Michael Barnett: Relocation not the answer for Auckland's port

The port is integral to Auckland's history, and to relocate it would create huge inefficiencies and take 20 years or more to plan, fund and achieve. Photo / Dean Purcell

Opinion

There is a certain irony that at a time Auckland is celebrating its founding as a port city 175 years ago, calls are growing to move the port elsewhere.

It would be easy for business to respond with facts and figures on the critical economic and social role the port plays in Auckland and why it should stay - more than 120,000 businesses and 500,000 jobs served by a port at the city's front door.

Let's remind ourselves that one of the major benefits of having a compact city is that 70 per cent of the cargo goes to manufacturing, assembly and distribution businesses located within 32 km of the port.

Yes, the port is integral to Auckland's history, and to relocate it would create huge inefficiencies - productivity and job losses for starters - and take 20 years or more to plan, fund and achieve.

I am also persuaded by a recent PricewaterhouseCoopers report which concluded that for New Zealand to cater for projected freight growth for the foreseeable future the upper North Island needs all three of its existing ports - Tauranga, North Port and Auckland - and they all need to become more efficient and expand. It found that Auckland's port in particular had a great deal of scope to improve efficiency and would not need to expand as much as once thought.

Instead of focusing on relocation, I suggest Auckland investigate how the port's commercial operating model could be improved and the port be made even more efficient and productive.

Here are some suggestions.

First and most obvious: Encourage the port to maximise efficiency through using all its existing footprint - looking for smarter, innovative ways to quickly clear cargo and rethink the logistic chain for processing the thousands of imported cars that are unloaded each week on to Kings and Marsden wharves.

Second, the port needs to be encouraged to reconfigure its footprint to allow for bigger ships to berth. A just-released report prepared for the Ministry of Transport has taken a "whole of system" assessment of the impact of port hubbing and the inevitable introduction of larger vessels on the New Zealand container trades. Larger vessels mean that services are likely to concentrate on fewer ports, which will require upgrades to existing port and related infrastructure.

The point, though, is that all scenarios that the study looked at which included Ports of Auckland tended to have lower domestic transport costs thanks to the high proportion of imports destined for Auckland businesses.

This leads to another suggestion - a northern ports merger based on the recommendations of the PricewaterhouseCoopers study that all three ports are needed to cope with projected growth. There is a range of options to debate and explore - from a voluntary co-management structure agreed by existing owners (unlikely - they will never agree), to government setting up a Northern Port company with a single board.

The international shipping companies are the only winners from the so-called "competitive" positioning between Auckland and Tauranga.

And finally, there are options that Auckland Council could take to both help the port become more efficient and productive and at the same time maximise the return from its 100 per cent ownership.

In the past 15 to 20 years, government-owned ports around the world have converged towards what is termed the landlord model. Local governments especially have opened up ports for competition and the private market, creating win-win income streams.

First, they rent the port precinct to a company for, say, 10 years creating a sustainable income.

They get to take a big chunk of cash up front for the sale of the concession, and then get regular operating payments for the life of the deal.

A deal by Auckland Council that increases its own revenue stream and at the same time releases some of the asset to private sector investors would be win-win - generate cash to help solve our transport funding shortfall, and free up the port company to run as a proper business.

Michael Barnett is chief executive of the Auckland Chamber of Commerce.