Thursday 3rd October 2019
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Relocating freight operations from Ports of Auckland to Northport over time would improve the efficiency of the upper North Island’s freight system, while also maintaining competition, an independent review panel says.
Shifting Auckland’s port operations – other than cruise ships – to Northland will foster innovation and cost-efficiencies in the region’s freight system and maximise the use of the land around Northport, according to the second report of the Upper North Island Supply Chain Strategy working group.
Making the change will reduce “friction” between the increasing freight volumes projected for Auckland and existing users of the city’s transport network and would open up the existing port land for other uses.
The group notes that the 30-year benefits of the change, estimated at $3.46 billion by consultants EY, would be roughly twice the cost of the change. The benefits of all the other options considered were much lower.
Relocating the activities to Port of Tauranga would deliver a net cost of $3.16 billion, splitting the activities across Northport and Tauranga would result in a net cost of $1.46 billion, while a new port in the Firth of Thames would come at a net cost of $2.86 billion.
"Moving freight is critical to the New Zealand economy and we believe that we must present a future supply chain that allows the costs of moving freight to be kept as low as possible,” the six-strong panel says.
“We do not have the ability to direct freight. Freight will flow in the most cost-efficient way possible as the market allows.”
The Upper North Island Supply Chain study was the result of a pre-election pledge by NZ First to move container operation from Ports of Auckland to Northport by 2027. Today’s document is heavily marked with a statement that the findings do not represent government policy.
While there is broad consensus that Auckland’s port will be increasingly constrained by the city’s development around it, there has been no agreement in recent years as to how soon change is needed, how much freight could be redirected through Tauranga or Northport, and how that would be achieved.
Relocating Auckland’s car imports to Northport was an early and relatively easy option and was canvassed in the study’s first report in April. The Auckland Council-owned port is half-way through constructing a five-storey storage facility on Bledisloe terminal which may hold up to 1,700 vehicles.
Late last month, Ports of Auckland chief executive Tony Gibson rejected suggestions the company shouldn’t be undertaking large investments while its future was being debated.
He observed then that relocating its activities would be a “massive job” that could take 30 years.
Northport, half-owned by Port of Tauranga, started operating in 2002 and is largely a blank canvas. Its 49-hectare footprint can be expanded to 75 ha, while its berth length can be more than doubled to 1,390 metres. The port lies next to 180 ha of commercial and industrial land controlled by shareholder Marsden Maritime Holdings.
Last month, the government committed almost $95 million to restore the freight capacity of the rail link from Auckland to Whangarei. KiwiRail is also working to establish the feasibility of a 20-kilometre spur line to Northport.
Shares in Marsden Maritime Holdings – controlled by Northland Regional Council - rose 2 percent to $5.56. Port of Tauranga shares fell 0.3 percent to $6.49.
Marsden Maritime chair Murray Jagger commended the group’s findings and “solutions-based” approach it was taking.
“We don’t see Marsden Point as a competitor to Ports of Auckland. We are much more interested in discussions around how we might facilitate Auckland’s growth by providing long-term solutions to the well-documented long-term capacity and congestion challenges the city faces,” he said.
Ports of Auckland has a 19.9 percent stake in Marsden Maritime.
Port of Tauranga chief executive Mark Cairns said a two-port solution is workable, subject to land-side infrastructure development, and would address concerns about economic land use in Auckland.
But he said more analysis is needed as some of the cost estimates, future capacity and cargo forecasts are at odds with Port of Tauranga's data.
Recent work by Netherlands-based container terminal experts TBA Group shows Tauranga can accommodate up to the equivalent of 2.8 million 20-foot containers on the existing footprint, he said.
Cairns noted that the port is among the world's 10 most efficient, has room to grow, and that the next stage of that expansion is already underway. Freight owners would continue to choose the most reliable and cost-effective supply chain, he said.
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