Application of Rules for Permits Issued Under Part VI of the Navigation Act 1912

Introduction

The Ministerial Guidelines for granting of licenses and permits to engage in Australia’s domestic shipping (Ministerial Guidelines) document the procedures followed by the Department of Infrastructure and Transport (the Department) in administration of Part VI of the Navigation Act 1912 (the Act) and the Navigation (Coasting Trade) Regulations 2007 (the Regulations).

This document sets out the practical application of the rules the Department uses to determine whether the conditions applying to permits granted pursuant to the Ministerial Guidelines have been breached.

The purpose of documenting and publishing rules specific to carriage of cargo is to provide transparency and improve compliance with coasting trade provisions under Part VI of the Navigation Act 1912.

Fundamentals

Under coasting trade provisions licensed ships have preference in the carriage of inter-state cargo. This preference for licensed ships is explained under paragraph 19 of the Ministerial Guidelines.

In carriage of coastal cargo by unlicensed ships the agent, masters and owners of the ship are jointly and severally responsible for compliance with the coasting trade provisions under section 293 of Part VI of the Navigation Act 1912.

Cargo or discharge port not listed on an approved permit

The Department considers a licensed ship to be unavailable if it is unable to carry the cargo listed on a permit, or is not travelling to the ports on the permit.

All cases of an unlicensed ship loading cargo or diverting to a port not mentioned on an approved permit will be treated as instances of carrying coastal cargo without a valid permit and the applicant would be in breach of the provisions of Part VI of the Navigation Act 1912.  This is because licensed operators have not been given the opportunity to assess whether they could carry the unlisted cargo or undertake the trip to the unlisted port.

In every situation the permit holder should notify the Department prior to loading or diverting of the vessel and where possible, apply for an urgent amendment to an approved permit. The Transport Security Coordination Centre will complete Australian Licensed Operator (ALO) checks and issue an amended permit as soon as possible following the notification.

Variation in sail date of an approved permit

The Department considers a licensed ship to be unavailable if it can’t carry cargo within a window of 3 clear days either side of the estimated sailing date in the permit application.

If permitted cargo is carried outside this timeframe it precludes the opportunity for a licensed vessel (which may have been available) from carrying the cargo and would therefore be a breach.  As a rule, the 3 day variation permissible in the sail date does not include the sailing date specified in an approved permit.

Variation in cargo volumes of an approved permit

The Department would consider a licensed ship to be unsuitable if it cannot carry the volume of cargo listed on the permit.

Permit applicants are therefore required to seek amendment to a permit under paragraph 61 of the Ministerial Guidelines where, volume of cargo carried varies by ± 10% from the nominated cargo volume.  This is because the altered cargo volume may be able to be carried by a licensed vessel.

The rules below clarify for applicants the criteria for determining a breach of the ± 10% load tolerance under an approved permit.

Method for calculation of variation in cargo volumes

Variation in cargo volumes will be determined by calculating the difference between the actual amount of cargo carried and the approved amount of cargo divided by the approved amount of cargo to be then multiplied by 100.

Unit applied to cargo volumetric measurements

In the Regulations, forms 2 and 4 for permit applications and form 5 for issue of single voyage permits list tonnage and TEU (Twenty-foot Equivalent Unit) as the relevant measures of ’cargo volume’ in a permit.

The Statement of Cargo Actually Carried (SOCAC) rendered on completion of a voyage under permit lists MT (Metric Tons) TEU (Twenty-foot Equivalent Unit) and BB (Break Bulk) as the relevant measures of cargo volume actually carried under permit.

Bulk Cargoes

Metric tons (MT) is the volumetric measurement commonly used for all bulk commodity loads (like grain, coal, and ores) and bulk liquids (like oil, gas, and liquid chemicals).

All bulk commodities and bulk liquids will be reported in metric tons as the unit of volumetric measurement of tonnage in a permit application and the SOCAC. In determining breach of an approved permit, the 10% load tolerance will apply to MT as the unit of measurement.

Containers

While different container sizes are used to carry containerised cargo, Twenty-foot Equivalent Unit (TEU) is the standard unit for counting containers of various capacities and importantly for describing the capacities of container ships where, one 20 foot standard container equals 1 TEU and one 40 foot standard container equals 2 TEU. As TEU is not a measure of mass, using MT as a unit to quantify mass in permit applications is important for purposes of collating coastal trade data.

