Implications of a Reduced Rate of Effort
Michael Beard and David Donohue
Investment in hydrography realises an essential service to national transport infrastructure. Hydrographic survey company improve safety at sea, contribute to the protection of the marine environment and advance a nation’s economic development and standing Bathymetric survey company in Australia.
Hydrographic Survey Company also play a key role in national security and maritime defence. Maritime infrastructure development, the opening of new ports, increases in shipping tonnages, the imperative to reduce shipping costs, demands from commercial fisheries and recreational tourist operators seeking to have larger cruise ships berth alongside new and exotic destinations, and the need to update charts of remote areas to better support law enforcement, surveillance and border protection activities, particularly in northern Australia, are all placing significant and growing pressures on the Bathymetric survey and charting program.
New charts compiled from more accurate datasets or new chart editions depicting alternate shipping routes are invariably required to meet some of these demands. Such charting products are reliant on data gathered either from new Bathymetric survey work or from periodic re-survey work as programmed in Hydro scheme.
Hydrographic surveys benefit the economy and industry
When the hydrographic survey and charting work was finally completed to open up Hydrographers Passage in 1984, this alternate route through the outer Barrier Reef reduced the number of time ships were required to transit through the pristine waters of the inner reef before exiting to the Coral Sea. Equally importantly, the route reduced the passage length of bulk carriers shipping Queensland coal to Japan by some 250 nm, slicing off about one day’s sailing time to realise significant cost savings for shipowners.
In a similar vein, the recommended maximum draft for ships transiting the Prince of Wales Channel through Torres Strait is 12.2 metres with an under-keel clearance of 10% of draught. This region is now monitored by an under-keel management system as an aid to navigation, and as a protection, measure to enhance the safety of ships transiting this environmentally sensitive area and important trade route.
Ahead of the system being declared operational by the Australian Maritime Safety Authority in December 2011, a study indicated that if the maximum depth of the channel could be increased to 12.5 metres or indeed 12.8 metres, greater cargos (equating to $10.3m and $13.3m respectively) could then be carried.
These two examples showcase hydrography as an essential service in terms of the economic benefits to be gained through new Bathymetric survey work and the programming of re-survey work. It has been suggested that the return on investment from having a fully resourced and effective national hydrographic survey and charting programme is in the order of 1:10 for countries having significant maritime interests or a large dependence on maritime trade.
This cost/benefit ratio alone should be sufficient to justify greater investment in identifying ways to boost current rates of hydrographic effort. The examples serve to draw attention to the potential implications for Australia should such important work not be undertaken, particularly if new charting products were not produced or if existing charts were not updated.
Reduced rates of effort are also likely to adversely impact other maritime-related areas such as the cruise industry and defence. Reliable charts are required to ensure the ongoing development of a viable tourist industry, particularly in relation to cruise liners.
This important source of revenue cannot be properly developed if safe navigation to remote tourist destinations is prevented or limited, by a lack of adequate charts. Similarly, chart coverage must be comprehensive and accurate in order to gain the freedom of maneuver for warships, to understand where the Navy and equally importantly, where the enemy can operate, and control the sea space when necessary.
Any further reduction in Hydro scheme rates of effort will only exacerbate the current situation and have a concomitant impact on chart production. This will require the AHS to further review its program and prioritise those survey tasks in Hydro scheme that can or must be achieved (with the resources available) at the expense of a deliberate decision to not undertake any new survey or re-survey work.
HSF sustainment issues
In the absence of any decision to replace existing HSF capabilities, and certainly, as ships age and shipboard surveying systems and equipment reach Life-of-Type (LOT), Hydro scheme is likely to come under additional ‘internal’ pressure in the short- to medium-term. There are currently significant sustainment issues impacting the HSF. For example, the HS has a planned life to 2020/21, and there are no published plans for replacement; each of the HS’ three embarked Survey Motor Boats are almost twenty years old. It is also understood that there are no plans to extend the current LADS contract beyond 2019, while the SML fleet will now reach LOT in 2024/25, having recently undergone a life extension to keep these ships at sea for a further ten years.
In addition to the expense associated with replacing or extending the life of HSF platforms, decisions to extend the LOT for existing hydrographic survey equipment will also need to factor in sizeable cost considerations. The HS’s Hydrographic Survey System is almost 15 years old. Despite incremental upgrades, as the ship’s primary ‘weapon’ system the Bathymetric Survey System has in the minds of many, already reached the end of its operational life, particularly as new technologies continue to enter the market. No replacement system for the Hydrographic Survey System has been identified.
The SML’s recent LOT activity to upgrade its ageing Hydrographic Survey System exceeded $30m. Even with such financial injections, other external factors may see some or all of these capabilities being supplanted much earlier, potentially well before any replacement capability is identified.
