Without the efficiencies and safety improvements of automation, the Ports of Auckland will struggle to remain internationally competitive. That raises new questions about the port’s future
Phil Goff leans forward out of his seat, his brow furrowed and his finger raised. “No, I want to finish this because I’m really angry at the statement that he’s made.”
In one of his last interviews before retiring as Auckland mayor, Goff is responding to criticisms from former Ports of Auckland chief executive Tony Gibson, who had told Newsroom that Goff undermined the council-owned infrastructure company with repeated public criticisms and questions about the port’s future.
“He was responsible for the financial management of the port,” Goff retorts. “Under the Ports Companies Act, he controls operational matters, and he runs it as a commercial business. And it was not run well, because each year it went down.
This war of words was triggered by the publication of a two-and-a-half page report from an independent review into the governance of the Ports of Auckland automation, after the new board put an end to the project and wrote off $65 million spent on it. It was robustly critical of the former board and executive leadership of the Ports.
The Ports of Auckland’s automation project would have replaced human-operated straddle cranes with 70-tonne automated ones, booting it around the docks at 22km/h without anyone at the controls. They had been trialled loading and unloading 120 containers ships, but the project was beset by problems. It faced delays caused by council consents, importing new cranes, straddles knocking over walls and containers, and increasingly, skittish operators intervening in the computerised automations.
Most of all, the project was undermined by the deaths of three men in workplace accidents – tragedies that weren’t related to the automation project, but undermined confidence in the company’s leadership and culture and shut down operations while the deaths were investigated.
The accumulation of problems led to the resignation last year of Tony Gibson, citing “persistent and sometimes personal attacks”. Without its champion, the automation project’s days were numbered.
“If the Government has a port strategy we might be clamouring to sell shares. We might have to sell a little.”
– Wayne Brown, Auckland mayoral candidate
Supporters and critics disagree about whether the project was fatally flawed: the board-commissioned review by Crown Infrastructure chair Mark Binns notes that former directors believe the board’s decision in June to end the project was wrong.
But what many do agree on, at least implicitly, is the decision was an existential one for Ports of Auckland.
It puts the questions back on the table, should a busy commercial port operate out of downtown Auckland, with the associated noise, visual pollution and congestion on our roads and waterways?
Should the Auckland Council continue to operate such a highly technical infrastructure business? Should it sell off some of its shares to allow more experienced and well-capitalised investors to take their seats at the board table? In an election campaign debate last week, mayoral frontrunner Wayne Brown refused to rule that out: “I might sell a bit.”
“While this particular automation project failed, there are ports around the world that have automated successfully, and it would be short-sighted to rule out the use of automated systems in the future.”
– Jan Dawson, Ports of Auckland
Can the struggling Ports of Auckland remain internationally competitive, or does it need to investigate new automated solutions?
“Without automation,” says former chair Liz Coutts, “the port will reach capacity sooner. This will result in an increase in transport costs and emissions as imports will then have to be transported from other ports in New Zealand to reach the Auckland market.”
Competing without automating
When the company’s board first made the decision to automate, there was not well-tested technology to operate unmanned cranes, so they opted for partial automation – just the straddle carriers. Today, full automation would be viable, and a relatively small New Zealand port could essentially buy tried-and-tested technology off the shelf from global port operators.
“While this particular automation project failed, there are ports around the world that have automated successfully, and it would be short-sighted to rule out the use of automated systems in the future,” says new chair Jan Dawson.
Meanwhile, though, the company must make do. The previous board and management had attempted automation to lift capacity, productivity and profitability without further port expansion or reclamation, she says. “We are confident we can still meet those aims and can continue to provide a safe and reliable service for our customers; we will just take a different path.”
For instance, the tall blue automated straddles can stack containers four high. The company plans to retrofit those to be operated by drivers, like the older, smaller straddles. Dawson says that will provide the ability to increase capacity and productivity in line with the growth forecast, in effect future-proofing the port.
The new board and management have agreed a new strategy, ‘Regaining our Mana’. Dawson says they’re very pleased with the progress and results to date.
“We continue to meet our requirement to recruit eight new stevedores every month in order to meet our commitment to restore berth windows. Many of our new employees have been referrals from friends and family who currently work for Ports of Auckland.”
Relocating the port
New Zealand has 12 commercial ports, more by some measures, to serve a population of 5.5 million. But the two biggest, by far, are Auckland and Tauranga.
