THE PROBLEM OF SHIPPING

Wanganui Chronicle, Volume 74, Issue 245, 16 October 1931, Page 5

THE PROBLEM OF SHIPPING

COMPETITION IN THE PACIFIC

PARLIAMENTARY ACTION DEEMED NECESSARY

In this article, the fourth of a series, the shipping requirements of the Australian Commonwealth and of New Zealand are analysed. It is pointed out that seasonal exports and steady imports demand a balanced shipping service. The unfair competition created by the American coastal law in its application to the Islands of Hawaii, and the advantages enjoyed by American shipping in the Pacific generally, are advanced as grounds for Parliamentary action in New Zealand.

(By

HUGH C. JENKINS.

Sea girt and isolated by long distances from the manufacturing countries which need the products of Australia and New Zealand, shipping is an essential part of tho business of running these two countries. But the export produce of Australasia is bulky, while the imports are smeller in size. The bulky exports are to a large extent seasonal, while the imports are more steadily consumed throughout the year. Australia and Now Zealand, therefore, cannot hope to “run their own shipping” because it is not a balanced proposition. Conditions, therefore. dictate that Australasian shipping shall tie-up with external shipping in some way to preserve the balance of things. Coastal and Trans-Tasman Shipping. There is a certain amount of coastal shipping which, although declining in importance in New Zealand, must remain an essential feature both of tho Australian coastal and transTasman trades. Were this coastal and trans-Tasman shipping subject to ruthless world competition then several results would flow from such a circumstance.

In the first place a ship with half a cargo costs as much to operate as a ship with a full cargo. At the present time the contraction in business has laid up more than a quarter of the tonnage normally required for Australasian shipping. But laying-up ships does not cut out all the costs. Capit* 1 interest runs on, then a rent is charged by the harbour authorities where the boats are laid-up, and tho boats have to be continually supervised and kept in a state of good order and repair ■ against the day of their being recommissioned. By a sensible tie-up with British shipping Commonwealth and Dominion shippers are able to gauge what ships to lay-up so that those in operation can run with reasonably full cargoes. Without this harmony with British shipping inter-colonial shipping would be more difficult to handle than it is now. The waste of purposeless competition would be greater and the outcome of the matter would be either tho elimination of much of the intercolonial shipping, thus throwing Australia and New Zealand on to the casual tramp steamers for the shifting of her cargoes. Alternatively, an arrangement would be evolved whereby the two services would both operate on the inter-colonial and coastal trades, but tho higher expense rate would be reflected in the freight rates. Australian Commonwealth Line. The endeavour of the Australian Commonwealth to run a line of its own may bo regarded as demonstrating, first, the undesirability of such a State enterprise and, second, the necessity for running the Australasian ' ade in harmony with that of some external shipping service. When the final sale of tho Commonwealth Line was made in April 1928 the contract provided, inter alia, that the purchaser was to maintain a service equivalent to that provided under the management of the Commonwealth Shipping Board and also to maintain an efficient Australian organisation. The purchaser was the White Star Line. This arrangement effectively provided the Australian trade with the economies of a large scale shipping organisation. The same economies have been made available to New Zealand by the harmony existing between the Union Steamship Companies and the White Star Line. This harmony results in the overseas shippers not competing in the inter-State trade or in the trans-Tasman trade. Resulting Advantages. The results which proceed from such an arrangement are fairly obvious. First, there is the economy of the big shipping unit; second, there is the preservation of the capital invested in ship.vjg in Australia and New Zealand. This must be considerable. The Now Zealand Stock Exchange list reveals that tho listed companies represent £11,612,464 of paid-up capital and £11,407,588 of reserves, making a total public investment in shipping of £23,020,052. The dividends earned on this investment must add a million sterling to the income of Australia and New Zealand.

Second, there is the employment provided. There are 6190 masters, officers, engineers and crew employed in the Australian inter-State and coastal steamship services in New Zealand.

