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21st August 2018

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Ports of Auckland

New KiwiRail chair pops up on upper North Island port study group

New KiwiRail chair pops up on upper North Island port study group. Photo: Lynn Grieveson

Newly appointed KiwiRail chair Greg Miller has also been appointed to a five-member working group charged with writing a new upper North Island supply chain strategy to guide the government’s desire to integrate port, rail and road transport infrastructure planning for the country’s economic and population epicentre.

The Ministry of Transport is close to announcing the five person group, to be chaired by former Northland mayor and health board chairman Wayne Brown, which will advise on a range of major transport and infrastructure issues, including “the current and future drivers of freight and logistics demand, including the impact of technological change; a potential future location or locations for Ports of Auckland, with serious consideration to be given to Northport”; and “priorities for other transport infrastructure, across road, rail and other modes and corridors such as coastal shipping”.

A Northport redevelopment could include refurbishment and extension of rail freight services into Northland and to NorthPort, and could ultimately include moving the Royal New Zealand Navy’s Devonport base to Whangarei.

Miller’s appointment to the KiwiRail chairmanship was announced yesterday after he resigned as chief executive at Toll Holdings on Monday and was heavily backed by State-Owned Enterprises Minister Winston Peters against initial objections from the Treasury and Finance Minister Grant Robertson.

The state-owned rail company is therefore changing both its chair and deputy, with both Trevor Janes and Paula Rebstock respectively stepping down, and its chief executive following the announcement last month by current KiwiRail CEO Peter Reidy that he was taking up a senior role at Fletcher Building. That decision is understood to have been prompted by the planned appointment of Miller, who was CEO at KiwiRail’s predecessor, TranzRail, at the time it was sold back to the government by Toll in 2008.

Also on the working group is a former TranzRail group general manager, Noel Coom, in another sign of NZ First ministers Peters and Shane Jones’ determination to inject deeper knowledge of transport and logistics into government thinking on transport and infrastructure.

Susan Krumdieck, a professor in mechanical engineering at Canterbury University with long experience consulting for local government, government departments and community groups on transport, energy and future demand projects will also join the supply chain working group, along with Sarah Sinclair, a construction and infrastructure specialist for law firm MinterEllisonRuddWatts.

Its fifth member is Shane Vuletich, who has represented the Society for the Protection of Auckland Harbours lobby group in public debate on the future of the Auckland central city port, and is managing director of the Fresh Information Company, a strategy and forecasting analysis business, with tourism, major events and infrastructure planning experience,

“A system wide review of the Upper North Island supply chain is important because about 55 percent of New Zealand’s freight originates in or is destined for, the Northland, Auckland, Waikato and Bay of Plenty regions,” the MoT’s explanation of the working group says, noting its recommendations could include “investment in the regions, and that the government might need to invest”.

No timetable has yet been set for outcomes from the study, the terms of reference for which were agreed last December.

Simon Wilson: Auckland’s port has to shift but where will it go?

The port has to move but there’s nowhere for it to go. That’s the problem facing Auckland as it inches towards a decision on the long-term future of its container port, the car imports, the cruise ships and the land they all currently take up on the edge of the sparkling Waitemata harbour.

It’s an unsolvable problem that has to be solved. We need a port and we need it to stay highly functional. And the land it sits on now is both publicly owned and the most valuable real estate in the country – we have the chance to create something very special there.

On Tuesday this week the Herald published a proposal by the architectural firm Archimedia for transforming the land. New beaches, a lagoon, a “volcano”, a Maori cultural centre, hospitality, apartments and offices all featured.

The proposal excited a lot of interest among our readers. The prospect of swimming and other calm-water recreation so close to the city has been especially popular. So have the big new parklands and the 8.2km of boardwalks and other public walkways/cycleways offered by the proposal.

We’ve also heard concerns. Some ask why commercial development will be allowed on the site. Others want to know where the port will go.

