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22nd November 2017

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HMM to Set Sail for 6th Place in World by Placing Orders for 20 Super Containerships

Hyundai Merchant Marine (HMM) aims to become a top 10 global shipping company by ordering 20 super large containerships. HMM is expected to have a capacity of 800,000 TEUs and rank sixth in the world when the company secures a super large containership fleet.

According to the investment bank (IB) industry and shipping industry on November 15, HMM will order 20 large-sized container ships starting early next year. “HMM will order 20 large-sized vessels, including nine 20,000-TEU containerships and 11 11,000-TEU containerships for aggressive fleet expansion,” a high-ranking official in the IB industry said. “This strategy aims to deal with major shipping companies’ expansion through mergers and acquisitions and the introduction of super large ships.” This is twice the size of the order projected in the market (around 10 units). In terms of order sizes (350,000 to 400,000 TEUs), HMM’s order is double that (220,000 TEUs as of the end of October) of Maesk, the world’s top shipping company.

Analysis says that HMM will ramp up the number of super large ships as a strategy to cope with the global division and congregation. HMM currently has 56 vessels and its capacity (maximum shipment volume) is 43,000 TEUs, ranking 13th in the world. On the other hand, Maesk which belongs to the 2M Alliance with HMM has a capacity of 3.55 million TEUs and MSC, 3.02 million TEUs, eight times that of HMM.

In particular, next year, Japan is expected to merge its three major shipping companies (MOL, NYK, and K Line). Then the new shipping company established via the merger is expected to have a capacity of 1.7 million TEUs. China’s major shipping company Cosco (1.81 million TEUs) will finally marry OOCL (670,000 TEUs) of Hong Kong, which is the seventh largest in the world in 2019. Then Cosco’s capacity (including that of ordered ships) will exceed 3 million TEUs, jumping to second or third place in the world. In particular, China’s Cosco (Ocean Alliance) and Japanese shipping firms (THE Alliance) are expected to put 20,000-TEU containerships into the Asian market beginning next year. This means that HMM will not be able to compete in such an environment as the shipping company has a maximum capacity of 400,000 TEU and its largest container ship has a capacity of 13,100 TEUs.

Around the year of 2020, nine 20,000-TEU containerships and 11 11,000-TEU containerships to be ordered beginning next year will be delivered to HMM. Then, HMM will have a capacity of more than 800,000 TEUs, about double its current capacity. This volume exceeds that of now-defunct Hanjin Shipping and close to 1,060,000 TEUs of Evergreen, the biggest shipping company of Taiwan. At the time of the final delivery of the 20 vessels ordered, HMM will raise the number of its over-10,000-TEU vessels from 16 to 36. As HMM’s long-term plan aims at securing a one-million-TEU fleet, the shipping company may order more super large containerships depending on future business performances.

Government addresses concerns of transport industry

Transport Minister Phil Twyford (file photo).

BRADEN FASTIER
Transport Minister Phil Twyford (file photo).

New and additional sources of funding are needed to help fix Auckland’s traffic congestion and growing pains, Transport Minister Phil Twyford says.

But Twyford believes it is not fair for the rest of New Zealand to pay for its biggest city’s woes.

Rail and coastal shipping will be a focus for both Auckland and elsewhere, he said.

The newly named minister made the comments in his first address at the Road Transport Forum’s annual conference in Hamilton on Saturday. “If we had a decent passenger rail from Auckland to Hamilton paid for out of the Land Transport Fund, then I could have been here much earlier,” he joked, referring to what RTF Chief Executive Ken Shirley had said to him after arriving late to the conference, having got stuck in traffic.

During the conference at Claudelands Event Centre, Twyford outlined the government’s direction on the future of transport throughout the country.

Creating a “resilient and multi-modal transport system, reducing carbon emissions and fixing Auckland’s congestion” were the priorities.

“We know the transport system is about networks and productivity and changes to one mode can have flow-on consequences.”

Transport in New Zealand needs to be resilient in the face of shocks, such as the recent earthquakes that shut down the major north-south highway in the South Island.

To do this, changes to funding is required.

Roading is currently funded through the Land Transport Fund, from road user charges, petrol tax and vehicle registration, which generate $4 billion a year.

“We need to tackle the problem of new and additional funding sources and the challenge of dealing with Auckland’s growth pains is one of the pressures here.”

