The proposed National Strategic Fleet represents a pivotal step in addressing Australia’s heavy reliance on foreign-flagged ships for transporting goods and critical supplies. This dependence raises significant concerns, including supply chain vulnerabilities, national security risks, and economic fragility. By establishing a sovereign fleet, the initiative aims to enhance Australia’s maritime resilience, safeguard essential trade, and reduce exposure to global disruptions. However, its success hinges on overcoming financial, logistical, and policy challenges while fostering collaboration across government and industry stakeholders.

Risks of Relying on Foreign Ships

Australia, as a sovereign maritime nation, relies heavily on international shipping for the transport of goods, raw materials, and critical supplies. Despite this, much of the cargo coming to and from the country is transported by foreign-flagged ships. This reliance raises several concerns.

Supply Chain Vulnerability

Global disruptions, such as the COVID-19 pandemic, exposed the fragility of international supply chains. Delays and price hikes caused by labour shortages, geopolitical tensions, and foreign policy decisions can severely impact Australia’s economy. Australia’s own supply chain issues were also exacerbated by periodic floods and bushfires, and the need to secure fresh emergency supplies from abroad. Trade data from 2021 and 2022 found 1.6 billion tonnes of import and export goods worth $755 billion were carried aboard ships.  

National Security Risks

Dependence on foreign-flagged vessels limits control over the transport of essential goods. In times of geopolitical conflict, access to such vessels could be restricted, putting Australia’s security at risk. 

Economic Resilience

A sovereign fleet provides a safety net, ensuring the uninterrupted flow of goods in emergencies. In retaining Australian-flagged cargo vessels, the nation can safeguard its economic interests and ensure maritime jobs remain in Australia.

This was further highlighted in the MV Portland dispute of 2016, where Alcoa terminated the ship’s 40-man Australian crew and had to send security guards to force the last of them off the ship. The company was selling the ship in Singapore and when the Australians refused to sail there for the handover, they were forced out. A foreign crew was subsequently transported to the docks to man the vessel and launch right away. The Federal Court of Australia ruled in favour of the dismissed crew in 2020. 

Environmental and Ethical Standards

Australian-flagged ships are held to higher labour, safety, and environmental standards compared to many foreign counterparts. Supporting a local fleet aligns with Australia’s commitment to fair working conditions and sustainable practices.

Australia’s National Strategic Fleet Initiative

Recognising these vulnerabilities, the Labor government set its sights on establishing a National Strategic Fleet. The previous administration established the Strategic Fleet Taskforce out of an initial proposal in 2022 by Mr Albanese, then leader of the opposition. The SFT report marked 16 recommendations on how the new fleet will take shape and its expected capabilities going forward. In November 2023, the federal government agreed or agreed-in-principle to 12 recommendations and “noted” the other four recommendations.

The initiative is supported by the Maritime Union of Australia (MUA), the Australian Institute of Marine and Power Engineers (AIMPE), and the Australian Maritime Officers Union (AMOU), who view it as a critical step toward securing the country’s economic and strategic future.

Key Components of the National Strategic Fleet 

The National Strategic Fleet has a number of vital parts to be developed under the five-year Strategic Fleet Pilot programme.

A Core Fleet of Ships

The National Strategic Fleet will consist of 12 Australian-flagged and -crewed vessels capable of three prime strategic purposes – supporting local manufacturing industries, emergency response, and logistical support to Australian Defence Force operations. The SFT categorised the proposed Fleet composition along the following vessel classes:

• Container ships capable of independent port operations using their own integrated cranes.
• Multipurpose vessels (MPV) that can carry and unload project cargo, containers, and some bulk items with their own ship cranes.
• Roll-on roll-off/roll-on lift-off (RO-RO/RO-LO) vessels, which may be vital for rapid vehicle transport. 
• Liquid bulk vessels that can carry multiple grades of fuel and chemical products in independent tanks.
• Dry-bulk vessels.
• Break-bulk vessels.

In September 2024, the federal government announced an initial tender for three ships to kick off the programme, and Australian companies were given until 29 November 2024 to present their tender proposals.

The SFT recommended that all 12 Fleet ships be listed on the Australian General Shipping Register; more ships can be added to this fleet by a review and update of the Australian International Shipping Register’s governing provisions. 

Strengthening Domestic Maritime Capabilities

The initiative will involve training and retaining skilled Australian maritime workers, which may comprise active seafarers or former Royal Australian Navy (RAN) crewmembers. This effort aims to reduce dependence on foreign crews while revitalising the local shipping industry. Under the government’s SFT tender, each of the three ships will have at least three training berths to ensure a constant flow of trained manpower. It will also apply to the other nine ships.

One of the SFT report recommendations covered the development of comprehensive recruitment and training programmes to attract more Australian seafarers, who would build up their experience in the coastal shipping circuit. Another recommendation that was noted suggested migration options for STCW-qualified seafarers to help train local crews. AIMPE federal secretary Martin Byrne said increased local shipping activity helps nurture more crews that can be tapped in a crisis situation.

