Welcome to Cubic Transport Services - for a great freight experience
24th September 2018

08:00 – 17:00

Monday to Friday

L 14, 151 Queen St

Auckland 1010, NZ

0800 2 CUBIC

Contrasting financial years for country’s largest ports

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Cargo Growth Produces Record Year for Port of Tauranga

Cargo Growth Produces Record Year for Port of Tauranga


Port of Tauranga’s hub port strategy is gaining momentum, with growing cargo volumes and increased transhipment driving record results in the year to 30 June 2018.

New Zealand’s largest, fastest growing and most productive port saw container volumes increase 8.9% to nearly 1.2 million TEUs , while overall cargo volumes increased 10.2% to almost 24.5 million tonnes.

• Group Net Profit After Tax increases 13.0% to $94.3 million
• Annual container throughput increases 8.9% to almost 1.2 million TEUs
• Transhipment increases 23.3%, making up a quarter of all container traffic
• Log volumes increase 14.3% to 6.3 million tonnes
• Exports increase 8.2% to 15.4 million tonnes, while imports grow 13.7% to 9 million tonnes
• Subsidiary and Associate earnings increase 11.9% to $16.4 million
• Annual revenue increases 10.9% to $283.7 million
• Asset valuation increases by $226.0 million
• Final dividend of 7.0 cents per share brings the total ordinary dividend to 12.7 cents per share, an increase of 13.4% on the previous year. In addition, a special dividend of 5.0 cents per share will be paid.

New Zealand’s busiest port, Port of Tauranga Limited (NZX:POT) today announced record annual earnings as freight volumes continue to increase and shippers utilise its hub port status.

Group Net Profit After Tax for the year to 30 June 2018 increased 13.0% to $94.3 million.

Good performance from our subsidiary and associate companies saw earnings lift 11.9% to $16.4 million.

The results were lifted by increased volumes across all major cargo categories, including export logs (up 14.3% in volume) and dairy products (up 4.0%).

Transhipment, where containers are transferred from one service to another at Tauranga, has grown 23.3% in the past year, demonstrating the entrenchment of the ‘hub and feeder port’ model in New Zealand.

“This growth is a direct result of Port of Tauranga’s six year investment in building capacity to accommodate larger vessels,” says Port of Tauranga’s Chair, David Pilkington.

“We completed our capacity expansion programme in 2016 and the effects were almost immediate. We are seeing larger container vessels, as well as larger bulk cargo and passenger ships,” he said.

With the fast container service connections between Tauranga and North Asia, North America and South America, shippers in Australia and New Zealand have increasingly been using Tauranga as a hub port. Containers transhipped from other New Zealand ports grew 54.7% compared with the previous year. The Port now handles 40% of all containers in New Zealand.

New Zealand’s importers and exporters are within easy reach of Port of Tauranga’s national network of ports, inland freight hubs and logistics services. The Group has interests in Northport in Whangarei and PrimePort Timaru, as well as operating inland ports at Auckland and Rolleston near Christchurch.

The Company today announced a further special dividend of 5.0 cents per share as part of its ongoing plan to return up to $140 million to shareholders. This is the third year of a four-year capital restructure plan.

Directors have also declared a final ordinary dividend of 7.0 cents per share, taking total ordinary dividends to 12.7 cents per share, a 13.4% increase on the previous year. The record date for entitlements is 21 September 2018 and the payment date is 5 October 2018.

Shareholders have received an annual equivalent return of 22.4% since the Company listed in May 1992.

Cargo trends
Imports increased 13.7% to 9.0 million tonnes and exports increased 8.2% to 15.4 million tonnes for the year ended 30 June 2018. Total ship visits increased 5.8%.

Log exports increased 14.3% to 6.3 million tonnes. Sawn timber exports also increased 10.3% in volume. Forestry products are still fetching record prices internationally.

Dairy product exports increased 4.0% to 2.3 million tonnes. Imports of dairy industry food supplements increased 18.2%, and fertiliser imports increased 16.4%, reflecting a strong sector.

Other primary product sectors also fared well, with frozen meat exports increasing 11.3%, and apples increasing 20.9%.

Cement imports increased 18.9% while steel exports increased 25%.

Oil product imports increased 9.3% and other bulk liquids increased 39.9%.

The number of cars and other vehicles imported at Port of Tauranga doubled compared with the previous year.

Whilst kiwifruit volumes were down 5.8% due to a seasonal drop in green kiwifruit, an increasing proportion of kiwifruit are being shipped via refrigerated container. The number of TEUs increased 27.6% compared with the previous year.

