Auckland port misses out on Asian service

By JIM EAGLES and AGENCIES

Ports of Auckland shares slumped yesterday, while Port of Tauranga and Lyttelton Port shares bounced joyfully upward, after P&O Nedlloyd announced details of a new direct express shipping service to South-east Asia.

The new service eliminates calls at Australian ports on the way and is restricted to just four ports in New Zealand: Tauranga and Napier in the North Island and Lyttelton and Port Chalmers in the South Island.

That means Auckland exporters will have to send containers to Port of Tauranga, using the port company's Metroport inland hub in South Auckland, in order to link up with the new service.

News of Ports of Auckland's exclusion saw its shares drop 5.6 per cent, or 45c, to $7.60.

Chief executive Geoff Vazey said the company was naturally disappointed to miss out, but he played down the impact.

"While our container volumes may feel the pinch initially," he said, "over the longer term we expect volumes to recover due to natural growth. The effect on our 2003-04 performance is likely to be minimal ... "

Vazey said history showed that not all cargo volumes followed shipping changes.

"If on this occasion all the cargo did go, then the impact on the company would be a drop in net profit after tax of about $2.5 million," compared with a net profit of $47.6 million last year.

The news had the opposite effect on Port of Tauranga, whose shares jumped 4.2 per cent, or 17c, to $4.23.

The boost was the more welcome because it followed a report two days previously that Fonterra planned to switch its dairy exports from Tauranga to Auckland.

That caused the share price to drop as low as $4.06 but it was subsequently denied by Fonterra.

Port of Tauranga chief executive Jon Mayson predicted the company would gain 30,000 containers of Auckland cargo a year as a result of the P&A Nedlloyd announcement.

Negotiations with the shipping line had been taking place for three months and at one point there had been a danger of losing business to Auckland, he said.

"They had greater volume than us but, in conjunction with Tranz Rail, we were able to deliver what the customer required."

But Mayson said he would contact the New Zealand Exchange about the Fonterra rumour, which he understood had originated in a client newsletter from sharebroker Forsyth Barr. "It's misinformation that goes into the marketplace and impacts on the credibility of the company.

"There will be some people with egg on their faces today and I will be raising the issue with the stock exchange."

Lyttelton Port shares also benefited from the news, climbing 2.5 per cent, or 4c, to $1.65.

The service, in conjunction with NYK Line, will begin early in the New Year, using new, larger vessels.

P&O Nedlloyd's New Zealand managing director, Tony Gibson, said moving imported cargo through Tauranga via Metroport would provide benefits for Auckland importers because containers would be readily available in South Auckland rather than having to move through the heavily congested central city.

The express service would also assist New Zealand exporters at a time Asian economies were on a massive upswing. The southbound transit time of 10 days between Singapore and Tauranga would set a new standard in the marketplace.

Gibson said the decision to concentrate on four ports in New Zealand was "economically correct" and in keeping with the ideal of having bigger ships making calls at fewer ports to allow quicker ocean transits.