NEW NZ DRY DOCK A BASIS FOR NEW INDUSTRY – KIWIRAIL

A dry dock to handle the country’s biggest vessels is affordable and can form the basis of a new marine servicing industry, KiwiRail chair Greg Miller says.

Establishing a new facility will reduce the increasing cost and risk shippers face getting regular surveys completed at ports in Australia or Singapore, he said.

The new ferries the firm plans to introduce from 2023 – 230 metres long and 30 metres wide – “actually sets the stage” for the project, he said. KiwiRail is keen to be a catalyst and initial discussions with other shippers have been positive.

The key, he said, is to integrate the new dock with other existing facilities. The resulting hub could then provide a full range of marine services.

“It’s nowhere near as big and scary as we think – if we get it right,” Miller told BusinessDesk.

“I’ve got a really good idea of the costs and they don’t scare us.” He wouldn’t provide an estimate.

Dry docks operate at Lyttelton and at Devonport in Auckland. But both are old and neither are large enough to cater for the increasing size of the country’s ferries, coastal carriers and some ocean-going fishing vessels.

Port Marlborough has spent several years campaigning to establish a floating dry dock at Shakespeare Bay and previously estimated the cost at up to $80 million.

Last year, the New Zealand Shipping Federation urged action on the project, saying it was open to any location that is affordable, can provide 24-hour, seven-day operation, has access to other wharves and is deep enough for use by international vessels.

It told the government’s working party on a supply chain strategy for the upper North Island that the only feasible sites are Whangarei and Shakespeare Bay.

Miller wouldn’t be drawn on the location of the facility, development of which may still be five to 10 years out.

Yesterday, he told Parliament’s Transport and Infrastructure Committee that the limited dry dock capacity is causing a loss of productivity.

Increasing coastal shipping around Australia is making it harder for New Zealand vessels to access facilities there. Getting to and from Singapore adds to time and cost and also adds considerable risk to scheduling.

Miller said New Zealand fishing companies are also designing vessels to fit the local facilities, reducing their ocean-going capacity and their efficiency.

The Devonport dock can handle vessels up to 170 metres in length. Miller said there are probably 14 local vessels that could use a larger facility now and he could see that figure getting to 20 “pretty easily”.

Beyond that there is additional scope to gain business from international shipping lines that currently can’t get vessels serviced here.

“We could build an industry,” he said. “We are going to really pursue a location and an opportunity for that.”

(BusinessDesk)

Ports of Auckland goes driverless to boost container numbers

In the high-tech equivalent of “look Mum, no hands,” Ports of Auckland’s new 70-tonne straddle carriers will hurtle around at up to 22km/h, without anyone at the controls.

This Luddite’s nightmare means no human contact with the container from the time the truck driver unscrews his twist locks to just before it is hoisted by crane and deposited on a ship. For imports, it will be the same process, only in reverse.

As the port sees it, public opinion is against expansion through further reclamation, so the only way to improve productivity is through technology.

The system is now being tested, with empty containers stacked high to act as a barrier in case something goes wrong.

And something going wrong doesn’t really bear thinking about: fully laden, the port’s new carriers weigh in at 100 tonnes – not easy to stop in a hurry.

When the project is complete, the port’s 27 new blue carriers will be involved in an elaborate dance to get containers on and off ships, with the process controlled by software at head office.

“It feels funny when you see this giant machine coming straight towards you,” says the port’s automation project manager, Ross Clarke.

The Auckland Council-owned port is under pressure from New Zealand First to relocate to Whangārei, and the Government is conducting a comprehensive upper North Island logistics and freight review to ensure New Zealand’s supply chain is fit for purpose in the longer term.

The review will guide the development and delivery of a freight and logistics strategy for the upper North Island. This includes a feasibility study to explore moving the location of Ports of Auckland, with consideration to be given to Northport.

Clarke says the new straddle carrier technology, alongside the port’s three new cranes that arrived last year from China, is seen as a game changer.Can we resuscitate our struggling sharemarket?

Automation will increase its terminal capacity from just over 900,000 TEU (20-foot equivalent units) a year to 1.6-1.7 million, the port says.

Auckland will be the first New Zealand port to partially automate its container terminal.

At the same time, the port says the straddle carriers will save as much as 10 per cent on fuel use. There should also be less impact on neighbouring communities as they will require less light and will not make as much noise as conventional, manned carriers.

