Shipping Australia recently met with representatives from the Department of Infrastructure’s Transport Resilience and Capacity Kickstart Program (TRACK) to discuss fuel security, the TRACK program’s likely second round of funding and its potential application to coastal shipping.
TRACK is a $52 million federal pilot initiative designed to conserve diesel and strengthen national freight supply chains during the current fuel crisis. The idea is that the programme will help reduce reliance on diesel by encouraging freight modal shift from road and onto more fuel-efficient transport modes.
In our meeting with Department officials, Shipping Australia emphasised that the global shipping fleet can really help Australia during the current fuel crisis, but it needs an exemption of vessels from the Coastal Trading Act.
Shipping’s unused cargo capacity
Shipping Australia emphasised that the international fleet of ships is already here in Australia. International ships are sailing around Australia from port to port each day, every day. Those ships have cargo capacity that is unused and you can think of this as “latent capacity”. In this context, the word “latent” means present but not used and the word “capacity” means the maximum amount that something can do.
Why isn’t that capacity already used?
Commercial businesses of every type and kind typically like to generate revenues. They tend to be quite enthusiastic about doing so. Companies generate revenue by selling a product. Ocean shipping’s product is space to put cargo while a ship moves over the sea. So you’d think that shipping companies would want to sell that capacity to their customers, and customers, being customers, would typically want to buy it.
So why isn’t this unused cargo capacity being sold by a willing seller to a willing buyer?
The dead hand of regulation
Anthony Albanese’s Coastal Trading (Revitalising Australian Shipping) Act 2012 basically makes coastal trading illegal in Australia unless you’ve got a licence.
Shipping companies, owners, charterers, masters and agents are forbidden by law from taking cargo onboard at port in Australia and then unloading that cargo at another port in another state or territory of Australia. If they do so without a licence, then they have to pay a fine of up to 300 penalty units (AUD$109,200) for an individual and ($546,000) for a company.
Coastal shipping already provides significant latent capacity that could be utilised immediately to move freight around Australia, particularly along major coastal routes.
Coastal trading licences can be granted, but there are a lot of rules, bureaucracy, ship registration requirements, having Australian nationality, time and effort involved, and the shipping companies have to engage with external third parties (notice requirements, document production requirements, and consultations etc).
There’s a couple of nasty stings for Australian cargo owners too, because there are two main types of licence: the temporary licence and the general licence. Firstly, generally licenced ships tend to be more expensive to run compared with ships on the open market, and so cargo carriage prices can be higher. Secondly, a person or company that applies to the government for a temporary licence will find that the relevant Minister will publish details of the cargo shipment on a government website. Holders of general licences then have the right to notify the government that it could carry the cargo instead. The applicant for the temporary licence (who could be a cargo shipper) then has to negotiate with the general licence holder over who gets to carry the cargo. All of this, including the outcome of the negotiations, has to be reported back to the Minister. And if the Minister can then refuse the application for a temporary licence.
That means that the owner of the cargo either cannot then get a temporary licence for itself, or, alternatively, cannot hire a temporary licence holder (such as a shipping company) to do the cargo transport job for it. The cargo owner will have to either leave the cargo where it is, use land transport, or hire a general licencee to do the job for it a much greater cost. There’s all kinds of rules, forms to be filled in, and waiting times around all of this too.
Now, if all that sounds like an attempt to force cargo owners to use more expensive transport options to their own detriment then, well, you’d be right.
We also know that Australian cargo owners do like to buy cargo space from the international fleet because that’s exactly what they have done, enthusiastically, vigorously, and in great numbers, whenever exemptions from the Australian Coastal Trading Act has been made during emergencies and crises. Exemptions of the Act can be done under section 11 at any time by the relevant transport Minister, which happens to currently be the Honourable Catherine King MP. All she has to do is to sign legislative instrument. It’s a quick administrative job. Done.
Ok, it’s a bad policy, but what’s this got to do with Australian fuel?
Well, everything.
There’s a bit of an international brouhaha in 2026 in the vicinity of the Middle East, you may have noticed the odd news item here and there in the media about it. It is causing disruption in the international oil markets and oil is overwhelmingly a transport fuel.
Let us break it down for you.
Energy can be a bit confusing, so we’ve stuck to discussing joules. A joule is a small measure of energy. Many gigajoules describe, say, the amount of energy an Australian household would use in a year. Thousands of petajoules would describe the energy used by a nation in a year. Exajoules describe the amount used on a planetary scale in a year.
According to the United Nations 2026 Energy Statistics Pocketbook, global oil consumption in energy terms was 173.2 exajoules (a measure of an enormous amount of energy). Oil used in global transport in 2023 stood at 104.1 exajoules. So global transport (all types) consumed roughly about 60.1% by energy of all oil.
