Should Australia Rebuild its Merchant Navy?

Australia’s vulnerability to maritime trade disruption is well recognized. International shipping moves some 99 per cent of the nation’s traded goods by volume worth A$755 billion in 2021, and provides not just prosperity but also vital resources such as 91 per cent of the country’s fuel and 90 per cent of its medicines. Canberra’s options to manage these risks range from resource stockpiling to electrifying transport systems. But for any extended disruption to regular trade, some seaborne supply of critical resources will be necessary. And here the nation faces a melancholy trifecta.

In a crisis, only Australian-flagged (i.e., controlled) ships could be requisitioned to sail for Canberra. Yet of the some 6,000 vessels conducting our international trade, only four of any size (over 2,000 tonnes of cargo) are Australian – insufficient to assure supply. Further, the armed risks to trade are growing. For non-state actors, a key danger was once lightly armed pirates in skiffs. Today, the Houthis have added various suicide drones, Anti-Ship Cruise and Ballistic Missiles (ASCM and ASBM), and helicopter assaults into the mix, and similar groups will likely copy them. For states, Australia’s key risk is a blockade by China, which has amongst the world’s most powerful navies and is both still growing that force and now deploying it into Canberra’s backyard.

The capability to manage such risks is decreasing. Fundamentally, securing supply means protecting merchant ships by using naval forces – commercial vessels simply lack the sensors and weapons to intercept drones, ASCMs and ASBMs. Yet the Royal Australian Navy (RAN) can’t fully crew even its ten frigates and destroyers suited against complex threats, let alone protect 6,000 merchant ships. Which is why Canberra depends in particular on the United States Navy, still the world’s premier fleet, to maintain a peaceful global maritime order.

Yet the US Navy’s contribution is in doubt. The fleet is at its smallest and oldest in decades, and fighting the Houthis has depleted weapons stockpiles, so if