Pacific Forum Line defends service changes
Despite protests from Samoan exporters, the Pacific Forum Line company is defending the changes to its Samoa-Australia freight services, denying it is monopolising the market.
In emailed statements to the Samoa Observer, the company's General Manager Jason Perry and Director Tupuola Koki Tuala said Samoa is not missing out under changes to the company's schedule.
He noted that Samoa remained a 50 per cent stake in the company, which it had bought outright from its Pacific neighbours in 2012, before selling half its share to a private concern just years later.
“PFL is acutely aware of our responsibilities,” Tupuola said.
“Our services changes are in accordance with our charter and that is to provide regular, reliable and affordable shipping services to and from Samoa.
“The transhipment model maintains, and in many cases improves services in Australia.”
Mr. Perry, who is based in New Zealand, said P.F.L is modernising its business model by using Auckland, Tauranga and Suva’s ports as hubs that Samoan exports will tranship from.
“By consolidating our worldwide cargo flows through these hub ports and redeploying our fleet, we can substantially increase the number of sailings across PFL's overall network, achieve faster transit times to/from most ports, and achieve economies of scale,” he said.
In the Sunday Samoan, experienced exporter Papalii Grant Percival accused the company of leaving him and others high and dry by dropping Australia from the route map and changing the New Zealand services to just one every 18 days.
Under the new schedules published online, he says he cannot see how his products are meant to get from the highly congested ports of New Zealand to Australia. And he says when he raised this with management, they assured him it could be done but have yet to provide him with new prices, leaving Papalii highly sceptical.
But Tupuola insists Samoa is better off under the changes.
“The new changes [are] part of PFL’s long term plans by recognising the current and future challenges as well as risks associated with the global shipping industry,” he said.
“There is no change to the service from New Zealand and Asia. We have added a new regional service calling Fiji, Tuvalu, Apia, Pago, Wallis and Futuna, Fiji.
“Most importantly we are maintaining service levels from Australia, New Zealand and Samoa but at a lower operating cost and that’s in Samoa’s interests because it protects Samoa from inflationary price pressures as global shipping costs and rates double.”
He said as well as maintaining existing services, adding new routes between Pacific Islands is intended to help grow regional trade opportunities.
“PFL will implement necessary changes like the new network to protect the long term interest of Samoa and Pacific island countries depending on global market forces.”
On Wednesday, Papalii said he doubts there is much trade, and will ever be much trade, between Samoa and Tuvalu or Wallis and Futuna, to justify increasing routes between them and not with Australia.
He believes P.F.L.’s other 50 per cent shareholder Neptune Pacific Direct Line is controlling the new routes and is taking control over a company that was intended to help Samoa and Samoa’s interests.
It’s a claim Tupuola says is “unfounded.
“Government is well informed of PFL’s developments and we have an open and transparent relationship with both Neptune and NPDL’s senior management who have consistently delivered for PFL.”
“Both shareholders are united in the aim of delivering consistent, reliable, and affordable shipping and logistics services to all our customers,” Mr. Perry said.
In 2012, the Samoan Government boasted that it had acquired a 100 per cent stake in the Pacific Forum Line (P.F.L) company from 11 other Pacific Governments as a means of prioritising imports and exports to Samoa.
But the Government's stake was soon diluted, when two years later Neptune Pacific Direct Line (N.P.D.L.) acquired half of the company; two years later, court documents show; the deal was held up as a “beacon of regional trade and development in the region.”
That stake in P.F.L. has led to the creeping control of P.F.L. which is now working against Samoa's business interests, exporter and manufacturer Papalii said on the weekend.
“The reality is that right now we own the shipping company and we have been given the really short end of the stick,” he said.
“I know ever since N.P.D.L.’s taken over it has gone downhill like a rocket, it’s as if they don’t give a damn. They don’t even care that we exist in the market, and we are partial owners.
“If they owned it completely, I would have accepted it, but as a Samoan taxpayer I want answers.”
