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Freight

A general introduction to shipping law and practice in Australia

An extract from The Shipping Law Review, 7th Edition

Commercial overview of the shipping industry

Ten per cent of the world’s sea trade passes through Australian ports and 99 per cent of Australian exports are transported by sea. In terms of its ocean freight requirement, Australia has the ‘fifth-largest shipping task in the world – a task that is forecast to double over the next 15 years’. Notwithstanding the global economic downturn as a consequence of the covid-19 pandemic, some areas of the mining resources sector have maintained strong export levels and China reopening to trade will inject confidence into the mining and agricultural export sectors. The drop in oil prices is expected to halt development in the offshore oil and gas sector with project deferrals already occurring. In recent years, Australia has had ‘the world’s fastest growing cruise industry’, with passenger numbers increasing by an average of almost 20 per cent per year since 2008. Per capita, Australia has more cruise passengers than any other nation, making it the fourth-largest cruise market in the world. However, it remains to be seen what level of long-term impact the covid-19 pandemic will have on the Australian cruise market. Due to the increased cost of operating Australian-flagged tonnage relative to international flagged vessels, the national fleet has continued to decline with only a small number of large cargo vessels flagged on the Australian Register, the majority of which are employed on Australian coastal trading services, access to which is restricted by federal cabotage legislation. Notwithstanding the cabotage restrictions, about 65 per cent of Australian coastal trading cargo is carried on international flagged vessels.

i Vessels registered on Australian shipping registers

As at March 2020, 12,251 vessels were listed as being entered on the Australian shipping registers. In terms of vessel types, they can be grouped generally as follows: 224 cargo vessels, 325 passenger-carrying vessels, 8,500 pleasure craft, 1,927 fishing vessels and 504 specific purpose-type vessels.Of those vessels, only 733 hold International Maritime Organization (IMO) numbers, the composition being approximately 68 cargo vessels, 62 passenger-carrying vessels, 28 pleasure craft, 188 fishing vessels and 323 specific purpose-type vessels.

ii Australian coastal trading

Australia has a substantial coastal sea freight task, which, in 2016–2017, was reported to be 103.9 million tonnes, a 0.2 per cent increase from 2015–2016.12 To date, petroleum and dry bulk products remain the largest tonnage component of coastal freight. As at December 2019, there were approximately 113 vessels operating with a temporary licence and as at March 2020, there were 112 vessels operating under a general licence.All vessels that had transitional general licences granted have since surrendered their licences or the licence has expired.

iii Foreign-registered vessels in the offshore oil and gas industry

The safety of marine operations in the immediate vicinity of Australian offshore oil and gas facilities is regulated through the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA).

A substantial number of offshore facilities and vessels, including foreign-registered floating production, storage and offloading vessels, floating storage units, accommodation vessels, drilling vessels, construction vessels and pipe-laying vessels, also form part of the Australian shipping industry and are regulated by NOPSEMA.NOPSEMA reported that, in 2018–2019, it conducted 176 inspections of offshore facilities in Australia, which is a 20 per cent increase in the number of inspections it carried out in 2017–2018. According to NOPSEMA, this was due to a variety of factors, including the decommissioning of offshore platforms due to wells’ exhaustion or profitability.

iv Foreign-registered vessel calls to Australia

Data in relation to the exact number of foreign ships visiting Australia is limited; however, the Australian Maritime Safety Authority (AMSA) indicates that, in 2018, 5,900 (an increase of 2 per cent) foreign-registered vessels called at Australian ports. The average age of foreign flagged ships calling at Australia was 10 years old. 

General overview of the legislative framework

An important characteristic of the Australian legal system is the distinction between federal and state or territory laws, both of which are relevant to shipping. From a constitutional perspective, the Commonwealth (i.e., the federal level of Australian government) has the power to make laws with respect to ‘trade and commerce’, which extends to laws relating to ‘navigation and shipping’. This does not, however, preclude the six states and two territories from also making laws relating to shipping; the primary constraint is that, in the event of inconsistency between Commonwealth and state or territory law, Commonwealth law prevails to the extent of the inconsistency.

From a territorial perspective, Australia has ratified the United Nations Convention on the Law of Sea 1982 (UNCLOS) and the Commonwealth exercises sovereign jurisdiction with respect to the territorial sea (i.e., 12 nautical miles seaward of the low-water mark or any proclaimed territorial sea baseline). Again, this does not preclude the states and territories from legislating with respect to their coastal waters and adjacent territorial sea provided there is no inconsistency with Commonwealth law. The Commonwealth also exercises jurisdiction with respect to Australia’s Exclusive Economic Zone.

At the Commonwealth level, the primary legislation regulating shipping in Australia is the Navigation Act 2012 (Cth), which was redrafted and re-enacted in place of the 1912 Act that preceded it. One of the main functions of the 2012 Act is the restructuring of the regulation of Australian vessels and seafarers, and accommodating the removal into new legislation of the overhauled cabotage scheme for coastal trades in Australia. The Navigation Act 2012 and other Commonwealth legislation also gives effect to a wide range of international maritime conventions and treaties to which Australia is party. State and territory laws typically regulate recreational vessels, ports and harbours, and other maritime infrastructure located within state boundaries.

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