Silver lining for Northport in Auckland port’s woes

BUSINESSDESK: Northport, the Marsden Point wharf operator, is well-placed to win a greater share of North Island trade from Ports of Auckland and Port of Tauranga, its owners and rivals.

Auckland, which has tried to sack stevedores if they don’t accept its cost-cutting regime, is hemmed in by the city’s CBD, has had wharf extension into the harbor rejected, and increasingly directs freight from an ‘inland port’. Port of Tauranga has 184 hectares of what it calls strategic land holdings, of which 44 hectares is available for development.

Ports of Auckland owns 19.9 percent of Northland Port Corp alongside Northland Regional Council, which in turn owns about 54 percent of Northport. Northport’s other investor is Port of Tauranga, who claim dominance in North Island trade handling similar bulk cargoes to Marsden Point, such as logs.

Northport also has about 180 hectares of land, owned by Northland Port, which is currently only at 50 percent capacity.

“We own just as much land as Tauranga but theirs is full and ours is empty,” Northland Regional Council chairman Craig Brown told BusinessDesk. “There is land galore at Northport. I think the owners of these ports have to come together and look at the future.”

Ports of Auckland and Port of 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.

The two are also linked through North Tugz, a venture between Northport and Auckland’s port that provides services to Northport and NZ Refining. The JV is indicative of an industry where most players have tie-ups with others in freight and logistics, including KiwiRail.

“Ports of Auckland and Port of Tauranga will be at capacity - this may lead to further port developments in Northland,” said Tony Gibson, the Auckland port’s chief executive. “Ports of Auckland’s investment in Northland is so that we can have input in this.”

Northport’s council ownership has caused trouble in the past. Former chairman of Northland Port Corp, Mike Daniel, quit in 2009 saying the port faced challenges that “need to be addressed courageously and commercially in partnership with our major shareholder the Northland Regional Council.”

“Regrettably, I’ve reached the conclusion in recent times that our major shareholder does not share my view,” Daniel, who retains an interest in about 3 percent of the company’s stock, said at the time.

Daniel said this week that Auckland’s wharves should be shut down, sold and trade moved north. He is pushing for Northland to be included as part of Auckland Council’s review of port operations following protests that expansion plans will disfigure the city’s harbour.

“I am talking about shooting down Auckland,” Daniel’s said. An extension of the relationship between the two rivals “needs to be considered, as it is a logical, economic step. The de facto merger between the two ports already is really helpful – I don’t think that it would be a major problem.”

Port of Tauranga chief executive, Mark Cairns said all three ports in the North Island need to remain open to keep up with growing demand.

“It is not realistic to assume that Auckland can be shut down,” Cairns said. “We think it is a great idea but not realistic in the short term. Our view is that it will be a wee way off.”

Port of Auckland’s Gibson said the port has no plans to review its holdings in Northland Port Corp, “currently seeing it as a long term investment.”

Auckland’s Northport holding is just below the 20 percent threshold that would trigger a takeover, but has no board representation.

Earlier this month, Ports of Auckland said it would make 292 workers redundant and outsourced its stevedoring services in a bid to catch up with the productivity of Tauranga. That plan has been put on hold today pending last minute talks with the union.

The port has said existing labour contracts eroded its competitiveness and caused it to lose business. The dispute has cost it contracts with shipping line Maersk and dairy exporter Fonterra Cooperative Group, who have shifted some services to Port of Tauranga and Port of Napier.

Stevedoring at Northport is a combination of in-house wharfies, outside firms under contract to exporters, importers and shipping companies, while Port Tauranga offers stevedoring, marshalling companies and shipping and customs agents, and works with several stevedore companies.

Shares in the Port of Tauranga rose to an all time high of $11.94 cents in February after it posted a record first-half profit of $34.6 million. The stock is currently trading at $10.85.

Northland Port shares have gained 16.6 percent this year and are currently unchanged on $1.75. It posted a 51 percent gain in first-half profit to $3.2 million for the six months ended Dec. 31 as the wharves bulged with logs bound for export markets. Sales increased 35 percent to $4.8 million.