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Latest Newsletter Dec 2011- April 2012

Summer has arrived the prospects of holidays has brightened everyone’s expectations, and this coupled with New Zealand ’s success at the Rugby World Cup, and a slow but steady economic recovery augers well for a more buoyant 2012.

The political scene which has dominated our news pages has calmed down. The Rena disaster continues, and the economy continues to slowly recover, although latest developments in Europe give cause for concern. Export prices are holding up. Interest rates are holding down, and the cautious conservative approach taken by many New Zealanders as a result of Government’s calls for ’savings - not spending’ has dampened the retail economy. Retail and tourism are still officially in recession, but the RWC improved tourism receipts, with a record 133,000 visitors over the period, so there is hope for retailers as Christmas always brings a boost in retail spending and hospitality.

We need a good long strong summer of contentment. We need a stable market and we need strong leadership and resolve to get the country out of the doldrums. The signs so far are promising.

Best wishes to all our readers during the Christmas period. Relax and enjoy time with your friends and family. Be safe on the road and in the water, and let’s return after Christmas, refreshed and rejuvenated for the 2012 year and what it may bring.

RENA CARGO OWNERS FACE MASSIVE BILL

The owners of cargo on board the Rena may have to pay as much as 80 per cent of the cargo’s worth just to get it back. It would be the highest charge in history to return shipwrecked goods, eclipsing the 60 per cent charged for cargo retrieved from the Napoli shipwreck off the British coast five years ago.

A number of unnamed media sources have leaked the news that salvors Svitzer plans to charge property owners the 80 per cent fee, but the company would not directly answer questions about the 80 per cent rate, nor confirm or deny the statenment.

Salvage crews working for Svitzer have retrieved 166 of the nearly 1300 containers stuck on the ship since it ran aground off the Tauranga coast on October 5. Under maritime law the company has a right to claim whatever it salvages and can then return the property if the owners guarantee to pay a percentage of its value.

The Mediterranean Shipping Company, which chartered the Rena, will also have to pay to retrieve its empty containers, and says the rate is too high. The claim rate may go to arbitration in London, but it will probably not reduce the rate by much.

Rena savlors update

Meanwhile salvors are making the most of good weather to remove more containers from the stricken ship Rena off the coast of Tauranga, but swells are likely to increase with a change in the weather. There has been no change in the state of the vessel but a light sheen of oil extends from the vessel, but no black oil is visible.

The total number of containers removed from the vessel is now 165.

So far, 960 tonnes of waste has been disposed of from shoreline cleanup operations. Another 1,331 tonnes of liquid waste has come from the bird washing process at the wildlife centre where 245 penguins and 43 dotterels are still housed.

So far 7,950 people have registered as volunteers, as well as 154 groups, including corporate groups, which include another 4904 people. Volunteers have so far spent 18,975 hours working on beach clean-ups and 750 hours have been worked under the Adopt-A-Beach programme.

As the volunteer response has begun to drop off, the last planned beach clean for volunteers will take place at Papamoa East opposite Grant Place at 8am each day until Sunday 4 December. Members of the public are still asked to report any signs of fresh oiling on the beaches.

The whole Rena operations recovery has been run from a central control room, which is shown at below right. rena salvage control room

Awanuia and Waka Kume welcomed

Seafuels bunker barge Awanuia and Ports of Auckland tugboat Waka Kume have returned to Auckland after nearly six weeks in the Bay of Plenty assisting in the salvage of the MV Rena. Staff were thanked at a special ceremony at the Cloud on Queens Wharf during which representatives from Ngati Whatua performed a Karanga and Ports of Auckland staff a haka.

Wayne Mills, Chairman of Seafuels and General Manager Multi-Cargo and Marine at Ports of Auckland, said it was great to have the crew and vessels back safe.

