Steamships hit by poor freight rates

Shipping

UNECONOMIC freight rates are

making shipping in the Gulf of Papua unviable, directors of Steamships Trading Co Ltd complain in the company’s latest annual report.

They said that despite further rational isation of operations, its services are losing money due to the refusal of the Papua New Guinea Price Controller to approve increases in shipping charges during the past six years.

Steamships had restricted regular ser vices to the major ports of Daru and Kiunga, with services to other ports on a charter basis only. “It is regretted that Papua New Guineans living along the Papuan coast will be disadvantaged due to the instransigent attitude of the Price Controller,” the directors said.

One of Steamships’ subsidiaries in the Australia-Papua New Guinea service had a very difficult year. Papua New Guinea Shipping Corporation Pty Ltd participates in the Chief Container Service. The report said that, even with the casualties among opposition shipping lines, freight rates remained at unecon omic levels on this service. This subsidi ary also has a 25 per cent holding in Consort Express Lines, which runs a five

day service between the major ports of Papua New Guinea. Since the closure of the Bougainville mine, one of the four ships has been disposed of and schedules revised to reduce frequency between port calls to seven days. But Steamships

reported that stevedoring operations,

particularly in Lae, performed well due to the substantial volume of cargo for the Porgera gold mine.

The 50 per cent owned North Sol omons Stevedores Pty Ltd, which oper ated transport and wharf services on Bougainville, struggled on until the total withdrawal of shipping services out of Kieta in March. All major items of equipment have been redeployed to other ports.

Directors reported that Steamships

operations generally were affected by the devaluation of the Kina in January. This resulted in substantial increases in the costs of raw materials and finished goods.

“In many cases, these additional costs have not been recovered due to a complete lack of response from the Price Controller to requests for price increases on controlled products.”

Directors said the decision to devalue the currency signalled a move away from

the Government’s traditional strong kina policy. “It is considered that little has been achieved by this action,” the report said. “Potential investors would, for the first time, be concerned about Papua New Guinea’s ongoing economic stab ility.”

Directors said the company’s disap pointing performance in returning a pre tax profit of K 4.85 million (U 554.57 million) less than half of the previous year reflected the weaker trading conditions in the country. Several div isions had not responded adequately to the rapidly changing economic environ ment. As well as commenting on ship ping problems, the annual report singled out the hotels division which had been affected by curfews in some centres and renovations in others, high management staff turnover and inadequate controls.

Steamships directors said that Papua New Guinea was in its first recession since independence, a situation which had been brought about by a combination of the Bougainville crisis and the collapse in prices for coffee, cocoa and copra. They welcomed moves by the Government to stimulate the private sector by easing restrictions on foreign investment, to improve worker training and to reduce duty on some equipment. □