-
Posted by David Sexton
- |
-
1, July, 2025
Resource rich but also facing issues such as shortages of power and foreign currency, DCN examines the trade and maritime transport outlook for Papua New Guinea
FIFTY years since Papua New Guinea achieved independence from Australia, it is perhaps timely to assess the nation’s progress and what it all means for maritime trade and logistics.
Professor Stephen Howes from the Development Policy Centre at the Australian National University (ANU) says higher energy prices from liquefied natural gas projects since the start of the Russia-Ukraine war in 2022 had benefited PNG in the form of tax and dividends to the government.
“That revenue is being recycled into the economy and PNG has benefited from that and there is a basic political stability in PNG which provides some foundation for growth,” Professor Howes says.
“Economic growth is occurring, but it has been volatile and on average quite slow.”
According to the Asian Development Bank, the economy of PNG is expected to grow at 4.2% in 2025 and moderate to 3.8% in 2026, following growth of 4.3% in 2024 driven by resource and non-resource sectors.
“Inflation in Papua New Guinea fell to its lowest level in recent years in 2024 at 0.7%,” the ADB stated in April 2025. “However, elevated prices for food, clothing, and footwear persist and are likely to continue… “Additionally, the sharp decline in the volatile betel nut prices, which contributed to the lower headline inflation, is not expected to continue. Hence, inflation is expected to rise.”
additional feature articles
Professor Howes says it is difficult to gauge the extent of unemployment given there are no unemployment benefits from which to measure.
“Most people work in the informal sector so you can’t measure employment and inequality is high,” he says.
“There is a massive resource sector but at the same time it is the most rural economy in the world and that makes for very unequal distribution of income.”
But the cost of living in PNG is high and life is a struggle for many people.
Issues remain in terms of power supply and road maintenance, with Professor Howes noting “it is not an easy network to maintain with adverse weather conditions”.
According to the Observatory of Economic Complexity, in 2023, the top exports of PNG were petroleum, gold, copper, ore, palm oil and nickel mattes with the top destinations being China, Japan, Australia, Taiwan and India.
The top imports in 2023 were refined petroleum, rice, delivery trucks, excavation machinery and motor vehicles including parts and accessories, with the top origins being Australia, China, Singapore, Malaysia and Japan.
An article in the Islands Business publication reported the volume of trade between China and Papua New Guinea in 2024 as topping K17.8 billion (US$4.39 billion).
Infrastructure construction, energy, minerals, power, telecommunications, agriculture, forestry are among the sectors in which Chinese businesses have sought out for investment.
Infrastructure has been boosted via investments from entities such as the Asian Development Bank (ADB) and the Australian government.
The ADB is co-funding maintenance and bridge upgrades on the Highlands Highway between Lae and Mt Hagen, a project valued at K3billion or around $1.1bn, contributing to easier freight movement.
The Australian Infrastructure Financing Facility for the Pacific (AIFFP) is providing the PNG government with a $95.7 million loan to upgrade Kimbe Port in West New Britain Province.
This is part of a broader $621.4 million Upgrading Ports across Papua New Guinea initiative to enhance port infrastructure and strengthen the port’s “resilience, efficiency and role as a key economic hub”.
According to the AIFFP, this initiative “reinforces Australia’s commitment to supporting PNG’s economic growth and regional connectivity and will improve infrastructure reliability, strengthen supply chain efficiency, improve connectivity and boost local economic opportunities”.
Kimbe Port is the first of several ports slated for upgrades.
PNG Ports chief executive, Neil Papenfus, hailed the project as a “significant milestone”, highlighting its importance for enhancing trade, connectivity, and commercial opportunities for West New Britain Province and Papua New Guinea as a whole.
“We sincerely thank the Australian Government for its financial support, which has made this development possible. We also acknowledge the West New Britain Provincial Government for their partnership in advancing this initiative,” Mr Papenfus said.
“Kimbe Port is our third-largest port and a priority in our 30-Year Port Infrastructure Master Plan. Located in PNG's largest producer and exporter of crude palm oil, the port is critical to our economy. This project will bring key benefits, including local job creation and economic engagement.”
The shipping line perspective
ANL senior line manager of PNG, Darwin, Pilbara, Timor and Pacific Island trades, David Pratt, has been managing trade connections there for more than a decade.
He paints a picture of freight volume growth of around 3% to 4%, with importers limited by inflation.
“It is becoming more expensive to buy goods, which has an impact on imports,” he says.
