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Sea rate rises outstrip road in Bass Strait trade

BITRE Tasmanian Freight Equalisation Scheme report gives broad indication

Sea rate rises outstrip road in Bass Strait trade

The BITRE freight rates graph


Having remained relatively static for nearly two decades, freight rates in the Bass Strait trade have risen 4 per cent a year over the last three recorded years, federal government figures show.

The statistics are contained in the Bureau of Infrastructure, Transport and Research Economics’ (BITRE’s) Tasmanian Freight Equalisation Scheme Monitoring Report 2020 consultation draft.

The report is the first four-yearly BITRE’s monitoring review of all components of the TFES. The focus is the volume and value of eligible claims for goods shipped between Tasmania and the mainland up to 2018-19.

The rise relates to full container wharf-to-wharf freight rates for Tasmania to Victoria TFES claims and is almost entirely due to a strong divergence between the ship rate and road freight.

That began in 2019-10, when both rates were at 50 per cent above 1996-97 base, when the sea leg rose strongly to about 120 per cent above, while the road rate remained static.

No further detail is offered on rates performance, which is based on BITRE estimates based on TFES data and consultancy Jacobs Group Australia unpublished road rates.

In 2018-19, $154.3 million was paid under the TFES, covering the equivalent of 210,480 twenty-foot equivalent units (TEUs) of containerised freight.

This was around the same as in 2017-18, but around 50 per cent higher than four years earlier, largely due to the introduction of the expanded component of the TFES covering goods shipped from Tasmania to the mainland for transhipment.

About 90 per cent of total TEUs in 2018-19 were shipped to or from Victoria, with the next most common state, New South Wales.

Simplot Australia topped the list of claimants with $19.04 million for 23,979 TEUs, followed by Norske Skog Boyer Mill with $10.83 million for 17,367 TEUs.

Claims were made for 178 commodity groups. The top three commodity groups were ‘Vegetables – frozen/processed/prepared’ (33,236 TEUs), ‘Newsprint’ (16,424 TEUs) and ‘Wood – processed’ (13,073 TEUs).

Some 40 per cent of TEUs shipped under the TFES in 2018-19 were in the broad commodity class ‘Food products beverages tobacco textiles apparel leather products’. The next largest broad commodity class was ‘Agriculture, forestry and fishery products’, accounting for 20 per cent of TEUs.

The median time between shipment and payment of the TFES assistance was 119 days and the maximum was 585 days.

“BITRE understands the latter was due to an invoicing error related to the claim,” it says.

Pre-TFES assistance freight rates have risen relatively quickly over the last three years, with nominal rates growing at 4 per cent per annum. With the TFES assistance covering the majority of the costs, this has resulted in the nominal post-assistance rate per TEU growing at 6.7 per cent per annum over the three years.

The full report can be found here.


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