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Strikes showed 'Tauranga couldn't cope with Auckland freight'

BUSINESSDESK: Stevedore strikes at Ports of Auckland showed Port of Tauranga couldn't cope with the sudden additional freight volumes sent down the coast, Auckland port’s chief executive Tony Gibson says.

The port in New Zealand’s biggest city is in a protracted dispute with the Maritime Union over plans to introduce flexible shifts, which Tauranga already has up and running.

There were rolling strikes and lockouts, with the parties going back to the bargaining table after Employment Court Judge Barry Travis granted an injunction and port management drew back from hiring external stevedoring contractors.

The dispute cost city-hemmed Auckland contracts with shipping line Maersk and dairy exporter Fonterra, which shifted business to Tauranga. POT has 184ha of what it calls strategic land holdings, of which 44ha is still available for development.

"The customers that we have got say we need both Auckland and Tauranga. It was very clear during the strike period that Tauranga couldn't cope with the additional volume," Mr Gibson told BusinessDesk.

"It's very clear when you model it that you need both ports."

He said customers were surprised at how much the land transport component added to freight costs during the strike. “A lot of importers and exporters actually realised that the land-based costs are significant in the total cost of freight.”

At the height of strike action Tauranga was processing 50,000 containers a month, up from 40,000 before the strike. That has now dropped back to about 45,000.

Chief executive at Port of Tauranga Mark Cairns says his company “coped with the volumes”.

“It challenged a lot of assumptions about how much we can do. We have still retained some of that volume."

In July the world's biggest container shipping line, Maersk, lifted container rates between New Zealand and the US in the first of what may be a series of price increases as it seeks a return to profit.

It increased rates by $US150 per 20-foot container and $US350 per 40-foot container.

The container industry contributes about $US380 billion in freight rates to the global economy or about 5% of total world trade, according to United Nations figures.

The New Zealand Transport Agency's National Freight study forecasts up to a 75% increase in the volume of commodities by 2031, while coastal shipping volumes are predicted to double to nine million tonnes. Tauranga and Auckland currently make up about 70% of New Zealand exports.

Last week, Port of Auckland board members met to review the company's financials for the six months ended June 30.

In April, it flagged a weak second-half result, following on from a flat first-half underlying profit. Net profit was $18.6 million in the six months ended December 31, though $4.8 million of that was a tax gain that is unlikely to recur.

Sales increased by 9% to $96.6 million, though operating costs climbed 12%.

Tauranga posted a record 22% rise in first-half profit to $34.6 million. Sales increased 14% to $105.7 million. The port’s shares fell 0.4% to $11.40 and have soared 14.4% so far this year.

Mr Gibson says Auckland container volumes fell as a result of strike action but he is "very pleased" with the results of its multi-cargo division in the latest six-month period. But he also sees the rival as a benchmark operator.

"You could say the Ports of Auckland and the Port of Tauranga have an underlying basic business philosophy and strategy which is similar – one of them is just a hell of a lot more successful than the other and that's Tauranga," he says. "I believe that's to do with their can-do attitude."

"They're very good competitors, they’re quick on their feet, they run a good shop. We've got to get to that stage on par or better than Tauranga for the good of NZ Inc.

"If we have got a similar cost base to Tauranga and similar productivity – that's going to be really good for New Zealand's supply chain," Mr Gibson says.

Auckland and Tauranga have been unable to forge a direct alliance as they compete for freight but both see strategic value in their partnership at Marsden Point's, Northport.

POA owns 19.9% of Northland Port Corp alongside Northland Regional Council, which in turn owns about 54% of Northport. Northport’s other investor is Port of Tauranga.

Northport has been pushing for a greater share of North Island trade from Auckland and Tauranga. It has about 180ha of land, owned by Northland Port, which is currently only at 50% capacity.

Auckland and Tauranga have previously stated they see Northport as a "long-term investment" and all three ports need to remain open to keep up with growing demand.
 

Comments and questions
8

And I am sure Auckland couldn't cope with Tauranga's volume if it had to take it on very short notice.

I am sure Tauranga could scale up to do it though if given more time.

They really should have merged a few years back.

Agreed, Tauranga could easily cope if they had a bigger notice period.

PoA is clutching at straws and should just focus on fixing their own mess (but I suspect that isn't possible).

Yawn. If there is one port that should be biting its tongue - right off, if necessary - rather than commenting on the capabilities of other ports...

Move it all to Marsden and complete the 'SuperCity'....making Len and Labour pay for the Holiday Highway.....along the way!!!

Moving Auck Port facilities to Marsden is logical, and upgrade the railway to two tracks. There would then be no need to build the 'holiday highway'; as the justification for this highway, was to allow improved productivity up North to be exported.
A true 'win-win' solution.
Tauranga could then easily cope with the few exports from Auck manufacturing.

Oh dear, Who cares, Never mind

Auckland needs to get over itself

The land that PoA sits on is worth more than the Port will make in a very long time. The council would do well to sell the land to developers, move the ports out of the CBD or hand the entire business over to Tauranga, which will face a boom time from the increased spend on infrastructure.

As it is we have duplicated facilities in the name of competition when in fact the market isn't big enough to sustain both.

It's often quicker to get a container off a ship in Tauranga and into central Auckland by train than it is to get a container off the ship in Auckland by truck across the city.

Hopeless.

Get Marsden Point's Northport up to speed as a container Port asap.
Enable the Rail link to carry 40 ft containers directly Auckland to Marsden. Sell off Down Town Auckland waterfront for new inner city residents, only berthing cruise ships.

Kiwi rail then only has to build the link out to Northport, possible funded in part from Northern Maori Treaty settlement monies.

Has the necessary thought been given to getting this new freight traffic through the New Market junction so as not to constipate the building and modernizing Maxx public rail system operating on the same tracks?