Decades of under-investment and congestion in Auckland is costing the city $1.3b a year in lost productivity, he said.

Aucklanders want it fixed, but Twyford said it will come at a cost.

“They understand that it costs money to do this.”

The Government is committed to a $15 million, 10-year programme that includes a rapid transport system in Auckland, which will join up with the road and highway system.

“We believe rapid transport should be funded in the same way as state highways and there are benefits for at least part-funding the rapid transport through the Land Transport Fund.

“We need to find additional sources of funding as well and we cannot ask the rest of New Zealand to pay the costs of Auckland’s growth.”

If asked, the Government will pass legislation to allow Auckland Council to levy a regional fuel tax, he said.

“We’ve talked about 10 cents a litre and that would generate about $150 million a year, about 10 per cent of the investment that is needed for the Auckland Transport Plan.

“Aucklanders have to be willing to chip in a bit extra.”

Income from targetted rates on what will be “massive increases” in the value of the land around the light rail network in Auckland could be reinvested in the rapid transport system, he said.

“The Government is going to continue to fund rail above and beyond the national transport fund, but what we want is to generate new and additional sources of revenue.

“In the long term, petrol excise will not be a sustainable way to fund the transport system.”

Previous governments had disproportionately invested the fund into motorway projects, leaving regional roads starved of funds, he said.

“Our coalition partner placed a very high premium on investment in the regions, so that will be a priority.”

Reducing carbon emissions

Another priority would be reducing carbon emissions from the transport industry, which make up 18 per cent of the country’s greenhouse gas emissions, he said.

Exploring coastal shipping is one way of doing this, he said.

“I believe if we level the playing field, coastal shipping can be a cost-effective way to move heavy bulk freight that is not time-dependent.”

He also addressed one of the biggest concerns from the industry – the shortage of top-class drivers.

Attendees said the driver-licensing system had become complicated and expensive.

Twyford said the government wanted to weave driver licensing into the school curriculum.

“When people don’t get their licence or never graduate to a full licence, it has downstream negative consequences for them to get jobs.”

He said stemming migrant numbers would not affect those in the transport industry.

“You’ll know the intention to change the immigration settings, as we believe the open door policy of immigration had quadrupled net migration.

“We think we can combat this by taking out the rorts and the scams in the education sector, where so-called education providers have been giving back-door visas.”

There are genuine skill shortages and regional skill lists will mean a particular regions can attract people in to live and work in that region, he said.

Bethunes shareholders to vote on Transport Investments deal next month

Bethunes Investments shareholders will vote next month on a deal to use its NZX listing as a vehicle for freight and logistics firm Transport Investments Ltd to go public while shifting its remaining assets into a new entity.

The company’s 335 shareholders will meet in Auckland on Dec. 5 to consider the reverse listing which if approved will see them own 0.6 per cent of the transport group, which has an enterprise value of $200 million, and keep their relative stakes in a new holding company – New BIL – which will house Bethunes’ existing investments valued at about $486,000.

Independent adviser Grant Samuel’s report judged the deal’s terms were “fair and reasonable to the shareholders of Bethunes not associated with TIL” and that “the proposed transaction is in the best interests of Bethunes given the options reasonably available to Bethunes at the current time.”

“The board considers that completing the transactions will add value for Bethunes shareholders as it presents them with the opportunity to own a shareholding interest in the transport and logistics business of Transport Investments Limited following the acquisition of that business by Bethunes, while also retaining their interest in the business and assets of Bethunes via BIL 2016 Limited,” chair Chris Swasbrook said in a statement.

“Accordingly, the board unanimously recommends that shareholders vote in favour of the resolutions in the notice of meeting.”

If Bethunes’ shareholders approve the deal, the NZX-listed firm will rename itself TIL Logistics Group and replace the board, with Trevor Janes lined up to chair the new directors. He would be joined by fellow independent directors Lorraine Witten and Danny Chan, executive director Jim Ramsay and non-executive director Greg Kern.

TIL had planned to list through an initial public offering, but gave up on those plans in mid-2017 after being advised “market conditions were not conducive, in part because of the New Zealand general election and likely resulting market uncertainty.” It began discussions with Bethunes in August.

