Cruise ship berthed at Queens Wharf, January 2023. Photo / Brett Phibbs
IS IT war?
Just one week after Wayne Brown became mayor of Auckland, he wrote to the board of Ports of Auckland Ltd (POAL). He told them he expected: 1) Better health and safety; 2) Much better financial performance; 3) Transfer of 100 per cent of container movements to rail; 4) A plan for the early removal of the car importing operation from the finger wharves and Bledisloe Wharf; 5) A medium-term plan for the cars and container operations to be gone from the port altogether.
To achieve that fourth goal, Brown wrote, the port should work with Ngāti Whātua Ōrākei, as mana whenua, and report back by March 31 this year.
Board chair Jan Dawson wrote back on November 1 to say, in essence: 1) We’re doing it; 2) We’re doing it; 3) Not our problem, talk to KiwiRail; 4) Nope; 5) Absolutely nope.
She didn’t put it that bluntly. In regard to the cars and other vehicles, including all the farm equipment, trucks and buses, she said POAL would “set up a working group with stakeholders”. She made no specific reference to Ngāti Whātua and provided an extensive list of great things she said the vehicle trade did for the port and the city.
In regard to the container operation leaving the port, she said nothing at all.
Her meaning was clear enough. Shortly after, Dawson met with the mayor and his advisers. Sources in the mayor’s office suggest it was a fractious meeting.
A week before Christmas, Brown wrote again to Dawson. This time it was a formal “Letter of Expectation” and he had the suppport of his council – they voted 21-0 to instruct him to send the letter.
But his demands had changed. Quickly moving the cars did not get a mention and nor did Ngāti Whātua. Moving the containers away wasn’t mentioned either.
Instead, Brown’s expectations were focused on very specific financial benchmarks, with some open-ended proposals about future strategy and land use. He called on the board to: “Support Council-led process to provide certainty on future of Port land, including a plan to return waterfront land to people of Auckland.”
These weren’t the only demands Brown had changed. His letter also made it clear he no longer expected the port to pay the council $400 million a year in rates and dividends, as he had repeatedly promised during the election campaign. Nor was he threatening to sack the board if it didn’t comply.
Instead, he noted POAL had “promised a $30m dividend in 2023/24″ and said council expected it would be higher.
But although Brown has forgone the brashness of his election promises, he hasn’t given up on getting his way with the port.
In the Christmas letter he asked the board to present its draft “Statement of Corporate Intent” (SCI) for 2023-2026 by April 1, even though legally it is not due until August 1.
And, he declared, “The Mayor and council will lead the development of a plan for a phased consolidation of port operations and the return of waterfront land for the use of all Aucklanders.” He announced separately that the council’s land development agency Eke Panuku will work with the port on this.
The Herald understands this is another thing Brown is no longer calling for: the resignation of the Eke Panuku chair, Paul Majurey. It seems the two have developed a more constructive relationship.
Brown wants the plan for the return of waterfront land to the public “to be complete by December 2023″. The process itself will “occur in phases over the period 2024-2039″.
He hasn’t abandoned his desire to see the cars or containers gone. Instead, he’s stopped asking the port to plan how to do these things.
The mayor has a new strategy: he’s going to take charge of the process himself. And, storm damage permitting, he’s going to do it now.
THE PORT is fighting back with a charm offensive, talking to councillors, media and stakeholders about the value of its own plans and activities.
Chief executive Roger Gray sat down with the Herald this week. He said the port is on track not only to improve its financial performance, but to outperform the financial targets set for it by Brown and the council.
He was frank about the “mistakes” of his predecessor and the former Ports of Auckland board, saying the company had “lost our mana”. The safety record was bad – people died – and the much-trumpeted automation programme for handling containers was a failure.
Referring to the dividend paid by POAL to council in 2021, he said it is “not acceptable to return only $4 million”. His goal, he said, was a dividend of “$1 million a week, which is where it was before we lost our way”.
And, as reported on Wednesday, he revealed he wants to build a new terminal for processing cruise ship passengers on Bledisloe Wharf. Currently, it’s done in a pop-up centre in Shed 10 on Queens Wharf.
This is big news. Gray says the building is needed and it’s hard to see where else it could go. He thinks it might cost up to $10 million, which POAL would pay, and they’d probably want to build it in about five years. Cruise ships would still arrive at Queens and Princes wharves; the disembarking passengers would then walk or take a shuttle, in a secure corridor, across to Bledisloe.