Historically, Auckland has handled about 75 percent imports, and Tauranga has handled about 75 percent exports. Container ships are getting bigger and bigger and often can’t be accommodated at many of the smaller ports such as Nelson; instead, they offload at Auckland, then steam back out into the Hauraki Gulf and around the Coromandel to Tauranga to pick up this country’s exports.
In 2019, a government-commissioned report by the Upper North Island Supply Chain Strategy Working Group concluded: “Ports of Auckland’s CBD freight operation is no longer economically or environmentally viable, and is constrained by landside infrastructure failure. It is in the interests of taxpayers and ratepayers that it be progressively closed, and the land it currently occupies be progressively rezoned for higher and better uses.”
That working group, it should be noted, was chaired by Wayne Brown – who is now frontrunner for mayor. Early in the election campaign, he said he would demand that Ports of Auckland pay its owner, the city council, $400m a year in ground rent to force it to start freeing up its land for more valuable uses than freight and imported cars.
But Liz Coutts says the relocation of Auckland port should not be considered in isolation: a national and holistic approach is required.
Other considerations include automation, the impact of the industry’s carbon footprint and emissions, and the consenting and stakeholder consultation processes.
As Newsroom reported this month, the first in a string of delays to the Auckland automation project was in 2016 when a Parnell resident challenged the status of the port’s tall cranes, under the city’s new unitary plan. The port was forced to put a hold on the project, and the importation of the giant 82.3 metre cranes from China, while it awaited a ruling on whether each crane would need a separate resource consent.
It’s futile to speculate whether, without that first delay, the project might have been completed on time – before the intervention of the Covid lockdowns sent it into a downward and terminal spiral.
Over the past few years, local champions, pork-barrelling politicians and technocrats have placed four credible alternatives on the table: relocate the Auckland port to Whangārei, to the Manukau Harbour, to the Firth of Thames, or consolidate the country’s imports and exports at Tauranga.
Whangārei was championed by NZ First leader Winston Peters and his offsider Shane Jones, who won Labour’s agreement to the Supply Chain Working Group report. It found that Northport should be developed to take over much or all of Auckland’s existing and projected future freight business.
But with NZ First’s defeat at the last election, the unfettered Labour Government seems less motivated to progress Northport as a solution.
Instead, Transport Minister Michael Wood obtained Budget funding this year for a new study into a port on the shallow, west-facing Manukau Harbour. The Ministry of Transport is calling for proposals from parties interested in doing the technical feasibility study, but it looks unlikely it will be completed before next year’s Parliamentary election.
There are some significant challenges: the shallow depth of the Manukau Harbour, the dangerous bar at the harbour mouth, and the fact that it is on the wrong side of the North Island for container ships.
Tony Gibson argues a Manukau port can’t work. “What a lot of people think is that all the services are coming from Australia – but they’re not. They’re coming across the Pacific. So if you went to the Manukau, then you’ve got to go around the top of the North Island to Tauranga, Lyttelton and Port Chalmers, which is significant in terms of distance and cost.
Northport, by its own admission, can’t soak up all the demand from Auckland. But Gibson (a director on a company that leases land to Northport) says it can assist with the wider supply chain. “And it can provide more resilience given the fact there are significant delays at the Ports of Auckland – and Northport have got some pretty good plans which include automation.
“Politicians, and Goff was one of them, say we’re gonna move the port. Well, let’s talk about what the problem is. Let’s look at 30 years’ time, and what the demand cycle will be for the upper North Island.”
Do the three ports in Auckland, Tauranga and Northport have the ability to expand to cope with that increased demand? “A lot of that is linked to your social licence to operate. And in many ports like Auckland and Tauranga, there are question marks around their social licence to operate.”
So Gibson argues for a much larger port that soaks up the demand in the Bay of Plenty, Waikato and Auckland, particularly South Auckland.
When he was still chief executive of Ports of Auckland, Gibson worked with port technology provider TBA to develop a proposal for a port platform in the middle of the Firth of Thames, around Kawakawa Bay. He presented the proposal to Mayor Phil Goff.
Containers would be loaded into a “hyperloop” – a tube like those in old post office branches – that would shoot the container through a tunnel under the sea and surface it at an appropriate positioned land port, where the containers could be loaded onto trucks and trains.