Mr Mills said Seafuels and Ports of Auckland had responded quickly to the incident, mobilising vessels and staff as quickly as possible. The Waka Kume was the first salvage vessel on the scene and the Awanuia arrived at daybreak Sunday 9 October and was on standby until salvors were ready to begin pumping.”

“Particular thanks are due to Z Energy, who agreed to release the Awanuia to facilitate it’s participation in the salvage operation, and to those of our staff who left their families to go to the Bay of Plenty at short notice, to work in incredibly challenging conditions.”

“But for their dedication and skill, the environmental impact of the grounding could have been much worse with significantly more oil spilled.”

“I’d also like to acknowledge the understanding shown by the port’s regular fuel customers, who have had to make alternative arrangements during the absence of the Awanuia, and Waterfront Auckland, who assisted in re-fuelling the cruise ship the Radiance of the Seas at Wynyard Wharf.”

One of the Masters of the Awanuia, Captain Rick Hunter, said, “It was an unimaginable situation, something we didn’t expect to see here in New Zealand. We are glad that the Awanuia was able to be of assistance.

Awanuia Master Captain John Skrine said being helicoptered down in an Army chopper from Auckland to the Bay of Plenty, and winched onto the deck of the Awanuia, was one of the most memorable experiences of his life.

“The salvage operation itself was also extremely challenging, and involved close teamwork and communication betweeen ourselves, the crew on the Waka Kume, the salvors and Maritime New Zealand.”

Mr Mills said the Awanuia, which suffered minor damage during the salvage operation, was fully operational. Permanent repairs will be completed now that she is back in Auckland.

The Awanuia is owned by Seafuels, a joint venture company between Ports of Auckland and Pacific Basin Shipping of Hong Kong, one of the world’s leading shipping companies. In normal circumstances the vessel is under time charter to Z Energy to provide a re-fuelling service for cruise ships and commercial vessels calling at the Port of Auckland.

The 80 metre, 3,900 tonne fuel tanker was purchased new by Seafuels in 2009. The tanker, which has a capacity of 25,000 barrels of oil, has state-of-the-art operational and environmental design features, including a double hull construction.

Defence stood down at Bay of Plenty

Defence Force personnel deployed to clean up oil from Bay of Plenty beaches have returned to their bases after helping remove more than 992 tonnes of oily waste. Hundreds of troops have been involved in clean-up efforts since the Rena ran aground on the Astrolabe Reef last month near Tauranga, spilling about 350 tonnes of oil into the sea. rena defence force

Maritime New Zealand operations manager Scott Read said Defence Force teams had been working tirelessly to clean up the beaches.

“We’ve had around 487 personnel involved since the response began and we’re extremely grateful for their energy and ability to get the job done,” he said.

Troops returned to their respective bases and homes on Thursday. Joint Task Force commander Lieutenant Commander Muzz Kennett said 50 personnel would remain on standby, ready to respond within 24 hours should further help be needed.

The Defence Force has had an average of 120 troops on the ground at any one time and removed around 8.5 tonnes of oily waste in the last 10 days.

Air Force Warrant Officer Steve McCutcheon said it had been messy work but it needed to be done. The public response had been really positive, he said.

“Even if people don’t stop, they yell out ‘thank you’. We’ve had a lot of support from local companies and the community,” he said

The Defence Force also deployed ships and aircraft to the area. A team of navy specialists helped to clear and maintain shipping channels, while the navy supplied imagery and information on the Rena’s condition. Seasprite and Iroquois helicopters supported with aerial observation flights, transporting salvage experts to and from Rena, and night search and rescue response standby.

COSTAMARINE MAKING 32 % YIELD ON USED CONTAINER SHIPS

Costamare Inc. has told investors it purchased secondhand container ships, including the MV Rena, at a good time and is making a yield of 32 per cent on them, company documents show.

Costamare has apologised for the grounding of the Rena on October 5 off Tauranga, causing an environmental disaster in the Bay of Plenty and to the east. The company, which says it is fully insured, has also thanked those involved in the cleanup “Costamare will be there to do the right thing, as the situation becomes clearer,” the company said.