The new terminal would be just east of the “car-handling facility”, aka the multi-storey car park at the base of Bledisloe Wharf.
The reason this is big news is that, if it happens, it will destroy any chance Brown has of realising the first part of his dream. Customs and biosecurity requirements would prevent the port land from Queens Wharf to Bledisloe being converted to public use. The cars would probably stay right where they are.
Through his office, Mayor Brown declined a request for an interview for this story, as he has declined hundreds of other media requests for interviews.
But, said a spokesperson for the mayor, “It is not for a port operator to decide the future of Auckland’s prime waterfront land.”
And there it is, the new heart of the dispute about the future of the port. After years of debate about possible new locations, the big conflict is now over the question: Who gets to decide what happens to the existing site?
The port and the land it sits on are 100 per cent owned by Auckland Council. So should the council decide, as Brown believes?
But POAL is not a “council-controlled organisation”. It operates under the Port Companies Act 1988, a law written expressly to keep councils at arm’s length from the business operations of the port. Even when they own it.
That, believes POAL, gives it the right to use the land as it sees fit.
Brown wants the port moved, but the port is digging in. It looks like war.
JUST NOW, the war is on hold, because the flood response has refocused the attention of the mayor. But it will come to a head soon enough: Brown expects all this to be addressed in the port’s draft Statement of Intent and the April 1 deadline he gave them is looming.
The debate has raged on and off for years. A large part of the business community believes the economic interests of the city are best served by the status quo. A range of other advocates say the land could be used much better, for recreational, social, environmental and economic outcomes.
If it was easy to reconcile the competing interests it would have happened already. Most port cities moved the loading and unloading of cargo away from their downtown areas long ago. But Auckland doesn’t have an obvious new location to put the ships and wharves and land transport links they require.
Which doesn’t inevitably make the status quo the best option. It has big problems too, not least of which are the lost opportunity cost – the other things the city could do with the land – and the congestion all those trucks cause on the city’s roads.
A hundred years ago, goods arriving in the port would be warehoused on the docks and then distributed to shops. When delivery to the drapery and grocer was by a small truck or, earlier, perhaps a handcart, having the port and warehouses near the city centre provided obvious efficiencies.
But that’s no longer the case. The warehouses, or depots and “inland ports”, are mainly in south Auckland now. Goods arriving at the port are freighted out of the city, before being distributed to retail destinations spread over a very wide area.
And even that’s not true for many imports destined for the Auckland market. Forty per cent comes in through Tauranga.
Conversely, 40 per cent of imports arriving in Auckland are distributed further afield.
In fact, as Roger Gray told the Herald, while Auckland has a third of the New Zealand population, the port handles only a quarter of all containers, and only half of that quarter are imports. The rest are exports and empty containers being shipped offshore.
In other words, we don’t need the port to be close to the city centre. What’s important is having efficient supply lines for goods when they arrive in the country.
What’s more, focusing just on Auckland distorts the picture. We already have interlocking freight operations across the entire upper North Island: the question is how to make them efficient for the whole region, now and for the next 50 or even 100 years.
IT’S WORTH looking a little more closely at what happens behind the red fence – on the port land that’s off-limits to the public.
There are, broadly, four main types of operation: containers; bulk cargo, which is unpackaged cargo like cement and coal; breakbulk cargo, which is individual units like cars or pallets of goods; and cruise ships.
Ferries and fishing vehicles also operate from the port, but they berth in public areas.
If Brown was to get his way in freeing up the land from Queens Wharf to Bledisloe for public use, the cars would have to move. But not necessarily offsite, at least not in the short term. There are some surprising options.
‘If we were being hard-nosed, we would shut containers down’
The port handles 850,000 containers on Fergusson Wharf, the giant eastern part of the whole port complex. The company lost $25 million moving those containers around last year, although Roger Gray expects they’ll do a lot better this year.
Regardless, containers use more land than any other port activity and yet are less able than the others to return a reliable profit. They are the port’s weakest link.
The Herald asked Gray why they keep the container operation going.
“If we were being hard-nosed,” he said, “we would shut it down.”
That’s a remarkable thing for a CEO to say. If POAL was a vehicle manufacturer and no one wanted to buy, say, its trucks, it would stop making trucks.
The Companies Act requires this: POAL, like all other companies, is supposed to act in the best financial interests of its shareholders. Being hard-nosed goes with the job.
What would happen if Auckland announced it would be phasing out its container operation?
“There would need to be greater capacity to handle containers elsewhere.”
