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20th October 2018

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Month: October 2018

Rolls-Royce and Intel announce autonomous ship collaboration

Rolls-Royce and Intel are intending to collaborate on designs for sophisticated intelligent shipping systems that will make commercial shipping safer, the parties announced yesterday.

This will advance smart, connected and data-centric systems for ship owners, operators, cargo owners and ports, bringing together the expertise in advanced ship technology from Rolls-Royce with components and systems engineering from Intel. With a focus on safety, new ships will have systems with the same technology found in smart cities, autonomous cars and drones.

The new shipping intelligence systems will have data centre and artificial intelligence capabilities as well as sophisticated edge computing throughout that independently manage navigation, obstacle detection and communications. The components embedded in these systems are dedicated to work load consolidation, edge computing, communications and storage, including:

  • Intel® Field Programmable Gate Array (FPGA) technology will solve design challenges associated with shipping intelligence by providing engineers with a flexible platform and the IP and components for edge operations such as obstacle detection and navigation
  • Intel® Xeon® Scalable Processors optimised for High Performance Computing (HPC) technology will manage complex modelling of ship functions, with future developments using learning models to support fully autonomous operations
  • Memory and storage, including Intel® Optane™ DC Persistent Memory and Intel® Optane™ SSD Intel® 3D NAND SSD will ensure ship intelligence systems are reliable, responsive and support extracting maximum value from the data generated through real-time analysis and systems modelling

Kevin Daffey, Rolls-Royce, Director, Engineering & Technology and Ship Intelligence said: “We’re delighted to sign this agreement with Intel, and look forward to working together on developing exciting new technologies and products, which will play a big part in enabling the safe operation of autonomous ships. This collaboration can help us to support ship owners in the automation of their navigation and operations, reducing the opportunity for human error and allowing crews to focus on more valuable tasks.

“Simply said, this project would not be possible without the leading-edge technology Intel brings to the table. Together, we’ll blend the best of the best, Intel and Rolls-Royce to change the world of shipping.”

Adrian Criddle, General Manager and SVP of Intel UK said: “Rolls-Royce is a key driver of innovation in the shipping industry we are proud to be working with them on smart, connected and data-centric systems that will be a foundation for safe shipping operations around the world in the future.”
Source: Rolls-Royce

Shipping Industry Stares Down New Fuel Restrictions

Tens of thousands of cargo ships, tankers, container ships and cruise liners belch noxious sulfuric gases and fine particles that drift over cities and cover them with smog.

It is not a pretty picture, but it is one that may change in January 2020 if a decision by the United Nations International Maritime Organization to strictly limit the amount of sulfur in maritime fuel is fully carried out.

That is a big if, because shippers have been slow either to make the switch to higher-quality fuels or install expensive equipment known as scrubbers to clean exhaust from what is known in the industry as “bunker fuel.” Oil companies are also watching and waiting, as few have upgraded their refineries to adapt to new regulations.

“It comes down to who is going to blink first,” said Neil Beveridge, an oil analyst at Sanford C. Bernstein, a research firm for investors. “So far, the shipping industry looks like it is sleepwalking into a disaster. Everyone is waiting for everyone else to make the first move.”

Methods of enforcement are also still an open question.

Billions of dollars in investments are potentially at stake, since the global demand for high-sulfur fuel amounts to more than three million barrels a day out of the 100-million-barrel-a-day market, according to industry experts.

Some economists say they believe that prices could be pushed higher when refiners reduce the production of diesel and jet fuel to produce greater quantities of cleaner marine fuel. Other analysts say the market disruption will be modest, in part because initial enforcement of the new rules may be weak.

It has been two years since the United Nations agency firmly established the 2020 deadline to reduce the sulfur content of maritime fuels to 0.5 percent from 3.5 percent, and all major global ports and shipping terminals have committed to using low-sulfur fuels.

The new regulation will not have a significant impact on carbon emissions, but public health experts say a reduction of sulfur gas emissions will reduce smog and avert millions of cases of childhood asthma. One big container ship can emit as much sulfur in a year as millions of vehicles.