The value of commercial activity is clear enough. Apartments to house 8000 people will help provide population density, giving life to the precinct. The land would be made leasehold, not freehold, and commercial developments will pay for public amenities.

Will that mean a new wall of buildings to block the views? The answer depends entirely on the final designs and the consenting process. It doesn’t have to be a problem.

The question of where the port will go is far from settled. But whether it has to shift has already been resolved. It’s worth remembering how that happened.

In 2015 then-mayor Len Brown set up a Port Future Study with a Consensus Working Group. The Chamber of Commerce and the Employers and Manufacturers Association were involved, along with Generation Zero and Urban Auckland, Ngati Whatua and the Tamaki Alliance, property developers, resource management experts, shipping, freight and logistics companies, and Ports of Auckland Ltd itself. It was a high-powered, diverse and very representative group.

A year later, in July 2016, they reached a remarkable consensus. The group agreed:

•The existing port is not big enough for the freight and cruise demands it will face in 25 to 40 years. (The port handles close to one million containers a year now; that’s expected to rise by a further million every 20 years.)

•Rail and road links out of the port will reach capacity within the same period, if not earlier.

•Over the next 20 or so years the port will require extra capacity on its existing site, “prior to a new port being established”.

•Economic, environmental, cultural and social factors are all critical in deciding the future of the port and of the port land.

•It is in Auckland’s best interests to keep all the existing functions of the port. So, for example, the city would lose out if car imports were shifted to Northport, near Whangarei.

•Other North Island ports will lack the long-term capacity to take over entirely from the Auckland port.

•Taking all this into account, there is “sufficient probability” that a new port for freight will be required. Planning should proceed on that basis.

•Berths for cruise ships should be retained in the city centre.

A long list of 28 site options was identified, including Northport and Tauranga. That was narrowed to eight and then finally to two: the Firth of Thames and the Manukau Harbour.

The hope was that all these conclusions would become the foundation for debate and planning about the future of the port.

Since then, the Government has changed and the coalition agreement between Labour and New Zealand First commits them to a ports future study of their own. The details of that are soon to be announced.

NZ First campaigned in the election for the car import business to be relocated to Northport, and other functions to be dispersed to the regions too. However, Infrastructure Minister Shane Jones told the Herald this week that the chief executive of Ports of Auckland and others had been briefing him and what they said had “taken my fancy”.

Shifting the port is not an easy proposition, Jones said, and he understood that much better now.

Why the Firth of Thames or Manukau Harbour? The first part of the answer is that the most important site is not either of those, or the current Waitemata site. It’s Wiri.

That’s where Ports of Auckland has its the inland port, where much of the freight is taken for sorting and dispatch. Wiri is the fast-growing heart of freight logistics in the upper North Island.

The Manukau Harbour is a very short hop, across largely open land, to Wiri. The Firth of Thames would also be relatively easy to connect to Wiri, with a dedicated road and rail corridor through the Hunua Ranges. Both options would allow freight capacity to grow without the transport links disrupting commuter traffic.

A port in the Firth of Thames would be on a new island connected by a causeway. There are many breeding grounds for birds in the area but, surprisingly, around the world port activity has not been disruptive to bird breeding.

A port in the Manukau would require extensive dredging, and shipping would be subject to the wilder conditions of the west coast and the Manukau Harbour entrance.

There are many other environmental, cultural and social issues to be considered. The cost of shifting the port was identified by the Port Future Study as being $5 billion, although there are other analysts who dispute this.

Meanwhile, this week the Auckland Council received an officials’ report on Ports of Auckland’s own 30-year plan. It includes the complete demolition of Marsden Wharf, a building for handling car imports, a hotel and a further extension of Bledisloe Wharf into the harbour.

That extension was to be 40m, but Ports of Auckland has scaled it back to 13m.

