The role of shipping commissions The role of shipping commissions in improving service delivery in the Pacificin improving service delivery in the Pacific

Micronesian Shipping Commission MSC

Central Pacific Shipping Commission CPSC

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•• Basis for ActionBasis for Action•• The ChallengeThe Challenge•• Constraints to PICT & SIS shippingConstraints to PICT & SIS shipping•• Overview of SPC/EDD InitiativesOverview of SPC/EDD Initiatives•• Shipping Commissions Shipping Commissions •• Summary: Way ForwardSummary: Way Forward

Presentation Presentation OutlineOutline

BASIS FOR ACTION BASIS FOR ACTION Irregular Shipping affecting PICTIrregular Shipping affecting PICT’’s s sustainability continue to dominate the sustainability continue to dominate the transport agenda of:transport agenda of:

••Forum Island Leaders meetingsForum Island Leaders meetings••Small Island States (SIS) Leaders meetings Small Island States (SIS) Leaders meetings

In 2006 the Leaders provided definitive In 2006 the Leaders provided definitive decisions on the way forward. decisions on the way forward.

Forum Island LeadersForum Island Leadersand SIS Leadersand SIS Leaders

SIS  Transport LeadersSIS  Transport Leaders

WHY?WHY?

•• Shipping Shipping -- underpinsunderpins trade, food security, employment opportunities.trade, food security, employment opportunities.•• Is a Is a key priority key priority for the region. for the region. •• PICTs importers of goods and services; however, individually thePICTs importers of goods and services; however, individually their ir

import import volumes do not meet the economic threshold volumes do not meet the economic threshold of private of private shipping companies to profitably provide regular shipping. shipping companies to profitably provide regular shipping.

•• Distance between islands are long & thin Distance between islands are long & thin •• Shipping Shipping not regular or not affordable not regular or not affordable for most small economies of the for most small economies of the

region.region.

Shipping is a key driver for socio-economic development in the region

THE CHALLENGETHE CHALLENGEProviding regular and affordable shipping ServicesProviding regular and affordable shipping Services

to the small island states. to the small island states. 

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SHIPPING TRENDS IN THE PACIFIC & SHIPPING TRENDS IN THE PACIFIC & THE SHIPPING COMMISSIONSTHE SHIPPING COMMISSIONS

In carefully studying shipping patterns in the region, EDD realiIn carefully studying shipping patterns in the region, EDD realises the ses the very close collaboration amongst shipping companies render littlvery close collaboration amongst shipping companies render little or e or no competition to the PICTs resulting in a no competition to the PICTs resulting in a near cartel environment. near cartel environment.

[An appropriate regulatory regime is needed to [An appropriate regulatory regime is needed to regulateregulate cartelcartel--like like operations & at the same time protect approved Operators from choperations & at the same time protect approved Operators from cherry erry pickers especially pickers especially in a small market economy of the SISin a small market economy of the SIS] ]

To address this situation, To address this situation, regulating international shipping services regulating international shipping services (through a Treaty or MoA)(through a Treaty or MoA) along the lines of the along the lines of the Micronesian Shipping Micronesian Shipping Commission (MSC) model is planned.Commission (MSC) model is planned.

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““..........there is no single solution..........there is no single solutionto address regional shipping issuesto address regional shipping issues””

THE SHIPPING ENVIRONMENT

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Small market economy Small market economy -- low cargo low cargo volumes volumes inboundinbound, , less or no cargo less or no cargo outboundoutbound, , IrregularIrregular shipping affecting SIS supplies, seasonalshipping affecting SIS supplies, seasonalhigh shipping high shipping freight ratesfreight rates..high high fuel costsfuel costs, , limited or no limited or no port facilitiesport facilities, , large infrastructure development & large infrastructure development & maintenance costs maintenance costs –– high port costshigh port costs..increasingly increasingly regulatedregulated operating environmentoperating environmentLow technology & Low technology & efficiency levelsefficiency levelslong distances long distances & thin routes, & thin routes, Limited Limited resourcesresources -- HR & FinanceHR & Finance

Funafuti, TUVALUFunafuti, TUVALURarotongaRarotonga

NiueNiue

TokelauTokelau

MAJOR PHYSICAL MAJOR PHYSICAL CONSTRAINTS CONSTRAINTS –– PICTS:PICTS:

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•• PFLPFL sold but services the profitable routessold but services the profitable routes•• Effects of the global Effects of the global economic downturn continueseconomic downturn continues•• Shift Shift in PICTs in PICTs trading patterns trading patterns from from

New Zealand and Australia towards AsiaNew Zealand and Australia towards Asia•• RationalisationRationalisation of operations by shipping companies through mergers of operations by shipping companies through mergers

and/or buyout, replacing smaller ships with larger economical onand/or buyout, replacing smaller ships with larger economical ones and es and concentrating on lucrative routesconcentrating on lucrative routes

•• Small operators Small operators have had to reduce services or form alliance with have had to reduce services or form alliance with other operators or get out of business or shift to less profitabother operators or get out of business or shift to less profitable le routes. routes.

