KEY POINTS:
New Zealand's port system needs to be reorganised before the shipping industry decides the country is merely a stopover from Australia, says Port of Tauranga chief executive Mark Cairns.
Port of Tauranga yesterday posted a 7.1 per cent rise in net profit for the year ending June 30 to $42.1 million, with revenue of $148.8 million up from $132.3 million.
Total trade was up 7 per cent at 13.5 million tonnes, with container traffic up 25 per cent to 582,072 20ft-equivalent units.
Cairns said he was proud of the result. "This result represents another record year," he said. "In the increasingly challenging economic climate, that should be seen as a clear demonstration of the company's resilience."
Shares closed steady yesterday at $7.15.
The port expected net profit to rise again during the current year.
However, changes were needed in a wider sector which had 16 commercial ports and nine vying for international status.
A Rockpoint Corporate Finance report showed the sector had a negative free cash flow for the past two years, Cairns said.
"That really is a disgrace," he said.
"Given 99.5 per cent of our trade goes through a port, it's something that is quite critical to our economy and I don't think we can sustain running ports at 2 per cent returns."
Port rationalisation would happen one way or another, he said.
"I think we've got to step back and ask ourselves do we want to be in charge of shaping our future or have it shaped by somebody else."
Shipping lines could end up shaping the future of the port sector and larger vessels during the next decade could be a driver for change.
New Zealand might only accommodate two international hubbing ports, or even just one, but Cairns was not advocating that ports should close.
"What we think needs to happen is that a hierarchy of ports needs to emerge like our roading system, like we've got motorways, state highways and regional collector roads," he said.
"If we don't get our act together we really do risk trans-shipping everything through Australia."
Trans-shipping through Australia would cut exporters off from direct links to international markets.
Ports of Auckland last week said it was interested in buying Port of Tauranga's container business.
Port of Tauranga chairman John Parker said Ports of Auckland had not yet presented a proposal but he struggled to see how an offer would add value in view of the strong result.
"Nonetheless, Port of Tauranga has always held the view that a full merger between Port of Tauranga and Ports of Auckland makes good sense," Parker said "That view has not changed."
Previous merger talks between the ports failed last year.
* Lyttelton Port chairman Rodger Fisher said the Christchurch company's financial results for the year were pleasing but the present situation was unsustainable in the long term.
"We still espouse the view that to achieve optimum returns on assets port rationalisation is necessary."