The RAN is facing sizable capability challenges in maintaining a fleet of Defence-owned ships with contemporary Hydrographic Survey Systems and then keeping these platforms at sea to steadfastly carry on with the national Bathymetric survey task. The Defence organisation continues to implement a reform agenda on multiple fronts to make Defence more business-like in its dealings, particularly in the areas of shared services and material sustainment. Committing considerable funds to maintain small fleets of ageing ships and like-capabilities seems at odds with the aim of Defence becoming ‘more efficient, commercially astute and accountable’ and in promoting the responsible use of Commonwealth resources if better alternatives exist.
The annual sustainment costs for the HS and SML fleets currently run to tens of millions of dollars. As the cost of asset ownership continues to rise, is the RAN achieving ‘smart sustainment’ in terms of astute contracting and process improvement in delivering ships and aircraft for the survey mission? In the face of efficiency dividends and ‘expenditure reduction measures’ and with increasing pressures on the general survey and charting, program alternatives need to be considered. The time is ripe for someone to step up and lend a helping hand. That someone is the industry.
There is no doubt that the RAN must mitigate the issues of cost ownership, relieve the pressures on Hydro scheme, and realise increased survey rates of effort. How best to achieve this? There are three options: maintain the status quo, rationalise current HSF capabilities, or outsource work to industry. Each option will deliver a balanced hydrographic capability to meet the AHS’s national (and military) hydrographic functions, but the critical question is ‘at what cost?’
RAN must make an objective assessment sooner rather than later. Regardless of the option, it is increasingly apparent that industry has a role to play in the way ahead.
Increasing the rate of effort - the options
One option is to pay off some HSF units, particularly those nearing their LOT (e.g. the two HS or the SML fleet) and instead redirect existing/future operating and sustainment funding to the management and conduct of contract surveys. For example, the HS fleet could be retired early or an earlier decision made to accept the 2015 LOT date for the SML fleet and instead, redirect part of the funding appropriated to upgrade the SML HSS to industry and have industry undertake the survey work instead. Another option is to weigh up the costs of outsourcing the entire hydrographic capability to the private sector.
There are substantial risks and attendant consequences associated with either option. For one, the 2013 Defence White Paper states that the Australian Defence Force (ADF) will continue to provide hydrographic survey and maritime charting services and that the ADF will continue to have the capabilities to conduct patrol, mine-hunting and hydrographic roles.
But even in light of an emerging requirement for Defence to ‘ensure that it [can] do what is required of it with the minimum of resources necessary’, surrendering ownership of ships do not always sit comfortably and brings its own set of challenges and questions:
- How will Defence’s military hydrographic surveying needs be met if the RAN no longer has recourse to the full suite of Defence-owned HSF platforms?
- Will a re-focused and re-structured future military survey force still be able to achieve the military task?
- What will be the second and third order effects in terms of reputation if the public perceives that by relinquishing control, the RAN may be failing in its international obligations to provide a vital ‘public good’?
- How will the RAN continue to manage and motivate its people and effectively sustain the RAN’s hydrographic survey category if fewer ships exist in which to send officers and sailors to sea to develop their skills and maintain category numbers?
These are important questions for Defence.
The best option, and one that should be considered as the first step to increasing industry involvement, is for the AHS to maintain the HSF status quo but emphasise the importance of the national hydrographic effort to Australia’s future prosperity and identify alternate lines of funding to then be able to engage industry to undertake selected Hydroscheme work. This engagement by industry would support current HSF efforts with the emphasis being on ‘augmentation’ rather than ‘substitution’ with a focus on the ‘public good’ and intrinsic economic benefits of progressing a comprehensive charting program through improved rates of effort.
Releasing some of the substantial sustainment costs currently required to support the HS each year, for example, would buy a significant amount of industry-sponsored survey time on task.
Any alternate funding should be identified and provided in a measured approach commensurate with the work to be outsourced and the capacity of industry to deliver. Given the pressing need for the RAN to consolidate and reduce ownership costs, and to ease pressures on the survey and charting program, something must change. If the next Defence White Paper provides for the RAN’s continued commitment to providing hydrographic survey and maritime charting services, there are options and benefits to consider in bringing industry ‘off the bench’ to contribute and help shoulder some of the work.
How industry has helped in the past
This particular option would certainly help progress Hydroscheme tasks. This approach is not a new concept and has proved successful in the past. The existing LADS capability is currently contracted to the industry. The AHS also contracts out some of its chart production activities. As part of the government’s efforts to combat illegal foreign fishing in Australia’s northern waters, the 2006-07 Federal Budget committed $18.5m to enhance charting of the Torres Strait and northern Great Barrier Reef over three years to enable ADF and Australian Customs vessels and ‘other enforcement agency vessels to navigate reliably in previously uncharted waters where illegal activity may occur.’