Operational developments
Port of Tauranga Chief Executive, Mark Cairns, said a ninth container crane had been ordered for delivery in 2020.

Port of Tauranga’s container terminal now has 2,634 refrigerated container (reefer) connection points, which are supplemented in the peak season with 12 generators each supplying power to 35 containers.

“We believe we have the largest reefer capacity in Australasia demonstrating the significance of the volumes we are handling,” said Mr Cairns.

The Port also opened a new purpose-built coolstore at Mount Maunganui to handle kiwifruit and other chilled cargoes.

The Port maintained its industry-leading record for productivity, with a net crane rate for the year to 30 June 2018 of 35.5 moves per hour (compared with the reported national average of 33.5 moves per hour and Australian rate of 28.9 moves per hour).

Our people and their safety
Mr Cairns said the injury frequency rate among the Company’s staff reduced by 2% to 5.6 per million hours worked, whilst the Company’s contractor injury frequency rate reduced nearly 70% to 9.3 per million hours worked.

The Company has launched a wellbeing programme for all Port of Tauranga employees.

Care for the environment
Port of Tauranga has appointed an Environmental Manager and is making use of technology to reduce carbon emissions and improve energy efficiency, including introducing electric vehicles where possible.

Stormwater management is a current priority, and infrastructure improvements continue as a long-running resource consent application for the Mount Maunganui wharves is dealt with via an independent commissioner.

The Company has also undertaken a comprehensive, independent carbon emissions audit to set targets for future reductions in emissions.

We continue to support forestry industry efforts to reduce the amount of methyl bromide used at the port ahead of the 2020 deadline for 100% recapture of the fumigant. We are encouraging exporters to de-bark logs prior to arrival at the wharves to reduce the need for fumigation.

Sector and industrial relations issues
Port of Tauranga is proud of its industrial relations track record and works hard to maintain productive employment relationships with our staff and unions. It is salient that more than 90% of our staff are shareholders in the Company.

The Company has made a submission opposing certain aspects of the Employment Relations Amendment Bill.

“Specifically, we believe the repeal of the ability for employers to opt out of Multi Employer Collective Agreement (MECA) negotiations breaches international conventions,” said Mr Cairns.

“We believe this aspect of the Bill will see a lowest common denominator outcome and will most certainly decrease productivity in the Port sector.”

Port of Tauranga continues to be concerned about the impact on New Zealand’s land transport network of further sub-economic investments being made or contemplated by other New Zealand Ports. This is not just an issue for the sector, but the economy as a whole.

“We support the Auditor-General’s advice to port companies to use fair value valuations to ensure major capital investments are properly justified. Port of Tauranga seeks a minimum return of 8.5% after tax on major capital investments;” said Mr Cairns.

Port of Tauranga has commenced planning for the next stage of capacity expansion.

The Company has approximately 40 hectares of undeveloped, port-zoned land available for future expansion. There are options to extend the quay length on both sides of the harbour, using Port-owned land south of the existing berths.

Port of Tauranga operates in a complex environment with many factors outside its immediate control.

“We have implemented the policies, processes and practices we need to deliver superior customer service, economic benefit to our communities and strong returns to our shareholders,” said Mr Cairns.

“We expect cargo growth to continue in the next year across most categories, and particularly containerised cargo,” he said.

Guidance on full year earnings will be provided at the Annual Shareholder Meeting on 17 October 2018.

The Global Container Shipping Industry since the Hanjin Collapse

In August 2016, Hanjin Shipping Co., at the time the world’s seventh largest container carrier, sought bankruptcy protection. It was the largest bankruptcy in shipping industry history. On February 2, 2017, the Seoul Bankruptcy Court declared that Hanjin Shipping would be liquidated, as restructuring its debts would be “prohibitively expensive.” But just how big was this debt load?

Hanjin Shipping had originally admitted to the equivalent of $5 billion in debts. Once the bankruptcy court got to work, there were nearly weekly announcements that more debt had been found, tucked away in nooks and crannies of the once glistening edifice. In the end, it was determined that Hanjin, when it entered receivership, actually had $10.5 billion in debts.

Hanjin had been tripped up by, among other factors, a problem that plagues the container shipping industry: overcapacity. And despite Hanjin’s liquidation, that overcapacity is getting a whole lot worse.