Mayor Phil Goff said he didn’t know if the hotel was a good idea or not, but noted that Ports of Auckland didn’t need a decision on it for five to 10 years. He also said he was “frankly uncomfortable even with the 13m extension” but was not going to oppose it.

Lindsay Mackie and Sean Park of Archimedia presented their plan at the same meeting. Goff was enthusiastic, calling it “a great design” and “a great first step”.

Planning committee chair Chris Darby was also keen. He called it “extremely stimulating” and said it was a reminder to council not to let Ports of Auckland do anything that would compromise the longer-term potential of the site.

He was particularly worried about that Ports of Auckland proposal for a hotel.

Goff’s main message to councillors, in regard to both the Ports of Auckland plan and the Archimedia plan, was that they needed a bigger picture. “Look at South Bank in Brisbane,” he told his colleagues. “It used to be a decrepit port area. Look at Darling Harbour in Sydney. We could do the same in Auckland.”

He reminded councillors that Ports of Auckland, as part of the Port Future Study, had accepted it would outgrow its site. “They knew that in 30 years they’d be out of there,” he said, adding that this was “confirmed in a workshop” the council held a couple of weeks ago.

He didn’t think either Northport or Tauranga would provide a solution for Auckland. He said it was a “no brainer” to support the Government as it considered its options for guaranteeing supply chains in the upper North Island. It was also a “no brainer” for Auckland “to protect our interests and our dividends”.

“It’s our port, not the Government’s port,” he said.

The mayor, and in all likelihood Auckland Council with him, want to shift the port but not by way of losing the car importing or any other functions. There’s a battle with the Government brewing on that one.

As for the Archimedia plan, it’s not a blueprint. Lindsay Mackie calls it a conversation starter.

Archimedia has left it to the economics and environmentalists and politicians and others to worry away about when and where to shift the port. But while that happens, it wants to inject some imaginative thinking into the debate about the current site.

It wants to lift the debate above the short-term distractions of new hotels and 13m reclamations and focus instead on big-picture planning and long-term opportunities.

It has challenged Auckland to think about what we would really like to see on our downtown waterfront.

Cement shipping to move from Auckland to Northland

The Golden Bay cement works at Portland near Whangarei.
The Golden Bay cement works at Portland near Whangarei.

New Zealand’s biggest cement manufacturer and supplier says it will move its shipping services to the South Island from Auckland to Northland.

David Thomas, Fletcher Building chief executive of building products, said Golden Bay Cement had late last year begun shipping cement directly out of Northport at Whangarei.

Around 11 per cent of all cement made in Portland will eventually be shipped to the South Island directly from Northport.

Previously, the cement had been shipped directly from Portland to Auckland where pods were filled at the Eastport facility – the large white dominant dome-shaped structure on Auckland’s waterfront.

Golden Bay was using Northport’s facilities and a newly-introduced fortnightly coastal shipping service to improve the way it moves cement powder from its plant in Portland near Whangarei, to distribution hubs around the country, Thomas said.

Paul Thorn, GBC Winstone head of cement, said that before the change to Northport last September, cement had been shipped directly from the Portland dock to Auckland.

“So we were effectively double handling the cement for the South Island.”

Stink bugs discovered on board fourth ship destined for NZ

The Sepang Express vehicle transport vessel, with red hull, docked at Ports of Auckland.

The Sepang Express vehicle transport vessel, with red hull, docked at Ports of Auckland.
 Stink bugs have been found on a fourth ship bound for New Zealand.

Two types of stink bug were found on the car carrier Glovis Caravel, operated by Japanese shipping company Mitsui OSK Lines, on the weekend.

The ship, bound for the Ports of Auckland, was redirected on Wednesday after a check conducted at sea, the company’s pure car carrier (PCC) manager Malcolm Jackson said.

“We decided not to risk bringing that bug to New Zealand.”

Jackson said the company was now looking for ports in Australia where the ship could be fumigated of its brown marmorated and yellow-spotted stink bugs.

