Maersk shipping decision highlights weak supply chain security

BY CRAIG HARRISON NATIONAL SECRETARY, MARITIME UNION OF NEW ZEALAND

The decision by Maersk to dump their New Zealand coastal shipping service Coastal Connect shows how vulnerable our supply chains remain to decisions made in overseas boardrooms.

Maersk’s announcement failed to acknowledge its decisions have real impacts on real people.

A few short months ago, in June 2022, Maersk stated the launch of the dedicated New Zealand coastal service marked “an important milestone in our 25 years of operation in the country as we continue to invest in the New Zealand market to offer reliable connections, both for domestic and international cargo.”

According to Maersk, the Coastal Connect service was intended to “protect critical connections to our International services and maintain buffer in our schedule to absorb impact from the supply chain disruption …”

This all made perfectly good sense, and still does. What has changed since June 2022? Reliable connections (and supply chain disruptions) are still important factors for New Zealand importers and exporters. The lack of dedicated New Zealand coastal shipping is still a problem.

Coastal Connect was a dedicated New Zealand coastal service, linking New Zealand ports, crewed by New Zealand crews, and ensuring a reliable shipping schedule.

It has been thrown out in favour of a rejigging of the existing Polaris service which sees Maersk vessels on a weekly rotation between a smaller number of New Zealand ports and Australia.

It is an extremely disappointing action by the world’s largest shipping corporation.

New Zealand seafarers joined the Maersk Nandi and Maersk Nansha as crew in good faith last year. Many left behind secure permanent jobs on other coastal vessels such as the Cook Strait ferries. Now they have been put out of work and effectively replaced once again by low wage foreign crews on an international service.

Conditions on the two Maersk ships were not very good. The ships had been in service in international waters and that means developing world onboard conditions for crew. However, our members were committed to making the new service a success and were working through the issues.

After barely getting established, the service has been shelved, leading to job losses and more uncertainty in the industry. The supply chain has not returned to a pre-COVID normal and may never. Security issues, economic volatility and the repercussions of rampant climate change all present threats going forward to our supply chain and maritime capacity.

New Zealand has always been at the behest of giant shipping companies. The names and technologies have changed over the years but the principles remained the same: New Zealand is very profitable for these operators, but it has very little control over what happens.

The problem has got worse in the several decades since New Zealand coastal shipping was effectively undermined, and left to slowly collapse through hostile Government policies, up until the present administration’s more progressive approach.

Result Of Neglect

The result of this neglect became apparent when shipping delays and transport disruptions during COVID created major and costly problems for New Zealand, which continued in the post COVID era.

This led to a change of heart from port executives and transport industry bigwigs who suddenly became new converts to the idea of New Zealand coastal shipping.

In 2022, Transport Minister Michael Wood announced $30 million of seed funding to get New Zealand coastal shipping back in the game. The decision was a success.

Pacifica Shipping brought on another container ship to supplement their existing coastal vessel, and a number of other existing operators and new entrants have introduced new coastal services.

Maersk did not apply for this funding, but it didn’t need to. It is the second largest shipping conglomerate in the world, and posted a record profit of over $30 billion last year, of which New Zealand contributed a small but not insignificant fraction.

The message cannot get any clearer.

We are not being served well by our reliance on foreign shipping giants.

New Zealand is a maritime trading nation and we are floundering when it comes to looking after our interests and economic security.

The last three years have delivered hard lessons one after the other. What are some positive steps that can be taken?

We need New Zealand trained and domiciled seafarers working on the New Zealand coast. Jobs need to have attractive wages and conditions. There is an urgent requirement for training. Shipping companies like Maersk have a social obligation to play a part here.

The ‘blue highway’ provides a low emission, low impact and low cost transport mode.

Coastal shipping can function when disaster disrupts road and rail links – note the recent re-introduction of a Napier–Gisborne container service, following the cyclone.

Building Maritime Capability

We need further measures to build New Zealand’s maritime capability, including cabotage.

One idea is for KiwiRail to extend their operations from inter island ferries to general coastal services.

Two new ferries are due but not until 2025/2026, and some more leased modern container ships could be an interim (or permanent) solution on the New Zealand coast.

Major exporters such as Fonterra must start working with New Zealand coastal shipping to move their product domestically.

They have an obligation to help build local infrastructure, and this will provide them with redundancy in their operations as well.

Finally we need a national port strategy. The situation in the Northern region shows what happens when essential national infrastructure becomes an election football for local body politics.

We are already seeing progress, with industry and unions working together on a number of initiatives in the port sector, but it needs to be scaled up with direction from the Government. Ports working together in a hub and spoke model, served by dedicated local shipping, would be a huge step forward.

Our supply chain security in an uncertain world is too important to be left in the hands of companies like Maersk.

Port workers back health and safety plan

Unions representing port workers say a new port health and safety plan is a good start to making New Zealand ports safer workplaces.

The Port Sector Insights Picture and Action Plan was launched at Centreport in Wellington in February 2023.

The plan was the result of the collaboration of the Port Health and Safety Leadership Group which is made up of unions, ports and stevedoring companies, the Port Industry Association, Maritime NZ and WorkSafe.

The PHSLG advises the Minister of Transport.

Maritime Union of New Zealand National Secretary Craig Harrison says some of the key aspects of the plan are locking in fatigue guidelines and an Approved Code of Practice for port operations.

He says unions have been advocating for these actions for many years.

Mr Harrison says there have been many examples of port workers being killed or seriously hurt on the job in recent years and change could not come soon enough.

“We have many large exporters and importers in New Zealand who we would like to see look at their supply chain practices and demand high standards from their stevedoring contractors.”

Mr Harrison says there is strong appreciation from port and maritime workers for the programme that Minister of Workplace Relations and Safety, and Minister of Transport, Michael Wood has driven forward recently in port safety.

Rail and Maritime Transport Union Acting General Secretary Todd Valster says the plan brings together a range of information on what is behind serious harm incidents in ports.

He says good progress has been made by the PHSLG and part of the success was that workers voices were being listened to.

Mr Valster says Maritime New Zealand has played a proactive role in developing the plan.

He says some key employers in the industry are showing better leadership on health and safety as well.

“This plan gives us another tool to make New Zealand ports safe workplaces.”