Tauranga would take more straight away, but its longer-term capacity for growth is limited.
The Government would need to step in and the critical issue is rail. Tauranga, Northport and Auckland itself all need significant investment in rail capacity if they are to grow.
Only 12-15 per cent of freight is transported by rail at present but there are many reasons to change that. Putting freight onto rail would lower carbon emissions and make the roads safer, less congested and less damaged. And rail freight, unlike road freight, can be transported long distances for little extra cost.
If Fergusson Wharf did lose the containers, the port could move the car imports onto that site.
Will the Government step in? It might. A draft national freight strategy is being developed by the Ministry of Transport and is due for release in the middle of the year.
The Herald understands Ports of Auckland has the ear of the ministry. The mayor has taken a different tack. He frequently praises Michael Wood, the Minister of Transport who is also the Minister for Auckland, and talks up their shared desire to create an integrated transport plan for the city that includes the port.
Brown says the ministry’s strategy should be informed by the views of the owner of the port, not written as instructions to the owner.
If the ministry accepts the port’s view of the world, will the minister overrule it? To date, Wood has resolutely declined all public comment about the port.
A ‘thought bubble’ about coal and cement
If losing the containers seems a bit too much of a shock, how about losing the bulk goods?
Golden Bay Cement moved onto the Waitematā wharves in 2010 and Holcim followed in 2016 when it closed its cement operation at Onehunga.
Why are they there? “That was an Auckland Council decision,” says Gray. “It wanted to develop the Onehunga wharf for public use.”
Ports of Auckland was pretty keen too: it has 50-year leases with both companies and has sited them right by Quay St, halfway along.
That is, at a time when debate on the future of the port was well underway, the port operators locked an industrial bulk goods operation in place in a prime spot on the downtown waterfront. Holcim is currently expanding on the site.
Auckland also handles a million tonnes of coal a year, in a dirty operation on Freyberg Wharf that sends 10,500 articulated coal trucks a month down the Southern Motorway. Most of it goes to the Genesis power plant at Huntly and to NZ Steel at Glenbrook, in the far south of the city.
Auckland city doesn’t need coal imports. It’s not even the biggest coal port: Tauranga handles four times the quantity each year.
A national strategy could remove the coal and cement businesses from Auckland at the stroke of a pen. And Roger Gray, at least in theory, is not opposed.
“We could exit bulk. Perhaps that could go to Northport or Tauranga. You could do it. That’s a thought bubble at the moment.”
That would free up land for better use, too.
Why are cruise ships allowed to ruin Queens Wharf?
Queens Wharf was supposed to be “the people’s wharf”, an attractive place to go for central-city residents and workers, visitors, people fishing, ferry commuters and the whoever’s curious or in love with Michael Parekowhai’s Lighthouse statue: the “state house” with a gigantic, troubled James Cook inside, which sits at the north end.
Instead, the wharf is mostly a barren wasteland, forced to be like that because of all the taxis, buses and trucks servicing the cruise ships.
The cruise industry is bouncing back so strongly, next season they expected to return to pre-Covid levels of about 120 ships a year. It’s lucrative for the company and for the city, because Auckland is a “turn port”, where the ships do their turnaround: refuelling, restocking the food and other provisions, and embarkation. Most passengers start and finish in Auckland, many of them staying a night or two in a hotel at each end of their trip.
Good to have, but the ships don’t need to berth at Queens Wharf and Princes Wharf. Again, despite his new terminal plan, Roger Gray seems, at least in theory, to agree.
Moving the cruise ship berths is also what he calls a “thought bubble”. He says if it was to happen, the council would have to let the port build a wharf for berthing at the north end of Bledisloe. Such a wharf would also be needed if cars were no longer held on Captain Cook Wharf.
It would extend the existing structure by only a few metres, and would be on piles, not reclaimed.
Would this be a reasonable trade off for putting Queens Wharf and Captain Cook Wharf into public use?
THE MAYOR and the port company are in a standoff over who’s in charge. But Roger Gray’s “thought bubbles” suggest he’s in the mood to talk. Wayne Brown may be too.
While he told POAL in his Christmas letter he “would like to see prime waterfront land returned to Aucklanders on an ambitious timescale”, he also said he wants to “preserve port activities in Auckland”.
He’s never said what that means, but it’s clearly not the same as “move the whole show to Northport”.
The next step? Perhaps the minister would like to wade in.
Bay of Islands Pastoral & Industrial Show on this Saturday.