The new Konecrane carriers will deliver more capacity because they can stack four containers compared to just three for the existing carriers. This, combined with changes to the terminal layout and past reclamation work, is expected to increase capacity by 80 per cent.

They come with a positioning system called Locator – a type of ground-based GPS that boasts an accuracy of plus or minus 3cm.

Clarke says that given its constrained area, something had to be done to grow the port.

Auckland's new automated straddle carriers can stack containers four high. Photo / Leon Menzies
Auckland’s new automated straddle carriers can stack containers four high. Photo / Leon Menzies

“If we didn’t do something to increase that capacity then the business’s throughput, and therefore revenue and profit, would be capped.

“We can’t expand the footprint of the terminal – the public have been clear about that,” he says.

“Dwell times” – the time it takes for exports inside terminal gates to be loaded onto a ship and imports onto a truck or train – are already low by world standards.

“So the only other avenue to increase the storage capacity is to stack more densely and we are going up with automated machines.”

Automation means stevedoring roles will go, but Clarke says the number of jobs lost is likely to be less than the original estimate of 50.

“The chances are that with the new cranes, and the increased throughput, the reduction in jobs might not be that much at all,” he says.

“Implementing automation helps fund the investment in the new technology. Reducing jobs was never the ambition – it’s just an outcome.”

Clarke says the port has trouble recruiting enough staff to deal with current demand, and there are vacancies it can’t fill.

“With the business growing, and the number of unfilled jobs that we have at the moment, the actual level of redundancies might be quite small.”

The high-tech carriers will initially work with the port’s new, $60 million, 82.3m high cranes which weigh in at 2100 tonnes apiece, against 1200 and 1300 tonnes for the older cranes.

The port says that with these new cranes, and the new deepwater berth they will sit alongside, the port will be able to handle the biggest ships coming to these shores.

They can lift four containers at once, weighing up to 130 tonnes combined, a New Zealand first. The current cranes can lift two containers, weighing up to 65 tonnes.

The new cranes can service ships carrying more than 11,000 TEU, which the port expects will offer some “future-proofing” against increases in the size of ships.

Ports of Auckland is only the second port in the world to automate as a “brownfields” development – most automated ports are built from scratch.

Clarke says maintaining the port’s day-to-day operations while the project is underway has been a big challenge.

Initially the northern third of the terminal – where the new cranes are – will be automated while the southern part will continue with manned straddle carriers.

Once it is satisfied that the technology is working to plan, the port company will complete the rollout for the rest of the terminal.

The first stage goes live in February next year, followed by the second stage in April.

Clarke says that by the middle of 2020, the port should have a fully operational automated container terminal.

NZ Herald

MPS TOLD $200M NORTHPORT RAIL LINK ‘CRITICAL

14/2/19

Economic growth in Northland is akin to that in Waikato and the Bay of Plenty during the 1970s and 1980s and will need investment in rail to support the region’s growing export industries, MPs heard today.

KiwiRail acting chief executive Todd Moyle said Northport is the only port in the country without a direct rail link. He says it is “critical” the government builds a 20-kilometre spur extension to link the Auckland-to-Whangarei line to the port at Marsden Point.

This potential new line is only an element of a wider project. KiwiRail is feeding into a business case the Ministry of Transport is aiming to complete by May on options for upgrading the rail link from Auckland northwards, Moyle told Parliament’s transport and infrastructure committee.

KiwiRail chair Greg Miller told MPs the development of dairying, forestry, pulp and paper and horticulture in Waikato and the Bay of Plenty 40 years ago was matched by government investment in road and rail to get that production to port.

Those same activities and industries are “migrating” to Northland and now is the time for the Crown – through KiwiRail – to put in place the infrastructure to support the considerable growth underway.

“The ‘North of Plenty’ is kind of like the Bay of Plenty for the next decade on,” he said.

KiwiRail has spent the past three months on geotechnical studies for a potential route from Oakleigh, on the North Auckland Line south of Whangarei, to Northport at Marsden Point. But the cost, estimated at about $200 million, is only a fraction of the expected $2 billion bill that could be required to bring track, tunnels and bridges on the rest of the Auckland to Northland line up to standard to handle major freight volumes.

