One of the vulnerabilities that we have, as was borne out in the pandemic—and I'm going to pull a lot of my conversation out of Robert Gottliebsen's article this week that talked about coastal shipping and international processes—is the fact that we do not have a homogeneous fleet of our own Australian flagged ships in times of trouble. The article says:
Over the past 20 or 30 years Australia has based its industrial and retail systems on a global "just in time" supply chain network.
And for the most part it worked and led to a vast array goods at low prices arriving when required, so reducing the need for large stocks. This gave consumers greater choice, curbed our inflation and boosted corporate profits.
And it made us complacent.
But in the pandemic, the system broke down and became much less reliable and far more costly. Australian companies are only now starting to tell the market how they are being affected.
Suddenly, in large areas of Australian society we are realising that in recent decades we have forgotten the lessons of our history.
In World War II, Australia also realised just how isolated we had become, and partly driven by BHP chief executive Essington Lewis, we established large industrial complexes—
and our own shipping fleet.
But now the pandemic and the Chinese bans on our exports appear to be combining to change our attitudes.
Australians are increasing their purchases of Australian-made goods—
leading to promotion of goods made locally.
Few Australians realised that our shipping lifeline was based on a very complex ownership and operational system with the ships owned in one country and registered in another.
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Integrated into that global system was our own coastal shipping.
Unlike Canada and the US, we use global ships to undertake almost all our local shipping. In theory, local regulations prevent global shipping on the coast, but all that is required to use global ships is to ask permission. It is almost always granted. We have only token numbers of local ships.
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Then came two unexpected developments. The first was that whereas the Covid-19 restrictions substantially reduced the demand for services, the demand for goods surged. We saw that occur dramatically in Australia with spending on home renovation and building. But it was a global trend.
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Sometimes it seems as though the Chinese control the distribution of our goods because they control so much of the trade.
Our first tangible response—
which I applaud the government on—
has been to prevent the closure of the Geelong and Brisbane oil refineries. We realised that, while oil is not part of the container trade, the sort of forces we have seen in containers could just as easily be applied to oil tankers—especially if there is military conflict.
But the Australian vulnerability goes much further than simply oil. Our total international and local shipping is in the hands of the global shipping cartel complex. We have no independence whatsoever.
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Retailers are now assessing the long-term attraction of promoting Australian-made goods. Like shipping, modern machinery has lessened the labour cost component.
In practical terms one of the lasting legacies of the Covid-19 pandemic might be that Australia will go back to its history and devise better ways to lessen the dangers of isolation.
The fact is we need our own Australian-flagged merchant fleet. Probably 12 ships. Too much to ask? Let's try for six, just to cover our bases. This is affordable. It protects us against dependence on others. And it lets us not repeat the mistakes of the past. Our leaders knew what was needed a century ago. A century ago, they knew what we needed. Are we today sleepwalking to chaos and further vulnerability?