New Zealand Upholds Cabotage Rules Rejecting Foreign-Flag Replacement

The Maritime Union of New Zealand and the International Transport Workers’ Federation are celebrating the decision of New Zealand’s Associate Minister of Transport to uphold the country’s cabotage rules. It comes at a time when many flags are under pressure due to rising costs and the option to switch to less costly foreign flag operations.

The debate was triggered after Holcim New Zealand, a supplier of cement, aggregates, and ready-mix concrete, announced plans to end its shipping operations. The company has been operating the Buffalo, a 9,000 dwt cement carrier since acquiring the vessel in 2016. Built in 1988, the ship is 130 meters (426 feet) in length and used to transport products from the company’s operations in the north to the lower North Island and South Island.

Holcim contends that the Buffalo is too large and inefficient for its current operations. Further, it says the vessel is costly to run and will require US$4.6 million of upgrades and repairs over the next four years. The company reported it had agreed to sell the ship to Swiss-based NovaAlgoma Cement Carriers as of the end of this year. It also filed a notice to terminate 32 New Zealand union seafarers who had been working on the ship.

To replace the retiring ship, Holcim entered into an agreement with NovaAlgoma to maintain the service on a contract running for up to three years. The ship was to be replaced with the NACC Vega (7,450 dwt). Built in 2010, the vessel, however, is registered in Panama and operates with a foreign crew.

New Zealand’s Associate Minister of Transport, James Meager, confirmed that he had received an application to waive the country’s cabotage regulations requiring New Zealand-flagged and operated ships to maintain coastal services. He notes that it is possible to waive the regulations, but it is typically done in special circumstances or for single journeys.

Holcim called the arrangement an interim solution for up to three years. They said they were also investigating building a “modern pneumatic vessel specifically for the local trade.” The company contends that the only other option, road transportation, is impractical and would be more costly.

“In this case, I was not satisfied that Nova’s application met the requirement of the act,” said Meager.

The unions hailed the decision as a protection of the maritime industry and said it could be used to help build New Zealand’s merchant shipping operations.

“New Zealand requires a robust and permanent policy framework to rebuild a dedicated New Zealand domestic coastal shipping fleet, crewed by New Zealanders, ensuring security and resilience in our supply chains,” said Carl Findlay, National Secretary of the Maritime Union of New Zealand.

The ITF said the decision reflects “growing global recognition” of the importance of strong maritime cabotage laws. It asserts that national-flag fleets and domestic crewing are essential for national security and supply chain resilience. They said New Zealand had risked setting a dangerous precedent and said the government was right to “shut the door” on the proposal.