Funding for the spur line study was provided from the government’s Provincial Growth Fund, overseen by NZ First member and Regional Economic Development Minister Shane Jones.

NZ First has also driven an investigation into the feasibility of relocating Ports of Auckland to Northport. That is being considered by a five-member working group tasked with developing a broader strategy to better integrate transport logistics chains in the upper North Island.

Challenged on the prioritisation of the Northland project, Moyle told National MP Paul Goldsmith that the funding of a business case for a third heavy rail track on the main line between Wiri and Westfield in South Auckland is being separately funded through the National Land Transport Fund. Adding capacity to this section of the southern line is considered critical to meeting both freight and commuter growth through Auckland. 

MPs were briefed by the Auditor-General’s office before the meeting. Independent MP Jami-Lee Ross said that briefing didn’t leave him with a lot of confidence that the broader machinery of government understands how Provincial Growth Funds are being allocated and accounted for.

He particularly questioned a $50 million working capital allocation KiwiRail has received and $80 million provided for tourism opportunities.

Moyle said $135 million has been received for specific projects, including a regional freight hub at Palmerston North and upgraded rolling stock for the company’s TranzAlpine and Coastal Pacific tourism services.

The $50 million of working capital will be used to restore track on regional routes that are otherwise in decline.

David Gordon, group general manager for investment and planning, said the PGF funding was enabling the company to bring forward investments that had a “compelling” business case.

“These were items which didn’t just come out of the ether. These are things we’ve been thinking about for a long time.”

KiwiRail, bought back by the government in 2008, has been hamstrung for decades by a lack of capital to maintain the country’s 4,000-kilometre track network and invest in new engines and more flexible rolling stock to remain competitive.

Ageing trains and tracks have seen speed restrictions placed on many routes, further reducing the competitiveness of freight services.

The previous government provided additional capital in two-yearly blocks – $450 million for the period through to mid-2019 – while it struggled to find a longer-term funding solution.

While the company’s financial performance is improving, Moyle said capital injections from the Crown being essential for the foreseeable future.

Miller said rail globally is enjoying a renaissance, both in tourism and because of the considerable returns rail freight provides by reducing road congestion and emissions.

KiwiRail’s growth plan for the next decade will be a critical part of delivering those benefits here, he said.

However, decades of under-spending will take a long time to correct. How that is funded is up to the government, he said.

“What matters to us is that it is a long-term funding model for the benefit of our primary exporters and domestic freight customers. Sustainable funding, rather than being a political football, is the ideal outcome for us.”

KiwiRail pleased with early Northland studies

KiwiRail says it is pleased with work undertaken to date on a potential extension of its rail network to Northport at Marsden Point.

The firm began geotechnical work in late October on a route for a 20-kilometre spur line from Oakleigh, running east toward Marsden Point.

The final drilling was completed today and further exploration work will continue this year, acting chief executive Todd Moyle said in a statement.

“Our investigations have focused on areas where the most significant engineering works would be needed,” he said.

“Concurrently we are looking at how we can upgrade the North Auckland Line between Auckland and Oakleigh. The tunnels on that line are old, low and narrow. We have had two significant derailments on the line in recent months due to a lack of funding for maintenance. It has been unable to carry passengers for the past year and freight options are restricted.”

Deputy Prime Minister Winston Peters and Regional Economic Development Minister Shane Jones visited the drilling site today.

New Zealand First has driven an investigation into the feasibility of relocating Ports of Auckland to Northport. That is being considered by a five-member working group tasked with developing a broader strategy to better integrate transport logistics chains in the upper North Island.

The cost of the new spur line was estimated at $100 million a decade ago. Bringing the Auckland to Northland line up to standard to handle major freight volumes has previously been estimated at more than $2 billion.

Jones, a list MP, lives in Northland and is a fan of rail. Tourism and freight projects of state-owned KiwiRail have so far received close to $90 million from the Provincial Growth Fund he oversees, including funding for the Northland spur study.

KiwiRail chair Greg Miller says significant agricultural and horticultural investment going into Northland will require an efficient supply chain.

The Provincial Growth Fund will allow a renewal of regional rail and there is a growing acceptance of the wider benefits rail brings by taking trucks off roads, reducing road maintenance costs and improving road safety, he says.

“There is a long way to go in Northland but we are heartened by what we have found so far.”