•• Some PICTs have been approached by ship ownersSome PICTs have been approached by ship owners’’ representatives to representatives to enter into an exclusive agreement to provide a service. enter into an exclusive agreement to provide a service.

•• Some have threatened to pull out their service if others join.Some have threatened to pull out their service if others join.

MAJOR COMMERCIAL MAJOR COMMERCIAL CONSTRAINTS CONSTRAINTS -- PICTPICT

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•• Sea level rise Sea level rise •• Food SecurityFood Security•• Nutritional imbalanceNutritional imbalance•• SocioSocio--economic issueseconomic issues•• High prices of goods & servicesHigh prices of goods & services•• Social & political stability threatenedSocial & political stability threatened

Additional Challenges Additional Challenges for SISfor SIS

Measures undertaken by SPC/EDD Measures undertaken by SPC/EDD to improve shipping to PICTs to improve shipping to PICTs

1.1. Provided Regional capacityProvided Regional capacity--building & capacity building & capacity supplementation in most areas of the maritime industry supplementation in most areas of the maritime industry

2.2. Commodity Mapping & Trade analysis: Commodity Mapping & Trade analysis: 3.3. InIn--country transport study country transport study 4.4. Regional Hub & Transhipment Ports: Regional Hub & Transhipment Ports: 5.5. Feeder Shipping Service Feeder Shipping Service 6.6. PurposePurpose--built ship built ship 7.7. Shipping Services Agreement (Interim) Shipping Services Agreement (Interim) 8.8. To To explore opportunities to maximize cargo capacity on explore opportunities to maximize cargo capacity on

KSSL Ships to Central Pacific SIS. KSSL Ships to Central Pacific SIS.

Measures undertaken by SPC/EDD Measures undertaken by SPC/EDD to improve shipping to PICTs to improve shipping to PICTs

Pacific Shipping Commissions Pacific Shipping Commissions -- establishmentestablishmentEngagement of a Shipping Adviser. Engagement of a Shipping Adviser. Regional Maritime Associations Regional Maritime Associations Aids to Navigation advice Aids to Navigation advice Port development advice Port development advice Regional Ship Owners/OperatorsRegional Ship Owners/OperatorsSPC & IHO MoU on Hydrographic Surveys & Charting in SPC & IHO MoU on Hydrographic Surveys & Charting in the regionthe regionPacific Horticultural and Agricultural Pacific Horticultural and Agricultural Market Access Market Access Program (PHAMA) & SPCProgram (PHAMA) & SPC’’s Land Resources Division s Land Resources Division Regional Bulk Fuel Purchase Scheme Regional Bulk Fuel Purchase Scheme -- supportsupportUse of renewable Energy in shipping Use of renewable Energy in shipping -- supportsupport

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Update on Shipping

SIS Shipping Service Agreement (Interim arrangement)

The first quarter of 2009 first quarter of 2009 saw significant activity aimed at establishing a shipping service to support the smaller island states of Kiribati, Nauru and Tuvalu.

In support of this initiative, a Central Pacific SIS maritime ministerial meeting was called on 25 February 2009 agree to a range of measures, among them the use of Kiribati Shipping Services Limited (KSSL) use of Kiribati Shipping Services Limited (KSSL) ships to provide a feeder service from Suva to these countries.

This service commenced in full operation in June 2009.

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Regional Maritime Ministers’ Meeting

Following the SIS Maritime Ministers’ meeting, a broader regional maritime Ministers’ meeting was convened on 14 May 2009. During the course of this meeting a range of issues were broached.

Framework for Action on Transport Services endorsed by MinistersFramework for Action on Transport Services endorsed by Ministers ‐‐a blue print for PICTS a blue print for PICTS 

Update on Update on ShippingShipping

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Sub-regional Transport Ministers’ MeetingsMay 2009 May 2009 -- two regional maritime ministerial meetingstwo regional maritime ministerial meetings. . • SIS ministers meeting• larger regional gathering from all Pacific Community members.

SIS Ministers agreed on SIS Ministers agreed on •the need for political will and the importance of increasing affordable and regular shipping services to address solutions to SIS shipping. • the establishment of a Central Pacific Shipping Commission modelled on MSC. • SPC & PIFS encouraged to continue the commodity mapping exercise• SPC to continue its assessment of options involving a purpose built donor funded ship.

