Australian Government Budgets Pilot Program for Three Merchant Ships

The program grew out of the argument that Australia is too dependent on foreign-flag shipping (Melbourne file photo)

PUBLISHED MAY 14, 2024 5:12 PM BY THE MARITIME EXECUTIVE

 

 

Contained within Australia’s massive $764.6 billion (US$506 billion) decade-long defense budget for 2024-2025 is this first allocation for the creation of the Australian Strategic Fleet. One of the promises made by now Prime Minister Antony Albanese was the revitalization of the domestic merchant fleet to support Australian commence and serve defense needs.

The newly-elected government launched a taskforce in October 2022 which submitted its final report in June 2023 providing a roadmap on how to establish the strategic fleet, and how to overcome any key challenges which may arise in the maritime industry. The maritime strategic fleet was born out of the government’s position that it needed to improve Australia’s resilience and maritime capability. The fleet will be made up of up to 12 privately owned and commercially operated Australian-flagged and crewed vessels. These vessels will be available for requisition by the government in times of need.

The 2024-2025 budget increases overall defense spending over the decade to create what Albanese terms a “more capable and self-reliant” Australia. The plan includes $11.1 billion (US$7.35 billion) over the decade to increase the size and lethal capability of the surface combatant fleet and an additional $1 billion (US$660 million) for autonomous systems.

“We’re increasing the defense budget by over $50 billion (US$33 billion) over the course of the next decade,” highlights Assistant Minister for Defence, Matt Thistlethwaite. He said that it would be record spending to ensure Australia has the capability to defend the nation.

The budget includes $21.7 million (US$14 million) over five years to support the establishment of the strategic fleet. It calls for an initial pilot program that would add three new merchant ships to Australia’s domestic fleet. The government expects to begin taking applications for these vessels later this year. 

The Australian Maritime Union and others have been strongly in favor of the program highlighting the decline in the domestic fleet. According to the International Transport Workers’ Federation, as of December 2022, there were only 11 Australian-flagged and crewed vessels over 2,000 dwt holding licenses for the coastal trade. They compare that to the more than 2,300 voyages operated by 504 foreign-flagged vessels in Australia during 2021.

The ITF issued a statement welcoming the government’s budget with the funding for the merchant vessels. 

“In many countries, domestically-owned and operated fleets are able to supplement supply chain capacity and move cargoes via national-flag vessels. This strategic capacity allows the industry to use vessels to move cargoes to smaller ports located further inland or has supplemented the capacity to move goods inland by rail and road, to reach their final destinations,” said ITF General Secretary Stephen Cotton. 

The COVID-19 pandemic highlighted what the Australian government called the country’s vulnerabilities and supply chain challenges. The ITF says shipping is critical to Australia’s social and economic well-being highlighting that shipping moves 99 percent of Australia’s goods traded by volume, and around 79 percent by value.

UK Plans Six Amphibious Warships in New Golden Age of Shipbuilding

Construction of HMS Cardiff, one of the new Type 26 frigate under construction (BAE Systems)

PUBLISHED MAY 14, 2024 7:28 PM BY THE MARITIME EXECUTIVE

 

The UK government detailed an ambitious plan to expand the Royal Navy highlighting that it calls for up to 28 new vessels including those in planning and under construction. In the latest move, the government announced plans for up to six new amphibious warships for the Royal Marines while also deferring the retirement of two vessels.

Speaking at the annual Sea Power Conference in London today, May 14, Defense Secretary Grant Shapps said the country was entering a new “Golden Age” of shipbuilding designed to support the future capabilities of the Royal Navy and Royal Marines. He said the plans for the newest vessels bring the total up to a potential 28 warships and submarines for the fleet.

“We’re learning from what’s happened in the Black Sea in Ukraine and learning what’s happening in the Red Sea currently to make much more flexible ships capable of carrying out a lot of different types of tasks,” Shapps told the BBC. He called the plans for the new ships “more flexible” while saying it would enhance the UK’s overall capabilities.

The latest plans call for up to six vessels called Multi Role Support Ships specifically designed for the Royal Marines and to support the commando forces while conducting special operations. The Ministry of Defense reports it has entered the concept phase for the new vessels and will be moving forward working with the shipbuilding industry. They will be flexible warships designed to carry vehicles, aircraft, “insertion craft,” uncrewed systems, and also feature medical facilities to support the mission.

