Maintaining a navy without a merchant fleet is a little like maintaining an air force without a commercial aviation industry: one is intended as a fighting force, while the other sustains the system.
Australia today maintains a navy but has largely abandoned its merchant fleet.
Charter rates for the world’s largest oil tankers are approaching US$550,000 per day. Only weeks earlier, similar vessels were earning closer to US$50,000. Much of the premium reflected voyages transiting the Strait of Hormuz, one of the world’s most critical energy chokepoints.
The strait carries roughly a fifth of the world’s seaborne oil. When instability rises there, tanker availability tightens rapidly. Shipowners demand higher rates, war risk insurance premiums surge, and some operators avoid the region entirely until risks become clearer.
The result is a sudden tightening of the global tanker fleet. Ships are diverted, voyages lengthen, and governments quietly begin securing supply.
Australia’s fuel supply chains now stretch even further. Increasing volumes of refined product are sourced from the US Gulf Coast, adding thousands of kilometres to voyages that once originated much closer to home. Longer voyages tie up ships for extended periods, further tightening vessel availability amid global market stress.
For most countries this is a manageable strategic problem. For Australia, it exposes something more troubling.
We are one of the most trade-dependent nations on Earth and one of the largest users of commercial shipping. Almost 99 per cent of our international trade moves by sea.
Yet Australia now possesses almost no meaningful commercial maritime capability of its own.
Shipping stops being purely commercial the moment geopolitical risk rises.
We have no Australian-controlled tanker fleet capable of sustaining energy imports, no fleet of bulk carriers able to guarantee critical commodity flows, and almost no Australian-flagged vessels trading internationally that could be directed toward national priorities in a crisis. Instead, the ships carrying our energy, fertiliser, and food inputs and exports are overwhelmingly controlled overseas.
In peacetime, this arrangement appears efficient. Global shipping markets are usually competitive and reliable. But shipping stops being purely commercial the moment geopolitical risk rises.
Conflict does not eliminate ships; it changes who or what they serve. Governments intervene, cargoes are prioritised, and shipping companies begin favouring their own national markets.
Countries with their own maritime capacity retain options. Countries without it become price-takers in an increasingly strategic market.
Australia would inevitably look to partners for support in a crisis. Some may continue moving cargo to and from Australia, but those same countries will be focused on sustaining their own supply chains and energy security.
Ships controlled by non-aligned states would certainly be directed toward their own national priorities rather than sustaining Australian trade. In either case, Australia would have little influence over where ships ultimately sail.
This vulnerability is particularly stark in fuel supply. Australia imports the overwhelming majority of its liquid fuels by sea, yet there are effectively no Australian-controlled tankers trading internationally that could sustain these supply chains.
In a prolonged disruption, Australia would simply enter the same global bidding war as every other importer, hoping ships remain available in an increasingly contested market.
The policy framework existed, but the commercial incentives required to attract ships back to Australia were not strong enough.
Australia already possesses a policy framework designed to address this problem, called the Australian International Shipping Register.
The register was intended to allow Australia-linked ships to operate competitively in international markets while remaining under the Australian flag and available to support national needs. Ships could operate with mixed nationality crews and access tax concessions designed to make Australian registration commercially viable.
But the register hasn’t delivered the fleet it was intended to support.
When the policy was introduced, the economic environment worked against it. The Australian dollar was near parity with the US dollar, making Australia-based operations expensive relative to maritime hubs such as Singapore and Hong Kong. Many shipping companies had already moved management, financing and corporate structures offshore. The policy framework existed, but the commercial incentives required to attract ships back to Australia were not strong enough.
The environment has since shifted. The Australian dollar has weakened, operating costs in regional hubs have risen, and governments around the world are again recognising the strategic importance of commercial shipping.
The United States maintains the Maritime Security Program to ensure access to commercial vessels during national emergencies. Other countries maintain international registers that support commercially competitive fleets while preserving national access in times of crisis. Australia, despite being one of the world’s most trade exposed economies, has largely stepped away from this field.
Rebuilding maritime capability will not happen spontaneously. Shipping is a capital-intensive industry with long investment cycles, and investors require confidence that policy settings will remain stable.
Australia does not need to recreate the large fleets of the past. Even a modest number of Australia-linked tankers, bulk carriers, and logistics vessels trading internationally could materially strengthen the country’s resilience during periods of geopolitical disruption. Such vessels would operate commercially in normal times. In a crisis, they would provide a strategic backstop for fuel imports and essential trade.
The framework already exists. What remains is the decision to use it.
Article reprinted with permission from the Australian Strategic Policy Institute's analysis and commentary site The Strategist.