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Month: August 2018

Auckland regional fuel tax a ‘political sham’ says Road Transport Forum boss

The Auckland Regional Fuel Tax has been labelled “a political sham” by the Road Transport Forum NZ chief executive Ken Shirley as he called for the market around the country to be opened up to cheaper competitors.

Mr Shirley told TVNZ1’s Breakfast that while the falling NZ dollar and global geopolitical issues meant oil prices fluctuated, many parts of the country still pay more than Aucklanders at the pump despite the 11.5 cents a litre tax in our biggest city.

“The whole Auckland regional fuel tax is a political sham, it’s done for political reasons to make it appear that the revenue is coming out of Auckland but in fact we all know it’s being spread across the whole country and this is just living testimony of that,” Mr Shirley said.

“Many parts of the country are paying 20 cents more than the market up there (in Auckland) so we do get fuel tax spreading, regional variations, that’s not surprising.”

Mr Shirley said if you lived south of “a line roughly from Masterton to Levin” you paid a lot more because Gull is not in the market in the lower North Island and South Island, something he wanted to see change.

“Because we don’t have Gull in the market in those areas, therefore you pay more because the competition is less,” he said.

“I’d like you to see Gull have better access to the southern North Island and the South Island to make sure those pencils are kept as sharp as possible.”

He rejected the AA’s suggestion that GST be dropped from fuel, but said that taxes made up 40 per cent, or a $1 of current fuel prices, and motorists should be concerned about what that revenue was being spent on.

“We’re now going to see road user and motorist taxes which previously had being going in to improving the highways being diverted into other uses.”

“Now that’s a first and it is a concern, there’s actually been an 11 per cent cut in the highway budget in the government policy statement for NZTA.”

Petrol passes $2.30 per litre hitting new record and prices are forecast to rise

The Automobile Association says prices jumped up by three cents per litre yesterday, in response to rising oil prices.

That’s due to reduced exports coming out of Iran ahead of heavy sanctions from the US Government.

While that increase has been predominantly offset by cheaper refined fuel, and a small gain in the New Zealand dollar, we’re still forking out more at the pump.

According to the AA, the national fuel price for 91 octane is now $2.329 a litre.

The AA’s Mark Stockdale says the latest price jump is unwarranted and doesn’t correlate with what’s happening in the market.

He’s sceptical the rise is down to fuel companies spreading the cost of Auckland’s fuel tax across the country’s stations.

“It’s too soon to say whether it’s happening.”

Transport Minister Phil Twyford has previously signalled that price-spreading “won’t be tolerated”, but says there’s no evidence to suggest the rest of the country is paying for Auckland’s fuel tax.

“We’re tracking the data very closely. There is no evidence to suggest that there’s any price spreading going on,” he said.

“I’ve got officials monitoring the prices very closely. If there is any indication, then we’ll act on it.”

With the country-wide fuel tax kicking into effect at the beginning of next month, the AA says prices are forecast to continue to rise.

The Panama Canal is a wonder of the modern world – here’s how it plans to reduce shipping emissions

Roughly 80 kilometers long, the Panama Canal connects the Atlantic and Pacific oceans. A wonder of modern engineering and design, 13,000 to 14,000 vessels pass through the canal each year.

By reducing the distance ships need to travel to reach their destination, the canal helps to reduce fuel consumption and, in turn, greenhouse gas emissions. During its lifetime, it has helped prevent the emission of around more than 700 million tons of carbon dioxide (CO2).

The shipping industry has an impact on the environment. In 2012, international shipping was responsible for an estimated 796 million tons of CO2 emissions — around 2.2 percent of total global CO2 emissions that year, according to the International Maritime Organization.

“The original Panama Canal was built between 1904 and 1914, a 10-year effort,” Jorge L. Quijano, CEO of the Panama Canal Authority, told CNBC’s “Sustainable Energy.”

“We are basically a short cut between the Atlantic and Pacific and to do this we use locks — so you go up 85 to 87 feet in elevation. Then you cross the continental divide on the lake (Gatun Lake) and you come down to zero-level elevation, which is… the Atlantic Ocean.”

The impact of the canal on the shipping industry has been significant — so much so that a specific type of cargo ship, the Panamax, has been designed to fit its dimensions. “It’s basically a vessel that’s 106 foot wide and… 965 foot long,” Quijano said.

