Poor infrastructure disrupts Australia-PNG trade

Lloyd's List reports that Swire Shipping, which recently upgraded its services linking Papua New Guinea with Australia and Asia, said infrastructure remained an issue despite the expansion of oil and gas resources.

Swire’s general manager for trades Toby Smith said that poor roads had slowed the speed of project development in the country.

"A lack of investment in Lae port, the gateway for most projects, means that it continues to experience congestion and slow landside operations," Mr Smith said.

“Overall there is a feeling that if the political and economic situation continues to be stable there is a promising outlook for Papua New Guinea but this will be reliant on the ability of the government to invest in the country’s infrastructure and allow its people to reap the rewards.”

He said that Swire Shipping, which has operated in PNG since 1952, has benefited from the headline grabbing oil and gas projects.

“Our multipurpose vessels have been able to take some advantage of the increased volumes of project cargo moving into the country, although large pieces of project equipment are still reliant on heavylift capacity,” Mr Smith said.

These oil and gas schemes, including liquefied natural gas projects planned by Canada’s InterOil and partner Petromin PNG Holdings and a US$17bn scheme proposed by a rival ExxonMobil-Nippon Oil group, will have a significant macroeconomic effect on the country.

However, Mr Smith said shipping lines had yet to see if they “will impact the micro-economy and therefore lead to a sustained demand for retail goods and foodstuffs which will have the greatest impact on cargo volumes”.

These projects have led to a rise in competition among shipping lines with ANL launching a second service to PNG late last year.

ANL’s Asia service has provided direct calls between PNG and Singapore, Port Kelang in Malaysia and Jakarta in Indonesia.

Swire Shipping is upgrading its Australia- PNG service with a total of four 13,500 dwt, 981 teu multi-purpose vessels, which will increase capacity and frequency to provide three sailings a month between.

Mr Smith said the sourcing of retail goods and equipment had shifted over the last five years from traditional Australian and New Zealand markets to Asia, although Asian volumes had recently dipped.

"Sustained growth in Asian flows has been consistent since 2006, although this growth has slowed significantly in the last nine months as commodity prices have dropped," he said.

"This has resulted in the average Papua New Guinean’s purchasing power being reduced,” he said.