How Coastal Shipping Can Reduce Your Transport Costs within Australia

Coastal shipping is recognised as vital to our national economy, moving essential cargo such as coal, ores and liquid petroleum gas (LPG) throughout the country. Over three-quarters of our population live on the coast, meaning shipments along the so-called ‘Blue Highway’ provide an exceptionally valuable service.

Despite this, only a fraction of our domestic freight is transported via coastal shipping. Below, we’ll outline the benefits of coastal shipping and how it can reduce your transport costs.

What is coastal shipping?

Coastal shipping refers to the domestic transport of cargo between Australian states via ocean container ships, as opposed to traditional road and rail solutions.

However, it appears to be a lesser-explored option between suppliers, and the reasons behind this are complicated. Suppliers and importers may be assuming that road and rail are more commercially viable options. The number of Australian-flagged vessels has been falling rapidly, the costs of vessels are high, many cargo facilities are focused on international rather than domestic trade and burdensome government policy has led many shippers to avoid coastal shipping.

Despite this, coastal shipping – in most circumstances – remains one of the best and most affordable options for container freight. We’ll explain why below.

Why choose a coastal service?

Shippers should seriously consider using a coastal service because of the following factors:

• More affordable – Coastal shipping often provides a cheaper alternative to road or rail freight between Australian states. This is because sea freight is charged per container, with a high tonnage capacity of approximately 22 tonnes. Rail options, by contrast, charge an ‘incremental’ tonnage above a base rate of usually 5 or 8 tonnes – this means the heavier your cargo, the higher the price.
• Environmentally friendly –Coastal shipping emits the lowest amount of carbon compared to any other mode of transport on a tonne per kilometre basis. So if looking after the environment is an important part of your business, sea freight will be the preferred choice.
• Consistency – Domestic coastal shipping offers reliable and consistent transport times. The most common coastal services are East Coast to Fremantle, Melbourne to Brisbane and the Trans Bass Service (Melbourne to Tasmania).
• Freight congestion relief ­– In mid-2020, during the COVID-19 pandemic, roadblocks imposed by different State Governments led to unwanted freight congestion, with shippers being recommended to use coastal shipping to alleviate this problem. Should roadblocks arise again, coastal shipping may be the useful alternative once more.

There are a few main shipping lines that service the coastal market very well in Australia. These include Pacific Asia Express (read about their services here) and the CMA CGM Group (read more about their services here). You can read more about what freight and cargo service providers are available in 2021 in our article.

Can I ship any cargo on a coastal service?

Only Full Container Loads (FCL) can be sent on a coastal service. This means shipping a container exclusively for a ‘full’ shipment, where you don’t share the container with anybody else’s cargo.  You can read more about what this means in our FCL blog.

When shipping on a coastal service, we at ICE offer a variety of container types including 20GPs, 40GPs, 40HCs and (subject to equipment availability) 40OTs. The container can be dropped off at your premises for loading prior to departure and de-hired after your interstate depot or customer has unpacked the goods.

Note: the cost of using the container is factored in with the freight price.

LCL shipping is not available on coastal services

As stated above, coastal services do not handle consolidated Less than Container Load (LCL) cargo, i.e. shipping cargo that takes up “less than” a container’s full space (and whereby you share with other cargo that is not your own).

For LCL shipments, you should look at road freight as a preferred alternative, or domestic air freight when urgent.

Will Coastal Shipping be Cheaper than Road Freight?

Generally, yes.

If you have a full container of cargo to send interstate, coastal shipping will mostly be cheaper than road freight.

Because of the charging methods we outlined above, there are real cost savings to be made. These savings can increase to as high as 60-65% when you compare ocean freight along the “blue highway” with road freight across long distances, such as from the eastern seaboard to Western Australia.

But it is always worth comparing costs to make sure. The rise of road freight reported by the Australian Bureau of Statistics in 2019 indicates that road freight is still a commercially viable option in many circumstances.

Your forwarder will be able to help you assess which transport mode is best for you.

Coastal vs Rail Shipping – Which is better?

When deciding between coast and rail shipping, there is a number of factors you should take into account such as:

• Cost – As discussed above, rail freight is generally more expensive than coastal shipping.
• Transit time – Rail freight offers a shorter transit time between most states. For more urgent shipments, rail shipping may be more appropriate.
• Container usage –Unless you have a shipper’s owned container (SOC) or a container already hired from a sea freight contract in progress, you will need to hire a container on a rail service from state to state. This can add additional costs to your freight movement.
• Delivery location – Rail freight is excellent if you need to transport goods to regional locations. Coastal shipments may need to be complemented with a rail shipment for shipping goods to more remote destinations.

Where do rail services cover?

The main rail services cover most capital cities – Brisbane, Sydney, Melbourne, Adelaide, Perth.

They also cover other coastal cities such as Newcastle, Gladstone, Mackay, Townsville, Bowen, Cairns and Innisfail. Interstate areas covered include Rockhampton, Kalgoorlie, Alice Springs, Mt Isa, Winton, Tennant Creek and others.

The Department of Infrastructure, Transport, Regional Development and Communications has built a comprehensive ‘National Key Freight Routes‘ interactive map where you can see key rail freight movements in Australia.

Questions?

Coastal, rail and road freight services all have a place in the domestic transport of cargo. Their advantages are impacted by many factors, including commercial trends and changing government policy.

Coastal shipping, despite dropping usage, remains a highly effective mode to reduce your transport costs. If you’ve got any questions about coastal shipping, please give us a call  and one of our expert freight forwarders will be more than happy to assist you.

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