Auckland and Tauranga ports in merger talks

The Port of Tauranga plays an important role in the wider Tauranga and Mt Maunganui community.

New Zealand's biggest export and import ports said today they are in talks about ways to work together, including the possibility of a merger of their operations.

Stock exchange-listed Port of Tauranga chairman John Parker today confirmed it was talking to Ports of Auckland, owned by Auckland Regional Holdings (ARH).

Talks were well advanced and a decision was expected before Christmas.

The move comes as New Zealand ports await word from the world's largest container line, Maersk, about which ports it will use in this country, including the prospect it will dump one of the two.

The Danish company, which has 40 per cent of the New Zealand market, wants to cut port calls in New Zealand from nine to five.

Two ports, one in the North Island and one in the South Island, would be primary calling points, it has said.

A merger would have major implications for all New Zealand ports, particularly in the North Island. The companies acknowledged there would be competition issues.

Ports of Auckland controversially delisted last year, when ARH bought out minorities at $8 a share, valuing the company at $848 million.

Ports of Tauranga, the biggest exporter, is capitalised at $676m, based on yesterday's closing share price of $5.05.

Mr Parker said discussions were well advanced.

"We are looking at specific proposals that are well developed but still require a significant amount of detailed work to be completed.

"There are definitely major efficiency gains to be had from better utilisation of the capacity and skills of the two ports, but exactly how this can be achieved is still being worked through.

"We are mindful that there a number of important matters such as regulatory issues that will need to be addressed."

Mr Parker alluded to the imminent Maersk decision but did not specially mention it in his statement to the stock exchange.

He said that changes in the environment in which port companies operated meant all options that would allow his company to continue to operate successfully must be considered.

Examples of those changes included the interest shown by foreign terminal operators in New Zealand ports and the recent consolidation of shipping companies.

"We have recognised for some time the need for rationalisation of the port sector," he said.

"It is clear that some shipping lines are determined to see the number of ports that they serve reduced.

"We are keen to see the shape of the New Zealand port sector determined by New Zealand interests."

New Zealand also needed a much more efficient regional investment in port infrastructure and related transport and logistics, Mr Parker said.

"It is vital that New Zealand maintains its international competitiveness through the maintaining of a world class port company.

"It is imperative that we avoid New Zealand becoming a branch office for overseas terminal operators or simply a feeder service to Australia."

Ports of Auckland chief executive Geoff Vazey also confirmed the talks.

The Port of Tauranga board expected to contact shareholders before Christmas on the matter.

Around the world there is a trend towards megaports providing one-stop-shops for global shipping lines such as Maersk.

Smaller port companies such as Wellington's Centreport are at risk of drowning in their wake, analysts have said.

An analyst told NZPA today "this is a game of big winners, and big losers."

Rationalisation in the industry was a two-to-three decade theme, he said.

It was hard to get solid investment into ports, when there was a threat of each of them closing down.

One problem was that every region wanted a port, but some were going to miss out, he said.

Tauranga, the country's No 2 container operator, set up the country's first inland port, Metroport, in June 1999 in South Auckland and it had been siphoning off Ports of Auckland business.

Two years later Ports of Auckland set up an inland port in Palmerston North to grab lower North Island business from Centreport and Port of Napier.

With Tauranga's predatory tactics a constant threat, the pressure came on for Auckland to seek more of its business from the rural export hinterland south of Taupo.

For the year to June the value of exports through Auckland rose 14.6 per cent to $6.5 billion, while those through Tauranga increased 2.8 per cent to $7.3b, Statistics New Zealand figures show.

Port of Tauranga shares were up 45c, or 9 percent, to $5.50 shortly after the New Zealand sharemarket opened at 10am today.

- NZPA