Ministers also directed work on EPSCMinisters also directed work on EPSC• to assess the possibilities of establishing feeder shipping service routes between Samoa, Tokelau, Cook Islands, Niue, and American Samoa, and other interested states and territories. This work has been ongoing.

Update on Update on ShippingShipping

Micronesian Shipping Commission (MSC) &Micronesian Shipping Commission (MSC) &Central Pacific Shipping Commission (CPSC)Central Pacific Shipping Commission (CPSC)

Micronesian Shipping Commission (MSC) Micronesian Shipping Commission (MSC) -- Federated States of Federated States of Micronesia, Marshall Islands and Palau. Micronesia, Marshall Islands and Palau.

Brief History of MSC Brief History of MSC (MSC Treaty on November 21, 1997)(MSC Treaty on November 21, 1997)•• The Micronesian Shipping Commission (MSC) based on The Micronesian Shipping Commission (MSC) based on ““Trust Territory Executive Trust Territory Executive

Order 113Order 113”” based on the US Federal Maritime Commission (FMC). based on the US Federal Maritime Commission (FMC).

CPSCCPSC -- Kiribati, Tuvalu, Marshall Islands, Nauru and possibly Wallis & Kiribati, Tuvalu, Marshall Islands, Nauru and possibly Wallis & Futuna. Futuna. What is the CPSC?What is the CPSC?•• It is an It is an interinter--governmental commission governmental commission for for joint cooperation, coordination and joint cooperation, coordination and

monitoring of international shipping servicesmonitoring of international shipping services in participating governments. in participating governments.

•• The rationale of CPSC is The rationale of CPSC is to ensure sustained commercial shipping services for to ensure sustained commercial shipping services for the common interest, needs and public welfare of the respective the common interest, needs and public welfare of the respective communities communities through controlled competition. through controlled competition.

Central Pacific Shipping Commission (CPSC)Central Pacific Shipping Commission (CPSC)

IMPACTIMPACTIt is expected that the CPSC will be able to It is expected that the CPSC will be able to effectively monitor international effectively monitor international shippingshipping to participating Member States. to participating Member States. This will have This will have a direct and positive effect on the economies a direct and positive effect on the economies of the Member of the Member States and States and well being of the respective communitieswell being of the respective communities, hitherto were , hitherto were recipients of irregular and costly shipping services. recipients of irregular and costly shipping services.

GOALS AND OBJECTIVESGOALS AND OBJECTIVESThere are There are four major goals four major goals of the CPSC incorporating specific objectives of the CPSC incorporating specific objectives within each of them. within each of them.

CPSC: as a medium for:CPSC: as a medium for:1.1. ConsultatioConsultation on matters affecting international shipping services to n on matters affecting international shipping services to

Member States;Member States;2.2. CooperationCooperation amongst Member States and stakeholders in advancing an amongst Member States and stakeholders in advancing an

attractive shipping environment to service providers;attractive shipping environment to service providers;3.3. A united front A united front by Member States for the negotiation of favourable shipping by Member States for the negotiation of favourable shipping

services; andservices; and4.4. Joint monitor and implementation Joint monitor and implementation of shipping policies by Member States.of shipping policies by Member States.

Objectives of CPSCObjectives of CPSC

•• Facilitate Facilitate access for Member States to international markets access for Member States to international markets to to promote national trade and commerce;promote national trade and commerce;

•• Facilitate Facilitate adequate and reliable frequency of shipping services adequate and reliable frequency of shipping services to to Member States to guarantee sufficient supply and inventory;Member States to guarantee sufficient supply and inventory;

•• Approved Carriers to arrange Approved Carriers to arrange services to all subservices to all sub--regional SISregional SIS, , thus carriers are to providethus carriers are to provide favourable route structures to serve favourable route structures to serve all member statesall member states’’ ports;ports;

•• Ensure Ensure affordable service ratesaffordable service rates in line with the local economies;in line with the local economies;•• Control competition Control competition based on the volume of cargo available and based on the volume of cargo available and

restrictrestrict number of carriers to remain commercially viable.number of carriers to remain commercially viable.•• Monitor conditions Monitor conditions for costfor cost--efficient shipping services.efficient shipping services.•• promote sufficient or controlled competitionpromote sufficient or controlled competition thus monopoly is thus monopoly is

removed removed

Commissioners of CPSCCommissioners of CPSC

•• The Commissioners consists of Cabinet Ministers, one from The Commissioners consists of Cabinet Ministers, one from each participating Government. each participating Government.

