Toll has eye on ports operation

David Jackson

Australian transport heavyweight Toll says it would be interested in leasing or buying the Ports of Auckland operations if the port company's aspiring new owner spins it off.

The Auckland Regional Council's infrastructure investment arm, Auckland Regional Holdings, has declared unconditional its offer for the 20 per cent of the port company it did not own. Its stake has climbed from 80 to 87.3 per cent.

Because a strong motive in Regional Holdings' $8 a share offer was to secure the port company's $182 million worth of blue-chip waterfront property, it has been speculated that the port operations could be put up for grabs.

Asked if Toll would be a starter for the business, Toll New Zealand chief executive David Jackson said that given parent company Toll Australia's interest in ports, he was sure it would be interested in the opportunity. However, there had been no discussions.

But ARC chairman Michael Lee said he would not want the country's major port under foreign control.

An analyst, who spoke on condition of anonymity, said Regional Holdings might not see itself as an expert on running a port, but neither would it willingly provide Toll with an opportunity to behave as a cartel, as it was inclined to do.

Toll has close ties with Auckland's fierce rival, the Port of Tauranga.

Regional Holdings has said it will be "business as usual" at the port's Mechanics Bay headquarters if it gains full control. But an analyst said if he was a port director right now he would not be so confident.

Lee said he did not have any say on who should be on the ports board.

"From where I'm sitting, the port is managed in a very effective way. I don't see any problem with it.

"It is in everyone's interest to have business as usual. There is no political interference in the operations of the Ports of Auckland."

But Lee said ARC councillors would not want Regional Holdings to raise its $8 offer to gain full control.

"ARH would have to come to the regional council if it wanted to change the price, and ARC is satisfied the price is right and would be reluctant to see an increase as we have other priorities for spending."

Meanwhile, Jackson said Toll hoped to be a significant player in the New Zealand plans of world No 1 shipping line Maersk, after its takeover of No 4 P&O, expected to be ratified in September.

He could not say how Toll hoped to be involved in the inevitable shake-up at New Zealand ports until it understood Maersk's plans.

"If they rationalise port calls, then they need rail infrastructure to feed them. It's unclear until we understand the strategy, but Fonterra will be part of that.

"They [Maersk] will be significant suppliers to Fonterra and, while you will get consolidation, you will probably also get opportunities opening [for other shipping companies].

"We hold a fairly neutral line on any port," said Jackson. "Our opportunities will arise from land bridging to ports where there may be rationalisation.

"The downside for us will be if there is a heap of coastal hubbing, which may take some volume off rail."

Maersk calls at most ports in New Zealand. P&O was about to decide whether to concentrate its European and Asian services at Auckland or Tauranga - a decision influenced heavily by Fonterra - when the takeover was announced.