Pam Graham: Big ships cause headaches

Ships are being built that are nearly three times the size of those now calling at New Zealand ports at present. When they arrive they will scrape the bottom of ports, not be able to turn corners in shipping lanes, and sit too wide at berths for cranes.

Port executives want big container ships to call, but catering for them is a major investment headache.

"My issue is with port companies speculatively investing huge sums to attract new business in a highly fragmented environment that is already over-capitalised and under-utilised," says Port of Tauranga chief executive Mark Cairns.

Ports of Auckland chief executive Geoff Vazey says there is a danger that several ports may spend $50 million to $100 million each to prepare for larger ships that might only arrive at one port.

New Zealand has 13 ports, 10 of which have container cranes competing for trade.

The bigger ports argue ports are over-investing in infrastructure that they will never make a decent return on. The trend will continue as larger ships place new demands on ports.

Research by McDouall Stuart Securities found New Plymouth's port has an annual return on equity over time of just 1.5 per cent, Timaru 1.5 per cent, Marlborough 4.8 per cent and Southland 3.8 per cent. Those figures compared with Auckland at 7.4 per cent and Tauranga at 5.2 per cent.

Industry participants believe the next generation of ships will stop at just one port, most probably in the North Island, intensifying the competition between Ports of Auckland and Port of Tauranga.

The biggest container ships visiting New Zealand are 4100s - so named because they can carry 4100 twenty foot equivalent units, or "teu".

Tony Gibson, the New Zealand boss of shipping line Maersk, says all the talk about bigger ships mostly comes from ports. Conceptually, larger ships are on the cards but questions remain about whether the market has the scale for them.

Mr Vazey agrees that larger ships would only come to New Zealand if the scale of the market supported them. Ships in the 5000-6000 teu range would be large for this market.

The containers on a full 6000 teu ship would fill Auckland's main container terminal's wharf space by itself.

Around the world, 3000 container ships are being built and they will increase world shipping capacity by 30 per cent. More than half are 5000 teu or bigger.

Mr Cairns thinks the next leap in ship size in New Zealand could be to 6600 teu.

Roy Weaver, chief executive at New Plymouth's Westage port, says big ships could be a bit like big planes on the transtasman route. The airlines put them on then discovered customers liked frequency of services so they downsized again.

He believes it will take the New Zealand market time to move beyond the 4100s.

Mr Vazey says it would be a challenge logistically if large ships only went to one port.

"I think the day will come for coastal shipping and, again, that is a scale thing. It would be good if it did."

Mr Vazey says Auckland can take ships with a 12.5m draught at the lowest spring tide. The port has a tidal range of 3.5m.

The 4100s, at most, have a 12.5m draught. Ships in the 5000-6000 teu range vary in depth but are as much as 14m.

Tauranga's issue is to do with a turn in its shipping lane, industry participants said. Mr Weaver says his port is dredging to 12.5m and has resource consent to go to 14m.

- NZPA