As of June 2018, all of the top 13 container carriers bar one had added capacity compared to a year earlier. The lone contrarian was Hyundai Merchant Marine (HMM), which is presently exiting the Transatlantic market altogether and as such is eliminating capacity. But the other 12 big container carriers more than made up for it. Here are some standouts:

Zimm Integrated Shipping Services (Israel) increased its capacity by 24.5%.

Orient Overseas Container Line (Hong Kong) added 18.4%.

CMA-CGM (France) added 16.3%. It also ordered from two state-owned Chinese shipyards nine 22,000-TEU (Twenty-foot Equivalent Unit) container carriers that will be the world’s largest when deliveries start next year. Here is a current record holder at 18,000-TEU. Note the tiny 40-foot containers stacked on top (image via CMA-CGM):

COSCO, a state-owned product of China’s “command economy,” added 12.4%.

Maersk Line, the largest carrier by capacity, ahead of COSCO, added 10.8% in capacity.

ONE (Ocean Network Express), a brand-new company formed from the container divisions of Japan’s top three shipping companies (Mitsui-O.S.K., Nippon Yusen Kaisha and K-Line) added 7.9%, despite many promises to the contrary.

Including HMM, the average capacity increase for these 13 already huge shipping companies was 8.5%. Including all companies, big and small, container carrying capacity worldwide increased by a 9.3% year on year.

As a result, despite surging transportation inflation worldwide, the China Containerized Freight Index (CCFI), which tracks contractual and spot-market rates for shipping containers from major ports in China to 14 regions around the world, at 821 on Friday, has not fully recovered from its brutal collapse that bottomed out at 636 in April 2016. Before the collapse, it had ranged consistently above 1,000 and periodically above 1,100:

Note that just like the Baltic Dry Index, the CCFI is not a measure of trade volume, but a measure of how expensive (or cheap) it is to ship goods by sea around the world.

Only part of the collapse of the containerized freight rates in 2015 and 2016 was due to overcapacity. Another major factor was the plunge of the price of oil, and therefore of bunker, the fuel for these giant container ships.

With the CCFI well below 1,000 since 2015, while bunker prices have been rising since 2016 along with the costs of emission compliance, profits are being eroded, and momentous changes are sweeping through the industry.

Above mentioned ONE can be considered one of the poster children for this “brave new world”: it started operations on April 1, 2018 (the beginning of the fiscal year in Japan), and during its first quarter of existence has already managed to lose $120 million.

Japanese shipping companies have a time-honored tradition of ignoring losses until they become too large to be ignored, and then there’s always a big scandal followed by an emergency bailout, merger or takeover. So a measly $120 million in losses in a single quarter is of no concern to them.

AP Moller-Maersk, the parent company of Maersk Line, bought Hamburg Süd from Dr Oetker KG of Germany for €4.3 billion. In 2013 Hamburg Süd had attempted a merger with Germany’s other shipping giant, Hapag-Lloyd, but Dr Oetker KG pulled out when a satisfactory financial package could not be agreed upon.

Hapag-Lloyd then merged with perpetually troubled Gulf carrier United Arab Shipping Company (UASC), resulting in a curious ownership situation. Due to previous mergers and share swaps, the largest shareholder of the “new” Hapag-Lloyd is Chile’s Grupo Luksic (20.7%), followed by three that each own 14%: Kuehne + Nagel AG (Germany, run through a shell company in Switzerland); the City of Hamburg; and Qatar’s national wealth fund, QIA. Saudi Arabia’s Public Investment Fund owns 10%. The rest is free float.

This group of shareholders has recently started looking for a further merger, but recent negotiations with CMA-CGM broke off due to anti-trust concerns.

Everyone has been keeping an eye on COSCO. It announced last year to great fanfare the purchase of Orient Overseas (International) Limited (OOIL) of Hong Kong for the equivalent of US $6.3 billion.

OOIL has long been one of the most profitable shipping companies worldwide. The fact that it is majority-owned by the Tung family, one of Hong Kong’s most powerful and richest clans, surely doesn’t hurt.

OOIL’s container division, Orient Overseas Container Line (OOCL), ranked as the seventh largest container carrier by capacity when COSCO put forward its offer. Stock markets uncorked the champagne and the financial media went into the usual hyperbole to sell yet another “deal of the century.” As the purchase process made its way through anti-trust agencies around the world, it seemed like a done deal until April 2018, when it run into two snags.

The first snag is the Trump Administration. In 2011, OOCL struck a deal with the Port of Long Beach to finance a large-scale modernization and expansion of the Long Beach Container Terminal (LBCT) in return for majority ownership. At the time, OOCL was owned by a wealthy Hong Kong family, so nobody raised any objections.

