Loss of car imports would be major blow for Ports of Auckland’s annual income: CEO

Auckland's new mayor Wayne Brown has demanded changes at Ports of Auckland. Photo / File

The end of car importing would cause Ports of Auckland to lose a major chunk of annual income, and relocating the operation would send carbon emissions rocketing, port chief executive Roger Gray says.

Gray, who took the role at the beleaguered port earlier this year, declined to tell the Herald the annual income from car imports, citing commercial sensitivity. But he said it was “an important part of the port’s profitability”.

It wasn’t the port’s main earner, but was significant, he added.

The port says it is the main import gateway for more than two-thirds of New Zealand’s vehicles but new Auckland Mayor Wayne Brown wanted the operation gone from Bledisloe Wharf.

Improving the port’s performance and getting rid of the vehicle import operation on the CBD waterfront land were election planks last month for Brown, who after his success wasted no time writing to the Auckland Council-owned port company with his expectations.

He wrote: “Aucklanders and I expect immediate steps to be taken to achieve a more efficient use of port land and in doing so, make some of its space available for the public”.

Gray told the Herald more than 300 people worked directly in the vehicle import operation and up to 10,000 jobs in the Auckland economy were linked to it. The port handled 240,544 car imports in FY22.

He also noted a 2017 NZIER report commissioned by the now-axed Auckland Council Investments Ltd found relocating vehicle importing to Northland’s Northport would increase the operation’s carbon emissions by 13,000 tonnes.

The current operation’s carbon footprint is about 14,000 tonnes, he said.

But Gray said his formal response to the mayor’s request would be best left until the work of a new committee of stakeholders looking into options for this port site is concluded.

Roger Gray, Ports of Auckland's new chief executive. Photo / Supplied

He said the Mayor requested the committee formation. It would look at the practicality and economic impacts of his request, Gray said.

“We think it’s very important to get a broad range of stakeholders, community people and mana whenua through to expert advice to have a good fact-based discussion [around] what are the options.”

Gray said the port company had started work on the mayor’s requests. Brown had asked for a response by March 31.

“What we are going to do is have a look at the facts and the issues and review the proposals put forward by the mayor. More importantly, what we are waiting for is a formal letter of expectation from the full council because that document will trigger our (new) statement of corporate intent.”

Meanwhile, the port company’s chair Jan Dawson and Gray had briefed the mayor, the council chief executive, mayoral advisers and the council on the port’s operations, key statistics and the port’s part within New Zealand’s trade markets and supply chain.

The meeting on November 2 was part of a wider briefing of the council by council-owned organisations.

Brown’s election campaign call for the port to deliver $400 million a year to ratepayers was not mentioned, nor was it mentioned in his letter of expectations to the port board.

The port’s total dividend payment to Auckland Council was $14.2m in FY22, up on FY21′s $10.4m return to ratepayers.

Gray said Brown indicated he would meet with the port company soon.

Gray also clarified the port spending the mayor took aim at in his recent inauguration speech.

Brown said the port had spent $24m and $27m on “other expenses” in 2021 and 2022 respectively.

“That’s not salaries, wages and contractors, or repairs, maintenance and finance costs, or anything like that,” Brown said. “It’s unknown other stuff.”

Gray said the port had responded to the mayor, informing him these expenses were a “roll up” of smaller expenses that would take too much space to itemise in annual reports.

“They’re things like digital licences, maintenance and support of digital systems, insurance, our rent and rates. We’ve had significant Covid costs. It includes community engagement costs, directors’ fees and health and safety costs.”

Gray told the Herald the port’s performance turnaround was well under way.

In October it had handled 24 per cent more cargo than in May, when he started in the job.

Container throughput in October was 65,000 TEUs (20 foot equivalent). In May 53,000 boxes were processed.

“We’re getting on top of our labour problem. We’re not where we want to be yet but the metrics are starting to show, things are starting to improve.”

The port was still on track to reintroduce firm berthing schedules for container ships in March. Berthing windows would be phased in throughout that month in conjunction with other ports.

Auckland is New Zealand’s main imports gateway, but did not perform well at the height of the pandemic supply chain shipping disruption.

Shipping lines introduced special Auckland congestion penalty charges and vessels diverted to Tauranga and Northport to avoid long delays at Auckland.

The port posted a $10.2m loss in FY22, reflecting a $63m write-off from a decision by Gray and the largely-new port board of directors to abandon a project automating the container terminal, still unimplemented six years on.

Revenue was $265.3m, up on $226m in FY21.

In comparison the Port of Tauranga, New Zealand’s main export gateway, posted a group net profit after tax of $111.3m, in FY22, up 8.7 per cent on the previous year.

Gray said the improvement in container handling productivity wasn’t due to global easing of container shipping traffic.

The port had actually had more ships calls in October than in May, at 32 and 28 respectively.