The company is a charter owner that charters vessels to liner shipping companies. Its largest time charter customers AP Moller-Maersk, Mediterranean Shipping Company and COSCO provide 75 per cent of its revenue.

Rena was one of four secondhand 3,351 TEU container ships built between 1990 and 1992 Costamare contracted to buy on September 23, 2010, for a total US$45 million. The Rena was delivered on November 22, 2010.

The time charter rate for the four ships, including Rena, is US$16,580 per day, according to a presentation to investors in June of this year.

Based on a vessel acquisition price of US$11.25 million per ship and estimate of earnings before interest, tax, depreciation and amortisation of US$3.7 million a year, the company calculated a yield on Rena of 32 per cent.

Costamare said in documents filed to the Securities and Exchange Commission that the container shipping industry experienced weakness from the middle of 2008 through the first half of 2010.

Costamare told investors that its management team had “overcome the worst container shipping crisis in history” and the company was now uniquely positioned for growth. The key to making superior returns was purchasing ships at the right time.

The market for container ship owners improved as global fleet capacity and order books for new ships fell and charter rates rose. Container ship charter rates peaked in 2005 and generally stayed strong until the middle of 2008, when the global financial crisis pushed rates to 10-year lows.

The estimated one-year time charter rate for a 3,500 TEU containership at the end of January 2010 was US$5,500 per day compared to an average of US$26,902 per day in the period 2000-2009. Time charter daily rates improved 99 per cent during the first nine months of 2010. By the end of September 2010 rates had recovered to US$19,000 per day.

Following an initial public offering on November 4, 2010, Costamare began trading on the New York Stock Exchange. Its shares last traded at US$12.10, which is near the offer price of $12 a share. The offer price was below from the US$15 to US$17 a share range in the prospectus, indicating poor demand for the shares.

costamare people Costamare purchased the 53 ship-owning companies held by the Konstantakopoulos family from Greece, comprising Captain Vasileios Konstantakopoulos and three sons Konstantinos Konstantakopoulos, Achillefs Konstantakopoulos and Christos Konstantakopoulos. The sons owned 77.1 per cent of Costamare after its listing. (Konstantinos is shown at left in the photograph, with his wife Rena at right. They are shown with John Samartzis, and Frans Malmros, of The Swedish Club.)

When it began the company owned and operated drybulk carrier vessels but since 1992 it has focused exclusively on container ships. Since assuming management of the company in 1998, Konstantinos Konstantakopoulos has founded the management companies CIEL and Shanghai Costamare, and a manning agency C-Man Maritime. CIEL is the technical manager of Rena.

The vessel owners are wholly-owned subsidiaries incorporated in the Republic of Liberia and each vessel is managed by at least one of the three management companies. Rena is owned by Daina Shipping Co.

The company argues that by providing container ships to shipping lines under multi-year time charters it is not subject to seasonal variations in demand. There are over 200 shipping liner companies, but the top 10 have 56 per cent of the market. AP Moller-Maersk’s deployed fleet accounted for approximately 13 per cent of the global fleet liner capacity.

The Rena is a relatively small containership as Costamare has new vessels on order capable of carrying 9,000 containers.

FONTERRA PLAN CONDEMNED AS ‘CENTRAL PLANNING ALLIANCE’

By Pam Graham

Fonterra’s plan to form an alliance of container freight users to counter the power of shipping lines is being condemned as an attempt at central planning bound to fail, and an example of poor business leadership, importers say.

Fonterra is combining with other exporters, led by Silver Fern Farms, in a limited partnership called Kotahi Logistics to be a “mechanism for the demand” to do business with shipping lines, the suppliers of services.

The Importers’ Institute is urging the Commerce Commission to turn down the plan.