Imports are typically foodstuffs, chemicals, mining supplies and construction materials from Asia with key containerised exports being minerals, coffee, cocoa and scrap metal.
A recent highlight was the arrival in Lae earlier this year of the ANL-operated CMA CGM Perth, on its way to Northeast Asia.
This was the largest gearless vessel to berth at Lae and according to Papua New Guinea Ports Corporation “demonstrates the Lae Tidal Basin’s capacity to accommodate larger vessels and [terminal operator] ICTSI’s ability to handle them efficiently”.
There is a massive resource sector but at the same time it is the most rural economy in the world and that makes for very unequal distribution of income Professor Stephen Howes, ANU
PNGPC described the 262metre boxship’s call to the Lae Tidal Basin as “a significant milestone in our commitment to strengthening maritime trade, enhancing supply chain efficiency, and fostering economic growth in Papua New Guinea”.
“The arrival of CMA CGM Perth is more than just an introduction of a new vessel; it represents progress, enhanced connectivity, and the confidence that global shipping partners continue to place in our port infrastructure,” the corporation said.
Other shipping lines to operate into PNG include Swire which has multiple services connecting all PNG main ports with Australia, NZ, the Pacific and Asia, Maersk, COSCO Shipping, Indonesian carrier Meratus has begun a service with a 400TEU vessel connecting Lae and Port Moresby with Jakarta, Surabaya and Dili.
The liner sector in PNG is thus quite competitive.
The role of ports
International Container Terminal Services (ICTSI) operates facilities at Lae and Port Moresby with manager Mr Maxwell reporting an increase in trade volumes year on year, with import laden being up 10% and export laden up 4%.
“Lae, the export hub of PNG for agriculture and extractive exports, recorded a 7% increase in export laden year on year, driven by strong growth in coffee and cocoa shipments compounded by reopening of Porgera mine,” he says.
“Both coffee and cocoa are currently trading at all-time high prices.” Farmers are earning more for the same volume of exports.
“This boost in income strengthens their purchasing power, leading to increased demand for consumer goods and food and beverage products,” Mr Maxwell says.
“The increase in imports is also supported by improved foreign exchange availability, a strengthening economy fuelled by the anticipation of the Papua LNG project and ongoing expansion in the mining sector.”
ICTSI has invested in new equipment to help facilitate trade growth.
At South Pacific International Container Terminal (SPICT) at Lae, two new ship-to-shore (STS) cranes were commissioned in Lae in January 2023, marking a new era of enhanced productivity.
According to ICTSI, their deployment has “significantly reduced vessel port stays, enabling larger and gearless ships to call at Papua New Guinea — a key enabler of trade efficiency and economic growth”.
“These major investment by ICTSI South Pacific has transformed vessel productivity, shortening supply chain time of cargo to market, and effectively eliminated port congestion,” Mr Maxwell says.
It is becoming more expensive to buy goods, which has an impact on imports. David Pratt, ANL
Two additional hybrid Mitsui RTGs were deployed in October 2023, expanding the fleet to a total of five units. These cranes not only enhance container handling capacity and cut truck turnaround times but also support greener operations—achieving up to 60% diesel consumption savings. This initiative is said to align with ICTSI’s global sustainability goal of reaching net-zero emissions by 2050.
An additional mobile harbour crane was commissioned at Motukea International Terminal in December 2024, increasing MIT’s total crane fleet to three.
PNG marine services company benefits from restructure
Pacific Towing, a key marine services provider based in Port Moresby, is reaping the benefits of a recent organisational restructure that has transferred the management and maintenance of its fleet to a new entity.
A key advantage of the change has been a marked improvement in fleet availability. This operational efficiency has also enabled leadership to sharpen its focus on securing new commercial ventures — including project-based opportunities tied to Papua New Guinea’s growing oil and gas industry.
Founded in 1977, Pacific Towing (PacTow) operates within the logistics division of the 106-year-old Steamships Trading Company Ltd., which counts John Swire & Sons as one of its two major shareholders. The division also includes Consort Express Lines (Consort), Papua New Guinea’s largest coastal shipping operation. Established in February this year, Steamships Ship Management (SSM) combines the in-house ship management activities of both PacTow and Consort under a single umbrella organisation.
