Australia's SeaRoad focuses on sustainable shipping in Bass Strait: interview

Tasmanian-based transport company SeaRoad last month signed an agreement with German shipbuilder Flensburger Schiffbau-Gesellschaft to construct a new roll-on/roll-off (RoRo) vessel with LNG propulsion worth more than €100mn ($117mn).

The new freight vessel will join Searoad Mersey II and replace the charter vessel MV Liekut to operate on the Bass Strait between Melbourne and Devonport, scheduled for the last quarter of 2023. The vessel will transport heavy cargo with a unit weight of up to 100 metric tons. In addition to its two Bass Strait shipping vessels, SeaRoad owns and operates a road transport and container fleet as well as cargo-handling equipment, which the business utilises at its various terminals and depots.

Chas Kelly, executive chairman, SeaRoad discussed the deal with NGW. Kelly also talked about sustainability in shipping, the future of LNG-fuelled vessels in Bass Strait and the company’s investment plans.

SeaRoad recently announced it has ordered an LNG-fuelled RoRo vessel. Why did the company opt for a vessel with LNG propulsion?

At SeaRoad, we are continuously looking at ways to reduce emissions and our environmental footprint. Our marine team looked at a range of options for the new ship and factored in that LNG-fuelled vessels are proven to significantly decrease sulphur oxides, nitrogen oxides and greenhouse gases.

By constructing a second LNG-powered vessel, we are not only playing our part in reducing carbon output but providing a more sustainable transport solution for our customers into the future.

Searoad Mersey II, which joined the fleet at the end of 2016, is the first coastal ship in Australia to use clean, green LNG fuel-and-power technology. It is also the first vessel in the world to use a roll-on roll-off LNG supply system via portable Type C independent tanks.

The vessel’s principal engines are dual fuel, burning LNG as the primary source of energy to significantly reduce emissions, minimise risk of oil pollution, and provide greater operational efficiencies and future environmental benefits.

SeaRoad effectively connects the island state of Tasmania to mainland Australia via Bass Strait. The addition of LNG-fuelled vessels to the sea leg of Tasmania’s supply chain further enhances the state’s credentials as a place of natural beauty and supplier of “clean, green” produce for domestic and international markets.

What kind of potential do you see for LNG-fuelled vessels in Bass Strait and Australia as a whole?

The limited size of the Australian shipping fleet and the capital-intensive nature of new tonnage constrain the resources available for innovation. However, Australian shipowners are aware of and must plan for compliance with emissions reduction targets. LNG-fuelled vessels offer proven technologies to assist shipowners in achieving those targets.

The absence of marine-based LNG bunkering assets along the east coast of Australia certainly restricts Australian and international operators in introducing increased numbers of LNG-fuelled vessels. It’s a significant impediment for shipowners to invest in replacement LNG-powered tonnage designated for trading in this region.

Is this segment poised for growth given the focus on sustainability?

We believe all industry participants will have to look to sustainable fuel solutions that are compatible with the future emissions reduction regulations. It’s feasible that more than 60 per cent of Australian coastal shipping operating on Bass Strait will be operating on LNG by 2025.

Will SeaRoad go for more LNG-fuelled vessels in near future?

SeaRoad is an early adopter of LNG-fuel technology. Our current vessel, Searoad Mersey II – ordered in 2014 and delivered in 2016is also LNG-powered and will operate alongside the newbuild scheduled for delivery in late 2023.

Our recent commitment to this vessel new build further commits SeaRoad to LNG as a sustainable, more environmentally friendly fuel for the longer term.

Do you see enough LNG-bunkering infrastructure in the region?

The current LNG-bunkering options on the Australian East Coast are almost non-existent. SeaRoad developed an ingenious solution to supply LNG fuel to Searoad Mersey II; it’s fuelled by a unique fleet of portable Type C LNG independent tanks that remain on the vessel. SeaRoad is confident that energy suppliers will realise the potential of more efficient bunkering options in the future.

What are the challenges for the LNG-in-shipping industry?

Energy security is of paramount importance in the shipping sector, as with other industries. The unique distinction in shipping is the reliance on a small number of operators in the energy supply (bunkering) space. The high entry costs will always limit competition.

In addition to two Bass Strait shipping vessels, SeaRoad owns and operates a large road transport and container fleet as well as cargo-handling equipment. What kind of potential do you see for LNG in road transport? Is SeaRoad looking at this option for its fleet?

Once again, the SeaRoad group sister company Chas Kelly Transport was an early adopter of LNG fuel in the road transport sector with a sizeable portion of their Tasmanian-based road fleet using LNG. Unfortunately, this pioneering spirit was not matched with the continued supply of LNG powered engines which forced a rethink on the group’s strategy. Our experience in this sector has not dampened our spirit and we continue to monitor this space with a willingness to re-engage. 

Finally, tell us about the company’s investment in infrastructure?

SeaRoad and TasPorts have worked jointly on a $15 million development at the East Devonport terminal this year, including fendering, berth strengthening, and mooring bollards works. These works were designed to accommodate SeaRoad’s current charter vessel, MV Liekut, and in preparation for the new vessel in 2023.

In Melbourne, we also invested over $1mn at Webb Dock for an additional auto mooring unit, fendering relocation, pile restoration, and other associated works.

SeaRoad is working closely with the Tasmanian State Government on its Port Master Plan of the East Devonport precinct. We support the Government’s A$240mn investment in port infrastructure, reciprocating the investment by shipowners.

Additionally, we have begun a $6mn investment in new technology to streamline and automate our systems and processes. This incorporates a new booking system, terminal operating system and gate operating system. SeaRoad plans to have this fully operational in the 2022-2023 financial year.

These investments in infrastructure by SeaRoad and supported by the Tasmanian government will deliver increased capacity across Bass Strait. They will provide a more comprehensive transport solution for customers, increasing Tasmania’s overall accessibility to both mainland Australia and the globe.