“Without exception, every economy that has ever attempted to replace markets with central plans devised by experts has ended up in total failure,” a statement from The Importers’ Institute said. “Fonterra is New Zealand’s biggest exporter. Can’t they just use their muscle to achieve those objectives?”

The institute said “obvious” efficiencies from central planning never materialise. “As someone said, if you introduce central planning to the desert, nothing much will happen at first, but after a while there will be a shortage of sand,” the Institute said.

It urges the government to take steps to free up the economy, including the break-up of export monopolies.

“We would expect our largest corporation to share these aims. Sadly, Fonterra has failed to exercise business leadership, in this case,” the Institute said.

Fonterra’s competitor Synlait’s submission argues that the selection of additional partners to the alliance should be on a non-discretionary open-access basis. The scope for authorisation should be clearly defined, Synlait said.

“We are not suggesting that Kotahi must offer common pricing for all,” Synlait said.

But the proposal must not result in other exporters and importers subsidising better prices and a negotiating vehicle for Fonterra.

Fonterra says shipping capacity to New Zealand has reduced because of a proliferation of vessel-sharing agreements, which are effectively code-sharing arrangements on ships. MSC maintains the only single-carrier service of any scale to this country.

CBAFF WARNS INDUSTRIAL ACTION WILL BE DISRUPTIVE

The Customs Brokers & Freight Forwarders Federation of New Zealand (CBAFF) has called for a “common sense approach” in the dispute between the Maritime Union and Ports of Auckland. CBAFF vice president Trevor Duxfield said that the industrial action will have significant impact on CBAFF members, their importer and exporter clients and Auckland road carriers.

“There have been some statements made in the media that suggest the port ‘will still be working during the industrial action,’ said Mr Duxfield. “However, that is misleading and the reality is that this industrial action will cause very significant disruption.

“We call for both parties to have a common sense approach to this situation with consideration to maintaining a sustainable and efficient supply chain for Auckland and the greater region.”

Mr Duxfield said that the majority of import and export cargo moving to Australia and beyond is on cellular container vessels which are handled at the Bledisloe and Fergusson container terminals that will be closed from 22.30 on Dec 1 to 22.30 on Dec 5, and from 22.30 on December 8 to 22.30 on December 12.

“There will be a compounding effect with only three days between the two periods of industrial action and we expect a rush to get containers processed and off the wharf,” he said. “The general wharves, which are handled by independent stevedoring companies rather than Port of Auckland employees, will still be operating but these process the self-loading vessels, which mainly only serve the Pacific Islands.”

Mr Duxfield said it was currently estimated that the number of containers affected by vessels diverting from Auckland port due to the action was about 6,500 TEU (Twenty-foot equivalent unit, a measure used for capacity in container transportation).

“Due to the industrial action four vessels are diverting from Auckland port with three going to Tauranga and one to Wellington to discharge their containers, which will be railed to Auckland,” he said. “We also expect significant delays in the import containers moving to Auckland simply due to the number of containers.

“Our members are already seeing significant disruption to normal container cartage service around Auckland as carriers concentrate resources on moving containers off the Auckland port prior to the strike coming into effect on Thursday night. Exporters are now having difficulty utilising the rail service from Auckland to Tauranga to meet these diverted vessels as the rail service is at capacity. One shipping line has issued a release advising customers that if they need to make their vessel they will have to ‘make their own arrangements to deliver the containers directly to Tauranga Terminal’.”

Mr Duxfield said that CBAFF would also like to acknowledge the support Port of Tauranga is providing to this situation by accepting the vessels into their schedule and offering extra rail capacity with support from Kiwirail.

EXPORT NZ SUPPORTS SHARED EXPORTS CONCEPT

ExportNZ is calling for the Government to encourage more collaboration between export-focused, small-to-medium-sized firms. The statement was part the Wellington-based lobby group’s Exporters Manifesto, released last month.

ExportNZ executive director Catherine Beard said a new generation of managers were more open to collaborative exporting than their predecessors.

