LIVING THE DREAM

In the deep end with Chas Kelly, CEO/Executive Chairman at SeaRoad.

or a man who has spent a lifetime in the transport industry, Chas Kelly uses the word ‘love’ a lot. He “loves” what he does, “loves” coming to work every day and the great place that is his home town – “loves it”. That hometown is, of course, Devonport, Tasmania. Chas has spent all his life there – born and bred in the port town where the Mersey River meets Bass Strait. It is Tasmania’s third largest city with a population of around 23,0001 - a lively place that has a long maritime history and is still home port to one of the most competitive and vibrant commercial routes in Australia. And it was in Devonport where Chas and his mates developed an interest in cars. At 16 he had ambitions to become a panel beater and there was a job going, but his mate got it. As a result, Chas took the next role on offer and three weeks before his 17th birthday he started at William Holyman and Sons Pty Ltd as a Junior Clerk. The hand of fate dealt Chas a fortuitous card, but he did not know it then. William Holyman and Sons was a pioneering transport and shipping company founded in Tasmania in 1850. Holyman’s had a progressive spirit, exposing the young Chas to all aspects of shipping and transport logistics.

FAt the time, Holyman’s not only had a strong shipping fleet, it also had a substantial road transport operation and previous history as an airline that ultimately became Ansett Airlines2 . Chas thrived in the business, even taking a six-month secondment in Melbourne, which reinforced his love for Tasmania. At Holyman’s he climbed the corporate ladder and became Chief Clerk. This role exposed him to all elements of the transport mix: ports, stevedoring, providoring, pay scales, subcontracting, ships, trucks – and he “loved it”!

By ALISON SAUNDERS

At this point Chas was 32, it was 1979 and there was plenty of business. With not much strategy but a lot of ambition, Chas decided to leave Holyman’s and set up his own trucking business.

Initially using sub-contractors, however lacking autonomy Chas then bought an old truck that he worked on each night to ensure it would be operational the next day. Gradually, Chas Kelly Transport developed into a “reasonable business”.

“We would turn ourselves inside out for our customers, we were reliable, and we always paid our creditors”, says Chas. “I listened to a few people, quite a few people and kept modifying the business – and we grew. Being Tasmanian, I understood Tasmanians, and there was a huge advantage in that.”

And so, Chas Kelly Transport grew to have trucking operations across five businesses and a footprint that goes from Tasmania all the way up the east coast of mainland Australia.

In the background, things were also happening with his old employer. In 1999, Patrick Corporation acquired Holyman Ltd. In 2006 Toll Holdings Ltd were keen to take over Patrick Corporation and offered to sell its Bass Strait shipping interests to meet the ACCC’s expectations. The outcome was that Searoad Mersey and Searoad Tamar came on the market.

Naturally, this generated a lot of interest in Devonport and one day, in a conversation with a colleague it was suggested Chas might be the new buyer. It was news to him. After this conversation Chas decided it was an opportunity to be pursued. He put together a group of friends and associates. “The market was good, and I knew Bass Strait shipping reasonably well. It took over six months in a competitive bidding situation to finalise the deal, but we got across the line.”

It was obvious in 2008 that there was a capacity issue with the existing two SeaRoad ships. A new build was a necessity and as anyone who works in shipping knows, a ship build takes a lot of time, a lot of planning and a lot of money.

Searoad Mersey II represents an investment in excess of A$110 million. The vessel itself was the first coastal ship in Australia to use LNG fuel and power technology and the first pure dry cargo ship globally to use a roll-on roll-off LNG supply system.

Innovation is the Tasmanian way - whilst the rest of the world were talking about LNG fuelled vessels, LNG infrastructure and LNG policy – SeaRoad was doing it. In 2016 Searoad Mersey II arrived in Devonport and started work. “One of the real highlights in my life was watching the Searoad Mersey II sail up the Mersey river. It was quite extraordinary” says Chas.

