Ports, rail need shakeup

By PAM GRAHAM

New Zealand's ports and internal transport system are in need of a good sorting-out.

That was the message from P&O Nedlloyd's New Zealand managing director, Tony Gibson, and others at a freight conference last week. The end result could be fewer, but larger, container ports linked to a more efficient rail system.

In Europe's Rhine-Ruhr valley P&O Nedlloyd's customers were sending more goods to an inland hub connected with dedicated trains to a main port of Rotterdam instead of over a multitude of networks, Gibson said.

"In the New Zealand context, I believe this is as relevant as it is in Europe.

"Commercial sensitivity means I cannot divulge details of initiatives which are being taken to further such close relationships. I can only advise people to 'watch this space'," he said.

There was a similarly cryptic message from Port of Tauranga chief Jon Mayson last week.

His port is buying a fourth container crane and increasing the volume of freight it sends via a rail link to an inland hub at Southdown in South Auckland.

P&O Nedlloyd last year unexpectedly chose Port of Tauranga over Auckland when it was reducing port calls on its Asian service.

Mayson said the decision was about establishing long-term strategic positions.

He said last week there were more cards to be played in the sector in the next six months.

Port of Tauranga is 55 per cent owned by Bay of Plenty Regional Council. Gibson was critical of local body ownership of ports.

Port reform in the 1990s was intended to give shares to local authorities as a step towards full privatisation. But privatisation took that step and stopped.

Regional councils did not happily shrink ports or give up the cashflow from them, Gibson said.

If ports were to work at optimum efficiency the country must revert to the intent of the reforms.

New Zealand is unusual. It is served by the biggest shipping lines in the world, but ships must have more plugs for refrigerated containers than normal.

P&O Nedlloyd's big 4100 series ships were purpose built for New Zealand and Maersk is also a big provider of refrigerated services.

Most imports come into Auckland but exports come from all over the country, necessitating the movement of empty containers.

"In other words, we carry 'fresh air'," said Gibson. At a cost.

Effectively he was saying that it was better to try to get imports in at the same place exports leave from.

Industry experts have long said that shipping companies go where Fonterra tells them and that shippers have played ports off against each other. The result has not been optimal.

When containerisation started the plan was to have just a few hub ports but terminals were developed at most ports.

Gibson produced a table showing that Tauranga's cranes were the busiest in New Zealand.

Its three container cranes make 334 moves per crane per day and Auckland's eight cranes make 226 moves per crane a day. But Wellington's three cranes make just 43 moves per crane per day. Bluff's one crane makes 31 moves per day and Timaru's three cranes make 45 moves per crane per day.

Wharf and traffic congestion are issues in Auckland but Port of Auckland has responded by increasing truck movements outside of rush hour and wants to use rail facilities more.

It wants to set up an inland port in Palmerston North but has not been able to get the rail connection working.

Everyone is talking about the supply chain and the business relationships that facilitate them.

"It doesn't much matter who provides the link in the chain - or even whether some links are jointly provided so long as they are robust and so long as their connection with other links are rock solid, and the customer's needs are met," Mayson told the conference.

The chain he has built into the Auckland market has been stretched recently and new investment is going into it.

"Strategic decisions must be made in the very near future to position ports with the ability to provide a total service," he said.

It was another "watch this space" message.

"Why is port performance that important in the wider scale of things?" asked Gibson.

Because the competitiveness of New Zealand exports was at stake.

Was maintaining 12 ports the best way for New Zealand Incorporated to optimise the performance of ports, he asked.

"It's up to the Government to enforce the intent of the original reform by ensuring regional councils divest shareholdings.

"Only when that happens will market forces then allow merger and acquisition and consolidation in the ports industry, leading to fewer main container ports and more specialisation."