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Ports of Auckland may revisit merger with Port of Tauranga

Wednesday 20th August 2008

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Ports of Auckland may revisit merger talks with rival Port of Tauranga to create economies of scale in the container trade.

"It is widely recognized that structural changes are needed in the port sector," Auckland managing direct Jens Madsen said in a statement accompanying the port's earnings release. "A single, integrated container business at the upper North Island" would lead to more coherent investment in road, rail and coastal shipping, he said.

The two port companies failed to negotiate a merger in 2007 after the proposal was rejected by Ports of Auckland's owner, Auckland Regional Holdings. Port of Tauranga today said a full merger between the two companies still makes sense.

The port companies are having to contend with shipping companies rationalising their routes and choosing so-called hub ports of call rather than visiting multiple facilities. Among changes, Maersk stopped visiting Tauranga and made Auckland its hub.

Ports of Auckland didn't give a potential price for its rival's container unit. Buying the business may help lift the competitiveness of the nation's supply chain, Madsen said today.

The Auckland port company today posted a net profit of NZ$21 million for the year ended June 30, down from NZ$64.6 million a year earlier, which included one-time gains from property and rental income.

Total container volumes rose 8.8%.

"The international shipping industry continues to face unprecedented fuel cost increases and freight rate pressures due to an over-supply of tonnage," Madsen said. "These pressures, combined with a difficult economic climate, are also felt by the port sector."

Port of Tauranga shares fell 1% to NZ$6.85 and are little changed this year.

By Jonathan Underhill

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