Shipownerrs can switch to low-sulfur fuels, installing scrubbers that remove exhaust from high sulfur fuels or switch to cleaner liquefied natural gas. But all three options have disadvantages.

Cleaner maritime fuels can cost $250 a ton more than high-sulfur fuels, which can mean an additional annual expense of roughly $3 million for a large vessel, a significant added cost in the typically low-margin, low-profit shipping business, according to market reports.

A few shipowners, particularly cruise ship companies, are building ships that can run on cleaner liquefied natural gas.

But they represent only a tiny fraction of the industry, because installation is expensive and refueling infrastructure still needs to be built in many parts of the world. That is bound to change over the next two decades, analysts say, and the new regulations could be a catalyst.

“L.N.G. is going to be the future,” said Ram Vis, chief executive of Viswa Group, a company that tests maritime fuels and manufactures scrubbers.

Dr. Vis said in recent months he had noticed a jump in scrubber orders. But he added that it would take years for an estimated 30,000 to 40,000 ships to be outfitted with scrubbers because there are only about 30 manufacturers of the equipment worldwide.

Scrubbers can cost $5 million to $10 million apiece including installation, according to the Energy Intelligence group. Dr. Vis said they could take at least 15 days to install, requiring downtime for ships. So far, a small percentage of the global fleet has converted, industry experts said. Shippers may be reluctant to switch because they are concerned that international emissions regulations may be toughened again and that their investment will be wasted.

That leaves the refiners with challenges. The pitch-black and molasses-thick bunker fuel they produce comes from the dregs of refined products. The refiners are not technically included in the new regulations, but they will need to adjust to a new market.

Refining low-sulfur fuel requires additional processing, requiring expensive plant refitting in many operations.

American refineries, which are generally the most sophisticated, are in a strong position to refine more low-sulfur fuel. Chinese and Korean refiners will also be ready. In the meantime, Russian, European and Middle Eastern refiners may need to scramble and make expensive adjustments.

Refiners will be forced to accommodate the expected new demand for cleaner maritime fuel by transferring oil that otherwise would have gone to producing diesel, jet fuel and heating oil, tightening the market for those fuels and raising prices.

“You are going to have to borrow from Peter to pay Paul,” said Tom Kloza, global head of energy analysis at the Oil Price Information Service. He said sophisticated American refiners, including Marathon Petroleum, Valero, Phillips 66 and Exxon Mobil, would profit from the market change. “It’s going to be a magical 2019 and a very profitable 2020,” he predicted.

There still remains the question of how the new regulations will be enforced, since the United Nations agency does not have enforcement powers.

That leaves the policing tasks to flag countries like Panama, which registers vessels but may not be aggressive about monitoring and enforcing rules far from their borders. Shippers may have to be careful about the loss of insurance coverage, reputational damage and stiff fines if they are caught.

Analysts predict that at least 5 percent to 10 percent of shippers will cheat.

“This will have to be a broad-based undertaking for this to be a truly effective global requirement,” said Jose L. Valera, an energy lawyer in the Houston office of Mayer Brown. “If nobody picks up the mantle and makes this a requirement it’s possible it won’t be implemented.”
Source: New York Times

Prospects for the multipurpose shipping sector are improving

Surging growth in renewable energy generation around the world and a construction boom in South East Asia that is expected to run for the next 10 years bode well for the once ailing multipurpose shipping fleet.

In the latest edition of Drewry’s Multipurpose Shipping Forecaster report we declare that we remain cautiously optimistic on the outlook for the sector. There are some caveats to this optimism as global general cargo demand is forecast to grow at a rate of just 2% per year to 2022, while the multipurpose and heavylift fleet is expected to contract at less than 1% per year over the same period. Meanwhile, the threat of a trade war continues to loom over the horizon and the competing sectors are not yet secure enough to move from this sector.

Multipurpose vessels benefit from the growth in demand for both breakbulk and project cargo and, while it is clear that both are effected by modal competition and trade tariffs, the latter has seen some renewal in certain sectors.

In BP’s latest energy outlook, global consumption of fuel in 2017 is compared to 2016 (see Figure 1). Although renewable energy consumption is still a minor part of the global mix, it is growing at a faster rate (almost 17% year-on-year) than any of the other fuel types.