The brown marmorated stink bug poses a risk to apples, kiwifruit, corn, tomatoes, cherries and wheat.

The brown marmorated stink bug poses a risk to apples, kiwifruit, corn, tomatoes, cherries and wheat.
 Three car carriers have already reached New Zealand’s shores with stink bug infestations this month: Armacup​’s Tokyo Car, Mitsui OSK Line’s Courageous Ace, and Toyofuji’s Sepang Express.

All three were turned away.

The port was largely empty of cars on Wednesday.

There are concerns the bug could destroy fruit and vegetable industries.

There are concerns the bug could destroy fruit and vegetable industries.
 “It’s had a huge effect. Just about every manufacturer has been affected into New Zealand,” Jackson said.

“Japan is high-risk and there are some meetings being held very soon to discuss the whole car industry at the moment.”

Jackson said Mitsui OSK had conducted a check of all ships bound for New Zealand after bugs were discovered on the Courageous Ace.

An MPI spokeswoman was unable to confirm stink bugs had been found on the Caravel, but a spokesman said earlier in the day that the third ship, the Sepang Express, was found to have 30 dead brown marmorated stink bugs on board and was treated with a knock down spray.

“After this treatment, a further 19 of the bugs were found on the vessel along with other insects.”

The spokesman said the cargo would need to be fully treated before it returned to New Zealand waters.

MPI would hold a meeting with involved parties to discuss the situation and ways to manage the risk, he said.

Ports of Auckland spokesman Matt Ball said there was no impact on the Auckland Council-owned company or its employees, “except for the fact that our vehicle-handling wharves are a bit quieter than usual”.

About 6000 cars and heavy vehicles were unable to be unloaded, but they were expected back once approved for import, he said.

“We may end up having a quiet February and a really busy month when they all come back.”

The noxious pest could cause hundreds of millions of dollars of damage to the New Zealand economy if it made it ashore.

Threatened foods included apples, kiwifruit, corn, tomatoes, cherries and wheat.

It could also invade properties and affect gardens.

Kiwifruit Vine Health (KVH) and Federated Farmers have both expressed concerns over the recent discoveries of stink bugs.

KVH chief executive Barry O’Neil said the brown stink bug could destroy fruit and vegetable industries.

“These are ships that have had hundreds of stink bugs on them and it is nothing like we have seen before.”

Federated Farmers biosecurity spokesman Guy Wigley earlier said the stink bug would have a huge financial impact on farmers if found here.

“I am worried. MPI have had this pest on their radar for a number of years.”

Stink bugs are native insects in Japan and hibernate in contained spaces during the northern hemisphere winter.

The insect releases a chemical when threatened, emitting a pungent odour.

Thousands of jobs at risk after ships with stink bugs onboard turned away from NZ ports

Tens of thousands of jobs in the car retailing industry are at risk as three ships float aimlessly in the Pacific.

The car carriers have been turned away from New Zealand ports after hundreds of marmorated stink bugs were found on board.

The pest has the potential to destroy the country’s fruit and vegetable industry.

No facility in New Zealand can effectively treat the infested ships.

Vehicle Importers Association chief executive David Vinsen says the car industry understands the danger to agriculture and MPI has done the right thing, but he says it’s causing a huge problem for his industry, which at this time of the year imports about 12,000 vehicles a month.

Vinsen says a disruption like this, even of one to two weeks, has enormous consequences and he’s worried about the jobs of tens of thousands of people who process and sell those vehicles.

Three ships, carrying cars from Japan, have all been turned around at New Zealand ports in the past week.

Vinsen says one has headed to Brisbane but has been told it can’t berth in Australia either.

He says the car industry and shipping companies need to know quickly what happens now.

