Security of Shipping Lanes

Relying on shipping (for imports) does not increase security risks, and shipping lanes are not easily disrupted.

• Most countries are reliant on movements of petroleum (crude and product) within and between countries, and particularly so for Australia (in both an export and import sense).
• Security of shipping cargoes is a key focus of the global supply chain and regional supply.
  • This includes for substantial exports of Australian commodities to Asia (coal, LNG, iron ore etc).
• The market would adjust to any threats or impacts to major shipping lanes (eg. wars, piracy etc).
  • Ship owners will deploy vessels to areas that the market will look to for alternative supply
  • Ship owners might continue to operate near hostilities (eg. vessels operating in risky areas have the option of recovering war risk insurance premiums from the Charterer)
  • Alternatives to major routes may be considered/taken, simply meaning increased voyage time.
• Independent assessments have concluded that shipping lanes to Australia are flexible and generally secure, including underpinned by military presence in the region.
• For Australia, there are options on many of the shipping routes into the country should there be issues on a particular route. For example, while the Malacca Strait (in the Indonesian archipelago) handles a significant proportion of shipments to Australia, efficient and established alternative routes are available if Malacca is threatened, including the Sunda and Lombok Straits. Such alternatives routes (or any others) would simply be at a slightly higher cost due to the additional sailing time required.
• Given the diversity and flexibility of Australia’s crude oil and products supply routes, and the thousands of ship movements each year through major shipping routes, the industry does not see that a terrorist attack on shipping routes would have any material impact on Australian fuel supply.

AIP has also produced a document on ‘Petroleum Ships on the Water’ which provides ‘real time’ snapshots (across March 2015) of the volume and diversity of vessels carrying petroleum products, crude oil, gas and petrochemicals.

This includes snapshots of vessels in Australian waters, the Asia-Pacific region, the Singapore trading hub and the Indian Ocean.

A copy of ‘Petroleum Ships on the Water’ is available.