Shipping Services

Loss Of Bp Subsidy Will

Bring Changes To P-Ng

By staff writer KEN McGREGOR Burns Philp and Co. Ltd.’s loss of its $400,000 annual subsidy from the Australian Government to run a shipping ser vice from Australia to New Guinea with Australian crews means no replacement will be bought for the company’s flagship Bulolo for the time being. There will also be some re-routing of BP’s ships in New Guinea.

In early November BP’s brokers were examining a Singapore offer to buy the Bulolo, which carries passengers and cargo on Australia- New Guinea runs. The Singapore offer is less than what BP’s asked for the ship over a year ago but it is understood the loss of the subsidy has obliged the company to consider lower offers for the ship, whose registration comes up in June, 1968.

Unregistered, the Bulolo would be hard to sell, other than for scrap.

News of the subsidy was an nounced by the Australian Govern ment in October. It was not un expected by BP’s, who had received the subsidy since 1955.

13 services to NG

The Government said “changing circumstances” had led to the decision to withdraw the subsidy.

Thirteen ships now served Papua- New Guinea and the withdrawal was unlikely to affect these services, it said.

The subsidy will be reduced in stages and completely withdrawn at the end of 1968. Special privileges granted to BP's to carry copra and Government-controlled stores also will be withdrawn on June 30, 1968.

The Bulolo’s subsidy would be the first to go in April; the Malekula’s on June 30 and the Moresby’s subsidy in December, the Govern ment decided.

BP’s other ships on the run— the Braeside and the Montoro —are not affected because they have Asian crews and do not receive subsidies.

The Tulagi operates the Norfolk Island-New Hebrides-Solomons run and it is also not affected.

When the Bulolo goes—and it is only a matter of time—BP’s passenger services to New Guinea will be severely curtailed. Bulolo has been very popular with round-trippers.

Bulolo carries 208 passengers.

Malekula and Braeside carry 24 people between them. The Montoro and Moresby carry only cargo.

Tulagi carries 12 passengers to the Solomons. BP’s feel the Braeside, which can carry more cargo than the Bulolo, is sufficient to meet their current cargo needs, and therefore won’t suffer by the Bulolo’s dis appearance.

Other changes likely

The company is doing a lot of re thinking about its ships, and it is likely there will be other changes before January, 1969, when opera tions will be without any subsidies.

BP’s feel they had legitimate reasons for receiving the subsidy, which in cidentally was taxable by about 40 cents to the dollar.

The company’s annual wages bill for shipping services is about $600,000, and is far in excess of other shipping competitors to New Guinea, who all use cheaper labour, in the form of Asian crewmen.

BP’s view is that new shipping companies to New Guinea have “picked the eyes out of the territory” by servicing only the big ports, but BP have continued a regular run to all small ports, particularly on the north coast of the mainland. Calls at these smaller ports are rarely worthwhile for freighters of the Malekula or Montoro size because there is so little cargo handled. With the subsidy gone and cargo privileges waived next year, BP’s is apparently reconsidering the value of these particular calls.

BP’s shipping fleet, owned by the parent company—Burns Philp and Co.—has shown an annual loss for many years now.

However, because the ships service BP stores and plantations in New Guinea, they indirectly contribute to

healthy profits of the big firm’s sub sidiary companies.

Therefore, despite general specula tion, there is no chance that BP’s will sell the entire fleet. While there are big BP trading interests in the islands BP’s need the ships—but not pas senger ships.

In the light of recent attempts by the Australian National Line to sail its ships overseas, it will be interest ing to see if the ANL will plug any gaps BP’s may be forced to leave in New Guinea in the near future.

And it will also be interesting to know what developmment will be offered by other lines which have been making noises in recent years for a piece of the NG passenger trade.

BP agreement

Under the agreement, BP ships had carried all copra produced in New Guinea—a valuable backloading for ships operating to New Guinea because more freight is carried in than taken out of the territory.

Now, with its copra privileges waived, BP expects to carry well over half NG’s copra and perhaps lose up to a quarter to its competitors,! in particular the China Navigation Company.

Up till April next year BP will carry about 80 per cent, of govern ment freight to NG; after April the company seems to be confident of keeping over half this business.