The brown marmorated stink bug

• The pest is a voracious eater of horticulture produce including apples, grapes and tomatoes

• A wide range of crops would be unmarketable if damaged by the bug. In the US some growers have reported crop losses of up to 95 per cent

• It is resistant to many insecticides, making it difficult and expensive to control

• When it gets cold, the stink bug bunches up in dark spaces in homes making it a major public nuisance

Ship and cargo causing a helluva stink for farmers

Federated Farmers is calling on the Ministry for Primary Industries (MPI) to hold firm on a shipment which has been previously turned away from the Ports of Auckland.

The vessel, carrying motor vehicles from Japan, was deemed a biosecurity risk after the discovery of over 100 brown marmorated stink bugs (BMSB).

As no port in New Zealand has the capacity to fumigate the ship, it has been subsequently re-routed to Australia.

“That ship and its cargo should not be allowed anywhere near our shoreline until we have assurances that it is comprehensively fumigated with all the marmorated stink bugs destroyed,” says Guy Wigley, Federated Farmers’ Biosecurity Spokesperson.

“The threat to our primary industries is significant and the implications are huge. It could damage our economy to the tune of hundreds of millions.

“This scenario is effectively akin to the Foot and Mouth disease of the crop world- it makes arable and horticulture farmers very nervous and we have to trust in our biosecurity measures.”

Federated Farmers intends following the situation closely and is anticipating that MPI will make the right decision, on whether the shipment should be permitted to dock in the future.

“The Federation considers biosecurity a top priority and we always advocate for strict enforcement,” says Guy.

Ports of Auckland inquiry outline handed to ministers

NZ First wants more ships going to Northport, Whangarei.

NICK UNKOVICH/STUFF

NZ First wants more ships going to Northport, Whangarei.

Government ministers are considering the terms of reference for an official inquiry into moving the Ports of Auckland operations to Whangarei.

NZ First campaigned on the idea and the feasibility study was a key part of its coalition agreement with Labour.

The terms of reference are understood to involve a greater role for rail, ensuring New Zealand has better negotiating leverage with international shipping companies, and NZ First’s commitment to a structure that would stop direct competition between the New Zealand ports and instead encourage more co-operative model in which they all work in the country’s national interest.

Shane Jones has sweeping powers under his regional economic development ministerial portfolio.

KEVIN STENT/STUFF

Shane Jones has sweeping powers under his regional economic development ministerial portfolio.

No names have yet been discussed to chair the inquiry, so the terms of reference are unlikely to be finalised before Christmas. It is understood that several people have been appointed to be part of the inquiry board, and Ports of Auckland is lobbying to have its interests represented among the board’s members.

Auckland Mayor Phil Goff and Regional Economic Development Minister Shane Jones held a meeting about the inquiry on Friday morning.

Auckland mayor Phil Goff's council coffers receive around $50m from the Ports of Auckland every year.

SIMON MAUDE/STUFF

Auckland mayor Phil Goff’s council coffers receive around $50m from the Ports of Auckland every year.

It comes six weeks after Goff wrote a letter demanding the inquiry consider national, regional and Auckland interests.

Jones has been given oversight of KiwiRail, which gives him power over decisions about the railway line that would serve the Whangarei port.

The port is worth about $50 million a year to the Auckland Council, and although Goff has said it will have to move from the Auckland CBD eventually, he would like to see it remain within greater Auckland.

The council wants to disestablish Auckland Council Investment (ACIL), the council-controlled organisation that manages its major investments.That would give it more hands-on control of the Ports of Auckland board. ACIL manages $2.3 billion of assets but operates with a skeleton staff.

Jones said: “I accept there is a measure of scepticism around yet another review about our ports. What I want to emphasise is it will not be a Clayton’s review. It has to be fair to the stakeholders of Port of Tauranga, Ports of Auckland and Northport.

“But this is a government that had put in its coalition agreement that there would be serious consideration going to a more enhanced role of Northport in relation to Ports of Auckland.”

Jones said he would ensure KiwiRail was involved in discussions about the port move.

