Holcim's Coastal Shipping Setback: Minister's Decision Forces Costly Shift to Road Transport
A recent decision by New Zealand's Associate Transport Minister, James Meager, has significantly impacted cement giant Holcim, forcing the company to abandon its preferred coastal shipping solution and pivot to more expensive road transport. This move stems from the Minister's rejection of Holcim's application to use a foreign-flagged vessel for temporary domestic cargo operations, a decision the company warns will harm local seafaring jobs and increase logistical costs.
The Proposal and Its Rejection
Holcim had sought a three-year time charter with Swiss-based NovaAlgoma Cement Carriers (NACC) to provide a temporary ship. This arrangement was crucial for Holcim while it worked on replacing its aging 27-year-old vessel, the MV Buffalo, with a purpose-built alternative. The company emphasized that this temporary solution was vital for maintaining a consistent cement supply across New Zealand's North and South Islands.
However, Minister Meager declined NACC's application. He stated that Holcim's bid did not meet the specific requirements of Section 198(2) of the Maritime Transport Act. This section generally mandates that coastal cargo be carried by New Zealand-flagged ships, with exceptions typically granted only for very short-term, one-off cargo movements or when local vessels are unavailable. Meager stressed that his decision aligned with the law's intent to safeguard New Zealand's coastal shipping interests for local commercial entities. "The public should have confidence that all authorisations to carry coastal cargo align with the intent of section 198 of the Act, and that has been my priority throughout this process," he affirmed.
Holcim's Dire Warning: Millions in New Costs and Environmental Impact
Holcim expressed profound disappointment, claiming the Minister's decision effectively "chosen road transport over coastal shipping." The company highlighted that NACC could not commit to a locally flagged vessel for the short-term charter, and no other local vessels were available to meet the required cement supply. Consequently, Holcim now faces an "undesirable, but now necessary, decision" to invest millions of dollars in expanding its road transport network.
This shift means approximately 15,000 additional tonnes of bulk cement will need to be hauled by over 500 trucks on New Zealand's roads every month. Holcim warned that the significant investment required for this expanded road network could eventually render a return to coastal shipping financially unviable. The company also countered the Minister's claim of protecting local shipping capacity, arguing that by blocking a "credible alternative," the decision effectively reduces it. Holcim expressed frustration that the Minister declined a meeting to discuss their viable solutions.
Looking Ahead: Search for a Solution
While Minister Meager urged Holcim to collaborate with the Transport Ministry to find an alternative solution for nationwide cement transport, the immediate future points to a substantial increase in road freight and associated costs for the cement provider. The incident underscores the ongoing tension between national maritime protection laws and the operational needs of multinational companies within the New Zealand transport sector.