Bethunes had planned an earlier reverse listing with Westgate Power Centre-subsidiary NZ Retail Property Group, however, that fell through when the real estate investor decided it wasn’t a good time to raise capital.

The Grant Samuel report says if the deal isn’t approved, Bethunes will remain a listed shell company seeking investment opportunities, but isn’t likely to try reverse listing another company again. If it is approved, Bethunes plans to relist the new entity.

The documents show TIL expects to report a statutory loss of $10.3 million on revenue of $327.8 million in the year ending June 30, 2018, turning to a profit of $11.1 million on revenue of $335.5 million the following year, when it would expect to pay dividends of 7.4 cents per share, representing a gross yield of 6.8 per cent.

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

China marries maritime ambitions with environmental protection

Much ink has been spilled of late about China’s expanding maritime ambitions from the announcement of new projects along the Maritime Silk Road to news of Chinese icebreakers operating in the Arctic.

Less attention has been paid to the environmental impact of this expansion and to the promising steps China is taking to control air pollution from ships.

China, including Hong Kong, is the second largest emitter of greenhouse gases (GHGs) from shipping according to a new report released Tuesday 17.

The International Council on Clean Transportation (ICCT), the US-based independent environmental organisation where we work, revealed that while air pollution from ships dipped between 2008 and 2012, it is on the rise once again, along with energy use, driven in part by vessels registered to China.

Carbon emissions rising
Ships accounted for about 3 per cent of global carbon dioxide (CO2) emissions from 2007 and 2012, according to the International Maritime Organization (IMO), the United Nations agency that oversees international shipping.

However, CO2 emissions from shipping are projected to roughly double by 2050 and are concentrated in East Asia, where shipping accounts for as much as 16 per cent of total CO2emissions. Nearly half of those emissions occur in the East China and South China Seas, where 40 per cent of the world’s seaborne trade took place in 2015.

Overall, the ICCT estimate that CO2 emissions from global shipping increased from 910 to 932 million tonnes, or about 2.4 per cent, from 2013 to 2015.

This is the reversal of the trend identified by the IMO in 2014, which found that shipping energy use and air pollution fell from 2008 to 2012 in the aftermath of the global financial crisis.

GHGs and air pollution is concentrated in a handful of the Flag States that register and license ships.

The top six flag states collectively emitted over half of total shipping CO2, with China ranking second (11 per cent) after Panama. Ships registered to China and Hong Kong also emit significant amounts of local air pollutants.

Open registries, which allow a merchant ship to register far from where it is owned and operated, make it difficult to calculate the magnitude of shipping emissions. For example, The United Nations Conference on Trade and Development (UNCTAD) estimates that China was responsible for 24 per cent of container goods movement worldwide in 2014.

Committed to cleaner air
These findings are important as China moves to reduce its domestic GHG emissions and address its air quality challenges.

China has pledged to significantly reduce its carbon intensity levels and peak total carbon emissions by 2030. It has also finished a mid-term review of the first phase of its Air Pollution Control Action Plan and is considering even more ambitious goals for fine particulate matter (PM2.5) and nitrogen oxides (NOx), an important precursor of urban smog.

The mid-term review specifically identified shipping as a major source of emissions in port cities.

The silver lining for China is that there is great opportunity in cutting shipping emissions.

Policies to control air pollution from ships remain underdeveloped globally. For example, fuel quality standards for passenger cars in most major economies require virtually zero sulfur fuels, while the majority of the world’s maritime fleet still uses fuels with as much as 27,000 parts per million (ppm) sulfur. Even today, most large marine engines remain essentially uncontrolled.

China is moving ahead by putting in place a series of domestic policies to control air pollution from ships and ports. In August 2015, the Chinese Ministry of Transport (MoT) released its Action Plan to Control Air Pollution from Ships and Ports (2015-2020), which aims to reduce shipping air pollution in three coastal port clusters by up to 65 per cent by 2020.

Subsequently, MoT designated three domestic emission control areas (DECA) for the Pearl River Delta (PRD) region, the Yangtze River Delta region and the Bo Sea region within which ships are required to burn cleaner fuels starting from January 1, 2017.

Finally, in August 2016 China’s Ministry of Environmental Protection (MEP) released the nation’s first emission standards for smaller marine engines used in domestic ships.

