A winner on the waterfront

By PAM GRAHAM

Take the proposition that the past is a guide to the future and apply it to the Port of Tauranga.

It is a story of public investment and private enterprise, and of key decisions carried out by key individuals, such as port chief Jon Mayson, to bring prosperity to a region.

First, backtrack to 1950 when planners had maturing forests and lack of infrastructure on their minds. Sound familiar?

A Government commission decreed that Mt Maunganui would handle the logs from the state forests maturing on the Kaingaroa Plains and the output from the Tasman mill at Kawerau and the N.Z. Forest Products mill at Kinleith.

The Ministry of Works built the wharves - two tenders from overseas companies exceeded the department's estimates - and they were handed over ahead of schedule to the local harbour board, which had 30 years to repay the capital cost plus interest.

The port prospered. Facilities to handle salt, grain and wood chips were built, and freezing works, flour mills and horticulture handling and storage facilities sprang up in the area around it.

The Government upgraded roads and built the Kaimai Tunnel, which extended the port's reach into the rich Waikato region.

Then the going got harder. When the Japanese log market was depressed so was Tauranga.

Containerisation arrived in the 1970s and sucked dairy products to Auckland. Planners were picking other ports for terminals.

Ownership was changing. The Government shifted ports' commercial operations to companies owned by local authorities as a step towards privatisation.

Port of Tauranga listed on the Stock Exchange, and after a 35-day strike was able to work ships when they arrived, reducing the time they spent in port and the need for new wharves.

By 1997, Mayson was chief executive and the task at hand was finding business for a $100 million container terminal built in defiance of the view that regional ports were not supposed to be large container ports.

Then Mayson made and implemented a key decision, to proceed with Metroport.

In a recent Management Magazine article, he talked for the first time about private issues such as upbringing and outlook on life.

The son of Christian pacifists has strong views on community and business - not many chief executives have been Values Party candidates.

Mayson joined the merchant Navy at 16, studied for an MBA at the age of 46, represented management in the port's labour dispute and pushed for Metroport.

He is straight shooting and is into self-belief and mentoring of others, having been influenced by former Tauranga Mayor Sir Robert Owens.

The job of building an "inland port," essentially a depot in South Auckland from which Tauranga could steal business from Ports of Auckland, suited him.



At the same time things were changing at sea.

The huge Maersk Sealand line had not been in New Zealand long and it was prepared to go where its major customer, Fonterra, wanted it.

Australia New Zealand Direct Line (ANZDL) was also open to offers.

Mayson believed that the foreign-owned shipping lines were import-focused.

They made bigger margins on high-value imports from a broad range of customers than from commodity exports from big New Zealand exporters with clout.

Still, they had to fill ships on the return journey.

The pitch was that a call at Tauranga could get imports to Auckland on rail and provide a chance to expand the export business, especially for new shipping lines.

Tauranga developed software to track freight and bought second-hand container cranes from Hong Kong. All rail had to do was run the shuttle. Vessels arrived at the weekend when rail wagons were more freely available, reducing costs.



ANZDL moved from Auckland to Tauranga and increased its total business by attracting dairy customers.

"It was a high-risk venture, but it worked and I guess it changed the New Zealand port scene forever," Mayson says of Metroport.

"What we were doing was clawing back volume that had been lost over the years. We established a niche in the Auckland market."

The lesson from the past for the future is that changes in shipping lines, customer choices and rail economics affect ports.



Another new shipping line, MSC, is gaining strength, and P&O Nedlloyd has increased the size of its vessels and decided to call only at Auckland, Napier and Port Chalmers on a weekly fixed-day direct service to Europe using huge vessels.

Mayson said that if P&O had shifted its west-bound service to Tauranga from Auckland, someone else would probably have moved into Auckland.

Instead the "someone else", MSC, chose to route 14 container ships calling at Australia to Tauranga and a yet-to-be-decided South Island port.

The company, privately owned by an Italian businessman, has to win business from others to survive.

Having defied those who said a large container terminal in the regions would never work, Mayson says "we cannot afford as a nation to have duplication of expensive facilities created on the whim of potential trade that a line may or may not bring to a port".

As the year ended, Northport, a joint venture between Northland Port Corp and Port of Tauranga, did a joint venture deal with Ports of Auckland to provide tug services in Northland.

Commercial sense prevailed among rivals.

The challenge for ports is what to do about trends in transport.

"How do we deliver services that may require us to move away from the wharf face and get involved in logistics?" as Mayson puts it.

He said Port of Tauranga was not interested in buying truck or rail companies because it had enough influence through contracts.

But it has invested in Northport because that complemented its relationship with customer Carter Holt Harvey.

In February, the port also bought Owens Services BOP, which handles forest products in 10 ports.





Mayson believes inland ports don't work as well in regional areas where customers are scattered.

"If you don't have the concentration you are into double handling," he said.

Auckland now co-exists with Tauranga.

Port of Tauranga returned $132 million to shareholders last year and increased earnings before interest and tax by 10 per cent.

The port is the winner in the new era of larger vessels.

It handles 68 per cent of the country's imports and 33 per cent of its exports by value.