Fig.1: Global consumption of primary energy by fuel type (million tonnes oil equivalent)

Source: Drewry Maritime Research

Wind energy provided more than half of that renewables growth, which is positive news for the multipurpose (MPV) sector. The equipment needed for a wind farm, including the blades and towers, is ideally suited to the MPV fleet. The equipment is large, unwieldy (project) cargo, which needs a vessel that can both lift and stow it correctly. Also the top two manufacturers are based in Europe, whilst the top regions for growing installed capacity are in Asia – a perfect trade route and a growing market for project carrier tonnage.

China reported a 25% increase in power generation from renewables in 2017, compared to 2016, to 106.7 million tonnes oil equivalent (mtoe), which is 22% of the global renewable power. Within that global increase, some regions have a much bigger share than others. Asia Pacific represents some 36% of renewable energy consumption (including China alone amounting to 22%). The EU is worth 33% and North America 23%. Asia Pacific is also the fastest growing region with 2017 consumption up almost 25% on 2016.

The other significant factor in our uplift for demand is a region-wide constriction boom for South East Asia that is expected to last the next ten years. It is largely fueled by China’s One Belt One Road (OBOR) initiative, which will link China to Europe through Central and South-East Asia. The latter is a pivotal element in the initiative and it is expected that China will develop these projects aggressively. India’s annual construction investment is also expected to increase by about a third over the next five years to an average $170 billion per year.

Fig.2 Development of dry cargo demand (million tonnes)

Source: Drewry Maritime Research

The outlook for the competing sectors, although mixed going into the final quarter of the year, remains positive for the medium term. It is true that the impact of US tariffs is more keenly felt by the container shipping lines, but here too there is still growth forecast, albeit at a slightly weaker rate than previously expected.

There may be trouble ahead but the green shoots of recovery appear weather-proofed to withstand the volatility expected to the end of 2018. Longer term, owners are more positive post 2020 when the true picture of the various environmental regulations will have become clearer. Maybe we should upgrade our forecast to reasonably optimistic?
Source: Drewry

NZ Transport Agency allocates $62m to upgrade Wairarapa rail line

rural railway line

The New Zealand Transport Agency (NZ Transport Agency) has allocated more than NZ$96m ($62.06m) to upgrade the Wairarapa rail line in a bid to improve transportation and tourism in the Wellington region.

The funding forms part of the government’s NZ$16.9bn ($10.93bn) transport investment under the National Land Transport Programme to bolster rail and road network across the country.

New Zealand Minister for Transport Phil Twyford opined that the Wairarapa investment will help to prevent further deterioration and service disruptions on the line.

Twyford said: “Passengers have a right to expect a safe and reliable service, and this investment will ensure the long-term future of this route.

“Passengers have a right to expect a safe and reliable service, and this investment will ensure the long-term future of this route.”

“It also highlights the importance our Government places on public transport.”

The total investment consists of NZ$50m ($32.3m) for track infrastructure works, and NZ$46.2m ($29.9m) for the rail line south of the Rimutaka Hill tunnel as well as for double-tracking works between Trentham and Upper Hutt.

New Zealand’s state-owned agency for rail operations KiwiRail also welcomed the investment.

KiwiRail acting chief executive David Gordon said: “The network is ageing and parts of it are nearing the end of their useful life, which means there have to be speed restrictions and more likelihood of delays.

“This funding will allow KiwiRail to get the network up to standard and make improvements that will allow for more and longer trains.”

Overall, New Zealand allocated a total of NZ$196m ($126.7m) to upgrade rail infrastructure across the Wellington region. Construction at the Wairarapa rail line forms part of this investment and is scheduled to begin in April next year.

Final call to save the world from ‘climate catastrophe’

It’s the final call, say scientists, the most extensive warning yet on the risks of rising global temperatures.

Their dramatic report on keeping that rise under 1.5 degrees C says the world is now completely off track, heading instead towards 3C.

Keeping to the preferred target of 1.5C above pre-industrial levels will mean “rapid, far-reaching and unprecedented changes in all aspects of society”.