Between 2009 and 2016, an extensive construction project saw the canal undergo a significant expansion when a third lane was built. This allows a larger type of vessel, the Neopanamax, to pass through. At the end of July, the 4,000th Neopanamax vessel transited through the expanded canal.

“We’re now looking at a vessel size that can carry as much as three times the numbers of containers that you could carry on the old Panamax locks,” Quijano said.
Source: CNBC

Truck engineer kept quiet about deficiencies

A heavy vehicle engineer kept quiet about deficiencies in his designs for years until a trailer snapped off a truck, according to NZTA documents.

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Transport Agency documents chart an investigation into Dick Joyce a decade ago, after a trailer broke off a truck and rolled backwards near Taupō (stock photo). Photo: 123rf.com

The Transport Agency put out a safety alert about the engineer, Dick Joyce of Wellington, earlier this month, adding to widespread disruption in the transport industry. It calls for urgent checks on the towing connections of almost 500 heavy vehicles including big trucks and logging trailers.

But Mr Joyce said it was a “witch hunt” and he had never knowingly endangered the public.

He expressed disbelief at what he said was a summary of the current inquiry that the Transport Agency had just given him, that faulted 80 percent of his 480 or so truck towing certifications over the last decade.

It was “stupid”, he said.

Transport Agency documents now released under the Official Information Act chart an investigation into Mr Joyce a decade ago, after a trailer broke off a truck and rolled backwards near Taupō.

Read the full Official Information Act request (PDF, 1.8KB)

Investigations from 2007 to 2009 found the stresses on the steel were three times the maximum allowed.

The documents say Mr Joyce knew about the deficient design as early as 2005, when he came across cracks in another truck’s drawbeam, but that he did not raise a red flag about it to anyone else, even though at least nine other large and medium-sized trucks had the same flawed design.

“Joyce failed to take reasonable steps to safeguard the health and safety of people … These actions present a significant risk to land transport safety,” the 2009 OIA documents said.

Dick Joyce rejected not only that finding, which he said he had disputed at length at the time, but also the current investigation into his work that has triggered alarm bells.

“I’ve never taken a shortcut,” he said.

“I’ve had probably 15 calls from people saying they don’t believe a word of it [the current inquiry], they agree that there’s a witch-hunt.

“I believe Land Transport [Transport Agency] are being totally unfair and they’re totally biased.”

The OIA documents said Mr Joyce modified the design but broke certification rules by not alerting the agency, or telling truck owners or Certificate of Fitness inspectors about the “need for extra vigilance”.

“I was aware of the deficiency but I decided the deficiency was not catastrophic,” Mr Joyce told RNZ.

“It would fail gradually and everybody would see that it had failed – it would crack slowly.”

The 2007 trailer failure was not due to the flawed design or cracking but because the truck driver probably missed a gear, and rolled backwards into a ditch, snapping the drawbeam, he said.

But the police’s crash investigation unit agreed with the Transport Agency, that it snapped while being towed.

This mirrors a similar trailer failure a year ago near Murchison, that sparked the extra scrutiny of certifiers that has since tripped up Mr Joyce and forced off the road 1500 heavy vehicles certified by Nelson engineer Peter Wastney.

The Institute of Engineers – IPENZ – also found against Mr Joyce.

The OIA documents said an engineer who certified at least 10 trucks with the flawed design reported that Dick Joyce never told him about the cracking.

“Not advising anyone … can only be considered as negligence and most likely conduct unbecoming … Joyce’s actions fell short of the duty of care required of a professional engineer.”

Mr Joyce, however, said he thought there was only one flawed drawbeam – but that a contractor had kept using his old, deficient drawings to make others, without him knowing.

Mr Joyce scored zero out of three for drawbeam calculations in a 2008 agency audit. Engineers must score above 2.4 to avoid extra auditing.

The 2009 investigation resulted in his suspension for three months. He did not appeal. “I had already spent a huge amount of time on this and decided that I needed to put it behind me and get on with life.”

He regained his certification quickly, he said, and had passed six or seven audits since, all above 2.4.

Now, though, his business in Seaview, Lower Hutt, was suffering and his reputation was on the line, he said; he had just got a summary from the Transport Agency of its investigation, and it was harsh.

“I’m prepared to accept that I’m not perfect and every now and then I’ll make a mistake.

“However, this is the stupid part about it, they gave me a summary and … if I take it as literal, 80 percent of my work was at fault” in certifying 480-odd towing connections in the last 10 years.