The central government, along with leading port cities such as Shanghai and Shenzhen, is also actively promoting new technologies like “shore power”. This allows ships to use electricity rather than burning dirty fuels while “hotelling” (the time a vessel spends in port that is neither loading or unloading) at a port, along with cleaner burning liquefied natural gas (LNG).

Plenty more options
With ambitious goals set to reduce air pollution and GHGs, China still has lots of policy options in the maritime sector to help meet the targets.

Two approaches in particular deserve mentioning. For the period of 2016-2018, ships need to use cleaner fuels only while at port within China’s designated DECAs.

Beginning in 2019, that requirement will expand to all activity within China’s territorial waters (UN baseline plus 12 nautical miles) for the three areas.

Fuel use at berth accounts for less than 10 per cent of air pollution in the greater Pearl River Delta region, compared to 63 per cent within the 12 nautical mile zone. In other words, the expanded DECA requirements will cover seven times as much air pollution starting with significant air quality and health benefits.

Fortunately, leading port cities lare embracing the central government’s regulations by accelerating the implementation schedule of the DECA requirements. MoT will also consider whether the existing DECA requirements should be further strengthened by the end of 2019.

A further step would be for China to formally designate an IMO Emission Control Area (ECA) off its shores. These are currently enforced off the coast of North America and in the North and Baltic Seas in Europe. They apply tighter fuel quality and engine emission standards on ships operating up to 200 nautical miles from the applicant country’s shore.

A Chinese ECA would reduce sulfur oxide (SOx) emissions by an additional 80 per cent and could also cover NOx emissions. This would be an important step to improve local air quality and to protect human health in East Asia. An ECA would also establish an additional incentive for ships to become more energy efficient to manage fuel costs, reducing GHGs at the same time.

An ECA application to International Maritime Organization, and the environmental commitment it represents, would be a fitting complement to China’s expanding maritime ambitions.
Source: Chinadialogue

Eden Haulage takes the titles at the Southland Transport Invercargill Truck Parade

Some of the DT Kings transport trucks coming onto Tweed St off the Stead St bridge.

Robyn Edie/Stuff
Some of the DT Kings transport trucks coming onto Tweed St off the Stead St bridge.

Southlanders defied the cold wind and rain to see the finest big rigs from Southland parade through the city.

About 120 trucks took part in Southland’s annual truck parade on Sunday, with people lined up along Tweed and Bond streets to get a glimpse.

The star of the show was the one-of-a-kind “Tex” the Texaco truck from Transport World.

Watching the trucks on Bond St are, from left, Lyall Goodwright, holding Austin Goodwright, 1, Olivia Goodwright, 6, ...

Robyn Edie/Stuff
Watching the trucks on Bond St are, from left, Lyall Goodwright, holding Austin Goodwright, 1, Olivia Goodwright, 6, Jessica Goodwright, Lilly Goodwright, 8, Declyn Cockery, 6, Eelah Cockery, 2, and Chontelle Kamana, all of Wrights Bush.

Parade organiser Mark Purdue said it was the first time the 1940 Dodge Airflow truck had been out of Bill Richardson’s shed

Although the weather conditions were less than favourable, it did not stop the Southland crowd turning out for the event.

“We’re not going to melt,” Purdue said.

Trucks rounding the roundabout onto Tweed St, showing the many spectator cars parked in the centre island.

Robyn Edie/Stuff
Trucks rounding the roundabout onto Tweed St, showing the many spectator cars parked in the centre island.

The turnout of 120 trucks for the parade was pretty good considering how busy the road transport industry was at the moment, Purdue said.

A group of about 20 classic trucks from Christchurch and Timaru travelled down to be a part of the show, Purdue said.

Southland Transport Invercargill Truck Parade 2017 King Rig winner Cole Frew from Eden Haulage did such a good job on his truck he had the judges scratching their head.

The Bill Richardson Transport World Dodge Airflow Texaco truck on it's first ever outing in the city, coming onto Bond St.

Robyn Edie/Stuff
The Bill Richardson Transport World Dodge Airflow Texaco truck on it’s first ever outing in the city, coming onto Bond St.

Purdue said he was impressed at the detailing of the truck and said nothing was missing.

The competition had been tight, with the runner-up Ricky Rodgers from Summerland Express Freight only missing out by points, he said.