It will be hugely expensive – but the window of opportunity remains open.

After three years of research and a week of haggling between scientists and government officials at a meeting in South Korea, the Intergovernmental Panel on Climate Change (IPCC) has issued a special report on the impact of global warming of 1.5C.

The critical 33-page Summary for Policymakers certainly bears the hallmarks of difficult negotiations between climate researchers determined to stick to what their studies have shown and political representatives more concerned with economies and living standards.

Despite the inevitable compromises, there are some key messages that come through loud and clear.

“The first is that limiting warming to 1.5C brings a lot of benefits compared with limiting it to two degrees. It really reduces the impacts of climate change in very important ways,” said Prof Jim Skea, who co-chairs the IPCC.

“The second is the unprecedented nature of the changes that are required if we are to limit warming to 1.5C – changes to energy systems, changes to the way we manage land, changes to the way we move around with transportation.”

What’s the one big takeaway?

Graphic showing what is likely to be affected by different rises in temperature
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“Scientists might want to write in capital letters, ‘ACT NOW, IDIOTS,’ but they need to say that with facts and numbers,” said Kaisa Kosonen, of Greenpeace, who was an observer at the negotiations. “And they have.”

The researchers have used these facts and numbers to paint a picture of the world with a dangerous fever, caused by humans. We used to think if we could keep warming below two degrees this century, then the changes we would experience would be manageable.

Not any more. This new study says that going past 1.5C is dicing with the planet’s liveability. And the 1.5C temperature “guard rail” could be exceeded in just 12 years, in 2030.

We can stay below it – but it will require urgent, large-scale changes from governments and individuals and we will have to invest a massive pile of cash every year, about 2.5% of global gross domestic product (GDP), the value of all goods and services produced, for two decades.

Even then, we will still need machines, trees and plants to capture carbon from the air that we can then store deep underground – forever.

What can I do?

The report says there must be rapid and significant changes in four big global systems:

  • energy • land use • cities • industry

But it adds that the world cannot meet its target without changes by individuals, urging people to:

  • buy less meat, milk, cheese and butter and more locally sourced seasonal food – and throw less of it away • drive electric cars but walk or cycle short distances • take trains and buses instead of planes • use videoconferencinginstead of business travel • use a washing line instead of a tumble dryer • insulate homes • demand low carbon in every consumer product

Lifestyle changes can make a big difference, said Dr Debra Roberts, the IPCC’s other co-chair.

“That’s a very empowering message for the individual,” she said. “This is not about remote science; it is about where we live and work, and it gives us a cue on how we might be able to contribute to that massive change, because everyone is going to have to be involved.”

“You might say you don’t have control over land use, but you do have control over what you eat and that determines land use.

“We can choose the way we move in cities and if we don’t have access to public transport – make sure you are electing politicians who provide options around public transport.”

The hottest that this location has ever been…

map showing where temperature records were broken across the world this summer

Tap or click to explore the data

Source: Robert A. Rohde/Berkeley Earth. Map built using Carto

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Five steps to 1.5

  1. Global emissions of CO2 need to decline by 45% from 2010 levels by 2030
  2. Renewables are estimated to provide up to 85% of global electricity by 2050
  3. Coal is expected to reduce to close to zero
  4. Up to seven million sq km of land will be needed for energy crops (a bit less than the size of Australia)
  5. Global net zero emissions by 2050
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How much will all this cost?

It won’t come cheap. The report says to limit warming to 1.5C, will involve “annual average investment needs in the energy system of around $2.4 trillion” between 2016 and 2035.

Experts believe this number needs to be put in context.

“There are costs and benefits you have to weigh up,” said Dr Stephen Cornelius, a former UK IPCC negotiator now with WWF. He says making big emissions cuts in the short term will cost money but be cheaper than paying for carbon dioxide removal later this century.

“The report also talks about the benefits as there is higher economic growth at 1.5 degrees than there is at 2C and you don’t have the higher risk of catastrophic impacts at 1.5 that you do at two.”

What happens if we don’t act?

The researchers say that if we fail to keep temperature rises below 1.5C, we are in for some significant and dangerous changes to our world.