“You start off with the question of how do you grow bigger companies - is there any shortcut to that?” she said. “Maybe a shortcut is companies actually leveraging off each other.”

Ms Beard said small firms often struggled to get noticed overseas. Wine exporters, for example, could band together to have a bigger presence on retail shelves and save on shipping costs in the process, she said.

New Zealand Trade and Enterprise chief executive Peter Chrisp has indicated he would like to see more firms collaborating in export markets.

“I think more and more companies are realising that to successfully go to market you have to [collaborate], but I don’t think it’s deep in our DNA to do it,” he said. He said that Pure New Zealand Greenshell Mussels - a joint venture of New Zealand seafood firms exporting shellfish to China - was a good example of firms working together to gain access to a booming marketplace.

ExportNZ’s manifesto made little mention of the impact the strong New Zealand dollar was having on exporters. The lobby group only called for “continued reduction in Government spending”, which it said would reduce inflation and keep interest rates and the kiwi lower.

Ms Beard said the strong dollar was a big issue for exporters.

“But I think we take the view that it’s a very difficult issue for New Zealand to control,” she said.

ExportNZ believed there was a lot of “poor government spending”, such as interest-free student loans and Working for Families, which would be better addressed through more appropriate tax rates. But while the group wanted spending cuts in social areas, the manifesto recommended that the Government boost its research and development funding to get this country’s total R&D spend closer to the OECD average, which was 2.33 per cent of gross domestic product in 2008.

Total R&D spending in New Zealand was 1.3 per cent of GDP last year, ExportNZ said.

The group also recommended that the Government investigate new policies that would help increase the access firms have to both domestic and international sources of venture capital funding.

“There are lessons to be learned from other successful exporting countries that use the tax system to incentivise investment in innovative export-focused companies,” the manifesto said.

It also said competitive transport was crucial for keeping exporters’ costs down. ExportNZ also said it hoped to see free trade negotiations successfully concluded with India and Russia. It would also welcome the Government exploring FTA linkages with the European Union and Mercosur - a political and economic agreement between a number of South American nations.

THANKS FOR YOUR SUPPORT

We continue to get good “traffic statistics” from NZMS Alumni members for this website. Consistently, since May last year we have been receiving over 20,000 hits per month. Our record month of useage is still June 2010, when we achieved over 30,000 hits but traffic of over 20,000 hits shows good use and support. For last month, November 2011, we achieved 20,488 hits, with over 5000 pages downloaded, but perhaps the rugby world cup games keept people away from their normal weubsite surfing. We watch those “stats” closely. Google Analytics gives us very good data about site patronage, and this helps us plan the website to the best benefit of members.

The support shown by students and graduates from the NZMS courses give us a lot of confidence in building the Alumni, and we are delighted with the positive feedback we have received. We are still pushing ahead to build membership too, so please keep telling your friends and colleagues about the NZMS Alumni website, and encourage them to join up…..And keep the feedback coming in. We appreciate each and every email we receive from members. We hope this newsletter keeps you up with the play….

KEEP CHECKING BACK AT OUR WHAT’S NEW PAGE LINK!

We hope you enjoyed this newsletter. Our Archive newsletter page holds all the previous newsleters from 2011. For the latest though, click on our “The latest” link on the home page masthead… This is updated at least weekly with industry related news items and commentary on current issues.

Latest Newsletter: October - December 2011

The prospect of summer and the holidays has brightened everyone’s expectations, and this coupled with New Zealand ’s success at the Rugby World Cup, and a slow but steady economic recovery augers well for a more buoyant 2012.

Export prices may down slightly but Australia and China are still buying. The NZ dollar is now at more realistic levels which is good for exporters. The trade balance is acceptable and there will be a ‘trickle down’ effect through the New Zealand economy. The cautious conservative approach taken by many New Zealanders as a result of Government’s calls for ’savings - not spending’ has dampened the retail economy. Retail and tourism are still officially in recession, but the RWC will improve tourism receipts, and there is hope for retailers as Christmas always brings a boost in retail spending and hospitality.