Eden Haulage also managed to take out the best fleet by only three points, Purdue said.

Doug Ronald, Esme McCleery, 5, and Natalia Ronald shelter in the back of their car to watch the trucks pass on Bond St.

Robyn Edie/Stuff
Doug Ronald, Esme McCleery, 5, and Natalia Ronald shelter in the back of their car to watch the trucks pass on Bond St.

He had been organising the parade for 15 years now and said the event had been going strong for nearly 35 years because transport operators were loyal to Southland.

It was their dedication that has kept the parade going, he said.

“It’s something that’s always happened.”

Some drivers spent hours working on their rigs to get them show ready for the annual parade, Purdue said.

 

 – Stuff

Transport Investments going public

nona.pelletier@radionz.co.nz

 

New Zealand’s largest private transport and logistics business, Transport Investments (TIL), is going public with a backdoor listing on the NZX.

The investment shell Bethunes Investment said it would buy Transport Investments, with a mix of shares and cash for $200 million.

TIL has a network of branches, depots and warehouses, which made $320m in revenue in the past year ending June.

Its brands included Hooker Pacific, TNL, Roadstar, Pacific Fuel Haul, TIL Freight, McAuley’s, MOVE Logistics and NZL.

TIL chair Jim Ramsay said the company had been looking to take the company public for some time.

“When the opportunity arose to participate in a reverse listing through BIL we decided this would provide existing TIL shareholders with a commercially sensible, viable and timely path to the NZX,” he said.

“We are pleased with the arrangements agreed and look forward to bringing TIL to the public domain with the support of over 300 existing BIL shareholders.”

The deal, which is subject to shareholders’ approval, would see Bethunes change its name to TIL Logistics, with a new board headed by Mr Ramsay.

A special meeting of TIL shareholders was expected to be held early next month, with Bethunes shareholders to meet late November or early December.

Earlier this month, TIL sold nine properties in Auckland to industrial property investment company, PFI, for $70m.

The transport company will lease back seven of the properties. That deal settles at the end of this month. transport and logistics business, Transport Investments, is going public with a backdoor listing on the NZX.

Shipping’s future on the horizon

eric.frykberg@radionz.co.nz

 

You’ve heard of self-driving cars, driverless trucks, and airliners that fly on auto-pilot – how about autonomous ships?

An artist's impression of an autonomous ship.

An artist’s impression of an autonomous ship. Photo: Rolls Royce Marine

New Zealand interest in the technology – which could allow ships to sail with no one, or just a handful of people, on board – is growing along with international developments.

The world’s first autonomous container ship, built by shipping and aerospace company Kongsberg, will carry fertiliser from next year along coastal routes in Norway, while Rolls Royce Marine has signed a deal with Google to help with the technology for piloting autonomous ships.

But these vessels won’t be modern day ghost ships, a mournful echo of the Marie Celeste.

An artist's impression of an autonomous ship. Rolls Royce Marine has signed a deal with Google to help guide autonomous ships.

Rolls Royce Marine has signed a deal with Google to help with the technology for autonomous ships. Photo: Rolls Royce Marine

New Zealand Maritime School industry training manager Kees Buckens said they would be state of the art vessels with sophisticated methods of avoiding a collision.

They would use radar and GPS, as well as new systems linked into infrared cameras that scan the water around the vessel, he said.

“These would give a very clear picture of anything that is on the water from a small log or boat to large ships,” he said.

This information would enable ships to take evasive action to avoid any obstacle.

Such vessels would be very safe, since 80 percent of marine accidents were caused by human error, Mr Buckens said.

While one or two people might be needed to keep an eye on the computers, they would not necessarily be on the vessel, but could be in an office thousands of kilometres away.

Kongsberg chief executive Geir Håøy said the company had been working on autonomy for decades.

New Zealand Shipping Federation spokesperson Annabel Young said the message from a recent Auckland seminar on the future of shipping was that there would be no “big bang” of autonomy.

“There will be an incremental development where people work out which routes and which type of cargo is best suited to an autonomous vessel.

“Some will be more suited than others.”

Ship stopped from entering NZ waters

The ship was due to arrive in the Port of Tauranga early this morning. File photo.

A container ship has been prevented from entering New Zealand waters after several moths were found on board.

The ANL Warragul was heading to the Port of Tauranga from Sydney when the insects were discovered.