He said Treasury was still undertaking an analysis of the role KiwiRail would play in the transport network, alongside rail corridor owner the NZ Railways Corporation.

The inquiry’s terms of reference were now being considered by ministers. “Once the full Cabinet has endorsed the terms of reference, a public statement will be made.”

Goff would not get into detail about the meeting with Jones.

“We talked about the broad terms of reference for the study into the Upper North Island Ports and Supply Chain Strategy.” Goff said.

Goff said he’d spoken to Jones about it before and, on Friday, they discussed his letter.

“It makes sense that the decision we make about the Ports of Auckland meets the needs of the city, the region and the country,” Goff said, adding that it also had to make economic, environmental and social sense.

“I expressed my expectation that whatever happens in the future with the port needs to have a strong business case behind it and be evidence driven. We need to be looking at how the ports – Northport, Auckland and Tauranga – could best work together and what the infrastructure requirements are,” Goff said.

He said the inquiry was not ideologically driven and that he and Jones were both prepared to consider options. “We’re not going into it with a conclusion and working backwards.”

Goff also noted that any decision about the future of the port was an important financial investment decision for the people of Auckland.

Northport and Ports of Auckland refused to comment. Northport is already working through its own expansion plans.

 – Sunday Star Times

Ports masterplan: The future for Auckland’s downtown wharves

2 Nov, 2017 5:00am

The days of views to the Waitemata Harbour being spoiled by rows of cars on the downtown wharves could be over under a new masterplan from Ports of Auckland.

The port company has today unwrapped a draft 30-year masterplan for the 77ha of land it owns on the city’s doorstep, which includes a five-storey parking building topped with a 1ha waterfront park accessible to the public.

The carpark and park could be connected to a five-storey hotel on Quay St at the city end of the port.

The draft masterplan also includes plans for a 13m piled concrete extension at the end of Bledisloe Wharf, which the company says is essential for a new berth and the success of the other wharf projects.

 It says the extension of 1.25ha is less than 1.275ha of space it will lose by removing Marsden Wharf and cutting back a wharf on the eastern side of Bledisloe.

The extension is bound to draw attention from critics of further expansion into the harbour for port use, but is in line with the recommendations of Auckland Council’s Port Future Study last year and smaller than previous expansion plans.

Since the Herald started campaigning against a 250m expansion into the harbour in 2012, the port company has gradually shrunk back its plans. Two months ago, Ports of Auckland chairwoman Liz Coutts said it was no longer acceptable to reclaim more land.

“We are listening. That’s the new us. We are serious about the way we behave and the way we change,” ports chief executive Tony Gibson told the Herald.

Last night, Mayor Phil Goff said he did not support further extension of the port into the harbour.

“This is a proposal only and needs to be subject to public discussion. Ultimately it will go through a consent process where public can make submissions,” Goff said.

Gibson said the company accepted its owner, Auckland Council, was undertaking a project to relocate the port but finding the best location, getting consent, securing funding and building would take decades.

“In the meantime, we need to ensure that we can continue to deliver freight for our import and export customers, and to Aucklanders.

“In response we’ve developed a draft 30-year masterplan that we think balances Auckland’s economic, social and environmental needs…it creates space for freight and gives Auckland Council the time it needs to make a sound decision on where, when and how to move the port,” Gibson said.

The masterplan addresses the day-to-day port business, including automation of the Fergusson container terminal at the Tamaki Drive end of the port, to provide additional capacity to serve a population of five million people.

A 10ha reclamation of Fergusson Wharf, approved in 1998, will be completed by 2020.

Ports of Auckland masterplan proposed engineering workshop and head office picture supplied by Ports of Auckland

Ports of Auckland masterplan proposed engineering workshop and head office picture supplied by Ports of Auckland

An architecturally designed new head office building and engineering workshop will be built facing the intersection of The Strand and Quay St/Tamaki Drive to improve aesthetics and provide a legacy if the port is moved.