Now things have changed: The Trump Administration has tasked the Committee on Foreign Investments (CFIUS), a panel of experts from 17 government agencies, with deciding if the LBCT constitutes a “strategic asset” and, if so, if it can be owned by a company directly controlled by a foreign government locked in a trade war with the US.

COSCO has already extended an olive branch, offering to sell the LBCT after the merger “at cost” if a buyer can be found. But until the CFIUS issues a ruling, the situation has stalled.

The second snag is the Chinese government itself. Despite being a state-owned enterprise, COSCO had to seek approval for the OOIL purchase from the Anti-Monopoly Bureau in Beijing. Initially it seemed little more than a formality, but deadline after deadline has passed without the Bureau issuing a ruling.

Neither COSCO nor the Chinese government have provided any explanation even after the last deadline, June 30, 2018, came and went. We’re left in the dark as to the motives, but China’s highly complicated power structure and the even more complicated relationships between Hong Kong and Macau “godfathers” and the Mainland government most likely have a hand in it.
Source: Wolf Street

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.

New KiwiRail Chair appointed

Wednesday, 8 August 2018, 4:04 pm
Press Release: New Zealand Government


Greg Miller has been appointed to chair the KiwiRail board, Minister for State Owned Enterprises Winston Peters and Minister of Finance Grant Robertson announced today.

Mr Miller replaces Trevor Janes, who resigned effective 30 June 2018. Acting Chair Brian Corban will continue in the role until Mr Miller takes up his position on the board. Mr Corban will resume the Deputy Chair role when Mr Miller joins the board.

Mr Miller is currently the Managing Director/Chief Executive of Toll New Zealand, a position he has held since 2008. He began his career as a cadet in transport operations at Mainfreight Group, rising through the ranks to become a key Group Senior Executive. He has since held roles at Tranz Rail and Tranz Link International as Managing Director across New Zealand, Australia and Asia and was Toll Tranzlink Director and Group General Manager from 2003-2008, where he chaired the Toll Tranzlink NZ Fonterra Strategy Committee.

“The Coalition Government has made rail a priority in our plan to boost the productivity of our regions after years of central government neglect for this crucial part of our economic apparatus,” Winston Peters said.

“Greg Miller’s leadership in the transport industry in New Zealand, in rail, road and sea transport, gives him a strong base for chairing KiwiRail and to help it meet the high expectations that the Coalition Government has for rail in New Zealand,” Winston Peters said.

“The 2018 Government Policy Statement on Land Transport highlighted how critical rail is for improving transport connections to the rest of the world for our exporters. KiwiRail is an important partner in this, and we look forward as shareholding Ministers to engaging with Mr Miller as we roll out our plans,” Grant Robertson said.

The appointment means Mr Miller will also join and chair the New Zealand Railways Corporation NZRC board.

“I look forward to working with the KiwiRail team, from the railway workers at the coal face to the new chief executive of KiwiRail, to keep building this company and delivering a rail operation that performs for our customers in all cities and regions, with a competitive commercial strategy,” Greg Miller said.

“I’m particularly keen to prioritise KiwiRail’s high-performance, high-engagement model where workers and executives collaborate to harness opportunities and improve productivity for the benefit of the whole company,” Greg Miller said.

Mr Miller has been appointed for a term of three years.

Are we ready for the ‘Walls of Wood’?

Logs piled up at Centreport in Wellington. Photo by Lynn Grieveson

Special correspondent Gavin Evans finds log exports have tripled in the last decade and could at least double again over the next decade. He takes a detailed look at the wave of port, rail and road investment needed to cope with this ‘wall of wood’, let alone an even bigger one planned under the Government’s ‘Billion Trees’ programme.

All over the North Island, ports and KiwiRail are scrambling to deal with a ‘wall of wood’ that has tripled since 2008. They say they will need to invest heavily again if they are to cope with another potential doubling of the harvest in the coming years. High log prices because of Chinese demand could easily trigger another surge in the ‘wall’.

The ports of New Plymouth, Gisborne, Napier and Wellington are straining to keep up with the demand to move logs from forests to ports, and will have to work hand-in-hand with a capital constrained KiwiRail to avoid regional roads and highways being pounded into potholes by fleets of logging trucks.

For example, Port Taranaki is hoping a planned rail service from Whanganui will help it capture a bigger share of the wall of wood coming out of the lower North Island.

The company has been working with KiwiRail and foresters and says it is close to settling a new service that could deliver between 80,000 and 120,000 tonnes of logs to the port annually starting early next year.

