The deal between the Tasmanian government and Swire Shipping on connecting Tasmanian exporters to the Asian market via a direct international shipping link has went awry.

In late 2014, the government signed a Memorandum of Understanding with Swire Shipping confirming they were the preferred operator with which to explore an international shipping solution.

However, the government and Swire both reserved the right to take into account any changes implemented by the Federal Government regarding the Tasmanian Freight Equalisation Scheme (TFES).

“Obviously, the recent decision by the Federal Government to inject an additional $203 million into the TFES will have a substantial impact on freight equalisation and the cost of exporting freight from Tasmania. As such, given this materially different strategic context, it was not possible to reach an agreement with Swire under the terms of the MoU and given the MoU has now expired, these negotiations with Swire have concluded,” said Will Hodgman, Tasmania’s Premier.

According to Hidgman, there may be future opportunities for Swire as the changes to the TFES are implemented and further changes to the Federal Coastal Trading Act are considered by Federal Parliament.

“The government is committed to ensuring the $33 million allocated for a potential international shipping service is spent on job-creating infrastructure and we will detail specifically how this one-off funding will now be spent in the 2015-16 Budget when it is handed down on 28 May,” he added.

Tasmania has been without an international service since 2011, when Agility Shipping canceled its Bell Bay route. The country’s exporters have been severely affected by the lack of an international shipping route.