Inland port plan stuck in the mud

By DANIEL RIORDAN transport writer

The tide may be running out for the Ports of Auckland's much-vaunted inland port at Palmerston North.

Ports of Auckland says the $5 million project, a joint venture with Tranz Rail, has been delayed. Dubbed Project Rover, it was meant to be operating last month.

Tranz Rail says it is "continuing discussions" with Ports of Auckland, a statement that does not imply sod-turning is imminent at the proposed railhead's Tremaine Ave site.

Several sources close to the project claim Rover is over, marking a major setback for Ports of Auckland in its attempt to poach cargo from its lower North Island competitors.

When it announced Rover in March, Auckland said the daily return rail service would attract additional export containers from the central and lower North Island for shipping out of Auckland.

South-bound import containers, unloaded in Auckland and destined for the region, would balance north-bound flows on the return journey.

The service would be anchored in Palmerston North by a new rail exchange, with an initial target of about 50,000 containers.

Analysts estimate Ports of Auckland draws between 5000 and 10,000 TEUs (20-foot-equivalent units) a year from the southern North Island.

To achieve its 50,000 TEUs a year the port would need to source the remaining 40,000 TEUs from somewhere, most likely from Wellington's CentrePort and the Port of Napier.

"When the two sides came together to complete the contract, it was apparent they were operating on different planets," said one insider.

The reasons for the project's demise are being laid at Ports of Auckland's door.

The Business Herald understands it expected the service would give it access to Tranz Rail's current cargo, which it could include in its targets to obtain cheap freight rates, but Tranz Rail objected, saying the service was for new business only.

One source said Auckland had already paid money to Tranz Rail for rolling stock and track access.

A sharebroking analyst, who asked not to be named, said Ports of Auckland had upset Tranz Rail by revealing sensitive details of the deal to the investment community and telling analysts about the deal's structure and its likely beneficial impact on the port company.

But as Rover rolls over, the model it sought to emulate, Port of Tauranga's inland port at Otahuhu, goes from strength to strength.

Metroport, established in June 1999 as a joint venture with Tranz Rail, has proven highly successful in luring cargo away from Auckland to Tauranga.

This week, Tauranga announced it was spending $300,000 to expand Metroport's capacity, creating an extra 450 container slots.

The improvements would also cut the turnaround time by separating the road and rail exchanges.

Metroport operates 24 hours-a-day, seven-days-a-week and has doubled the amount of cargo it handles since it opened.

The strategy behind the inland ports - Auckland also has designs on a site at Hamilton - is clear: set up an outpost in your competitor's territory and poach as much of their "natural" business as you can.

The biggest player, Auckland, wants to be the North Island's preferred port-of-call for shipping lines.

This ambition has been given greater urgency by most of the major shipping lines looking to introduce bigger vessels in the next two years.

These will make fewer port calls, quite likely just one in each island.

Auckland is spending $170 million enlarging its facilities to handle the bigger ships and the smaller ports are moving to respond.

Napier is reviewing its expansion options and Tauranga says it has the channel depth Auckland is busy creating for the big ships.

Other changes are keeping the ports on their toes.

In March, major shipping line Fesco New Zealand switched its Far East service from Auckland to Tauranga, boosting Tauranga's operations by 15,000 to 20,000 TEUs a year.

This week, the world's largest container line, Maersk Sealand, said its new container service to North and Latin America would call at Tauranga, New Plymouth and Timaru.

That follows a Dairy Board decision in May to switch to Maersk from Columbus Line for its North American exports.

Wellington's CentrePort is responding to the pressures by spending $5.3 million on a sophisticated crane and forestry shed and Napier is reviewing its expansion options.