China Navigation to acquire the bulk shipping activities of Hamburg Süd

Hamburg Süd and The China Navigation Company (CNCo), a subsidiary of the Swire Group, today announced an agreement for CNCo to acquire the bulk shipping business in Hamburg Süd which includes Rudolf A. Oetker (RAO), Furness Withy Chartering and the bulk activities in Alianca Navegacão (Aliabulk).

The bulk shipping business in Hamburg Süd operates from Hamburg, London, Melbourne and Rio de Janeiro with a chartered fleet of approximately 45 vessels in the segments: Handysize, Supra/Ultramax and Kamsarmax/Panamax. Whereas liner shipping activities in Hamburg Süd involves transporting cargo in containers, bulk shipping involves flexibly transporting dry goods – such as agricultural raw materials, ore and steel – in bulk carriers from port to port worldwide, depending on the customer’s requirements.

CNCo, headquartered in Singapore, is the wholly owned deep-sea ship owning and operating division of the multinational Swire Group. The company today employs around 2,500 employees globally and owns and operates about 135 vessels consisting mainly of dry bulk carriers and multipurpose liner vessels. Swire Bulk, its dry bulk trading business, was established in 2012 and trades a modern fuel-efficient fleet of over 100 Handysize and Supra/Ultramax vessels comprised of owned, long term and short term-chartered tonnage. The business is focused on being a leading provider of sustainable and innovative shipping services and being partner of choice to its’ long-term charterers and industrial customers.

Closing of the agreement is expected by the end of the first quarter of 2019, subject to regulatory approval. The parties have agreed not to disclose the sales price. The RAO Tankers business unit is not included in the sale and will remain part of the Hamburg Süd Group.

Gordon Campbell on why shipping is New Zealand’s big new trade problem

So Jacinda Ardern and Theresa May have signed a piece of paper promising peace in our time when it comes to our trade with Britain.

Hard Brexit deal or no Brexit deal at all, there will be something called ‘regulatory continuity’ that will ensure the rules governing our trade with Britain won’t change overnight. Reportedly, Ardern thinks this should re-assure our meat industry, even though (small detail) this piece of paper is not a guarantee of trade access. So if and when Britain crashes out of the EU causing goods to pile up on both sides of the Channel and our lamb exports can’t get through to Britain for the Easter trade etc etc at least we’ll be able to sleep easy in our beds knowing that the red meat quota hasn’t changed for now. Small comfort, one would think.

Right now, a statement from Theresa May on Brexit has as much credibility as a statement by Donald Trump about North Korea’s plans for scrapping its nukes. Despite her recent crushing defeat in the Commons, May is continuing to playing chicken with Britain’s future, for personal and party advantage. No change there. She is still gambling she can terrify enough of her MPs (and the public) about the chaos of a ‘no deal’ such that Parliament will eventually ratify her wretched deal as the least worst option available. In these circumstances, New Zealand is useful only insofar as we can contribute to the illusion that Number 10 is open for something that looks like business as usual. It isn’t, of course. On both sides of the Atlantic, the practices of normal government are in virtual shutdown.

The Marpol Treaty “Tax”

Brexit is not the only concern. To date, the Ardern government’s biggest crisis came in the spring of 2018 when global fuel prices rose, and the public chose to blame the price hikes on domestic fuel tax increases. At the pump, people largely ignored the major global spike in the price of oil and raged instead about the relatively minor tax add-ons imposed by central and regional government. Panicked, the government blamed the oil companies. Luckily for all concerned, the global oil price suddenly slumped, and the political problems have largely subsided. Holiday motoring, which could have been a nagging reminder all summer of the intersection between fuel taxes and petrol prices, has caused no ripples on the political pond.

In 2019 though, a new and different kind of fuel price Godzilla is coming over the horizon, and it is likely to boost the prices of everything going in and out of the country, from Amazon packages to milk powder. It is called the Marpol Treaty, and like many things that change the world for better and worse, it started out with the best of intentions. Basically, the Marpol Treaty is a set of UN-mandated regulations (devised by the International Maritime Organisation) that among other things, is aimed at cracking down on the pollution emitted by ships, and the crucial bits are in Annex VI. As Bloomberg News recently reported, the global shipping fleets currently consume about 3.8 million barrels a day of fuel oil — in the main, this is heavy, lower-value stuff from a refining process that contains about 1 to 3.5 percent sulphur. That content level is about to change:

From January 2020, new rules from the International Maritime Organization will limit sulphur-dioxide emissions from ships. All else equal, a ship would need to burn fuel with only 0.5 percent sulphur content or less to comply.

