Boats have transported people around the Pacific Ocean for centuries, and even today shipping remains the region’s lifeline. Often a small craft is the only means of contact an island community has with the rest of the country. 

Unlike telecommunications and aviation, the international shipping market in the Pacific has always been competitive or at least contestable. Shipping services are generally of a reasonable standard. Container ships have a good record of meeting their published schedules and provide enough space for the needs of importers and exporters. However long distances between destinations and the fact that many Pacific countries import more than they export, make international freight rates high.

Regional feeder services are starting to overcome the problems faced by the smallest Pacific island countries such as Nauru and Tuvalu, where services are very limited and where supplies can run out before the next ship arrives. These feeder services are changing shipping patterns. Guam’s transhipment centre provides an alternative to direct services to the Federated States of Micronesia and the Marshall Islands while an Auckland centre services the South Pacific. Samoa is also trying to position itself as a transhipment hub. Kiribati, Tuvalu and Nauru are discussing a sub-regional strategy to provide more efficient services.

Domestic shipping is extremely important to people in dispersed island communities. It is sometimes the only means of getting goods to markets, being able to travel to receive medical treatment or education or visit family and friends. The problem is that many routes are commercially marginal, some are unviable and many of the vessels are old and do not meet recognised safety standards. Fiji has introduced a franchise scheme where subsidies are auctioned to private sector operators for services on non-commercial routes. As a result, remote locations now have a monthly shipping service, passenger numbers have increased by 60 per cent and cargo volumes by 80 per cent. No system is perfect but innovative approaches can provide Pacific island countries with a sound framework for providing shipping subsidies to remote locations.