All containerised cargo will be reported in both MT and TEU as units of volumetric measurement in a permit application and the SOCAC. However, in determining breach of an approved permit, the 10% load tolerance will apply only to TEU as the unit of measurement, which is the standard unit describing the capacity of a container ship.

RORO and Breakbulk

The different types of packed and unpacked cargo, such as, machinery, steel, refinery equipment, ammonium nitrate and defence equipment is carried by general cargo ships and Ro-Ro ships either in holds, roll on and roll off, or in some cases as containerised cargo.

All cargo carried by ships, other than bulk carriers, tankers and container ships, is to be reported either in MT or where applicable in MT and TEU or BB as units of volumetric measurement in a permit application and the SOCAC. TEU as a unit of measurement with MT should be used only when the cargo is containerised.

In determining a breach of an approved permit, the 10% load tolerance will apply to MT as the unit of measurement in cases where, cargo volumes are reported in MT or where cargo is reported in MT and BB. Where cargo is reported in MT and TEU the cargo will be taken to be containerised and the 10% load tolerance will apply to TEU as the unit measurement.

Load tolerance applied to full or individual types of cargo volumes

The Ministerial Guidelines outline how permits are issued for a particular vessel to carry nominated cargoes between particular ports, loading and sailing on specified days.

Information provided by applicants in their permit applications forms the basis for carrying out checks of availability and adequacy of licensed vessels to carry the nominated cargoes.

An approved permit states the total volume of cargo to be carried across different cargo types.  The 10% load tolerance will apply to individual types of cargo volumes nominated in the permit application. SOCAC entries must be completed for individual types of cargo volumes discharged and these will be compared with those stated in the permit application.

Load tolerance applied to full or individual legs of a voyage

As stated out in the Ministerial Guidelines, permits are issued for a particular vessel to carry a nominated cargo between particular ports, loading and sailing on specified days.

Information provided by applicants in their permit applications forms the basis for carrying out checks of availability and adequacy of licensed vessels between particular ports on or about the specified days.

While an approved permit states the total volume of cargo to be carried, the 10% load tolerance will apply to cargo volumes nominated in the permit application to be carried between particular ports or in other words to each individual leg of a voyage. SOCAC entries must be completed for cargo discharged at each port stated in the permit application.

Summary of rules for determining permit breaches

• Licensed ships have preference in the carriage of inter-state cargo.
• All cases of an unlicensed ship loading cargo or diverting to a port not mentioned on an approved permit will be treated as instances of carrying coastal cargo without a valid permit.
• The 3 day variation permissible in the sail date will not include the sailing date specified in an approved permit.
• Variation in cargo volumes will be determined by calculating the difference between the actual amount of cargo carried and the approved amount of cargo divided by the approved amount of cargo to be then multiplied by 100.

  Percentage variation in cargo volume =	Actual amount of cargo ~ Approved amount of cargo	x 100
  	Approved amount of cargo

• Bulk commodities and bulk liquids will be reported in MT as the unit of volumetric measurement of tonnage in a permit application and the SOCAC.
• Containerised cargo will be reported in both MT and TEU as units of volumetric measurement in a permit application and the SOCAC. However, only TEU will be used in determining breach of an approved permit.
• Cargo carried by ship types, other than bulk carriers, tankers and container ships, is to be reported either in MT or where applicable in MT and TEU or BB as units of volumetric measurement in a permit application and the SOCAC. TEU as a unit of measurement should be used only when the cargo is containerised. The unit MT or TEU where cargo is containerised will be used in determining breach of an approved permit.
• While an approved permit states the total volume of cargo to be carried, the 10% load tolerance will apply to individual cargo volumes nominated in the permit application and to each individual leg of a voyage. SOCAC entries must be completed for cargo discharged at each port stated in the permit application. 

Conclusion

The implications of carrying coastal cargo by an unlicensed ship without a valid permit are serious. In cases where cargo is carried in breach of the conditions of an approved permit further permits may be refused unless a satisfactory explanation under paragraph 61 of the Ministerial Guidelines is provided.

Moreover, carrying of coastal cargo without a permit or in breach of the permit conditions may result in prosecution against the agent, master or owner of the unlicensed ship and is a punishable offence on conviction by a fine not exceeding $5,000 under section 288(1) of the Navigation Act 1912.

Permit applicants should notify the Transport Security Coordination Centre as soon as practical of a change in the sail date or load amount outside the stipulated tolerance and seek an amendment to the permit.