Mr. Perry maintains Samoa is getting better services with larger capacity.
“From Australia to Samoa the frequency remains every 18 days and the transit time with the transshipment over Auckland after allowing for 3 days relay connections are between 2 and 5 days faster than our historical service,” he said in an email.
“For Taro and Coconut exports to Sydney and Brisbane, the transit time doesn’t change. For Melbourne in the short term, our transit time is longer and we are working on a solution to improve the connection to Melbourne.
“We understand that for Samoa’s Taro and Coconut exporters that this means that instead of packing for 2 ships Exporters now need to concentrate their harvest and packing to one vessel.”
On Wednesday, Papalii said perishable goods cannot sit around waiting for a single container vessel a month.
The longer it takes to pack and hold them, the more he pays in refrigeration and storage costs. And when there are fewer ships, there is less cashflow to fund the next collection run, he said.
With just one boat there is no back up either, so if something happens to the container ship there is no alternative to get the single shipment a month out of Samoa.
“Tonga has a second vessel, Fiji has a second vessel, we only have one. We seem to be paying an awful lot to service other countries and not Samoa.”
When Samoa had a service a week, alternating between New Zealand and Australia, that was perfect for him, Papalii said.
“The whole thing indicates a real lack of knowledge for markets and a lack of support for agriculture,” he said.
He also took issue with Mr. Perry describing the connections as taking between two to five days, when the Auckland congestion has become so poor that ships are waiting a week or longer to berth and unload, meaning the schedule is not reliable without enough time allocated to transit.
Another gripe Papalii has with the changes is how swiftly they came and with no consultation or advance notice.
Tupuola says in normal times, management would have travelled to Samoa to “personally inform the market” of the route changes.
Asked when exactly the changes were made, Mr. Perry would not give a date but said the company is “constantly reviewing our scope of services.
“Doing so is an essential requirement to deliver consistent, reliable, and affordable shipping and logistics services. Therefore, network adjustments evolve after careful review with all stakeholders.”
But Papalii says this is not a reasonable explanation.
“They know who is shipping and they know we should have been consulted. They sent out that email to all the shippers didn’t they, so if they had that why didn’t they say we’re looking at this proposal, is there any feedback?
“They didn’t. We’re working pretty hard to try and drive this forward and every time we get to a certain stage somebody does something without thinking, and when it’s a Samoan company or a Samoan Government-owned company, I want to speak up, I need it fixed.”
The company also sent a letter to its Samoan customers on Wednesday, outlining some of the issues raised in this newspaper and explaining some of the impacts that COVID-19 had on shipping, include the effect on crew.
There is an ongoing critical mental and physical health concern across the globe concerning the well-being of the seafarers that facilitate global trade.
“To assist this, we have regularly diverted vessels to ad-hoc ports and delayed schedules at significant cost to do our utmost to ensure crew changes can occur and that our seafarers are not restricted on our vessels and that they can be relieved as required,” the letter said.
“General trade volumes have dropped approximately 15% since the beginning of the pandemic meaning that cost increases have not been countered by any potential to increase revenues by carrying more volumes.
“[…] At the same time capacity increased with our competitors adding the 3rd vessel to the Samoa service. More broadly in every major trade lane in the world, freight rates have spiked. The global Baltic 40 ft freight index is up from usd1466 in March last year to usd4164 this week.
“So far PFL has minimized price increases and the economies of scale from our service modernization will moderate the extent of future increases to freight levels.”
Papalii said he has no issues with the local teams working for P.F.L. and Pacific Direct Line (P.D.L.), who he says “worked their butts off” trying to help him maintain a steady export business.
“They have always done so, they have always been willing to go the extra mile. I don’t have any problems with them, and even though they’re competitors, they have worked with me after hours, and they have said don’t worry,” he said.
“I have never had any problems at this end, they all know how hard it is to get exports and the need to comply with the rules, it’s just the foreign owners. Why are they managing us, that’s what I can’t understand.”