Ports of Auckland in mood for comeback

By Yoke Har Lee

Ports of Auckland chairman Sir Richard Carter has described the fall in the company's share price as an over-reaction, saying Auckland is poised to compete against rival port Tauranga.

Metroport, Tauranga's depot at Onehunga, began operations earlier this year with one customer, shipping company ANZDL, which accounted for about 10 per cent of Auckland's total container volume.

Tauranga's full impact on Auckland will only be felt in the current financial year, as the move happened at the end of the port's last financial year.

In Ports of Auckland's annual report, Sir Richard says: "The board believes that the market over-reacted to these developments. Although they will undoubtedly have an effect in the short term, the company is confident that its response to the competition will minimise any loss in business."

The year ahead will be challenging but the port is ready to meet the competitive pressures, he says.

At the beginning of this year Ports of Auckland's shares were trading at $7.20. News of Tauranga's plans helped to push the price down to $5.05 at the end of June.

The shares now trade at about $5.

Ports of Auckland chief executive Geoff Vazey says in the report: "Tauranga has planned for several years to take trade from Auckland, so its strategy did not take us by surprise.

"We are confident that our competitive strategy for the coming year will minimise the impact on volume and profits."

Among other strategies aimed at lifting business, the Auckland company is helping carriers' customers to balance their import and export flows, cutting the cost of moving empty containers, working on paperless clearances for clients, and getting new North Island cargoes for the port.

On the outlook for cargoes, Mr Vazey says the export sector has tapered off.

"Many New Zealand exporters managed to find new markets and maintain volumes during the worst of the Asian economic crisis, but continuing low commodities prices are still affecting volumes overall," he says.

A survey of the port's major shipping line customers showed they all expected their volumes to increase.