Chief executive Guy Roper says the details of the cost and the share of the investment are still being worked through. But he says an improved supply chain would be more efficient and improve the return to forest owners.

“This is about growth – additional logs coming to Port Taranaki from the Whanganui area,” he says.

“Logs within a closer radius of the port are still likely to come on trucks. But logs will no longer be exclusively on trucks, which will help congestion, help reduce the amount of maintenance and upgrades required, and reduce carbon emissions.”

Taranaki handled 692,000 tonnes of logs in the year through June, 42 per cent more than a year earlier. But it is not alone trying to cater for the forestry boom. Many of the country’s ports have experienced 20 percent-plus annual volume growth in recent years as trees have reached harvest age and strong demand from China has delivered record prices.

Many ports have, or are, extending log yards and rationalising wharf space to cope. Others are planning dredging to cater for bigger vessels or paving yards and buying bigger loaders and higher book-ends – the massive steel frames logs are stacked within – to improve their use of space.

But some, such as Napier and Eastland at Gisborne, are also facing a step-change in investment to increase capacity and reduce congestion. The major berth expansions planned in coming years will cater not just for the expected logs growth, but also increasing cruise ship visits and growth in other export freight.

And the planning and commitment that entails should be on peoples’ radar if the country is to more double or almost triple its forest estate by 2050 – as recommended by the Productivity Commission – to help meet its climate change targets.

That extra 1.3 million to 2.8 million hectares of trees will most likely be planted in more marginal – and hard to get to – dry stock land in eastern Taranaki, Wanganui, Manawatu, southern Hawke’s Bay, Wairarapa and down the east coast of the South Island. And that will have big implications for the road and rail links in those areas – if they exist – to get those logs to port.

As Forestry Minister Shane Jones told MPs in June, careful planning will be needed to ensure any exotics planted as part of the billion trees programme don’t become “stranded assets”.

And then there are the capital requirements. Hawke’s Bay Regional Council,which owns Napier Port, has already signaled it doesn’t have the funds to meet both its environmental plans and fund the $250 million to $300 million of spending the port says it will need in the next decade to meet its growing log, cruise ship and export apple trade.

The council will go to ratepayers later this year on options that could include selling part of the business or leasing the port out long-term to an operator prepared to make that investment.

Northport has also begun consulting on a much longer-term concept plan for extending its wharves east and west to cater for more log and container traffic.

Better times for KiwiRail

In the meantime, KiwiRail has benefited from the rising harvest volumes and has expanded its fleet of log wagons 40 per cent since 2011.

It converted about 130 container wagons to carry logs last year. It will accommodate the new Taranaki service within the 200 wagon conversions it plans in the current financial year, Alan Piper, the firm’s sales and commercial general manager, says.

The viability of a rail service to a forester depends on a range of variables, including train size and the distance of a forest from the rail head.

But, as a general rule, he says distances of 85 kilometres or more from port provide the biggest advantage over trucking. And the truck trips avoided reduce road wear and cut emissions by about two-thirds.

Earlier this year KiwiRail was delivering 60 log trains a week to Tauranga from yards at Kawerau, Murupara and Kinleith. It estimates those loads avoided 340 truck movements a day.
Centreport in Wellington has also benefited from its rail links to Wairarapa, the main trunk line north and west to Wanganui to deliver its increasing log volumes. It handled 653,000 tonnes of logs in the six months through December, 5 per cent more than a year earlier.

But nationally, the sheer volume is the challenge, and it’s not all coming from regions well-served by rail.

Exports have tripled, and may rise another two thirds

New Zealand has about 1.7 million hectares of plantation forest and the harvest reached a record 33.1 cubic metres in 2017 – a 50 per cent increase since 2008, according to Westpac. Log exports reached 19.4 million cubic metres, 11 per cent more than a year earlier and almost triple that in 2008.

And depending on markets and the industry finding enough contractors and trucks and wharf space, that could reach 43 million cubic metres by 2021, according to age-based projections of wood availability. One Ministry of Primary Industries scenario sees the available harvest rising as high as 55 million cubic metres by 2022. (Updates from earlier version to make clear available harvest could rise 66 percent, rather than double)

A more measured scenario, in which hundreds of small forest owners adopt the more sustainable harvest policy of the large-scale operators, could see volumes sustained at more than 35 million cubic metres for a decade from about 2024, according to forecasts prepared for the Ministry of Primary Industries in 2014.

Regardless of when the peak supply arrives “there is a whole big wall of wood coming during the next seven years,” Westpac industry economist Peter Clark says.