“Elon Musk came up with this concept in California,” Gibson tells Newsroom. “So you might pooh-pooh the idea, but this is the sort of thinking we have to do. Not whether we should move the port tomorrow.”
“So I’m not against having moved the port. It’s the logic behind it. And we’re not approaching it from a logical perspective. It’s around demand, the demand cycle. And what that looks like between now and 30 years.”
‘I didn’t respect what he did at the Port’
Newsroom asked Phil Goff whether he accepted that his public questioning and criticisms of the port – its health and safety culture, its automation, and whether downtown Auckland city is the right place for it – was destabilising for the business.
He is unrepentant. “My job as mayor of the city is to represent the shareholders and to hold the port company to account. That’s my appropriate job. It’s not just my right, it’s my responsibility to do that. And I make no apologies for raising those issues and making the changes that were made. And he would be in a very small minority of people that thinks that the port company was operating fine, and it was somebody else’s fault.
“Each year, we were getting a worse and worse return,” Goff adds. “The competitiveness of the Ports of Auckland was declining against Tauranga. We were losing shipping lines. You look at every one of those statistics, the return on equity, the ship rate, the crane rate. They were all deteriorating.”
Gibson describes Goff as “the most failed leader I’ve come across”. There is no love lost between the two men.
“The feeling’s mutual,” says Goff. “I didn’t respect what he did at the Port.”
He echoes Mark Binns’ criticism of the governance and management of the automation project, and rejects Gibson’s defence that the problem was with the council in effect abolishing its investment company, Auckland Council Investments Ltd, and taking direct ownership.
“That is a total cop-out,” Goff replies.
“I didn’t start off with any axe to grind against the port at all. I didn’t want to have further reclamation of the harbour, and nor did Aucklanders. And that stopped.
“He accepted the fact that the port had to be relocated over a 30-year period; he accepted the findings of the Port Future Study. Every commercial decision that was made in the port was made by the management and approved by the board. It was not made by either ACIL or by the Council itself.”
Goff highlights the failed health and safety culture in which three men were killed. “He is responsible for a health and safety record on the ports that was totally unsustainable. And what he was telling me, and what I was reading in the WorkSafe and Maritime NZ reports, were absolutely at odds with each other.”
As mayor, he’s commissioned an independent review of health and safety at the Ports of Auckland.
“There was no contesting of that. People died because the systems weren’t in place that should have been, and systems were in place that actually incentivised people to behave dangerously.”
In the early hours of August 27, 2018, Laboom Dyer’s straddle crane tipped over and killed him. The 23-year-old left behind his former partner Natesha and their son, Noah.
In a subsequent WorkSafe prosecution, court documents show the straddle cranes that Dyer was driving were fitted with an alarm that sounds when the vehicle is in danger of tipping.
The port operated a bonus system that rewarded drivers who completed the most container movements but did not take into account tip alarm activations. Dyer regularly received the bonus but also had one of the higher tip alarm rates.
“I probably exceeded the authority that I might have had, because it’s operational. But it was critically important. People were dying, and the wrong decisions were being made, and the port wasn’t delivering.”
– Phil Goff, mayor
According to Gibson, it is human factors like these that provide an argument for automation.
But according to Goff, that’s a red herring. “There was no following through on the rules that were set, such as driving a straddle with a seatbelt, or not using your phone while you’re driving the straddle. One of the guys who died there had made 64 phone calls or something during the shift that he was on that he died.
“The port failed. And I found that utterly unacceptable,” the mayor says.
“I probably exceeded the authority that I might have had, because it’s operational. But it was critically important. People were dying, and the wrong decisions were being made, and the port wasn’t delivering.”
Goff rejects accusations from the Ports’ former leadership that he had a predetermined view of automation’s failings – he says he took an evidence-driven approach.
“If automation works effectively and it increases your productivity, of course you do it. But this was not increasing productivity – it was having the reverse effect. It was not safe.
“The software programming was such that the straddle carriers, on at least two occasions, went off and did their own thing, and not what they were programmed to do, which was life-threatening, and property-threatening.
“When the new board came in, they stopped the automation process. They said there is not sufficient evidence that by continuing to invest more and more money into that we’re going to produce the results that were promised.
“I don’t claim to have expertise in running a port,” Goff says. “But I do know how to look at statistics. And I do know when things aren’t working. And my obligation, on behalf of the shareholders who are Aucklanders, was to make sure that that port company was operating effectively. On all of the criteria, it wasn’t.”