THE CHANGE of premier in Australia’s state of Tasmania in early April has given some hope to the people of King Island that their long-running shipping nightmare will finally come to an end.
“Jeremy Rockliff is a fair person and a friend of King Island,” one prominent island cattle farmer told DCN of the new premier. Mr Rockliff hails from Tasmania’s north-west coast, whose ports (Burnie, Devonport and Stanley) traditionally service King Island.
Others are not so confident. The change of leadership has prompted the King Island mayor Julie Arnold to write to the new premier drawing his attention to the “considerable disquiet in the King Island business community” about yet another change to the shipping service to the island, which has led to sharp increase in freight costs.
Decisions over many decades by Tasmanian state governments, successive transport ministers and state-owned TasPorts have led to today’s situation where major businesses on King Island, along with its farm and kelp exporters, are coming under increasing financial pressure from ever-rising costs due to inefficient and unpredictable shipping services.
The two vessels that service King Island are John Duigan, operated by the TasPorts-owned Bass Island Line and King Islander operated by the Eastern Shipping Line, in turn controlled by – and mainly catered to – the requirements of meat processor Greenham Group. The two vessels supply the island with an estimated 90% of its imported goods and services and virtually its exports. The exporters are soon to be joined, if all goes to plan, by the Group 6 Metals group, which is looking to re-start the island’s Dolphin tungsten mine that closed at a time of low prices for the metal in 1990.
The latest shock to the island’s business and population, and the final straw according to prominent island figures, was the decision by Bass Island Line, the island’s main shipping service provider, to stop its direct service between the island and Victoria in March. BIL said the decision was made to reduce costs, after BIL lost $4.2 million in the 2021 financial year. Mayor Arnold in her letter said the change has produced nothing but “very increased costs and severe time delays”. These delays can be for as long as two to three weeks, she wrote.
Instead of shipping directly between the King Island port of Grassy on the island’s east coast and Geelong or Port Melbourne, since March livestock, building materials, fuel, vehicles and groceries have to all be freighted via Devonport on Tasmania’s north-west coast. BIL says on its website it offers a “seamless” transhipment service to and from Victoria via Devonport using the SeaRoad service. The Tasmanian government (through TasPorts) has just spent $2.4 million upgrading the Devonport facility to take roll on, roll off cargoes to enable the vessel to use Devonport. However, King Island exporters and importers must now pay a “ramp facility fee” adding another $38 per pallet when they ship through the port.
Chairman of the King Island Shipping Group, Greg Morris, estimates the decision to stop the direct Victorian service has added 25-30% to freight costs, and this comes on top of other factors leading to sharp increases in fuel and building materials prices. The increase is hitting some of King Island’s main businesses hard, particularly the Canadian-owned Saputo group which owns King Island Dairy, and is also causing some angst at Group 6 Metals in its work on the Dolphin mine. Saputo estimates its freight costs will increase $50,000 this year and Group 6 is looking at a $150,000 increase on its original budget. The whole dairy sector on the island is delicately poised with one of its biggest properties just coming on the market and farm numbers falling to just six.
Mayor Arnold said in her letter, “one major shipping group member [would see a] minimum increase of $100k per year” and high analysis fertiliser 28% increase, fuel groceries and bakery items up 22% minimum, fuel supplies from Victoria up 59%, and a quote for a farm baler (considered over width) to be shipped to King Island up 63% in the freight cost. Petrol on the island typically costs $2.44 a litre, well above the $1.90-$2 it costs on the Tasmanian mainland.
By dropping the direct service to Victoria BIL expects to save $2.4 million a year by disbanding one of its two crews.
The cost-cutting move has fed concerns on King Island that the government and TasPorts will try again to find another operator for the BIL service, or even sell it.
Even before this latest freight cost shock, King Island businesses have been frustrated by the unreliability of BIL’s vessel, the John Duigan, which had been lying idle in a Malaysian shipyard for years and was designed to ship fuel in far calmer waters than the Bass Strait. Bought by the Tasmanian government, it needed substantial repair work and came into service in May 2018. One angry user described the vessel as “just a barge that struggles in Bass Strait conditions”. King Islanders say one reason for BIL’s loss last year was the fact that the John Duigan could not sail for days at a time because Bass Strait was too rough for it.
Another pointed out that the government had, since the vessel was acquired, always called it an “interim vessel”, but stopped calling it that in December.
Mayor Arnold, with the backing of the island’s King Island Shipping Group, in her letter stated:
“It is absolutely vital that a three-month breathing space to these proposed rate increases be given to allow further consideration of this substantial change not only to rates but to the service the island can expect. We ask for your genuine consideration of this request.”
Whether the government’s TasPorts maintains control over the main service, BIL, or sells it, the operator will need some sort of government assistance, according to Morris.
TasPorts, by the way, paid a $4.6 million dividend to the state government last financial year, despite running a loss on the King Island run.
Things for TasPorts can’t be that bad.