LNG first presented itself to Chas as an alternative fuel in the trucking space. “Around 2010, we started converting our trucking fleet to LNG, Again, a group got together and invested in a refuelling network. It all turned sour when Gunns went into voluntary administration in 2013. The engine manufacturers exited the business soon after and there was nothing left but a good idea.”

The idea of LNG as a fuel was appealing but the specialist bunker barges, and associated infrastructure were costly. “It was around this time that my son was involved in V8 Supercar racing and they use dry-break fuel refueling systems. A derivation of that process looked like it would work on a ship.”

I listened to a few people, quite a few people and kept modifying the business – and we grew.

Being Tasmanian, I understood Tasmanians, and there was a huge advantage in that.

The LNG tanks used on Searoad Mersey II are driven on and off as would be any

ro-ro cargo. At any one time three of the purpose-built tanks (Type C Portable Tanks) are positioned on the stern of the weather deck of the ship, where they are secured to the special loading bays with multiple twist-locks. Once in position the tanks are “plumbed in” via special manifolds to the ship’s fuel system, which is otherwise standard technology for any gas-burning installation; while the ship is at sea the liquid is converted in a gas-handling room situated below deck and fed to the dual-fuel engines3 .

When in port the tanks are simply removed via the vessel’s stern ramp, driven away to be refilled, and returned. LNG capacity is more than adequate for a Bass Strait crossing with a considerable safety margin, and there is always the fallback of marine diesel if required.

In 2016, Searoad Mersey II provided 62% more capacity for SeaRoad Shipping all year round. The vessel has been more successful than expected, achieving higher freight volumes earlier than anticipated. As Chas says, “we are very happy with its success”.

Terry Morris, Chas’s partner in the SeaRoad business observes “Chas has developed his skills and abilities to a level that enables him to handle the CEO/ Executive Chairman roles at SeaRoad admirably. He is not only a first-class executive but more importantly his life experience equips him well to be a mentor to the management team at all levels. I observed the planning and building of the Searoad Mersey 11 and a highlight was the dedication of the team to produce a vessel that would excel in the unique conditions of Bass Strait. The hull and design not only provide the necessary stability but also outstanding efficiency that gives SeaRoad confidence in maintaining the tight schedules necessary to service the market and our valued customers”

Devonport is the southern terminus for SeaRoad Shipping’s vessels, Searoad Mersey II and Searoad Tamar as well as TT-Line’s two Spirit of Tasmania passenger ferries. The Toll Shipping cargo vessels Tasmanian Achiever II and Victorian Reliance II sail between Melbourne and Burnie. Bass Strait is a busy route and a fiercely competitive market. SeaRoad have another vessel planned for delivery in July 2023. “COVID-19 has disrupted our plans a little and we haven’t exactly locked away a shipyard. We are still committed to the build though. The next ship will be bigger and better: 210 metres long, another lane wider and a 4th deck.”

The odds of growing up to become an Australian shipowner are slim. The odds of growing up and owning a firstin-class ship are even slimmer. Owning a second vessel? Slimmer still. It is a reflection on Chas’ drive and opportunism. Even so, Chas does not like to take the credit. “It’s a team effort, I was and am surrounded by people with a lot of knowledge, I don’t like to interfere with what they do.”

The SeaRoad story has happened without any government assistance. A ship build is a long-term investment that requires planning beyond the political cycle. “How do you talk to a politician when you work in 30-year scales and they work in three?” says Chas. SeaRoad was, however, able to access benefits from MIAL’s work in reforming fuel tax credits and corporate tax, which culminated in the Shipping Reform (Tax Incentives) Act 2012. “MIAL has always been an independent voice for the industry, they have done a good job and we are very supportive of their work” says Chas.

Even with a new ship build and a new management team, Chas is not slowing down in his beloved Devonport. “I live in the perfect world, Tasmania is always going to be here with growth in agriculture, aquaculture and minerals. We Tasmanians are opportunistic in our thinking but what I’ve learnt is to stick to the knitting. We concentrate on transport, that is all we do. And I love it.”