Christmas freight jam: Will Gisborne be our latest container port?

Gisborne's Eastland port has $140m eye on future business. Photo / Supplied

Importers frustrated about container freight jams at Auckland's port may like to note Eastland Port in Gisborne has the greenlight to start on its biggest upgrade in more than 100 years - a project that could open the region to container shipping.

The community trust-owned port has after three years of regulatory consent and consultation process, got the all clear to proceed with the rebuild of a major wharf and a slip way, part of a $140 million investment to upgrade port facilities over the next five years.

Chief operating office Andrew Gaddum said some of the port's essential infrastructure is more than a century old, and approval of the first stage of the upgrade opens the possibilities of shipping containers to and from the Gisborne region by coastal ship service.

The go-ahead for this stage from the Environment Court will allow a construction start in the second quarter of next year - after the kiwifruit and squash export season - on the port's "twin berth" part of its development plans.

"This will allow for two 185-200 metre long ships to berth at once, and open up the possibilities of shipping containers to and from the region via a coastal service," said Gaddum.

Contract negotiations for the redevelopment are under way. The successful contractor will demolish and rebuild the port's Wharf 7 so it has the strength to carry mobile harbour cranes. Construction is expected to take about 18 months.

Next year the port will apply for consent for stage two, extending another wharf, reclaiming about 1.5ha, dredging the channel and harbour and rebuilding the outer breakwater structure. The port will also seek to upgrade its southern log export yard.

While Gisborne may be a long freight stretch in the minds of metro city businesses confronting long delays for containers due to ship congestion and unloading delays at Auckland, the country's main import port, Whangarei's Northport has also been exploring coastal shipping to get cargo landed there moving off the wharves.

Northport is currently unloading the biggest container ship it's ever handled to help ease the import congestion issue at Auckland port and the spillover to Port of Tauranga, the country's biggest cargo gateway and in the midst of its busy export season.

The pandemic and the big squeeze it has put on available shipping and airline cargo space have sharpened NZ Inc's mind on the resilience - or otherwise - of the upper North Island supply chain, an essential contributor to the country's economy.

Auckland freight industry participants say container shipping lines have put up their rates by 400 per cent this year. This doesn't include special new Auckland congestion charges of up to US$500 an import container.

International maritime industry analyst Sea Intelligence refers to a report from specialist industry watcher Joc.com that says given quarter three financial year results, it's expected the container shipping industry will achieve an operating profit of $14 billion for the full year - the best result in a decade.

Joc.com reports "dismal service levels and worsening container imbalances out of Asia that comes with the sting of rates that have hit record levels in the trans-Pacific and six-year highs on Asia–Europe trades".

It also notes bunker - ship fuel - costs are down significantly compared with last year.

Eastland Port and Gisborne Airport, part of the Eastland Group of regional infrastructure owned by Trust Tairawhiti, reported ebit of $25.3 million last year on operating revenue of $39.3m. Their ebit made a 53 per cent contribution to the FY20 ebit result of the Eastland Group..

Exports from the port were 2.9m tonnes. Eastland Group recorded an $18.5m profit - $12.3m of which was returned to the trust - and 7.2 per cent return on equity.

Just over 280,000 tonnes of logs were exported on 118 ships in FY 2020, only slightly under 2019 volumes - despite the severe initial impact of Covid-19 lockdown on forestry operations.

Volumes of other exports increased from 2019, with 11,264 tonnes of squash loaded on six ships, 5098 tonnes of kiwifruit on five ships, and a total of 747 tonnes of fish landed.

The Auditor-General expects to report in the first half of next year on the results of its 2019-2020 port company audits, which the sector expects will comment on what the money invested in New Zealand ports - mostly local authority or part council owned - has returned.