Third, labour conditions on ships are subject to tho regulations of our Legislatures and also to tho awards of the Arbitration Courts of Australia and New Zealand.

Fourth, the purchase of ships’ stores is a good trade and the carrying out of maintenance work in Australia also provides considerable employment to I engineers and repair men. | The South Pacific Trade The trade between Australia and New Zealand prior to the development

of the present crisis can bo gauged by the figures for 1927-28. In that year Australia sent to New Zealand goods valued at £3,854,635 and received from New Zealand £3,206,143. In the same year Australia’s trade with Canada were: Imports £3,278,269, exports from Australia £856,767. Passenger traffic between Australia and New Zealand is considerable while the trade and traffic with the islands of the South Pacific is not inconsiderable. Fiji provides sugar, Samoa and Tonga provide copra and tropical fruits, while tho Norfolk Islands provide sub-tropical- fruits and vegetables. Tho difficulties of this trade, however, are many because the islands are small, the fruits they produce are quickly perishable and, being seasonable, they can easily glut the market. There is no convenient concentration point for the South Pacific trade. The North Pacific Trade. In tho North Pacific conditions are much more favourable for trade and shipping. Tho islands of Hawaii—called the cross-roads of the Pacific—are a natural centre for the trade of that area and the output of sugar, pineapple and, until recent years, cf rice, provides a steady trade, ■while tfie proximity of the populous and rich United States of America ensures a regular and large tourist traffic. This territory comprises 6406 square miles with a resident population of 368,336 persons.

The shipping of Australia and New Zealand is, of course, at liberty to take cargo and passengers to tho United States; but is precluded from making deliveries to a series of ports along the coast. Further, the application of the law which excludes foreign ships from American coastal trade to the islands of Hawaii, which are some 2100 nautical miles distant from San Francisco, America’s nearest mainland port, is indeed stretching the term coastal to its extreme limits. This coastal shipping law undoubtedly gives to American shipping a tremendous advantage in the Pacific trade over the shipping of Australia and New Zealand. With this advantage also tho American Matson line has the advantage of the shipping subsidies, which, while they tend to equalise with the shipping of Free Trade Britain, give an added advantage when in competition with Australasian linos which have high shore costs to contend with. An Unfair Contest. The engaging of the Matson line in both the inter-colonial trade and in tho Pacific trade is, therefore, an unfair contest. All the advantages are with the American line. All the disadvantages are with the shipping of the Commonwealth and the Dominion. This unfair competition cannot last long, because shipping is an expensive business to conduct. For instance, the Niagara which was pre-war built, would to-day cost about £BOO,OOO and its running cost would approximate at about £BOO a day. The Aorangi, which cost over £1,000,000 to build, entails a running cost of about £lOOO a day. Such expenses cannot be carried on with inadequate cargoes and passenger quotas and it is surely desirable for the reasons brought out in this inquiry that Australia and New Zealand should not come to depend solely upon American shipping. If nothing is done to even up the conditions under which the American Matson Line and the New Zealand Union Company compote, then the time will hardly be far distant when America will dominate and decide the trade conditions of Australia and New Zealand. Something should, therefore, be done. What Is To Be Done? There can be no objection to the Matson Line bringing American cargo and passengers to Australia and New , Zealand in the same way as our ship- > ping goes to the United States. But , there is the precedent of the Americans themselves for excluding the Matson Lino from tho trans-Tasman passenger and freight business and also from the Fiji and South Pacific trade. This may not bring about a condition of equal competition between the two lines; the advantages would remain with the American shipping line in the Pacific trade. It would, however, ease tho situation to some extent. Tho Parliament of New Zealand has already declared by Statute that when an unfair condition obtains in shipping competition that counter-vailing ' action along tho line indicated will be I taken.

From this survey of the situation it is clear that such an unfair condition prevails to-day which calls for Government action along the lines laid down by Parliament.

This action should not be taken in a retaliatory spirit or with the idea of giving tho Americans “some of their own medicine,” but solely with the object of preserving to Australia and New Zealand the control of its own shipping destiny.