Gerard Kasnari, general manager of PacTow, notes the restructure has delivered measurable results in fleet availability. “Repairing and maintaining vessels, including dry docking, presents an ongoing challenge for fleet owners across PNG and Melanesia,” Mr Kasnari says. “Fleet availability is rarely where we want it to be, but this new structure is helping us get much closer to those targets.”
Vessel maintenance in PNG is a key operational challenge, driven by the high cost and limited domestic availability of parts. Sourcing components internationally often involves prolonged lead times — particularly for oversized items that cannot be transported by air. PNG also has limited docking facilities. As a result, PacTow has increasingly opted to send its tugs overseas for mandatory dry dockings, with two tugs, Waiowa and Keera, completing their life extension dockings in the first quarter of 2025.
SSM has managed to improve PacTow’s fleet availability relatively quickly through best practice technical management and via a more streamlined and systematic approach to preventative maintenance. It is anticipated that further availability improvements will be realised under SSM’s uniform dry dock management approach. The company should also begin to realise cost savings through SSM’s centralised procurement, rationalisation of spend, and economies of scale in purchasing.
Another benefit of the PacTow restructure is the time Kasnari and his team now have to take advantage of new commercial opportunities.
“Under the old structure we were spending an unsustainable amount of time trying to rectify sub-optimal fleet availability. However, with SSM now responsible for fleet maintenance, as well as vessel bookings, HSSE, crewing, procurement, and vessel IT support, we are able to focus more on business development,” he says.
“This includes pursuing international towage and other project-based work, some of which is tied to PNG’s expanding oil and gas industry, as well as to other major resource developments and infrastructure programmes such as the upgrading of several of the nation’s ports.”
Pacific Towing is Melanesia’s largest marine services business. It employs more than 250 staff and has a fleet of 20 vessels. It provides a broad spectrum of marine services including towage, emergency response, commercial diving, life raft services and salvage.
Other planned investments are:
- Lae Tidal Basin (LTB) quay extension (SPICT). The 240-m quay extension will support future growth and vessel calls. As part of this project, an additional ship-to-shore (STS) crane will be procured, bringing the total number of STS cranes in Lae to three.
- Fire safety enhancements (MIT and SPICT). Dedicated fire trucks have been procured for both terminals, each equipped with both dry chemical and foam fire extinguishing systems to ensure comprehensive fire safety coverage.
- Power Solution (SPICT). A long-term power supply solution is being studied, with a battery energy storage System (BESS) identified as a potential option to enhance reliability and operational continuity at SPICT.
- Administration building refurbishment (SPICT). A major refurbishment of the administrative office in SPICT is underway to modernise facilities and ensure operational readiness through to the end of the concession period.
- RTG Introduction (MIT). MIT will transition to rubber-tyred gantry (RTG) operations with the deployment of four RTGs, aimed at improving yard efficiency and space optimisation.
Opportunities for growth are expected to include the final investment decision (FID) on the Papua LNG project in December, the Pasca A offshore gas project which is on track for FID early next year, the reopening of Porgera mine which occurred last year, the K92 mining expansion and the Wafi Golpu project.
Mr Maxwell notes several challenges to trade growth.
“The timing of the Papua LNG FID remains uncertain, with potential delays posing implications for associated infrastructure development, investment planning, and economic momentum,” he says.
“Ongoing tribal conflicts and social tensions continue to pose security challenges in certain regions, impacting logistics, workforce mobility, and overall business continuity.”
The role of tugs
Tug boats play a crucial role in keeping PNG shipping functioning, a leading player being Smit Lamnalco that operates five tugs in the market, four being Robert Allen RA3070 tugs and one 50-tonne azimuth stern drive (ASD) tug.
The five Robert Allen tugs, built by Cheoy Lee Shipyards in Zuhai, southern China, and they are on a long-term contract to the PNG LNG project in Caution Bay.
According to Smit Lamnalco managing director for Australia and PNG, David Fethers, the vessels have been operating at the LNG terminal for more than 10 years.
One additional 57T ASD tug is based in Port Moresby and is available for spot work throughout the Pacific region.
“We are looking to develop this business further through offshore towing, salvage and wreck removal work,” Mr Fethers says.
Smit Lamnalco began operations at the PNG LNG terminal in May 2014, performing the first berthing operation for the LNG carrier Spirit of Hela at the ExxonMobil-operated marine terminal near Port Moresby.
The company had secured a 10-year marine support and towage contract in June 2012, valued about US$120 million, with options to extend up to 25 years.
Mr Fethers says they had learned to adapt to logistics challenges in PNG.