But knowing when that volume will peak, and how best to move it, is the challenge for ports and transport firms. And while rail may be the more efficient, low-emissions way to move logs, it isn’t available everywhere and may only soak up the growth in volume rather than reduce the number of trucks already on the country’s roads.

Clark says the long-term outlook for New Zealand forestry is very good, given ongoing urbanisation and construction demand in places like China and India. The increasing use of New Zealand pine as structural timber in more markets is also positive.

But he says nearer term risks to the demand outlook are real. There has already been a slowdown in China – New Zealand’s biggest log buyer – and looming trade wars may also have an impact.

The central North Island dominates the country’s radiata pine crop and Port of Tauranga takes the lion’s share. The country’s biggest port moved 3.3 million tonnes of logs across its wharves in the six months ended December – 12 per cent more than a year earlier.

Napier Port, the country’s fourth-largest, handled a record two million tonnes of logs in the year through May. The 1.6 million tonnes shifted in the September year was 35 per cent more than the year before.

Log trucks arrive every few minutes at the port which also receives a daily log train from Whanganui. Rail delivered about 202,000 tonnes of the logs the port loaded onto 118 ships last year.

The company is now seeking consent for a $125 million wharf expansion to help cater for extra log ships and cruise liners.

It is expecting an almost nine per cent lift in log carrier visits by 2019 and a 49 per cent increase in all export volumes by 2026. And a big part of that is down to the reopening of the Napier-Wairoa freight line expected by the end of this year. KiwiRail estimates that could take as many as 5,500 log trucks off the roads a year.

Expansion plans in Gisborne

Eastland, the country’s second-largest log exporter, moved close to three million tonnes in the March year just ended – another record and about 20 percent more than the year before.

The community-owned firm, which has upgraded its log yards and started a satellite yard at Matawhero west of the city in 2011, believes those volumes could reach four to five million tonnes in the next six to eight years.

Eastland has invested more than $90 million in capital projects for the port in the past decade. Last year it indicated its Twin Berth project – to enable it to handle two 200-metre Handymax carriers at a time – would account for most of the $70 million of capital work planned during the following five years.

The work includes dredging, extending an existing wharf and strengthening the existing breakwater. Its final cost will depend on the extent and pace of reclamation – anything from 1.5 hectares to about four.

Like any infrastructure operator, Eastland wants to make sure it has the capacity in place to meet exporters’ needs. But it also needs to do that at least possible cost if the region’s foresters are to benefit.

Ports infrastructure manager Martin Bayley told foresters earlier this month he is keen to hold off “pouring more concrete” if some of that expected increase in volumes can be met with more efficient use of the existing assets.

“It’s easier to build cost than it is to build value,” he said during a presentation at the New Zealand Institute of Forestry conference in Nelson on July 10.

Eastland’s catchment stretches from the Wairoa River, 100 kilometres south of Gisborne, to Hicks Bay, 180 kilometres north at the top of East Cape.

And the region’s fragile soils mean its “trash” roads are hard to maintain, Minister Jones told the same conference. That’s why he’s pushing investigations of a wharf at Hicks Bay that logs could be barged from.

Eastland is working with iwi interests to test the feasibility of the plan.

Its early days. Bayley says building a wharf is one thing, but the economics of shifting logs is a function of both distance and the number of times the logs need to be handled. A port, he notes, also relies on a small industry of supporting operations to function.

Virtually all the country’s ports are investing in new loaders or paving to improve the efficiency of their log operations.

Even in the South Island

Port Marlborough’s Shakespeare Bay facility is handling about 700,000 tonnes of export logs, up from 507,000 five years ago. The company believes it can lift that to about a million tonnes in coming years through judicious investment in new plant and higher stackers.

Southport at Bluff is investing about $2.2 million adding a hectare of log space this year; Lyttelton recently resealed 15,000 square metres and improved storm water treatment for its all-weather log yard.

Port of Nelson embarked on a string of projects three years ago buying land, demolishing buildings and rationalising space. It expects to complete the work mid-2019.
A recent small reclamation will increase its storage space by more than 13 per cent to at least 85,000 Japanese agriculture standard cubic metres.

The firm handled 1.13 million cubic metres of logs in the June year, 26 per cent more than a year earlier. Annual shipments averaged 650,000 in the decade ended 2016.

“There has certainly been significant growth over the last two years,” acting chief executive Matt McDonald says. “Looking at the figures for the past six months or so, the volume going through the port has been more in the 1.2 – 1.3 million JAS range.”