You can kiss coral reefs goodbye, as the report says they would be essentially 100% wiped out at two degrees of warming.

Global sea-level will rise about 10cm (4in) more if we let warming go to 2C. That may not sound like much but keeping to 1.5C means that 10 million fewer people would be exposed to the risks of flooding.

There are also significant impacts on ocean temperatures and acidity, and the ability to grow crops such as rice, maize and wheat.

“We are already in the danger zone at one degree of warming,” said Kaisa Kosonen, from Greenpeace. “Both poles are melting at an accelerated rate; ancient trees that have been there for hundreds of years are suddenly dying; and the summer we’ve just experienced – basically, the whole world was on fire.”

In 1980, the minimum sea ice extent was 7.7 million square kilometres. This year it was at 4.7 million square kilometres.2012 was the lowest year on record, when it was down to 3.6 million square kilometres - less than half what it was in 1980.

Sea ice extent is much lower than in 1980. It reached its lowest level in 2012
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Is this plan at all feasible?

Analysis by David Shukman, BBC science editor

The countdown to the worst of global warming seems to have accelerated. Seriously damaging impacts are no longer on a distant horizon later this century but within a timeframe that appears uncomfortably close.

By the same token, the report’s “pathways” for keeping a lid on temperatures all mean that hard decisions cannot be delayed:

  • a shift away from fossil fuels by mid-century
  • coal phased out far sooner than previously suggested
  • vast tracts of land given over to forests

It’s mind-bending stuff and some will say it’s hopelessly unrealistic, a climate scientists’ fantasy. So is any of it plausible? On the one hand, the global economy relies on carbon and key activities depend on it. On the other, wind turbines and solar panels have tumbled in price and more and more countries and states such as California are setting ambitious green targets.

Ultimately, politicians will face a difficult choice: persuade their voters that the revolutionary change outlined in the report is urgently needed or ignore it and say the scientists have got it wrong.

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Is all this about saving small island states?

The idea of keeping the global temperature rise to 1.5 is something very close to the hearts and minds of small island and low-lying states, which fear being inundated with flooding if temperatures go to two degrees.

But over the three years that the report was in preparation, more and more scientific evidence has been published showing the benefits of staying close to 1.5C are not just for island nations in the Pacific.

“If you save a small island country, then you save the world,” said Dr Amjad Abdulla, an IPCC author, from the Maldives. “Because the report clearly states that no-one is going to be immune. It’s about morality – it’s about humanity.”

How long have we got?

Not long at all. But that issue is now in the hands of political leaders. The report says hard decisions can no longer be kicked down the road. If the nations of the world don’t act soon, they will have to rely even more on unproven technologies to take carbon out of the air – an expensive and uncertain road.

“They really need to start work immediately. The report is clear that if governments just fulfil the pledges they made in the Paris agreement for 2030, it is not good enough. It will make it very difficult to consider global warming of 1.5C,” said Prof Jim Skea.

“If they read the report and decide to increase their ambitions and act more immediately, then 1.5C stays within reach – that’s the nature of the choice they face.”

Campaigners and environmentalists, who have welcomed the report, say there is simply no time left for debate.

“This is the moment where we need to decide” said Kaisa Kosonen. “We want to move to clean energy, sustainable lifestyles. We want to protect our forests and species. This is the moment that we will remember; this is the year when the turning point happened.”

Taxes add to $600 million transport surplus

The Transport fund financed by fuel taxes posted a $634 million surplus, adding fire to the debate around the role of tax in high fuel prices.

Four months before the Government’s 3.5 cent fuel excise increase kicked in, Transport Minister Phil Twyford was given a pleasant surprise — an expected $634 million surplus in the National Land Transport Fund, the pot of money funded by fuel taxes.

Documents obtained by Newsroom under the Official Information Act show the NLTF was expected to post a $634 million surplus for the years 2015-18. The document, a May briefing to Minister Twyford, shows that higher than expected revenue and lower than forecast expenditure would generate the surplus.

The period covered was before the Government increased fuel excise by 3.5 cents in September and does not include the Regional Fuel Tax, which raises revenue for Auckland Council.