The agency is also investigating whether some heavy vehicle certifiers have been signing off on engineering work based just on photos, without checking it firsthand.

Dick Joyce said he had never done that, but had seen “indications” it had occurred. He would not comment further about that.

Union proclaims KiwiRail pay deal a ‘landmark’

A KiwiRail train travels along the Kaikoura coast .

Rail and Maritime Transport Union and KiwiRail General Secretary Wayne Butson says higher paid KiwiRail workers agreed to a deal that gave most benefit to lower paid workers.

Butson said a flat rate of higher pay applied across all 2319 of its members, rather than the usual percentage increase for workers.

“Personally, I’m over the moon that members have seen the value of a pay deal which evens the playing field…maybe this small chink in the capitalist armour will see a new age of fairer pay deals, less greed and a more equal society,” Butson said.

The equivalent percentage increase for the higher paid workers would be approximately 2.6 per cent over the two year contract while the lower paid workers would receive the equivalent of close to 9 per cent, he said.

“The really important thing was the way the higher paid workers brought into it because of their awareness of inequality. I don’t know if we could do it year after year but we need to look at how can lift the people at the bottom as well as the top,” Butson said.

Wages varied currently from $17.60 an hour for the lowest paid, to about $50 an hour for highest skilled with the most responsible jobs such train drivers and signal technicians.

KiwiRail chief executive Peter Reidy.

KiwiRail chief executive Peter Reidy.

KiwiRail chief executive Peter Reidy said the deal was negotiated within a day and with “immense goodwill on both sides of the table”.

“This deal reflects our desire to play our part and improve the standard of living of all while lifting productivity.

The company and the union workers had worked together over the past three years on a programme to lift performance.

“It has seen productivity gains and health and safety improvements at the organisation, but more importantly it has signalled a new era of workplace relations.

“We have moved into a partnership model and we tackle issues together as they arise,” Reidy said.

The Coastal Pacific KiwiRail passenger service between Christchurch and Picton near Hapuku.

The Coastal Pacific KiwiRail passenger service between Christchurch and Picton near Hapuku.
Butson said the new programme had energised workers because their suggestions were taken seriously, and their confidence and job satisfaction increased.

“It is with huge relief that we reported to our members that the system they are now using regularly in their work place was the basis for a fair pay deal.”

 – Stuff

Straddle carrier accident at Ports of Auckland

A large container-lifting straddle crane tipped over about 3.45am on the Fergusson Wharf at Mechanics Bay.

The injured driver was taken to Auckland Hospital in a critical condition, where 1 NEWS understands he is gravely ill.

The Noelle container straddle carriers in use at Ports of Auckland are more than 12m tall, weigh about 60 tons and can carry about 60 tons of weight.

Ports of Auckland acting CEO Wayne Thompson said in a statement that “at this stage the cause of the incident is not known.

A webcam image of the Ferguson Wharf at Ports of Auckland - straddle cranes are visible at the bottom left.

“Our primary concern is for the welfare of our colleague and we are doing everything we can to look after him and his whānau, friends and colleagues.”

The terminal is closed while an investigation is carried out by Worksafe, and Ports of Auckland says it will also investigate.

The Maritime Union of New Zealand has confirmed the man is a member, but declined to comment further.

KiwiRail loss widens in 2018 on further writedowns

KiwiRail reported a net loss of $235.9 million in the year to June 30 versus a loss of $197.3m in the prior year. Photo / File
KiwiRail reported a net loss of $235.9 million in the year to June 30 versus a loss of $197.3m in the prior year. Photo / File

KiwiRail, the state-owned rail and freight operator, widened its loss in 2018 with further writedowns to its rail network, even as revenue and underlying earnings gained.

The Auckland-based state-owned enterprise reported a net loss of $235.9 million in the year to June 30 versus a loss of $197.3m in the prior year.

That reflected an impairment charge of $248.6m on KiwiRail’s rail assets, down from $295.8m.

As the rail network does not generate sufficient cash to cover the level of required investment, a large proportion of the accounting value must be written off each year, it said.

Earnings before depreciation, amortisation, interest, impairment, capital grants and fair value changes fell 7.1 per cent to $48.5m, weighed down by a $45m hit from the Kaikoura earthquake. Stripping out the quake impact, underlying earnings rose 2 per cent to $94m, while operating revenue gained 3.5 per cent to $615.8m.

