Port loses $20m shipping contract

Port of Tauranga. File photo / Sam Ackland

Ports of Auckland, in the midst of strike disruptions, will lose almost $20 million of annual revenue after Maersk, the biggest shipper visiting New Zealand, switched one of its services to Port of Tauranga.

The loss of Maersk's Southern Star container service amounts to 52 ship calls, or 82,500 containers a year, Ports of Auckland chief executive Tony Gibson said in a statement. The industrial action at Auckland played a part in the decision, Maersk's New Zealand marketing manager Dave Gulik said in a separate statement.

"The security of their supply chain is of primary importance to our customers, so anything affecting that, or likely to affect that in the future, will come into the equation when we are deciding schedules," Gulik said.

The loss of revenue amounts to 11 percent to the $177 million Ports of Auckland garnered in sales in the year ended June 30. Profit fell 37 per cent in its latest year.

The port has postponed mediation talks with the Maritime Union that had been slated for today. The union and the port have been at loggerheads over their employment contract, precipitating a strike and a lock-out this month - typically a peak period in the run-up to Christmas.

"We are hugely disappointed," Gibson said. "The Southern Star was one of Auckland's largest shipping services."

Maersk's switch will take effect from this weekend.

Shares of Port of Tauranga rose 0.9 per cent to $9.90 and have climbed 32 per cent this year. Tauranga and Auckland are fierce competitors who haven't found a way to progress a merger.

Tauranga now operates an 'inland port' in south Auckland, sending containers by rail to its wharves in the Bay of Plenty city. Port of Tauranga claims to be the nation's biggest port by volume.

Maersk's Northern Star service will continue to visit Auckland. The two star lines link New Zealand with key Asian hubs of Port Klang and Tanjung Pelepas.

Maersk's Gulik said the service changes would not have a material impact on total transit times. Most of the export cargoes shipped out of Auckland originate from the Waikato-Bay of Plenty regions, where exporters' transport and logistics operations "tend to be port-neutral," he said.

The postponed mediation was an attempt to reach agreement on the terms of a new collective pay contract for waterfront workers. The strike involved 327 of the ports 500 employees.

Maersk operates the South Star service with Malaysia's MISC Berhad, which has flagged it will exit the container business in June 2012, Gulik said.