“Unjustified” but already budgeted for

National Party Transport Spokesperson Paul Goldsmith told Newsroom the surplus showed the Government’s fuel taxes were “unjustified”.

“The surplus is enough to cover 57 per cent of the tax the Government is trying to source – more than the first two fuel tax increase are expected to raise over the next three years,” Goldsmith said.

“The NLTF is expected to have $634 million in surplus that has been carried over from 2015-2018 and the Government is planning to raise $1.124 billion in new national fuel excise increases over the next three years,” he said.

The documents said the surplus would be carried forward into the next round of NLTF spending. A spokesperson for Minister Twyford said the funding will contribute to new projects going forward, in addition to the revenue raised from fuel taxes.

National Party Leader Simon Bridges, who was Transport Minister during most of the period in which the fund posted surpluses, launched a petition on Friday to have the regional fuel tax and the increase in fuel taxes repealed.

“The average New Zealand household is now paying $200 a year more in petrol taxes than this time last year and in Auckland that figure is $324,” Bridges said.

The briefing noted that in spite of posting big surpluses, the future of the fund was far from secure.

Changing economic conditions and the rise of more fuel efficient or electric vehicles would put pressure on the sustainability of the fund.

Where does the money come from? 

The NLTF is a Government fund administered by New Zealand Transport Authority, which funds roads and other transport related projects throughout the country.

Every three years, the Government draws up a Government Policy Statement for transport, which roughly directs how the money will be divided up and the level of funding that will be given to the NLTF. The most recent GPS, for example, emphasised local roading projects and safety over highways.

The GPS uses Treasury forecasts of economic growth to estimate the revenue that will flow into the fund, which helps it to estimate the amount of money it has to spent.

The surplus comes from revenue consistently exceeding those forecasts, due to faster-than-expected population growth and increased road use. In 2015/16 the fund raised $3.5 billion, rather than the $3.3 billion forecast.

These surpluses continued until the 2017/18 year, when the fund was forecast to raise $357 million or 3.4 percent above its forecast. The briefing was drawn up in March, when the financial year still had three months to run so it’s final figures were estimates.

“Expenditure should be as close to target as possible” 

On the other side of the ledger, NZTA consistently underspent on transport projects over the three years.

At March 2018, expenditure was 88 percent of the three year budget, although the fund had targeted to spend just 91 percent of the budget.

This means the fund had revenues roughly three percent higher than forecast and expenditure roughly three percent lower.

The briefing said NZTA aimed to have expenditure run as close as possible to target.

“Although expenditure for the NLTP can be underspent for a variety of reasons, expenditure should be as close to target as possible,” it said.

“Any NLTF surplus will carry over into the next financial year and GPS 2018.

…but a surplus doesn’t mean an end to taxes 

The Ministry of Transport warned Twyford that the fund’s golden run was likely to run. As worsening economic conditions and changing vehicle user habits depleted revenue.

The Ministry uses the latest Treasury figures to forecast what revenue is likely to be in the future.

It said that lower than previously forecasted real GDP, which is correlated with vehicle kilometres travelled impacted upon the forecast.

Lower migration would also impact the fund, as it flowed-on to fewer new cars on the road.

The train will get through – eventually

The washout which has delayed the reopening of the Napier to Wairoa railway line. PHOTO/FILE.
The washout which has delayed the reopening of the Napier to Wairoa railway line. PHOTO/FILE.

The reopening of the Napier-Wairoa railway line could be delayed until April next year as a result of a washout just north of Raupunga.

The line had been scheduled for reopening by the end of this year to start dealing with the wall of timber from forestry in Northern Hawke’s Bay, but the delay was confirmed by KiwiRail acting chief operations officer Henare Clarke yesterday, five weeks after the heavy rain that caused a washout which left 45 metres of track and sleepers suspended in the air approaching a bridge.

Clarke said a detailed assessment had shown it to be “a more complex situation than our initial assessments indicated.

“KiwiRail’s preferred option is to rebuild the embankment, which will involve removing a significant volume of slip material and backfilling on the site,” he said.

KiwiRail is still working through specifics such as consents, community and iwi liaison, design and associated construction programmes, and now expects the extra work to be completed by April. It is also still assessing the extra cost.