“KiwiRail has really put in the hard yards to re-energise the business over the past four years and despite the challenges nature has thrown at it, it is now primed for growth and ready to deliver for New Zealand,” said acting chair Brian Corban.

“Even through this difficult period, KiwiRail has achieved productivity initiatives to the tune of $7m and invested $9m more in capital expenditure than the prior year (excluding Kaitaki ferry purchase), primarily in rolling stock replacement as we seek to renew our ageing locomotives and wagons.”

The 2018 financial year saw KiwiRail lift revenue across all divisions, with a 1.5 per cent gain in freight to $350.7m; a 5.2 per cent increase from the Interislander to $137m; a 5.8 per cent lift from infrastructure to $52.5m; and a 5.1 per cent increase from property to $45.1m.

Its scenic division, which covers tourism, boosted revenue 21.9 per cent to $27.8m in the year. Kiwirail said freight volumes in forestry rose 12 per cent in the year, and bulk freight lifted 6 per cent.

“These gains are despite the ongoing challenge of the Main North Line railway between Picton and Christchurch still closed for daytime freight services while the recovery work from the 2016 Kaikoura earthquake continues,” Corban said.

Bulk Cargo Growth Drives South Port Ahead

South Port New Zealand Ltd’s reported after-tax profit for the June 2018 year is $9.66M, up 14% on last year’s result of $8.45M. South Port Chairman, Mr Rex Chapman said, “this is an excellent result for the Port, underpinned by a 13% increase in cargo flows.” Total cargo volume through Bluff set a further record of 3,445,000 tonnes (FY17 3,053,000 tonnes) due to strong growth in bulk cargoes and a positive development in shipping line connectivity.

“The mainstay of our business continues to be bulk cargoes representing 85% of all volumes handled across the Port wharves,” said Mr Chapman.

Revenue from port and warehousing operations equated to $40.7 million ($36.9 million), an increase of 10%. Higher volumes through the Port saw operating profit before financing costs and tax increase by 13% to $13.8 million ($12.3 million).

Net financing costs were $579,000 ($449,000). Earnings per share were 36.8 cents (32.2 cents per share). Net tangible asset backing per share equates to $1.53 ($1.42 per share). In establishing the dividend payment level, Directors took into account sustainable profit plus future maintenance expenditure.

Shareholders will receive a consistent final dividend of 18.5 cents, which sustains a full year dividend of 26.0 cents, fully imputed. The dividend payment represents a gross return of 5.2% (net 3.7%), based on a share price of $7.00 as at 30 June 2018.

A dividend payout ratio of 71% results for 2018 (using reported NPAT) and equates to 61% of free cash flow. Mr Chapman said that “South Port has recently been successful in renewing its insurance cover, including material damage, up to $250 million.” Insurance companies are now raising the issue of whether ports need to carry out additional strengthening work on critical assets in coming years to maintain insurance cover.

This could have significant cost implications for the Port and Management has started to investigate these requirements.

Not enough demand to move Ports of Auckland to Northport

Aug. 24 (BusinessDesk)


Port of Tauranga chief executive Mark Cairns welcomes the government’s review of the upper North Island logistic and freight systems but says there isn’t enough demand to justify moving Ports of Auckland to Northport.

He also sounded a warning about proposed legislative changes to employment law.

Earlier this month, the government announced a five-member working group would conduct a review to ensure New Zealand’s supply chain is fit for purpose in the longer-term and indicated the review will include a feasibility study to explore moving the location of the Ports of Auckland, with “serious consideration” to be given to Northport.

Cairns told BusinessDesk that Port of Tauranga welcomes the “greater focus” on the issue and noted “there is an issue of capital discipline in the port sector,” with some ports getting a return on equity as low as 2 percent.

In June the auditor general said a variety of accounting treatments used by the country’s port companies makes it hard to compare and greater alignment would increase transparency. The port sector generated an average return on equity of 8.9 percent in the June 2017 year, however, returns by individual companies ranged between 2.3 percent and 26.1 percent, according to the auditor general.

Port of Tauranga seeks a minimum return of 8.5 percent after tax on major capital investments.

Regarding any changes to infrastructure – such as moving Ports of Auckland – “it has to be a rational decision for what the import and export demands are for the country and there just isn’t the trade demand in Northland,” Cairns said. He emphasised the need for the review to have a clear picture of import and export cargo demand across the nation.

Port of Tauranga has a 50 percent stake in Northport. The other 50 percent is held by Marsden Maritime Holdings, which counts Ports of Auckland as a 19.9 percent shareholder.