To address significant capacity issues on the general cargo wharves at the city end of the port, the company plans to build a five-storey carpark to hide away the 30,000 cars a month that come across the wharves. It could be built within five years.

The carpark will free up space on nearby Captain Cook Wharf, which the council has been eyeing as the city’s main cruise ship terminal. It will require an extension at a cost of $50m to $100m.

Gibson said by removing Marsden Wharf, one of several finger wharves at the city end, and part of Bledisloe Wharf, known as B1, will create nearly 1km of new general cargo berth space.

Ports of Auckland

Ports of Auckland

He said the company wanted Aucklanders to be proud of their port and the projects outlined in the draft masterplan, which could be built over the next five to 10 years.

“We’ve tried to develop a plan that fairly reflects the feedback we’ve received and also balances sometimes divergent wants and needs,” Gibson said.

Details of the draft masterplan can be found at: www.masterplan.poal.co.nz

Brian Gaynor: Winston Peters’ port plan fails to make grade

One of the more intriguing aspects of the general election campaign is New Zealand First’s policy “to move all container operations from Ports of Auckland to Northport by the end of 2027”.

According to NZ First leader Winston Peters, “the days of the Ports of Auckland as a container port and as a car yard are numbered”.

He went on to say that “New Zealand First will bring forward legislation to move all operations from Auckland to Northport. This will start with vehicles on Captain Cook Wharf ahead of the America’s Cup. Aucklanders want their harbour back while Northlanders want the jobs and opportunities that would come from Northport’s transformation”.

Peters added that this policy “is a cast iron commitment from New Zealand First but it needs New Zealand First to be in a pivotal position to demand it”.

Not surprisingly, Peters hasn’t released any details on the costs of moving Ports of Auckland to Northport.

There are three ports involved in this proposal, directly or indirectly: Ports of Auckland; Port of Tauranga, which is 220km from Auckland; and Northport, which is 144km north of the main Auckland port.

Auckland

Ports of Auckland (POA) listed on the NZX in October 1993. This followed the sale of 39.8 million shares, or 20 per cent of the company, by the Waikato Regional Council at $1.60 a share. This gave Ports of Auckland a total sharemarket value of $318 million, with the Auckland Regional Services Trust retaining its 80 per cent stake.

In April 2005 Auckland Regional Holdings announced a takeover offer for POA at $8 a share, valuing the company at $848m. This compared with the pre-offer price of $6.44 a share and Grant Samuel’s value of between $7.69 and $8.55 a share.

The $8 a share bid was successful, POA delisted and is now 100 per cent owned by Auckland Council Investments.

POA has been a disappointment under 100 per cent Auckland Council ownership. In the 13 years since 2003-04, its revenue has increased by only 35 per cent, to $222.4m, and net profit after tax by 36 per cent to $60.3m.

Tauranga

Port of Tauranga (POT) was listed in 1992 after issuing 20 million new shares at $1.05 each and the Waikato Regional Council selling all its 12.6 million shares at the same price. After the initial public offering, the company had a sharemarket value of just $80m, based on its $1.05 issue price. The Bay of Plenty Regional Council had a 55.3 per cent holding.

POT, which now has a sharemarket value of $2,960m, has been one of the most successful listed companies over the past 25 years.

For example, since 2003-04 POT’s revenue has increased by 69 per cent to $255.9m, compared with POA’s 35 per cent rise, and POT’s net profit after tax has swelled 148 per cent to $83.4m, compared with POA’s more modest 36 per cent profit increase.

Northland

Northland Port also listed on the sharemarket in 1992, shortly after Port of Tauranga. This followed the sale of 10 million shares, representing 24.1 per cent of the company, for $1.25 a share. This gave Northland Port a sharemarket value of $52m at the $1.25 IPO price, just slightly below POT’s listing value.

The Northland company provided ship handling services to the NZ Refining jetty at Marsden Point and at Port Whangarei.