The prospect of a general election in November too might add impetus to the economic situation. The Government seems well positioned to be returned, and next year, we will see some real impetus in Christchurch rebuilding, along with a lot of leaky building repairs in Auckland… so tradesmen should be able to rebuild their businesses, and demand may well exceed the supply available.

We need a good long strong summer of contentment. We need a stable market and we need strong leadership and resolve to get the country out of the doldrums.

Transmission Gully development goes on fast track.

A decision on Transmission Gully will be made within months, nearly a century after an inland route was first suggested - but tolls are still likely to help fund it.

Environment Minister Nick Smith has referred the roading proposal to an independent board of inquiry under new rules to fast-track projects of national significance. Dr Smith said the swift process would avoid lengthy delays such as the 17 years it took Wellington’s inner-city bypass to gain approval.

The board of inquiry, to be overseen by the Environmental Protection Authority, will decide within nine months whether the project can go ahead as planned. Construction could start as early as 2015.

The proposed 27-kilometre four-lane expressway from McKays Crossing to Linden is part of the Levin to Airport Road of National Significance. An alternative inland route was first suggested in 1919 and has been investigated seriously since the 1980s.

Transport Minister Steven Joyce said Transmission Gully would cost just under $1 billion and a toll to contribute to the cost was still likely. He said the streamlined process was fair because all submitters were given one chance to make their argument.

The road would be the “biggest catalyst” for economic growth in the lower North Island and would ensure a more secure route in and out of the capital should a natural disaster strike, he said.

But Green Party transport spokesman Gareth Hughes said the project would avoid robust scrutiny under the fast-tracked process.

“I think it’s been delayed for so long for a very valid reason - the plan has never stood up to proper scrutiny and it still doesn’t,” Mr Hughes said.

Usually plan changes and consent applications are considered by local councils, and appeals can be made to the Environment Court.

Under the new national consenting process, the Environmental Protection Authority can recommended a board of inquiry assess applications, hear submitters and make a decision on whether projects should go ahead. The decision can be appealed only on a point of law.

Pukerua Bay Residents’ Association chairman Iain MacLean said the community was relieved to have some certainty. State Highway 1 runs through the middle of the village.

“We have about 27,000 vehicles travel through the bay every day and at times the road is close to capacity…it doesn’t take very much for things to grind to a halt and we understand that Transmission Gully could take a substantial proportion of the traffic.”

Porirua Mayor Nick Leggett said it was a sign that the Government backed the project.

“I think Porirua people will be delighted…because there’s such strong support for Transmission Gully in our community. We’re a region of 450,000 people and we’ve got a road network that would serve a 1950s population,” he said.

Wellington Mayor Celia Wade-Brown said Transmission Gully would create additional traffic issues for the capital, including the influx of more cars into the city.

CHRISTCHURCH EARTHQUAKE CAUSES NATIONAL CONTAINER SHORTAGE

By Amanda Cropp, in Christchurch

The Christchurch earthquake has exacerbated a nationwide shortage of shipping containers with thousands in use as barriers around damaged buildings and unstable cliff faces, and as temporary storage for householders and businesses. Using the containers as quake barriers was vindicated during yesterday’s aftershocks, with motorists hearing boulders crashing into them as they drove down cliffside roads.

The self storage industry is also booming with heavy demand for units needed to accommodate furniture, personal effects and the overflow from businesses forced into smaller premises.

Royal Wolf hires out containers and since the February quake it has brought about 1000 extra containers into Canterbury, shipping them in from its branches around the country, as well as from China and Australia.

South Island sales manager Rick Mills says that following the economic down turn there has been a worldwide shortage of containers because shipping companies stopped buying new containers leading to the closure of Chinese factories that made them. Although the factories are up and running again, they are not back to full capacity.