Regarding his overall confidence in the economy, Cairns said Port of Tauranga is keeping a close eye on any fallout from geopolitical tensions as it could potentially impact demand. Earlier the company said it operates in a complex environment with many factors outside its immediate control.

“It is very much a watching game. We are seeing effects on the dollar and that perversely helps exports but will have an impact on us from rising fuel prices,” he said. “We expect to have to deal with that in the coming year.”

Regarding the Employment Relations Amendment Bill, he said Port of Tauranga has no problem with collective bargaining or dealing with unions because “that is how we do business now.”

However, “the one aspect of the bill that we really have a problem with is the prospect of multi-employer collective agreements.” According to Cairns, if the legislation passes “you could conceivably have a number of unions approaching all ports in New Zealand to have a one agreement applying to all ports.”

He said that is a “real problem” given that a number of ports have had industrial action over the past year and under a multi-employer collective agreement every port would be shut when another port is having industrial action and “that would be a dreadful outcome for New Zealand.”

Port of Tauranga shares gained 3.4 percent to $4.92 after it said net profit rose to a record $94.3 million in the year to June 30 from $83.4 million a year earlier. Container volumes lifted 8.9 percent to nearly 1.2 million twenty-foot equivalent units, and overall cargo was up 10.2 percent to almost 24.5 million tonnes.

Contrasting financial years for country’s largest ports

The full year to June financial results for New Zealand’s two largest ports were poles apart, with the Port of Tauranga posting a 13% profit gain while Christchurch’s Lyttelton Port Company’s profit declined 16.6%.

Port of Tauranga, New Zealand’s biggest port company, posted a 13% rise in annual profit, driven by record cargo volumes, and said it is planning to expand capacity.

Conversely Lyttelton Port Company’s annual profit fell as strike action and costs of hiring additional staff outweighed higher revenue.

At the Port of Tauranga revenue increased 10.9% to $283.7million and net profit rose 13% from $83.4million a year ago to $94.3million.

At Lyttelton Port Company, revenue rose 7% to $122million, but lagged behind the $126million flagged in its statement of intent, while net profit fell 16.6% from $14.4million to $12million.

Forsyth Barr broker Suzanne Kinnaird said Tauranga delivered a “strong result”, in line with expectations, with its underlying profit gain of 123% driven by cargo growth of 11%.

“Port of Tauranga has recorded a second year of meaningful earnings growth, driven by cargo volumes,” she said.

Tauranga’s container volumes lifted 8.9% to nearly 1.2million twenty-foot equivalent units (TEUs), and overall cargo was up 10.2% to almost 24.5million tonnes.

Tauranga’s chief executive Mark Cairns said in the annual report the company’s expansion programme to accommodate larger vessels, coupled with New Zealand’s buoyant economy, resulted in the 10.2% increase in cargo volumes.

Volumes lifted across all major cargo categories, with export logs up 14.3% in volume and dairy products up 4%.

Tauranga paid a final dividend of 7c, taking total dividends to 12.7c, up 13.4% on a year ago.

Mrs Kinnaird noted capital expenditure guidance of $60 million was ahead of expectations and was “cautious” that continued cargo growth would be sustained, and might decline in the financial year ahead.

Lyttelton Port Company chief executive Peter Davie said its revenue increase was mainly driven by the port’s container terminal and MidlandPort, its inland port at Rolleston.

Profitability was impacted by strike action, hiring additional staff in the container terminal to meet customer demand, and more investment in health and safety, he said.

The port company did not say whether it would pay a dividend to the Christchurch City Council.

It paid $8million in dividends in 2017, and had targeted a 2018 payment of $1million in its statement of intent.

Container volumes rose 5.7% to 424,560 TEUs and would have been higher, but industrial action in March and April reduced TEUs by about 10,000.

The company said yesterday it gained resource consents that would allow the infrastructure development required to manage the forecast doubling of Canterbury freight volume during the next 15 years.

“It was vital we obtained the resource consents that permit dredging of the harbour shipping channel to deepen and extend it, [and] the expansion of the container terminal land area at Te Awaparahi Bay,” Mr Davie said.

These two developments were crucial for the port to grow Canterbury’s trade.

The dredging programme meant larger container ships would be able to call at Lyttelton.

“At the same time we will expand the reclamation by 24ha and construct a new 700m container wharf,” he said.