Australia’s transport sector consumed about 1,734.6 petajoules of energy in 2024-2025 (a petajoule is smaller than an exajoule but is still a colossal amount of energy). That is about 29.5% of the total Australian energy consumption by sector, according to a 2026 Australian Energy Statistics Update Report.
Because of the global fuel crisis over most of 2026, we have seen huge fuel price spikes and panic buying. That in turn drove up the cost of transport, made it uneconomic for people to get to work, made it hard in some case to source fuel (at least initially in the panic), and, as oil is used as a feedstock for plastic packaging and chemical, drove up the price of a wide range of goods. Australians suffer when there is a fuel crisis.
So, because of world and Australian utter reliance on oil as a transport fuel, you can see it’s kind of a big deal for Australia’s transport sub-sectors when there is an international disruption that could disturb Australian fuel supplies.
OK, so fuel disruption is bad. How does this work out in terms of freight transport?
Trains, trucks, planes and ships all consume energy to provide power for motion. Fortunately, that energy is embodied in different kinds of fuel resource (e.g. diesel, aviation fuel, marine bunkers and so on). We say fortunately, fuel isn’t always interchangeable between modes of transport (if you ever get the chance to put marine bunkers in the fuel tank of your car, then we would strongly recommend that you don’t do it. Seriously, don’t).
Road travel consumes a vast amount of Australian fuel, about 1,220 petajoules worth in 2024-2025, about 70.3% of the total share, according to the Australian Energy Statistics Update Report. About half of that is used by cars, according to the Bureau of Infrastructure and Transport Research Economics (BITRE), Australian Infrastructure and Transport Statistics Yearbook 2025. Cars used about 624.1 petajoules of energy in 2024–25, accounting for approximately 50.2% of road transport energy consumption, according to BITRE.
Light commercial vehicles, articulated trucks, and rigid trucks together accounted for about 589.3 petajoules of energy according to the BITRE (table 9.10). Although light commercial vehicles include vans, utilities and other vehicles that aren’t necessarily engaged in commercial freight haulage, many are, so we’ll call these “trucks” to save time and effort.
Trucks have a lot of benefits in the freight transport system. They can collectively move huge volumes of cargo over land in varying parcel sizes right to where it is needed in all manner of locations.
Ships, comparatively, can bear massively-colossal volumes of cargo. Not just massive volumes. Not just colossal volumes. But massively-colossal volumes of cargo. Like, a lot.
Think, for example, of one of the smaller cargo containers on a truck that might have gone by your car while you’re travelling on the motorway. Now, scale that up to 8,000 to 10,000 of them. That’s the kind of size of cargo that ships handle in Australia (overseas, on the big routes, they go up to 22,000… or more!). That’s the kind of difference we’re talking about. Because of the nature of the sea and water transport, it’s always much more efficient to move ridiculously huge volumes of cargo by sea.
Ships in the international fleet, incidentally, tend to buy their fuel overseas. So when they’re sailing around Australia, they are burning overseas-sourced, i.e. not Australian-sourced, fuel. That means international cargo ships are generally not using Australia’s stock of fuel.
TRACKing government policy failure
We are in a fuel crisis.
The Australian fuel crisis causes Australians to suffer.
We should therefore encourage a modal shift of cargo away from the least fuel efficient to the most fuel efficient forms of transport.
Other than moving cargo in a wheelbarrow, trucking is one of the least efficient forms of freight transport.
Australian trucking accounts for a large consumption of fuel.
Global shipping moves massively-massive volumes of cargo.
International shipping is the most fuel efficient form of freight transport hands done, bar none, no question.
Existing ships in the global fleet that are already sailing and trading around Australia have spare cargo capacity.
International ships now sailing around Australia could carry extra cargo.
Global shipping carrying Australian cargo from Australian port to Australian port would save large volumes of fuel and could ease the crisis.
Australian shippers want to buy international shipping space to carry Australian cargo.
Australian ship operators want to sell international shipping space to Australian shippers to carry their cargo.
Australian law prohibits this from happening.
Public policy is what governments decide they want to do or to not do.
Action is a policy choice. Inaction is a policy choice.
Minister King, who is a Federal Government Minister, can exempt ships from the Act by signing a section 11 legislative instrument.
That declaration can happen at any time at the Minister’s discretion.
Curiously, the Australian Federal Government is acting to spend up to $52m in the TRACK programme to encourage the modal shift.
The Australian Federal Government has not acted to make the practically costless s.11 declaration, which would encourage the modal shift.
A section 11 declaration would be a simple, easy, and cheap way to encourage the modal shift.
Australians are therefore suffering unnecessarily as a result of government policy.
That is all.