“While this setback is unfortunate we remain committed to reopening the rail line for forestry and are working closely with the other stakeholders and forestry owners to see if there are other options for rail freight while this section is repaired.

Work on reinstatement of the line which had been mothballed more than five years began immediately after KiwiRail was allocated $5 million in line reinstatement funding from the Government’s Provincial Growth Fund in February.

New KiwiRail locomotives arrive

Four of the new DL locomotives arriving at the Mount Maunganui railyards yesterday, hauled by an earlier member of the class.
The latest batch of KiwiRail’s new DL class diesel electric locomotives has arrived at the Port of Tauranga.

The 15 engines, ordered in 2016, are joining the 48 the national rail operator already has on its books, bringing the total number in the class to 63. The first DLs arrived from Chinese manufacturer CRRC’s Dalian Locomotive Works in 2010.

After unpacking and initial testing at the Mount Maunganui KiwiRail yards, the locomotives will be transferred to Hamilton to be commissioned. They’re expected to see service on all main lines in the North Island, including the East Coast line through Tauranga, and the North Island Main Trunk.

The move to add a further 15 locomotives to the DL fleet was made by KiwiRail following its controversial decision to mothball the Main Trunk electrification, which is still expected to go ahead despite opposition from environmental groups and unions.

KiwiRail also raised eyebrows in deciding to stick with the Chinese manufacturer after earlier units of the class suffered from unreliability and asbestos contamination issues.

Last year the incoming Labour-led Government pledged to direct KiwiRail to reverse the decision to discontinue using electric locomotives on the Main Trunk, and has been criticised for not as yet acting on its promise.

The state-owned company said however that it needed the new locomotives regardless of the electrification issue to replace ageing engines in its fleet.

Ports of Auckland net profit rises 27 per cent

Ports of Auckland CEO Tony Gibson. Photo / File
Ports of Auckland CEO Tony Gibson. Photo / File

Ports of Auckland reported a 27 per cent lift in net profit, boosted by some one-off gains and a full year of revenue from its Nexus Logistics and Conlinxx units.

Reported net profit for the year to June 30 was $76.8 million, up from $60.3m the year before. But that included $17.6m for items related to asset valuation changes and impairments, compared to $5.3m in the 2017 year.

Ports of Auckland will pay a dividend of $51.1m to the Auckland Council, slightly down from $51.3m the year before.

Group revenue was $243.2m, up $20.8m. Freight volumes increased and the port benefited from buying out its joint venture partner in Nexus Logistics in May 2017. That brought Conlinxx, which manages Ports of Auckland’s Wiri inland port, back under its control.

The country’s largest port said that container volumes were up 2.2 per cent to the equivalent of 973,722 twenty-foot units, while breakbulk and bulk volumes were up 4.8 per cent to 6.77 million tonnes. The container terminal team delivered an average crane rate of 35.63 moves an hour this year, nearly one move per hour more than in the previous year.

The company said significant progress has been made on the automation of its container terminal, due to go live in the second half of the 2019 calendar year.

It has also completed earth works at the Waikato Freight Hub and started construction of the first freight handling facility for Open Country Dairy.

Road and rail connections will be built during the next 12 months and the hub will open for business by mid-2019, it said.

As a result, capital expenditure was $130.5m, versus $88.2m in the year to June 2016.

“We’re making a significant investment in our people, technology and infrastructure to establish a platform for sustainable future returns, with

Looking ahead, chair Liz Coutts said the risks to the trading environment are similar to last year.

Container shipping lines continue to consolidate, with the top 10 lines globally now accounting for 80 per cent of all container traffic.

In New Zealand, the largest line has captured around 50 per cent of the market and the number of container lines calling at Ports of Auckland is down to eight as a result of mergers and acquisitions.

“We face relentless pressure to increase efficiency and cut costs,” she said.

Coutts said the company is also mindful of the potential threat to the global economy from the rise of protectionism and a possible trade war.

Any global economic slowdown that resulted would probably affect New Zealand and reduce global shipping volumes.

However, “the company is in a good position to weather such an event,” she said.