Oh sure, there are a few ways of mitigating the impact. “Scrubbers” can be installed on board to wash the bad sulphury content into the sea, but they’re expensive to install and operate, and obviously they add to marine pollution. Very few ships will have them in place by 2020. New ships can be built to run on liquified natural gas, but obviously, that’s no answer for the existing fleets. Also, ships can be induced to steam at slower speeds, which would cut down on their emissions. New Zealand, which is famously far from its markets, would probably not welcome any move guaranteed to bring its exports/imports to market at a slower pace.

In fact, distance is one reason why the Marpol Treaty regulations may impact more severely on New Zealand than on most other nations. The advent of the Internet and digital commerce may have shrunk distance in many respects, but lets not kid ourselves. As the New Zealand official briefing papers on Marpol point out:

New Zealand relies on international shipping to move some 98 percent (by weight) of its imports and exports.

And moreover:

Over 96 percent of international maritime trade, including almost all ships involved in New Zealand’s international trade, is carried on ships registered to States that have acceded to Annex VI [which contains the sulphur emission rules]

Oh, and there’s yet another problem. The Marsden Point refinery does not seem able to cope with the changes that are coming down the pike:

The cost of retooling Marsden Point to convert all high-sulphur residues to MARPOL-compliant product will be high and prohibitively expensive. The refinery is currently exploring if it is possible to produce smaller volumes of 0.5% sulphur fuel, and what may be required to achieve this. This has not yet been fully scoped nor costed. Currently, high sulphur by-products from refining have commercial value to Marsden Point. Once the 0.5 % sulphur requirement comes into force, this situation may change, affecting the refinery’s business model in this regard. In the event that there is a major shift to low SOx fuels, there is an open question as to how the high sulphur residues will be disposed of or used.

Do I hear the cliché “perfect storm”? Here’s another contributing factor to that storm. As the folks at Bloomberg point out, the transition to a low-sulphur diesel or gas oil fuel is also likely to push the price of the good low-sulphur diesel sharply upwards. At which point of course, President Trump could decide to intervene, if only to stop any sharp increase in fuel costs for MAGA-cap wearing truckers from undermining his chances for re-election in 2020:

While fuel-oil prices would tank, the price of low-sulphur diesel would, all else equal, jump. That’s a problem for truckers — like the ones ferrying Amazon’s goodies around — for whom fuel has fluctuated between roughly 20 to 40 percent of the cost-per-mile over the past decade. This explains why President Trump…might want to slow the International Maritime Organisation’s roll in 2020. However, since the U.S. effectively agreed to the rules a decade ago via an act of Congress, delaying or thwarting them isn’t a simple process. Despite efforts by the Trump administration to turn it, a supertanker is bearing down on drivers, oil majors, and even Amazon.com Inc.

Footnote: According to the government briefing document linked to above, New Zealand needs to get its position together on the Marpol Treaty Annex VI process quite soon. A Cabinet decision to accede to the process is expected in the first half of 2019. All going well, a parliamentary select committee would then consider the National Interest Analysis (NIA) and treaty text, and report back to Parliament by mid-2019. Government agencies would complete work on the regulatory amendments required to put the Treaty provisions into domestic law by the third quarter of 2020, and New Zealand would hope to deposit its instrument of accession with the IMO by late 2020, with the aim of putting our compliance into effect by the beginning of 2021. Right now, public submissions are being invited, and the closing date is 11 February 2019. Werewolf will continue to report on this issue.

Interislander ferries to be replaced with rail ready fleet


KiwiRail has confirmed plans to replace its three ageing Cook Strait ferries with two new, larger, purpose-built rail ferries.

The Aratere

The Aratere. Photo: RNZ

Interislander’s current fleet, comprising the Kaitaki, Kaiarahi and the Aratere, is due to be replaced by 2024.

KiwiRail’s decision follows a two-year consultation process which found rail-enabled ferries were the most cost effective, efficient and best in the long-term.

The new boats will be able to carry more people and freight, and be faster, making six return sailings a day, the maximum.