In 2002 the port activities at Marsden Point and Port Whangarei were transferred to Northport, a 50/50 joint venture between Northland Port and Port of Tauranga. NZX-listed Northland Port subsequently changed its name to Marsden Marine Holdings.

Marsden Marine is now an investment company with a 50 per cent stake in Northport, valued at $46.1m, and investment properties valued at $66.4m. These include freehold land, a marina and a commercial complex adjacent to Northport.

Its largest shareholders are Northland Regional Council, with a 53.6 per cent holding, and Ports of Auckland, with 19.9 per cent stake.

Marsden Marine has been a disappointing listed company, with a sharemarket value of only $215m. The company’s directors received $198,000 for the June 2016 year, a large figure for an investment company with few employees.

Chairman Sir John Goulter, who is also chair of the hugely disappointing Metro Performance Glass, received director’s fees of $54,000 for the June 2016 year and an additional $40,000 as chairman of Northport.

The opportunity to rationalise the port sector, and reduce commercial shipping activity at the Auckland port, was missed when Ports of Auckland withdrew from merger talks with Port of Tauranga in March 2007.

The Mount Manganui based port was clearly disappointed and chief executive Mark Cairns had this to say: “The economic and financial modelling demonstrates that the merger would generate significant financial benefits to be shared with customers and shareholders alike.

“The merger would also generate substantial public benefits: reducing CO2 emissions; facilitating better opportunities for coastal shipping; and making a start on the inevitable port rationalisation that needs to occur in New Zealand in the future with the advent of larger, faster container vessels.”

He went on to say: “In a country with a population of approximately 4 million people (similar to Sydney) New Zealand’s tax base simply cannot sustain the funding of high quality road and rail infrastructure connections to all 13 ports.”

The proposed merger between Ports of Auckland and Port of Tauranga made far more sense than the Ports of Auckland/Northport scheme. There are several reasons for this, including:

• The cost of building an extensive road and rail network from Marsden Point to Auckland would be prohibitive and take decades to complete. Coastal shipping could be an alternative, but these ships would continue to use Ports of Auckland

• Northport is small and would need substantial expenditure on its facilities, particularly container handling facilities

• The move from Ports of Auckland to Northport would put huge pressure on the Marsden Point facility. For example, 673 container ships visited Auckland in the June 2017 year compared with only 36 berthing at Northport. In addition, Auckland had 181 vehicle carrier visits while Marsden Point had none in the same 12-month period. Thus, if Ports of Auckland moved its container ship and vehicle carrier operations to Northland, the Marsden Point facility would have to facilitate 854 of these vessel arrivals every year instead of 36 at present

• There is a mismatch between Northport and Ports of Auckland because the former is a bulk port and the latter is predominantly a container port. Northport had export log volumes of 2,808,000 tonnes for the June 2017 year, representing 77 per cent of its total bulk exports, while Ports of Auckland container volumes were 952,331 TEU (one TEU equals one standard 20-foot container).

The obvious solution to the Ports of Auckland issue is the partial privatisation of the company and a listing on the NZX. There are two main reasons for this.

Port of Tauranga and Auckland International Airport have been great performers as listed companies and are paying large dividends to their council shareholders. By contrast, Ports of Auckland has been a disappointment since the Auckland Council acquired its 100 per cent holding.

Under a sharemarket listing, there is a far better chance of a merger, or a joint venture agreement, between Ports of Auckland and Port of Tauranga. This is because local body politicians, who are usually opposed to these commercial agreements, would have a limited influence.

An Auckland/Tauranga agreement could lead to a sharp reduction in commercial ship visits to Auckland and enable Auckland importers and exporters to switch their business to a well governed and well managed port facility at Mount Manganui.

A merger between Ports of Auckland and Northport doesn’t make sense from a commercial or cost point of view.

• Brian Gaynor is an executive director of Milford Asset Management.

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