Suez Canal Grinds to a Halt after Multi-Ship Groundings, Collisions

Suez canal
illustration; Image Courtesy: Wikimedia under CC BY-SA 3.0/AashayBaindur

The Suez Canal, Egypt’s busiest waterway, has been experiencing traffic mayhem over the past two days as multiple groundings and collisions brought the canal to a standstill.

The drama started with the grounding of a containership on July 15, which has been identified as Aeneas.

The 63,059 dwt containership grounded during its transit at about 1830 hours local time, GAC Egypt reported.

It was the 20th in the Southbound convoy of 27 vessels. Initial reports indicate that the ship suffered an engine failure that led to the grounding.

Suez Canal tugs towed the stricken boxship to Suez outer anchorage at 01.36 hours on July 16 and the canal was cleared, GAC reported citing Suez Canal Authority.

“Some of Southbound ships that had been behind the grounded vessel cleared the canal. Only four were detained and resumed their transit at 0300 hours today (July 17),” GAC said.

The incident was followed by the grounding bulk carrier of 39,929 dwt on July 16, identified as Panamax Alexander.

The 39,000 dwt bulker was behind the the stricken containership in the Southbound convoy and run aground having collided with another bulker right behind it.

Two bulkers, Sakizaya Kalon and Osios David, are also anchored in the canal area, today’s data from Marine Traffic shows.

Based on the latest information from the Suez Canal Authority, the grounded bulker was refloated on Monday afternoon and has arrived at the Great Better Lakes.

As of today, the Suez Canal is ready for convoys to resume transiting, the authority said, however, dozens of ships have been delayed.

The transit arrangement for delayed convoys from Monday and Tuesday have not yet been announced, GAC said.

The 18 ships whose transit was interrupted on July 16 resumed their voyage Southbound early this morning and are expected to start exiting the canal later today.

As for the Northbound convoy, only 6 ships entered the canal and they are waiting at Great Better Lakes. Around 12 ships remain waiting at Suez anchorages.

There are 25 vessels that were scheduled to start their Northbound transit today and they are still waiting at Suez anchorages for SCA transit arrangements, GAC informed.

With regard to the Southbound voyage for today, only 11 ships from total 29 ships entered the canal and the rest of this convoy is still waiting at Port Said anchorage for further instructions.

World Maritime News Staff; Image Courtesy: Wikimedia/AashayBaindur under CC BY-SA 3.0 license

Fuelling the ships of the future

By 2020, the global shipping fleet will be required to reduce greenhouse gas emissions by 50% and switch to low-sulphur fuels, a move that is expected to radically improve air quality. The recent decision pushed through by the International Maritime Organisation, the United Nation’s leading shipping agency, is one of the biggest revolutions in maritime history. Its effects will be felt the world over, by refineries and ship owners as well as trading hubs and ordinary consumers at the gas pump.

This is good news for the environment. According to a recent report by the National Resources Defense Council, with ships allowed to burn fuel with sulphur levels that are up to 3,500 times higher than permitted in on-road diesel, one container ship cruising along the coast of China emits as much diesel pollution as half a million new Chinese trucks in a single day. The major overhaul shows that the industry is finally making the transition from thick, sulphur-rich bunker fuel to cleaner, more environmentally friendly maritime fuel.

But in order to make sure that these changes have a lasting impact that goes beyond the shipping industry we will need to embrace the full potential of marine fuels and liquefied natural gas (LNG) and create a new culture of transparency, although within the International Maritime Organisation (IMO) itself.

The IMO ruling to push the sulphur cap for bunker fuel down to 0.5% will affect 70,000 ships and will be a game changer for marine fuel. More broadly, the wider commodities industry, from coal to oil to sugar, is likely to face a price hike. No sector will be immune to these changes as the shipping industry carries almost 90 per cent of world trade. Airlines and travellers worldwide are also likely to be affected due to a knock-on effect creating higher fuel prices.

So where do we go from here? There is no silver bullet to the post-2020 scenario. Alternatives include using sulphur-rich fuel oils alongside so-called scrubber systems, exhaust gas cleaning systems, a technology which also has many drawbacks. The cost of investing in scrubbers can exceed US$10 million per ship. The low margins of the sector mean that ship owners are understandably reluctant to make these investments.

That is why the shipping sector must create a general consensus for post-2020 bunkering, one that will help cut costs and improve energy supply and security. Low sulphur fuel oil and liquefied natural gas are the way forward. They are credible solutions for energy stakeholders seeking an economic and environmentally sustainable option. LNG bunkering contains almost no sulphur, produces low greenhouse gas emissions and has a proven technological track-record.