•• Chairmanship of the Commission is rotated annually. Chairmanship of the Commission is rotated annually. •• Decisions made by the Commission are based on consensus, Decisions made by the Commission are based on consensus,

although a majority vote of 2/3 is required for adoption of any although a majority vote of 2/3 is required for adoption of any measures. measures.

•• The CPSC meets annually or as often as may be required to:The CPSC meets annually or as often as may be required to:–– evaluate performance of shipping services, evaluate performance of shipping services, –– review new shipping proposals and review new shipping proposals and –– review carriersreview carriers’’ tariff rates.tariff rates.

CPSC functions CPSC functions 

The duties of the Commission shall be to ensure that its purposeThe duties of the Commission shall be to ensure that its purpose of of Monitoring commercial shipping within its area through shipping Monitoring commercial shipping within its area through shipping licenses licenses is carried out in accordance with the MOU to:is carried out in accordance with the MOU to:

•• determine the general policies determine the general policies for fulfilling the purpose of the CPSC;for fulfilling the purpose of the CPSC;•• review the performance of shipping services review the performance of shipping services provided by international carriers provided by international carriers

holding shipping licences for services;holding shipping licences for services;•• consider proposals and decide on approving, disapproving, revokiconsider proposals and decide on approving, disapproving, revoking, or issuing ng, or issuing

shipping licencesshipping licences to commercial carriers for shipping services in the Central to commercial carriers for shipping services in the Central Pacific region; andPacific region; and

•• review and approve or disapprove applicable tariffs filed by shireview and approve or disapprove applicable tariffs filed by shipping licence pping licence HoldersHolders for shipping services in the Central Pacific Region or any subsfor shipping services in the Central Pacific Region or any subsequent equent changes in the tariffs as may be requested by the shipping licenchanges in the tariffs as may be requested by the shipping licence Holders.ce Holders.

Provision of Shipping Licence (SL)Provision of Shipping Licence (SL)

•• Shipping Licence will be required for all Shipping Licence will be required for all service to all member statesservice to all member states. . •• An annual fee applies for each SL issued by the CPSC. Member staAn annual fee applies for each SL issued by the CPSC. Member states also tes also

commercial carriers servicing the region, except for Government commercial carriers servicing the region, except for Government owned and owned and operated vessels, operated vessels, to arrange to arrange contribute to the effective operation of the contribute to the effective operation of the Commission.Commission.

Criteria for Granting a Shipping LicenceCriteria for Granting a Shipping Licence•• Routes must satisfy basic trade requirementsRoutes must satisfy basic trade requirements of all member states. of all member states. •• All Tariffs charged should be reasonable All Tariffs charged should be reasonable for the service proposed. for the service proposed. •• The Carrier must demonstrate capability to provide a reliable anThe Carrier must demonstrate capability to provide a reliable and stable service d stable service

in terms of frequency, regularity and on time performance. in terms of frequency, regularity and on time performance. •• The The Service must be flexible Service must be flexible to accommodate both specialized and to accommodate both specialized and

conventional tonnages/cargo. conventional tonnages/cargo. •• Capitalization or investment Capitalization or investment shall be sufficient to adequately sustain the shall be sufficient to adequately sustain the

proposed service.proposed service.•• Employment of suitable citizens Employment of suitable citizens of the Member countries will also be expected. of the Member countries will also be expected.

Monitoring & Evaluation

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MSC & CPSC SUBMSC & CPSC SUB--REGIONSREGIONS

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MAJOR HUB PORTS & SHIPPING ROUTES

Micronesian Shipping Commission

Central Pacific Shipping Commission

Melanesian Spearhead Group

PSC SubPSC Sub--regional Groupingsregional Groupings

Eastern Pacific Shipping Commission

PALAU

PNG

SOLOMON ISLANDS

FRENCH POLYNESIA

TOKELAU

Current Pacific  Routes including the Current Pacific  Routes including the Central Pacific subCentral Pacific sub‐‐regionregion

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SummarySummary

•• The improvement in shipping services to PICTs within the contextThe improvement in shipping services to PICTs within the context of of sustainable development sustainable development will require multilateral actions, will require multilateral actions, including decisions by individual Governments. including decisions by individual Governments.

•• However, to obtain economic and political leverage, However, to obtain economic and political leverage, regional and regional and international cooperation by PICTs is also necessary. international cooperation by PICTs is also necessary.

•• Conversely, Conversely, without coordination, individual States will without coordination, individual States will continue to be marginalized by larger groups that continue to be marginalized by larger groups that already dominate economic and maritime policy.already dominate economic and maritime policy.

Thank you for your TimeThank you for your Time