Two separate airborne bathymetric Light Detection and Ranging (LiDAR) contracts (hydrographic instructions) were awarded to the industry in 2006 and 2007 respectively, which resulted in the gathering of 6,360 km2 and 6,151 km2 of bathymetric data. Undertaken in two phases, the Fisheries Protection Survey and Charting Project expedited the compilation of provisional navigation charts to Border Protection Command to better inform and shape surveillance operations. By successfully surveying significant parts of the Torres Strait, the project demonstrated the viability and value in the engaging industry in contributing to Hydroscheme as well as the ability for the AHS to manage and control a commercial activity that realised significant savings for the Commonwealth.
A number of national and international surveying companies have recently expressed interest in reinvigorating another round of similar strategic partnerships.
Commercial contracts are regularly granted by other hydrographic organisations
The National Oceanic and Atmospheric Administration (NOAA) manages the hydrographic surveying and charting requirements for some 3.4 million nm2 of US coastal waters through the Office of Coast Survey. NOAA is the equivalent of the AHS although the administration does not come under the control of the US Defense Department. Even with its own fleet of ships and with various navigation survey teams at its disposal, NOAA still sees the value in outsourcing hydrographic survey work. NOAA recently awarded new “five-year contracts to eight private hydrographic survey companies for projects throughout US coast waters … [which will] … provide critical hydrographic data for updating NOAA's nautical charts.” NOAA has a significant charting responsibility and considers engagement with industry a worthwhile collaborative activity. Over the last 15 years, “NOAA has awarded more than USD$400m to private survey companies under Coast Survey's hydrographic contracting program.”
The industry’s perspective
The AHS has a monopoly in the conduct of coastal hydrographic surveying. While the maintenance of inland waters (which include ports and harbours) remains a state and territory responsibility, with port authorities and state-sponsored agencies employing small-scale surveying entities for the specific purpose of conducting port, infrastructure and inland water hydrographic surveys, the job offshore has always been the responsibility of Australia’s national hydrographic authority.
The lack of opportunities in the offshore and coastal hydrographic space, along with the strict control of localised operations at the port and harbour level, means that much of the work for Australian-based commercial hydrographic entities needs to be directed elsewhere, either in offshore oil and gas construction and exploration or more broadly at an international level where opportunities do exist.
Ahead of developing its own hydrographic capability, Saudi Arabia currently contracts its survey requirements to the global marketplace.
Land Information New Zealand (LINZ) offers similar opportunities. Since 2012, LINZ has contracted all of its hydrographic survey requirements to the open market with work being regularly awarded to the very same commercial hydrographic organisations that continue to petition both the AHS and RAN. The lack of any domestic opportunity effectively compels industry to look elsewhere and, in doing so, does little to ease the mounting pressures on the national survey and charting program.
The potential benefits of engaging industry
1. Savings of 144%
The potential consequences of engaging industry
While the two main benefits of outsourcing manifest as more efficient and reliable data collection and reduced ownership and operating costs, careful consideration still needs to be given to assigning work to industry.
These are real risks but on face value, if managed expertly and professionally, each can be appropriately mitigated. The benefits appear to outweigh such risks and there is merit in at least considering outsourcing components of the national surveying task to industry thereby giving the industry a chance to contribute and help reverse current rate of effort trends.
"Working together is a success"
Hydrographic surveying as a public good is a time-consuming business. The size of the hydrographic task in Australia will always exceed the current naval resources available to do the work. However, using military ships for the hydrographic task is an expensive exercise. Outsourcing to industry makes good sense in terms of realising significant cost savings, an improved return on investment for the RAN, and a more effective contribution to the hydrographic survey and charting programme. Moreover, there are substantial second order benefits for local small to medium enterprises working within a maturing hydrographic community.
Having a national hydrographic program is vital for an island nation like Australia which relies on maritime trade for its economic prosperity. This program remains under constant pressure from various quarters. However, the commercial hydrographic industry is eager to contribute and share the workload to help ease such pressures; this has been demonstrated in the past. Industry can help increase current rates of effort through its growing capacity and enthusiasm for the task, its willingness to participate, and a demonstrable level of flexibility to get the job done and deliver cost-effective results. Using industry resources has the real potential to help address Navy’s cost ownership issues.
The AHS has already proven its ability to augment its organic HSF capability with contracted surveys to meet Government priorities. By leveraging strategic partnerships through annual contracts for the completion of specific survey areas or alternatively, by establishing long term standing arrangements that are underpinned by effective checks and balances, industry can again complement current HSF efforts to help make a difference. The risk for the RAN of not engaging with industry is that the present inefficiencies in survey data collection and the burgeoning cost of ownership will remain. Importantly, the national surveying program will remain an unremitting and seemingly endless task.
Henry Ford once wrote that ‘coming together is a beginning, keeping together is progress, working together is success‘.
Industry can be an important member of the team to deliver an improved hydrographic effect. The imperative for greater industry involvement is clear and the winds of change may well be starting to blow.
Including industry as part of the solution will require the RAN to make some courageous decisions and shift its strategic intent. Until then, industry waits ready and willing to help.
Related Tag: Marine Survey