Ports of Auckland boss Roger Gray: ‘Our supply chain balances on a knife edge’

Ports of Auckland CEO Roger Gray shares his thoughts about NZ's supply chain.

OPINION:

Snaking across the country is a network of ports, railway lines, trucking routes and distribution centres that dictates our ability to move freight through New Zealand.

The last few years showed us just how important this network is, but we’re kidding ourselves if we think the Covid hangover is done. Right now, New Zealand’s supply chain balances on a knife’s edge, and we need to work together to change this.

A resilient, low-carbon economy at the bottom of the world depends on our ability to ship goods in, out and around efficiently. The decisions we make in the coming years are going to define how successfully we can do this for the long term.

Right now, our supply chain network is a finely balanced operation that can fall into disarray if only one small component is disabled.

When Ports of Auckland dropped the ball around 2020 it caused a massive rupture in the chain. The knock-on of that was felt widely. We don’t deny that we’ve let New Zealand down and are working hard on fixing our operations and building back trust.

However, small issues can also cause significant disruptions.

Don’t play spin the bottleneck with NZ’s supply chain, Gray says.

KiwiRail’s line closure over Labour Weekend means Port of Tauranga still has ships backed up. There are more ships at anchor waiting to enter the harbour than you can count on two hands, all from one rail line closure. Similarly, Lyttelton Port lost the use of a single container crane recently, resulting in significant delays.

Resilience comes from a robust and cohesive nationwide supply chain that works end-to-end from port to rail, to road, to warehouse, and then on to your house or business. But to achieve this we need 24/7 operations right across the supply chain.

Shipping lines and ports work 24/7, trucking companies mainly transport freight six days a week for roughly 18 hours a day, and final-leg warehouse, distribution centres and container depots often only operate during business hours five days a week.

Each pipeline element is crucial, but it bottlenecks as you add links to the chain. So, rather than creating new port operations, like some suggest, we first need to thicken the pipeline. We need all elements of the supply chain to work 24/7. That way all elements of our New Zealand supply chain will operate more efficiently and with more resilience.

Don’t play spin the bottleneck with NZ’s supply chain

The tough reality is that New Zealand is a small economic player in the global trade market and ships will stop coming if it’s too difficult to work with our supply chain.

We may be the first nation to see the sun each day, but we’re basically the last to receive containers and the first to be culled if things get too hard.

Island nations like us need comprehensive port strategies. Ports create jobs, they enable business, they reduce our carbon footprint compared to other import options, and in the case of Auckland, a profitable port subsidises Aucklanders’ rates by tens of millions of dollars per year.

The line-up of ships anchored in the Hauraki Gulf during Covid was our version of the Suez Canal blockage. It’s simply a curtain-raiser to the chaos ahead if we fail to invest in a resilient and cohesive country-wide supply chain servicing New Zealanders for the long term.

If Auckland’s vehicle operation moves to Northport, a car carrier truck will need to leave every 2.5 minutes from Northland to Auckland, 24/7, Gray says. Photo / Michael Craig

It’s idealistic to suggest we can, with the click of a finger, remove and relocate one of these vital components elsewhere and quickly. Our current system is operating on standing-room-only basis, with no capacity elsewhere within the system for operations to go.

Ports of Auckland handles more than 800,000 of the three million containers that come through the country’s ports each year. The cement, steel and gypsum that builds our largest city, and the farming equipment that helps our agri-sector feed the nation, all come through the port.

Our wharves welcome around two-thirds of the cars Kiwis drive. And this number is set to increase as we continue to switch to electric vehicles.

If Auckland’s vehicle operation moves to Northport, a car carrier truck will need to leave every 2.5 minutes from Northland to Auckland, 24/7.

While that fits the 24/7 brief, it’s not in the way we need. Instead, it’s going to further clog an already heavy traffic road between Whangārei and Auckland and double the port’s carbon emissions.

Without an overarching plan, closing an integral part of the supply chain at short notice such as Ports of Auckland is guaranteed to cause a bottleneck elsewhere.

It’s going to take audacious vision, national determination, and diligent planning to make necessary fundamental changes.

Infrastructure gold rush

We’ve had constructive dialogue with many Auckland councillors on our turnaround at the port. We have demonstrated the critical role we play in the supply chain, and we agree that any operational changes need to be planned and be progressive.

We’re working hard to return to a profitable port operation that is serving our economy, returning a dividend to the council, considering the environment, and a desirable workplace. These pillars are what will earn us the right to grow and the right to remain on the waterfront in Aucklanders’ eyes.

Transport Minister Michael Wood worded the situation well when he said yes, Ports of Auckland will move, but it takes time and robust freight infrastructure to enable an achievable plan.

In fact, we’re eagerly awaiting the National Freight and Supply Chain Strategy draft for consultation to continue the conversation of how New Zealand can have a resilient, lower-carbon supply chain that sets us up for the next century. It’s something that all businesses should be anticipating.

No matter what happens in years to come, one thing will always be true - we sit at the bottom of the world, a long way from the main freight routes, at the end of global supply chains.

So, while it’s easy to focus on only one piece of the puzzle, the real risk is not having a cohesive national strategy that gets us off the supply chain knife’s edge.

Roger Gray became Ports of Auckland’s Chief Executive Officer in March 2022. Before joining Ports of Auckland, Gray was CEO of Lyttelton Port Company for two years. Prior to that he worked for Air New Zealand for 6.5 years.