The decision represents a shift by KiwiRail, which in the past dismissed rail ferries as “very rare and really expensive”.

KiwiRail acting chief executive Todd Moyle said that was a different era, when KiwiRail was comparing the cost of second-hand ferries versus buying new ones.

But investigations found there was little difference in the price of a new rail ferry and a new non-rail ferry.

“They’re an inter-generational investment,” Mr Moyle said.

“These are going to be around for 30-odd years so we need to make the right decision to ensure that we’ve got that long term resilient outcome.

“We’re a rail company we want to grow rail, we see that as being really critical for New Zealand.”

Rail and Maritime Transport Union general secretary Wayne Butson said KiwiRail’s decision represented a shift to sanity.

Only one existing ferry, the Aratere, can take rail. The other two rely on a system which involves loading containers off railway wagons onto rubber wheeled trailers, then driving the trailers onto the ferries.

This is a lengthier process, which Mr Butson said was also more labour intensive.

“Using rail ferries, you can have three people that load 1500 tonnes of freight onto the ferry. If you use road bridging you’ve got 30 people doing the loading and unloading.

“Safety issues around [the] interface between the passengers and the vehicles is significantly heightened.”

Mr Butson said in recent years KiwiRail had been dogged by short-term thinking, as shown by its decision to close workshops in Dunedin.

“We’re now all struggling with the difficulties that the closure of Hillside poses when you’re in a KiwiRail that’s trying to grow quickly to meet the needs of New Zealand, and also the wishes of the current government for increased wagons, carriages, locomotives.”

Mr Moyle said the new ferries would not come cheap, with Mr Moyle estimating they would cost more than $200 million each.

A more accurate estimate will be known later this year.

Any potential job losses could be dealt with by attrition

Mr Moyle denied the decision was dependent on the will of KiwiRail’s political masters, saying process began under National.

“The rail-enabled element is only one component of these ferries. We’ve had the largest tourism season on the Interislander and also commercial vehicles, trucks and other elements, so we’ve got the three bits that work on the ferry.

“We’ve had to make the decision based on all the elements.”

Both the union and KiwiRail said staff had welcomed the announcement even though it could signal job losses.

But Mr Moyle said reductions in staff numbers could be mostly dealt with by attrition given the new ferries were five years away.

The ships would likely to be built in Europe or Asia.

Mr Moyle said while the bulk of the ferries would be a standard design, there will be elements that are customised for Cook Strait like the lower decks and the passenger areas.

Mr Butson said designing the ferry from scratch had its advantages.

“There are now new hull configurations which are able to deal with the wake issue in terms of the [Marlborough] Sounds.”

Annabel Young: Get ready for fuel price rises in 2019

Prices are expected to climb rapidly as demand increases, especially in New Zealand. Photo / File

NZ Herald By: Annabel Young

COMMENT:

Prices at the petrol pump were a regular item in the 2018 news but spare a thought for businesses that buy fuel by the tonne (1000 litres). In shipping circles, the expectation is that the price of oil-based fuel products will rise steeply in 2019 and that they will keep going up. International price rises will be reflected in prices in the domestic market, at the suburban fuel pump.

Here is why this is happening and how it will affect you.

By January 2020, most ships in the world will be subject to restrictions on sulphur emissions. This is the effect of a treaty known as Marpol Annex VI which imposes a maximum level for sulphur content of emissions at 0.5 per cent. Currently the maximum limit is 3.5 per cent sulphur content although it should be noted that in practice, many ships operate below that level.

New Zealand has not ratified Marpol Annex VI yet but it is assumed by the sector that this will be done by at least 2023. In the meantime, the majority of ships operating around New Zealand are flagged to countries that have ratified the Annex and they are therefore bound by it.

Sulphur emissions from fuel are a result of the fuel used and there are a number of ways to address this, but there is no easy option. The fuel oil used by most ships originates from crude oil as the fuel is the residual left after the diesel or other distillates have been extracted. The residual becomes bitumen and fuel oil, termed HFO, IFO and LFO. When the residue is no longer used as a shipping fuel, it may continue to be used in shore-based oil-fired consumers, eg power stations.

