02 November, 2017
Big Ships And Big Bets –
Port Infrastructure Debate Rolls On
INSIGHTS ABOUT THE NEWS - The debate over NZ’s future port infrastructure is continuing in a new context – a new Govt
more likely to intervene.
Much of the argument within the sector has been about who can cope with the larger ships being built and whether NZ
would be best served in focusing investment on a single container hub port feeding the other ports.
As reported in Trans-Tasman’s sister publication, the NZ Transport Intelligence Business Alert, Rex Chapman, chairman of South Port which runs the Port of Bluff, disagrees with Port of Tauranga chairman David
Pilkington. Pilkington says the trend to consolidation and bigger ships will mean more and more of NZ’s trade will be
funnelled through Tauranga as a container hub port.
Chapman, noting three global alliances have emerged which now control over 77% of global container shipping capacity,
points out the size of new container vessels being built has grown from 10,000 to 14,000 TEU vessels to 18,000 and now
22,000 TEU size.
“However, it has recently been reported in shipping media there is starting to be a difference in opinion between the
biggest two shipping lines, MSC and Maersk, whether this trend will continue. Maersk now believes the race for bigger
and bigger ships is gone for the foreseeable future.”
The range of ports capable of handling larger vessels is limited and larger ships mean fewer sailings which does not
suit customers. The rationale for using larger vessels was to get economies of scale and reduce costs, but these
financial benefits are only obtained if the ships are full.
Chapman reckons in NZ strong competition continues among all ports for cargo within their catchment and this should be
allowed to play out. He says all ports have a different mix of cargos, revenue streams and in some cases non-port
businesses, noting South Port converts 23% of its revenue to net profit after tax.
The change of Govt could bring a change in focus. NZ First Leader Winston Peters is a strong advocate for the Govt to
back a port in Northland.
The agreement with Labour says they will commission “a feasibility study on the options for moving the Ports of
Auckland, including giving Northport serious consideration.”
If this study was to turn into a reality it would need a great deal of investment not only in the port itself, but the
infrastructure to and from it. This investment is unlikely to come from the private sector unless it can show a way of
making a profit.
It would therefore require Ministers to back a “winner” and then use taxpayers’ money to fund it. That’s a bet many
would be nervous about making.
Trans Tasman’s sister publication, The New Zealand Transport Intelligence Business Alert, is a weekly source providing you with in-depth news, analysis and opinion on NZ’s transport and logistics sectors.
FREE! If you are not already a subscriber to Political Pulse, please sign up here for your personal copy.
Permission to reprint or quote from this article is given
providing it is sourced to transtasman.co.nz