“These will be the most capable amphibious warships the nation has ever owned, designed to be fully interchangeable with our closest allies in Europe and NATO,” said First Sea Lord, Admiral Sir Ben Key. 

Shapps told BBC that three vessels would definitely be built and planning was also underway for three additional ships.

He highlighted that the expansion of the naval forces comes due to the commitment of Prime Minister Rishi Sunak to increase the UK’s defense spending to 2.5 percent of GDP by the end of the decade. While the Conservative and Labour parties rarely agree on policy, both sides support the plan to raise the investment in defense.

The total plan now calls for eight Type 26 Frigates, with the first three scheduled to enter service before 2030, along with five Type 31 Frigates. Two Astute class submarines are also under construction and four Dreadnought class sub are planned for the UK’s nuclear arsenal. Three support ships are scheduled to start production next year for delivery by 2031.

They highlighted that the shipbuilding work is involving companies across the country. The Type 26 and Type 31 are being built in Scotland, the submarines in Barrow-in-Furness, England, and the fleet support ships in Belfast, Northern Ireland, and Devon, England.

The Defense Secretary also confirmed that HMS Albion and HMS Bulwark, two 20-year-old amphibious vessels, will remain active till their planned out-of-service dates in 2033 and 2034. There had been speculation that one or both would be retired near term. Shapps said both would remain active until the six new vessels were commissioned. The new vessels are also expected in the early 2030s to replace three landing dock ships in the auxiliary and the Aviation Support Ship RFA Argus.

HMS Argyll, the longest-serving Type 23 Frigate in the Royal Navy, they reported has been sold to BAE Systems. She will be used in the shipbuilding sector to support apprentice training. HMS Westminster, which along with the Argyll has a total of 63 years of service, will also be officially retired.

Philippines Says HD Hyundai’s Partnership at Subic Will Launch Shipbuilding

Hanjin Heavy Industries' Subic shipyard at its peak

PUBLISHED MAY 14, 2024 2:57 PM BY THE MARITIME EXECUTIVE

 

Officials in the Philippines hailed the announcement that U.S. private equity firm Cerberus and South Korea’s HD Hyundai Heavy Industries have completed a strategic partnership agreement for shipbuilding operations at the former Subic facility. President Ferdinand Marcos Jr. called it a landmark moment that would provide a “fresh start” and a “strong foundation” for shipbuilding in the Philippines.

Cerberus acquired the southern portion of the former Subic shipyard in 2022, three years as South Korea’s Hanjin suspended operations when it filed for bankruptcy. Hanjin had been operating the facility since 2006. Settling the bankruptcy, the Philippines arranged for a portion of the facility to be leased to the navy for a new base and maintenance facility while Cerberus took the other portion promising to create a new industrial area and expand investment in the Philippines.

“We have established our position as the largest source of competent and able seafarers in the world. The next logical step for us is to ensure that the ships run by Filipinos can also be made by Filipinos,” said Marcos at the ceremony marking the signing of the new partnership agreement. “As HD Hyundai is recognized as one of the largest producers of ships in the world, we look forward to the opportunity to usher in a new era of shipbuilding in the country.”

Marcos highlighted that the Philippines was the seventh-largest shipbuilder in the world in 2022, contributing almost 400,000 gross tons of newly built sea and ocean-going vessels. 

Cerberus committed to $40 million of investment to make the shipyard operational again and to attract new businesses and investors. The company said its strategy was to develop a diversified base of companies. It has already attracted Subcomm, a subsea cable company, and V2X, a logistics company to Subic. Reports are that it is also exploring the conversion of the Subic airport into a cargo and logistics hub.

A year ago, it was reported that HD Hyundai was interested in operating two of the dry docks at the site in Subic. The reports said it would be a maintenance facility. The company however has booked all the building slots at its three South Korean yards and has an extensive backlog for new ship deliveries.

Hyundai built the Philippine Navy's first two missile frigates and holds contracts for two anti-submarine corvettes as well as an offshore patrol vessel. It also holds a lifetime service support contract with the Philippine Navy for the guided-missile frigates.