to claw back the public funding it’s already put in to Move Logistics' aborted coastal shipping project
Analysis: If ever New Zealand needed a wakeup call to the vulnerability of its road and rail networks, Cyclone Gabrielle provided it. With Gisborne and the East Coast cut off, government agencies turned to 'the blue highway' as a lifeline.
The Government provided a $500,000 grant and $2.25 million underwrite to Eastland Port to charter the cargo ship Rangitata for three months, to bring in vital supplies – and ship out what little produce the region was still able to salvage from its devastated farms and forests.
But with the withdrawal of Maersk shipping line, delays to Aotearoa Shipping Alliance's barge, and now Move Logistics’ cancellation of plans to build and launch a new ship for coastal routes, even that blue highway is under renewed threat.
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The gradual demise of coastal shipping had been identified by officials as a dangerous shortcoming as the country battled earthquakes, post-Covid supply chain breakdowns and increasingly frequent severe storms.
Regional ports were still being occasionally serviced by international cargo ships that would drop off their freight in Auckland, then continue down the country, before finally filling up their holds in Tauranga and departing these shores. But if there were delays, they’d skip some ports. If the tides were wrong, they’d skip ports. If there wasn’t a sufficiently long wharf available, they’d skip ports. Exporters warned it was threatening their businesses.
“We've got loaded containers sitting at the wharf,” Sealord chief executive Doug Paulin told me, back in 2021. "In some instances, we've got to change the whole order process because all of a sudden we missed the vessel."
"Move Logistics Group Limited informed Waka Kotahi NZ Transport Agency earlier this month that the company is unable to proceed with its planned sea freight service between Nelson and New Plymouth. Waka Kotahi is currently considering its options under our funding agreement with Move." – Deborah Hume, Waka Kotahi
After protracted consultations, last year former transport minister Michael Wood finally announced $30m funding to Coastal Bulk Shipping, Move International, Swire Shipping and Aotearoa Shipping Alliance. It was to help each company bring at least one extra coastal vessel into service.
It seemed (to adopt the supply chain jargon) just in time. In February this year, Cyclone Gabrielle hit. Then in March, international shipping line Maersk said it would withdraw its dedicated NZ coastal service, known as Coastal Connect.
For each step forward (this year Swire Shipping’s Takutai Chief began sailing between Tauranga, Wellington and Nelson) there are two steps back.
Ray Mudgway, from the iwi-owned Aotearoa Shipping Alliance, tells Newsroom its barge (formerly known as Star Victory) is being overhauled at a dry dock in Indonesia. It's over budget (well north of $10m) and running 10 to 12 months behind schedule.
He now hopes it will enter service in February or March next year, serving difficult ports like Westport, Tairāwhiti and Kawhia, where iwi have mineral rights that they struggle to get to market. There's no point compromising quality by rushing: "Ours is a 50 to 100-year business," he says. "Our view of life is, take a long term view – don't sweat the short term too much."
And Move Logistics had excitedly boasted it was using its $10m co-investment from Waka Kotahi to go full steam ahead with the construction of a new $12m methanol-capable roll-on-roll-off vessel. With three sailings a week, the Vietnam-built freighter could service at least 13 NZ ports, the company promised. It was to enter service this year.
But yesterday at the company’s AGM, chief executive Craig Evans announced the order's cancellation because, contrary to design specs, the ship wouldn’t be able to load cargo at smaller ports in a variety of weather and tidal conditions. "Some critical design limitations have been identified and we have now been advised that a suitable vessel cannot be designed that meets our essential requirements," he told investors. "Accordingly, Move will not be proceeding with construction of the new vessel."
It’s not yet clear whether Waka Kotahi will be able to claw back the taxpayer funding it’s already put in.
Deborah Hume, the agency's national manager of multimodal integration, says Move Logistics informed Waka Kotahi this month that the company was unable to proceed with its planned sea freight service between Nelson and New Plymouth. "Waka Kotahi is currently considering its options under our funding agreement with Move," she says.
Earlier this month, Maritime Union national secretary Craig Harrison had hailed the investment in coastal shipping as one of the Labour Government’s key achievements.
This morning, the union is expressing concern that the modest growth does not stall. "NZ desperately needs to develop coastal shipping capacity for our regional supply chain," it says. "The incoming Government needs to continue this support."