Designing a new vessel to operate on an alternative fuel to oil is much easier than retrofitting an existing ship. By way of example, a shift to methanol would be a great way to solve the emissions problem but it costs about $2 million extra to build a methanol ship; whereas it costs significantly more to retrofit an existing vessel. So methanol, being emissions free and locally sourced from Taranaki, looks perfect but may be difficult to implement as a replacement.

Liquefied Natural Gas (LNG) is another option widely available in Australia, but in New Zealand it is tricky to source. Nuclear power is not currently an option for commercial vessels (it is for warships) but may feature as a civilian propulsion choice in the future.

The practical option for most current ships operating on fuel oil is to shift to a lower sulphur oil-based fuel. The obvious choice is diesel because other low sulphur oil-based fuels are not yet in significant production.

An alternative to switching fuels is to install so-called “scrubbers”, that is equipment that uses sea water to clean emissions. About 1 per cent of the current world fleet uses scrubbers; and it is not expected that scrubber production will be able to scale up in the short or medium term. Of course, the scrubber option is only useful if the current higher-sulphur-content fuel remains available.

So what is the likely impact of most ships in the total worldwide fleet shifting to diesel? Ship operators expect significant increases in fuel costs and also worry about availability. At current prices, diesel is at least 35 per cent more expensive than the fuel currently used by ships. Prices are expected to climb rapidly as demand increases, especially in New Zealand as we already rely on importing at least 30 per cent of current diesel needs and would have to import any increased usage.

To achieve the 2020 deadline, it is expected that the worldwide conversion of ships to a low-sulphur fuel will begin in mid-2019. The effect will be a steep rise in demand for diesel. And increased demand means increased prices. The six month lead-in is because changing the type of fuel used by a ship is not as easy as switching on a lamp. It is almost a case of saying that the engine has to want to change.

Around the world, the change in fuel is expected to throw up a range of engineering issues on every vessel, and in some cases the issues will be unable to be resolved leading to the removal of that vessel from the fleet. Some ship lines have already imposed an additional tariff to cover the cost of the switchover.

As the price rises in the world market, the effect on the price of any oil-based fuel (not just diesel) at the local petrol pump is likely to be substantial and immediate.

The impact of higher costs of ship operations will also play out in the cost of everything that you buy because virtually everything has a component of transport in its price.

Ship operators are even wondering if they will be able to source fuel at all.

• Annabel Young is the executive director of the New Zealand Shipping Federation which represents coastal ship operators.

Maersk withdraws Port Nelson direct service

It’s still smooth sailing for Nelson container customers despite a major shipping line discontinuing its direct service to its port, Port Nelson says.

Maersk’s Northern Star service between Tanjung Pelepas, Malaysia and Auckland previously called directly to Nelson for freight services, one of four shipping lines calling in to the city.

However, Maersk announced an end to the stopover in late July.

Container traffic shipped through Nelson now went via a feeder service to Tauranga with the Pacifica line to meet onward connections to Asia, the Americas, Pacific Islands and Australia.

The move is understood to be in line with a global trend within the shipping industry to use larger vessels in most trades to reduce costs, following heavy financial losses in recent times.

Customs Brokers and Freight Forwarders Federation of NZ executive director Rosemarie Dawson said New Zealand was over serviced in terms of the number of ports it has relative to market size.

Due to the high costs involved in port visits, carriers were looking to reduce the number of calls they made.

With the growing trend towards bigger boats carrying more cargo, the relatively shallow depth at Port Nelson poses a problem for shipping lines.
BRADEN FASTIER/STUFF
With the growing trend towards bigger boats carrying more cargo, the relatively shallow depth at Port Nelson poses a problem for shipping lines.

Nelson was one of the smallest ports with the least volume and was heavily reliant on export cargoes, unlike other ports which had a more balanced trade in terms of imports, she said.

Nelson also has a relatively shallow draft – the vertical distance between the waterline and the bottom of the hull which determined the minimum depth of water a ship or boat can safely navigate – which posed operational issues for carriers wanting to bring in bigger vessels.

Several businesses are understood to have been adversely affected by the loss of Maersk calling directly, with one business owner saying the issue was “a huge problem” for the city.

Relying on containers coming from Australia and South America – the owner said the loss of Maersk’s direct line had resulted in infrequent arrivals causing disruption of the supply chain if the product turned up in the wrong order or delayed.

