New Zealand Shipping Coastal Resilience and s198 Flag Waivers

New Zealand currently has a fragile coastal shipping industry, with a dwindling number of aging and unreliable vessels on our coast, and more leaving service each year. The Government has put together a Coastal Resilience Fund to address this crisis, but a valuable solution already exists within our legislation.

Coastal cargo, which refers to passengers or goods loaded and unloaded at New Zealand ports, is regulated under section 198 of the Maritime Transport Act 1994. This section is design to protect New Zealand's coastal shipping industry, by prioritising New Zealand vessels to carry coastal cargo, but allowing limited, controlled exceptions to ensure efficiency and continuity coastal freight movements.

Under subsection one, section 198 limits the carriage of coastal cargo to:

• (a) New Zealand ships;

• (b) Foreign ships operated by New Zealand entities with crew agreements compliant with local law; or

• (c)  Foreign ships carrying coastal cargo incidentally to international cargo.

This framework prioritises domestic vessels while allowing limited exceptions, to keep cargo moving and uphold employment standards.

When no New Zealand-flagged ships, or ships covered under subsection one, are available, subsection two empowers the Minister to authorise a foreign-flagged vessel to carry coastal cargo. This is commonly referred to as a “flag waiver.” The Minister may impose conditions on the authorisation, to ensure freight continues to flow under regulatory oversight.

Together, these provisions aim to strengthen coastal resilience in New Zealand, balancing the protection of domestic commercial shipping interests with the practical flexibility needed to fill operational gaps.

The flag waiver is an effective tool for addressing New Zealand’s currently weak coastal resilience. The only requirement for authorisation is that no vessels meeting the criteria of subsection one are available to undertake the work.

If you have questions as to what is permitted under section 198 or how to apply for a flag waiver please contact Peter Dawson on +64 27 229 9624 peter@maritimelaw.co.nz, Troy Stade on +64 27 368 6730 troy@maritimelaw.co.nz, or Petrina Sheldon on  +64 20 400 88909 petrina@maritimelaw.co.nz.