THE suitability of the TasPorts/Bass Island Line-owned ship John Duigan for the King Island service has been questioned by a major government inquiry.
The inquiry by the Office of the Tasmanian Economic Regulator into the BIL freight pricing has determined costs are acceptable.
However, it said specialist advice should be sought on available alternatives
to the John Duigan based on suitability, level of service and operating costs.
The Regulator found BIL’s pricing was within the range of its direct competitors and shipping companies serving comparable markets. The report recommended a review of the suitability of the John Duigan to consider whether the asset base should be optimised.
“I will consider these recommendations and intend to discuss them with the board and executive,” Transport Minister Michael Ferguson said.
The Regulator’s report states BIL’s annual operating and trading results over the past five years have cost close to $22m in taxpayer funding.
“The independent expert report also addressed the range of opinions on Bass Island Line, such as ‘operating at a loss, it is setting prices so low as to exclude competition from the market’, to the opposing view that its prices are too high and unfairly take advantage of its market position.
“While this service is still not profitable on an annualised basis, it received stronger demand for its services since the shift to the new service model in early 2022,’’ Mr Ferguson said.
TasPorts CEO Anthony Donald said the review found no evidence of overcharging by BIL.
“Further, it recognised BIL’s pricing behaviour to be consistent with other shippers and that there was nothing in BIL’s pricing outside of what is considered normal practice within the shipping industry,” he said.
King Island Mayor Marcus Blackie said he needed more time to digest the report but remained hopeful it will provide King Island some leverage.
“More importantly for us, Mr Ferguson also mentioned that he has instructed his department to start drafting the scope for our Grassy port expansion study, to be funded by the State Government.
“So, I will take that as the good news for the week on the shipping front.”
There are elements within the report that have raised eyebrows and questions are already being asked by stakeholders around accuracy.
“Bass Island Line has been operating in a competitive, commercial market for more than five years and provides King Island’s only dedicated weekly sea freight service,’’ the Minister said.
However, this is disputed by competitor Eastern Shipping Line.
“The report also found that notwithstanding stakeholder concerns that Bass Island Line’s participation in the market had the potential to discourage other players from entering the market, a third player has announced its intention to enter the King Island sea freight market,” Mr Ferguson said.
Preliminary questions also have asked why TasPorts port charges, which impact freight pricing and costs, have not been included in the report.
Next week’s Courier will have the island’s stakeholders, shipping companies, and Independent Murchison MLC, Ruth Forrest, who initially proposed the government inquiry into King Island Freight costing and prices, responses to the report.