“The big shipping companies seem to be by-passing Nelson and they haven’t got their act together with coastal shipping to replace that in time – that’s creating mayhem with our containers, so instead of them coming in 10 a week – we don’t get any, then we get 50.

“It’s nothing, then a whole stack of containers, then you’ve got the demurrage costs associated with that and our people having nothing to do, followed by going flat out and having to put in a whole lot of overtime.”

Maersk Line Oceania trade and marketing director Hennie Van Schoor said with the trend of continuously declining ocean freight rates, the company was constantly reviewing the efficiency of its network for serving the New Zealand market.

 A key consideration was the long distances to main centres and multiple local port calls in NZ when compared with internationally competing markets such as Australia, South Africa and Brazil.

The removal of the Northern Star service and a vessel upgrade on the Southern Star service had met the necessary capacity required for its customers, he said.

“In the case of the Northern Star and Nelson, the specific draft of this port has previously prevented us from upgrading our vessel size.”

Port Nelson will spend about $29 million to boost its infrastructure, including the redevelopment of a wharf and a new harbour tug.
MARTIN DE RUYTER/STUFF
Port Nelson will spend about $29 million to boost its infrastructure, including the redevelopment of a wharf and a new harbour tug.

Port Nelson chief executive Martin Byrne said prior to the Northern Star pullout, Nelson’s container needs were serviced by Maersk, ANL, MSC and Pacifica, with CMA CGM stopping in during the fruit season between March and September to collect mainly kiwifruit and wine cargo.

He anticipated the port would be back to four weekly container services by March. In the meantime, exporters still had access to a number of trans-shipment and direct options, despite Maersk’s departure.

Byrne said the additional announcement of a $29 million investment in the Main Wharf North and a new tug to accommodate larger container vessels demonstrated the large contribution container freight made to port operations.

“We wouldn’t be spending that money if it wasn’t needed,” Byrne said.

The Port’s 2018 annual report stated total cargo volume of 3.6 million tonnes was well up on the 3.1m reported in 2017, while container volumes grew a further 10 per cent in the last 12 months, from 108,000 to 121,483 total equivalent units.

Total vessel visits had also increased from 805 to 887 in the last 12 months.

“I suppose it’s a balance for the shipping lines and as the vessels get bigger,” Byrne said. “And we’ve said it for a long time there’s that mix between direct services and trans-shipment feeder services through the likes of Tauranga.

“The actual number of shipping options hasn’t reduced, even though the number of direct calls has.”

 

CargoChain – NZ’s blockchain solution for global logistics

18 December 2018 – Jade Logistics Group, New Zealand’s leading port software company today announced a new business called CargoChain that it believes will revolutionise the way that cargo information is shared across the global supply chain.

The CargoChain platform was borne out of witnessing first-hand an inability to share supply chain information amongst multiple interested parties. David Lindsay, CargoChain CEO said “we observed this first with ports and then looked across the entire supply chain, and the problems were the same. Siloed, important information that supply-chain actors didn’t have, but needed, to make better decisions”.

Lindsay adds that following five years of R&D, CargoChain has created a cargo information sharing and innovation platform that supports the distribution of previously unavailable cargo information, as well as the development of third-party applications. “We believe that the collaborative and independent nature of the CargoChain platform is a first for the global industry.”

“The proposition is made even more powerful as today’s consumers are demanding trust while those involved in the supply chain require full transparency and visibility. We saw the need for a digital platform that provides this by sharing trusted information amongst all supply chain actors.

“CargoChain is one of the few supply chain solutions in the world that has blockchain as an integral working part of its platform to provide this trust.”

“Blockchain is currently right at the top of the technology hype cycle and most companies understand its importance but are really struggling to understand how they might use it in their business. CargoChain takes this pain away, as it already delivers a working blockchain solution for our customers”.

While blockchain is an important part of CargoChain, Lindsay notes that the platform itself provides significantly more to supply chain actors.

CargoChain’s ultimate vision is to empower the supply chain by providing its platform to application developer communities globally.

“We want to allow developers to solve the world’s supply chain problems for all logistics players, large or small.”

Initial CargoChain applications are already in development for a number of Australian and New Zealand customers, along with pilots for other significant supply chain projects. In New Zealand there is also significant interest from major food exporters, driven by the need to prove complete provenance with an emphasis on food trust and safety.