Looking to the future, it is important that the shipping sector takes steps to harness the full potential of LNG as well as offset the potential consequences of the new regulations pushed through by the IMO. To do this, we first need to address the likely challenge of millions of barrels of high sulphur bunker fuel being displaced as a result of the new limits. This is because the marine market has traditionally been a major outlet for the refining industry.

Second, we will need to do the maths and work out the logistics of sourcing high volumes of LNG for bunkering in line with domestic and industrial needs. This will involve addressing the question of supply, mindful of the fact that in the short-term low-sulphur fuels will dominate until large scale consumption of LNG takes hold across the bunker sector.

Finally, a new culture of transparency has to take root in the shipping industry, encompassing all major players – including the IMO. A report published this month by Transparency International, the global corruption watchdog, highlighted several accountability shortcomings that are weighing down the Organisaton. These must be addressed if the IMO is to deliver on its ambitious and honourable goals.

The IMO’s ground-breaking changes are essentially a force for good. And they are no doubt the first of many steps aimed at making the shipping sector less of a menace to the environment. This is a unique opportunity for energy stakeholders, big and small, to stay ahead of the curve and rethink how we do business.
Source: New Europe

Southern flavour for 2018 road transport conference

This year’s Road Transport Forum Conference, which is now only two months away, will celebrate the important role of the road transport industry in the Otago and Southland regions, says RTF Chief Executive Ken Shirley.

The Conference, which is to be held on 26 and 27 September at the fantastic Forsyth Barr Stadium in Dunedin features a range of influential and inspiring speakers to inform and entertain delegates.

“We are grateful that Transport Minister Phil Twyford has committed to returning after speaking at our 2017 conference and we look forward to learning more about the Government’s new transport plans that will have such a major impact on our industry,” says Shirley.

“Other speakers include highly regarded economic commentator Cameron Bagrie, who will provide an analysis on the state of the New Zealand economy; Chairman of HW Richardson Group, Rex Williams, who will share his experiences of being involved in the iconic Southland transport company and Graeme Gale from Helicopters Otago, owner of one of the largest commercial helicopter operations in New Zealand.”

“Specific industry issues such as driver fatigue and impairment, and training and qualifications will also be discussed by panels involving subject experts and road transport operators.”

Well-known Dunedin entertainer Doug Kamo will MC the Conference while Otago sports icon and legendary rugby commentator Paul Allison will entertain delegates with stories from his days both on and off the sports field. There will also be trade and vehicle displays supplied by sponsors and supporters of the industry.

The prestigious New Zealand Road Transport Industry Awards Dinner will be held on the evening of the 26th September in the Dunedin Town Hall and will be a celebration of some of the outstanding achievers in road transport as well as a great night of local entertainment.

The 2018 New Zealand Truck Driving Championships Final, traditionally held alongside the Conference, will this year start a day early and take place on the ‘East Slab’ of the stadium, which should make for a tight and technical course in a spectacular setting.

The Conference website, including an online registration facility, accommodation options, sponsorship packages, transport and a partner’s programme is available at www.rtfconference.co.nz.

The Road Transport Forum represents the interests of the road transport industry and our member associations – National Road Carriers, Road Transport Association NZ and the NZ Trucking Association.

World’s largest container vessels under construction in Shanghai

Construction of two container ships with the carrying capacity of 22,000 TEUs, which would make them the largest container vessels in the world, began on Thursday, the paper.cn reported.

The two are among nine 22,000 TEU vessels deal signed by French container shipping operator CMA CGM and China State Shipbuilding Corporation (CSSC) in September last year.

Built by Shanghai-based Jiangnan Shipyard and Hudong-Zhonghua Shipbuilding, the two container vessels measure 400 meters in length, 61.3 meters in breadth and 33.5 meters in depth. The deadweight of the box ship is 220,000 DWT, which can contain 1,000,000,000 iPhoneX (with standard packing box). Moreover, it can still hold 2,200 4-foot refrigerated containers, accounting 20 percent of the whole TEU.

Besides, they are also the world’s first giant container ships propelling with engines burning liquefied natural gas, a technology breakthrough for environmental protection. They have distinctive advantages compared to the current ships using heavy fuel oil: Up to 25 percent less CO2, 99 percent less sulphur emissions, 99 percent less fine particles and 85 percent nitrogen oxides emissions.

The two vessels are expected to be delivered in 2019.
Source: ChinaDaily