Another recommendation pointed at fostering closer collaboration between the Australian Maritime Safety Authority, the Defence Department, the Transport and Logistics Jobs and Skills Council, and civilian mariner bodies in increasing skills alignment among the civilian and military seafaring corps. At the same time, SFT suggested the reconvening of the Australian Maritime Defence Council as a leading agency to develop military sealift requirements that the civilian shipping industry can handle and to also build a common labour force. 

Partnership with Private Operators

The government plans to work closely with private operators to integrate the National Strategic Fleet into Australia’s broader shipping network. Under the SFT report’s recommendations, tax incentives and other financial incentives may be offered to private shipowners to compete with foreign vessels while putting levies on foreign arrivals based on their tonnage to help finance the development of the new ships. However, the government simply noted the concerns and assured further financial studies.

Legislation and Policy Reforms

Legislative support is a cornerstone of the Strategic Fleet Pilot. By streamlining regulations and offering incentives for local operators, the government aims to make the establishment of a sovereign fleet financially and logistically feasible. One of the SFT report recommendations pointed at a possible review and update of the Coastal Trading (Revitalising Australian Shipping) Act 2012. The government stated that this will be done one year after the first National Strategic Fleet ships are in service.

Australia’s Shipping Dependence

At present, Australia’s shipping industry is heavily reliant on foreign-flagged cargo ships. According to recent data, foreign vessels account for 99 per cent of the nation’s international trade by volume and 79 per cent in value. While this arrangement has been cost-effective in the short term, it has left Australia vulnerable to external disruptions.

The decline of Australian-flagged cargo vessels over the years is another pressing issue. Once thriving, the nation’s maritime fleet has dwindled due to factors such as high operational costs, limited government support, and global competition. A 2023 SFT report found that there were 11 Australian-flagged and -crewed merchant vessels in the country’s waters as of December 2022 – against 26,400 foreign ships that arrived all that year. Another four Australian-flagged ships are being used for international trade. All of them are over 2,000 dwt but PM Albanese said such numbers would be a handicap in a major crisis.

The National Strategic Fleet is a step towards reversing this trend and securing Australia’s maritime future.

Benefits of the National Strategic Fleet

Strengthened Supply Chains to Australia

A National Strategic Fleet will serve as a critical lifeline during global crises, ensuring that essential goods continue to flow into and out of the country. By reducing reliance on foreign-flagged ships, Australia can protect its supply chains from external shocks.

Boost to the Domestic Economy

Investing in the fleet will create job opportunities for Australian seafarers, shipbuilders, and maritime service providers. It will also stimulate other industries reliant on maritime logistics, such as agriculture and mining. The SFT identified this need in terms of the following areas:

• Transporting refined petroleum from Australian refineries or import terminals to other end-users in the country such as northern Australia’s regional and remote ports 
• Transport of dry and non-liquid bulk cargo for local manufacturing
• Transporting cargo containers between Australian ports in the event of disruptions;
• Shipping project and over-sized cargo locally before heading to overseas ports

Enhanced Crisis Response

In times of natural disasters, pandemics, or military conflict, a sovereign fleet can be rapidly mobilised to deliver aid, evacuate people, or support defence operations. The SFT tagged this issue in terms of helping the ADF’s transport of vehicles, equipment, and stores to northern Australia or to facilitate delivery of aid or other assistance to Pacific island-nations.

Challenges of the National Strategic Fleet

While the benefits of a National Strategic Fleet are evident, there are challenges to address.

High Costs

Operating and maintaining Australian-flagged vessels is more expensive than relying on foreign ships. Subsidies or incentives may be needed to bridge the cost gap. Officials said local shipowners suffered cost gaps of between $5m to $8m a year in trying to compete with more affordable foreign vessel entries.

Policy and Regulation

Striking a balance between regulatory oversight and operational flexibility will be crucial for the success of the fleet. Even as the Fleet was being conceptualised back in 2022, Shipping Australia Ltd has criticised the idea as wasted resources. 

Global Competition

Competing with international operators will require strategic partnerships and innovative business models.

Conclusion

Developing the National Strategic Fleet underlines Australian commitment to sovereignty, security, and resilience. The Strategic Fleet Pilot is a promising start, but its success will depend on sustained government support, industry collaboration, and public awareness. With a sovereign merchant fleet, Australia can secure its maritime future and ensure that the nation remains well-prepared for any challenges that lie ahead. In a world of uncertainty, the National Strategic Fleet is a vital anchor for Australia’s economic and strategic stability.

DISCLAIMER: This article is for informational purposes only and is the author’s sole opinion. BARTERCARD is not a stakeholder in the National Strategic Fleet initiative nor has business ties with any organisation mentioned or shipbuilder.