FREIGHT costs for Queensland's sugar industry could rise up to 16% if changes to coastal trading and shipping laws are passed by the Senate.
In an effort to get more international cargo ships registered in Australia, the Federal Government created a suite of reforms which passed the House of Representatives on Thursday.
Among the changes outlined in the bills were requirements that Australian industries, including sugar, will need to use Australian registered ships to transport commodities up and down the Queensland coast.
But while Australia relies on shipping for 99% of its international freight task, the actual number of Australian-owned and registered ships has halved in the past decade.
Canegrowers chief executive Steve Greenwood said on Friday the sugar industry currently transported a vast majority of sugar on foreign-owned vessels through coastal trading areas to the nation's largest sugar refinery in Melbourne.
But he said the changes outlined in the Coastal Trading (Revitalising Australian Shipping) Bill 2012 would see costs rise up to 16%.
Mr Greenwood said the requirement to use Australian ships would see cost increases as foreign-owned ships had much lower labour costs.
But Transport Minister Anthony Albanese said the government did not want to compete in a race to the bottom by "paying people a dollar an hour".
"We do not want situations where people who work on flags of convenience ships crash those ships into the Great Barrier Reef because they have not been to sleep for more than 24 hours," he said.
"That is why we need to ensure - and through the Fair Work Act we have ensured - that people who work on ships operating around the Australian coast do have to comply with Australian wages.
"The whole cost differential argument that has been put is a nonsense."
Apart from the expected cost increases, Mr Greenwood said the changes could also pose environmental safety risks.
He said Australian ships were older than many foreign-owned vessels and he preferred that the newest and best equipped ships should be used, particularly in coastal trading waters on the Queensland coast.
Currently, the average age of Australian cargo ships is 19 years, while the international average age is 12 years.