Megaports threaten Wellington

The advent of one-stop shops for global shipping lines has put the heat on smaller port companies such as Wellington's Centreport.

Rob Mercer, head of research at brokerage Forsyth Barr, said global pressure on driving down costs was causing shipping companies to cut back on port stops.

"The trend is intensifying for ships to call less and less to ports outside Ports of Auckland, Lyttelton Port and Port of Tauranga.

"Pressure is really coming on ports which don't have a natural long-term business that can protect them from [ships] not stopping at Wellington or Napier or wherever," he said.

The warning comes after Ports of Auckland - New Zealand's largest container port - announced a deal last month with Tranz Rail to create a cargo hub in Palmerston North, in the heart of Centreport territory, to freight goods north by rail.

The 15-year agreement, to be operated by the port's container division, Axis Intermodal, has an initial target of 50,000 containers a year, starting in the second half of this year.

Independent market commentator Dave MacIntyre said the announcement made waves in the shipping world. "Make no mistake, this is a big deal.

"Talk of 50,000 containers a year moving on the service is an initial target only - the intention is to compete for substantial lower North Island container traffic," he said in a commentary for the Shipping Gazette.

The move represented a "throwing down of the gauntlet" by Auckland to the ports of Wellington and Napier, he said, adding that a suggestion from Axis that the new service could change transport logistics in the North Island was a "serious message rather than a marketing blurb."

Centreport marketing manager Stuart Scott said the Wellington port - two-thirds owned by the Wellington Regional Council, and one-third by the Manawatu Regional Council - was keeping a keen eye on Auckland's progression south.

"It is certainly a huge development in the New Zealand port scene for Ports of Auckland or any port to set up an inland operation so far from their ocean-side operations," he said.

New Zealand's No 2 container operator, the Port of Tauranga, set up the country's first inland port, Metroport, in June 1999. The port, based in South Auckland's industrial area - a Ports of Auckland stronghold - has since moved to siphon off former Auckland customers such as Regional Parcel Carriers and Australia New Zealand Direct Line.

The battle over turf heated up last week when Tauranga snatched another key Auckland client, Fesco New Zealand.

In a move expected to boost container movements at the port by more than 20,000 twenty-foot-equivalent units (TEUs), Fesco said it had opted to make the Tauranga port and its inland operation its sole North Island destination for its weekly service to the Far East.

Port of Tauranga chief executive Jon Mason said Fesco's decision came after the port last month negotiated with Tranz Rail to extend the Metroport from a weekend to a 24-hour, 7-day a week operation.

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

Mr MacIntyre estimates that Ports of Auckland at present draws between 5000 and 10,000 TEUs from the southern North Island.

To live up to its planned 50,000 TEUs per annum, the port would need to source the remaining 40,000 TEUs from somewhere - most likely by pirating Wellington and Napier business.

Around 75 per cent of Centreport's exports come from areas more than 100km from Wellington.

One area of Centreport's business immediately at risk is its 2-year-old Palmerston North mini-dry port operation, aggregating the wares of the region's small exporters and importers and sending them by rail to Wellington.

But although Auckland's move south obviously poses a significant threat to Centreport, Mr Scott said it was not unexpected.

"Let's not underestimate the competitive market that exists already. New Zealand ports have been competing, both by region and on a national basis for well over 10 years now."

Centreport was ready to counter the Auckland attack.

- NZPA