A Ministry for Primary Industries spokesperson says a number of dead and live moths have been found on board the vessel.

“We haven’t identified the moths yet, so we don’t whether they’re regulated or not. The vessel is currently outside the 12 nautical mile mark, so they’re not currently in New Zealand territorial waters.

“If the moth is found to be regulated, the vessel may not be permitted to enter New Zealand.”

According to the shipping schedule, the ANL Warragul was due to arrive in port at 5am this morning, and depart for Papeete, Tahiti at 10pm.

The Port of Tauranga directed all SunLive enquiries to MPI.

Transport weak link for doing business – ODT

Banked-up traffic near Milburn.

Banked-up traffic near Milburn.
A freight train near Wingatui, both south of Dunedin.

A freight train near Wingatui, both south of Dunedin.

New Zealand’s road and rail  transport networks have been found wanting. ODT senior business reporter Simon Hartley talks to Westpac’s new industry economist Paul Clark about the  country’s road and rail.

Internationally, New Zealand’s roading network is ranked 40th out of 137 countries while the rail network comes in at 47th, the latter behind Poland and Hungary.

The data comes from the World Economic Forum’s recently published global competitiveness index report. It ranks New Zealand’s overall competitiveness as 13th out of the 137 countries.

However, Westpac’s industry economist Paul Clark said the data showed companies were ”dissatisfied” with the state of road and rail.

”The quality of our road and rail networks was identified as one of a number of weak spots in our overall competitiveness,” Mr Clark said.

New Zealand has 95,000km of road, including 11,000km of state highways. Rail is 4100km in length.

New Zealand has for more than a decade been spending $5billion a year in these areas, most of it on road and rail infrastructure.

Firms operating in New Zealand had for 2017-18 rated the quality of the country’s roads as the same as 2009-10, meaning ”no change in quality over the past eight years,” he said.

”This is not a one-off.

”For a number of years an inadequate supply of infrastructure has been seen by firms as being the biggest hurdle for doing business in New Zealand,” Mr Clark said.

He said the importance of having a high-quality land transport network could not be overstated, both for domestic use and getting exports to the rest of the world.

”When working well they can make a significant contribution to New Zealand’s economy . . . but when not, they can constrain the economy’s growth and prosperity,” Mr Clark said.

About 82% of New Zealand’s roads were open to ”high productivity vehicles”, or heavy commercial traffic. They have a capacity to carry from 44 tonnes to a maximum 62 tonnes.

”These vehicles help freight operators move more freight with fewer trucks, at lower cost,” Mr Clark said.

Unsurprisingly, those vehicles account for more than 30% of heavy commercial traffic, he said.

Mr Clark said the capacity of the road network against demand for travel had only ”edged higher” in recent years. The country’s relatively strong domestic economic performance had underpinned the growth in demand.

”Much of this [annual $5billion] spending has been focused on addressing an infrastructural deficit caused by chronic under-investment in the 1980s and 1990s,” Mr Clark said.

The spending had increased the road network capacity and helped to maintain it in ”tip-top” condition. But it had not always been enough to handle some of the large increases in traffic, at least without some deterioration in network performance.

While progress had been made on rail and road public transport, particularly in Auckland, there had only been ”limited progress” on freight – with almost 85% moved around the country by road.

”There’s good reason for this. Road is not only cheaper than rail, it also provides a convenient door-to-door service,” Mr Clark said.

By contrast, rail typically involved road-bridging freight to a public freight yard or container transfer facility, or investing in and servicing customer rail sidings.

”Either of these takes time, money and logistic effort.

”That’s not to say possibilities do not exist – the New Zealand Transport Agency and KiwiRail, together with sector partners, are actively looking at ways to improve road and rail integration, but more needs to be done.”

Earlier this week, Port Otago floated the idea of eventually having State Highway 88, between Dunedin and Port Chalmers, truck-free, but rail would have to be embraced to achieve that end.

Mr Clark said ”the key is to improve the competitiveness of rail freight and until that happens the possibility of a fully integrated transport system seems quite far off.”

While neither the data nor Mr Clark delved into the political scene, whichever government is formed money will still need to be spent on national transport.

National has roads as its priority but Labour, the Greens and New Zealand First all favour upgrading New Zealand’s rail.

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