THERE has been a marked shift in routes travelled by Australian-accredited livestock ships in the past year, analysis in Wellard’s latest annual report shows.
The annual report drew attention to recent results from ongoing “route heatmap” analysis conducted by Wellard to monitor AMSA (Australia Maritime Safety Authority)-accredited competitor vessels operating around the world.
Wellard says the routine monitoring provides it with insights into changing route dynamics and enhances its ability to respond to market trends and ensure its vessels are deployed to the areas of greatest activity and profitability.
As part of the monitoring program, a snapshot was taken of voyages every six months and analysed on a square metre basis (rather than ship-by-ship) to ensure the movement of larger carriers was appropriately weighted.
The route-by-route comparison and resulting heatmapping revealed three key trends, according to Wellard’s annual report released yesterday:
- Trend One: Shipping capacity between Australia and South East Asia (largely Indonesia and Vietnam) more than halved from June 2021 to June 2022 and into December 2022.
This route represented 38 percent of AMSA-accredited shipping capacity in June 2021, but fell to just 17pc and 18pc in June 2022 and December 2022 respectively.
There has been a small increase to 24pc in June 2023, most likely from vessels that were previously engaged on the North Asia breeder cattle route.
Reasons for trend:
Due to the combination of sustained very high Australian cattle prices, issues with FMD and LSD, and strong competition from Indian Buffalo Meat and Brazilian beef, Indonesian importers have only been buying small consignments of cattle at a time, taking bigger ships out of the equation on this route.
Plus, the trade to Vietnam has only been small and sporadic for the past two years due to the very high Australian cattle prices.
- Trend Two: The market for breeder cattle trade to China is almost at a standstill, when just a year ago half of the AMSA-accredited shipping capacity was engaged on this route from both Australia and New Zealand.
It was 22pc in June 2021 and rose to 53pc in June 2022. In June 2023 just 4pc of capacity was engaged on this route.
Reasons for trend:
With the looming New Zealand ban on live exports, importers ramped up their purchases in 12 months prior to its April 2023 closure to acquire significant breeding cattle numbers while they were available.
This created a backlog in China, which will eventually move through the system, and we expect the trade to return to a more ‘normal’ cadence of activity and capacity in 2024.
(The report also noted further on that while there was some expectation that North Asian importers would seamlessly switch to Australia and South America once New Zealand has closed, that hasn’t occurred yet.
In fact, total number of head shipped from Australia to North Asia halved between H1 and H2 FY2023 (76,526 head vs 38,020 head))
- Trend three: There has been a significant shift to South America, with almost half of the AMSA fleet deployed there from a zero base just six months ago.
It was 26pc in June 2021, dipping to just 2pc in June 2022 and zero in December 2022, but now 44pc.
Reasons for trend:
The release of import permits by the Turkish Government to combat food inflation created considerable demand for tonnage, both for AMSA-accredited and non AMSA-accredited vessels.
As a long-haul route, exporters and importers are seeking to charter larger, more economic vessels through until the end of the year.
Wellard says it is unlikely that these vessels will return to Australia anytime soon given the demand and relocation costs.
Minimum mandatory standards needed for global livestock carriers
The WA-headquartered livestock ship owner and charterer has long campaigned for greater regulatory scrutiny to be applied to the global livestock shipping fleet and called for mandatory minimum standards to be put in place.
Wellard again turns its attention to the issue in its latest annual report, stating that it continues to push toward achieving reform in this area, but notes that “reform is not easy”.
“It remains of considerable concern to Wellard that aging, substandard livestock vessels are allowed to continue to conduct this trade in many countries, placing the lives of the shipboard crew and its livestock cargo at peril, as well as failing to meet globally accepted safety and animal welfare standards.
“There remains limited to no coordinated international oversight and regulation of this sector, to the detriment of human and animal lives and the long-term future of the live export industry, and although this has been acknowledged by the International Maritime Organization (IMO) and the Australian Maritime Safety Authority, change has not occurred with either the IMO global standards or Marine Orders 43 which are the relevant Australian standards which AMSA administers.”
Wellard says that without an effective regulatory regime setting mandatory standards for all international livestock vessels, animal welfare on the non-AMSA-accredited fleet is likely to be at greater risk.
This is because:
- stocking densities are largely unregulated;
- there are no minimum standards for the supply of air, feed and water; and
- old, inferior vessels are used to transport sheep and cattle to their destinations.
“It is encouraging to note that in recent years some individual exporting jurisdictions such as Romania and Brazil have implemented animal welfare standards for managing livestock density onboard ships.
“Unfortunately, the lack of truly global standards and failure to overcome the deficiencies in Australia’s own standards creates a disincentive to build new vessels because new vessels are unable to compete on price with old, substandard vessels which can operate in unregulated or substandard markets.
“The last new livestock ship entered service six years ago, no new vessels are under construction, and to the best of our knowledge, none are planned.
“Unless standards are improved and enforced there is no or low financial incentive to replace old, outdated ships with new, state-of-the-art vessels, and those who place our valuable livestock and the long-term sustainability of the livestock export industry at risk will continue to ply the trade.”
The report emphasises Wellard’s “very real fear” that history will be repeated, and thousands of cattle, crew, and the future of the live cattle trade will suffer from an entirely preventable situation because successive governments have relied on a false sense of security and failed to listen to experienced industry experts who want a sustainable trade.
“Of note, the National Party in New Zealand, which wants to overturn that country’s ban on all livestock exports if elected, has proposed a Gold Standard which includes purpose-built vessels and an age limit6, two changes that Wellard is seeking in Australia.
“If implemented, Australia will no longer be able to lay claim to possessing the best livestock shipping standards in the world.”