Lack of shelf space in damaged Canterbury warehouses has had a knock-on effect, with warehouses further north running out of room for new stock, forcing them to hire containers for extra storage space.

Containers are in demand for other uses and Royal Wolf has provided the Fire Service with containers designed as accommodation units for the Australian mining industry. They are in use as sleeping quarters to replace damaged crew rooms at the Christchurch central fire station.

Mr Mills says the company has just landed 45 containers fitted out for use as offices or shops complete with windows, wooden floors, heat pumps, power and data jacks.

Debbie and Wayne Hardaker are operating their Village Grape wine shop from a retail container behind their damaged Sumner premises. Wayne Hardaker says the weekly rental of $98 is much more affordable than Portacoms which are very hard to get. “We found one in Tauranga and it was going to cost $4000 to get it down her and $4000 to get it back.”

Mr Mills says demand for containers peaked in March but he expects another spike as house repairs get under way and as demolitios increase. “We’re ringing around contractors to see what their immediate needs are to see if we need to bring in more from Australia.

Christchurch company YS Containers has more than 200 containers leased out and owner Noel Thomas says demand is unprecedented.

“Our Auckland supplier said if he had 1000 containers by Monday he’d be rid of them all by Friday…

In the last month we’ve had one customer who has hired about 10 to 12 40-foot containers because they’ve had to move out of a building in their complex.

Mr Thomas has a waiting list of about 40 people wanting to buy containers and he says in some cases insurance companies are paying for the purchase because it is more economical than hiring containers for the two to three years it is going to take to rebuild houses.

Self storage units are another option for desperate home owners and businesses.

Safe Store has 1450 units in Christchurch spread over five sites and manager Fiona Paskell says the 60 units empty at the time of the February quake quickly filled up. “They went within a week or two and now we are full with about 20 to 30 people on the waiting list.”

She says demand for shipping containers is high too and the company’s lease stock of 200 is fully committed.

Storage Plus runs four self storage facilities in Christchurch and owner Dave Bailey is catering for a lot of CBD businesses in the red zone. “Sometimes they’ve been told ‘you can get in today and only have an hour to get things out.’”

Mr Bailey said he no longer hires out containers because the wide variations in day and night time temperature in Christchurch cause condensation which “rains” on contents .

“Unless the container has a proper pitched roof over it which eliminates most of that. If a container is sitting on its own it warms up nicely during the day then it cools off quickly at night, and that’s very hard on furniture that’s not made to have moisture anywhere near it. ”

ASHIKA CONVICTION APPEAL SUCCESSFUL

Former Christchurch businessman John Jonesse, jailed for his role in the fatal sinking of a Tongan ferry, has returned home to New Zealand. After six months behind bars, Mr Jonesse left prison a free man last week having successfully appealed against his conviction.

john jonesse

Mr Jonesse, shown at left, was head of the Shipping Corporation of Polynesia, which owned the Princess Ashika. The vessel sank during an overnight voyage from the Tongan capital Nuku’alofa to an outlying island in August 2009, killing 74 people.

Mr Jonesse was convicted on eight charges, including one count of manslaughter by negligence and five of sending an unseaworthy ship to sea, and sentenced to five years in jail. He lodged an appeal in April.

The Court of Appeal in Nuku’alofa has suspended the remainder of his prison term, saying the original sentence was manifestly excessive, the Matangi Tonga newspaper reported.

Upon his arrival at Auckland airport on Saturday, Mr Jonesse was asked what he had to say to the families of those who died.

“I have spent time with many families over a long period of time and I’ve always done my best to support them fully,” he told reporters.

The Ashika’s captain and first mate are also appealing against their convictions, while Tonga’s solicitor-general was appealing against the “light” sentences they were given.

CONTAINER LINE TO BYPASS AUCKLAND

By Christopher Adams

A shipping firm’s decision to make Port of Tauranga its only New Zealand stop on a new route is a blow for its competitors, such as Ports of Auckland, an analyst says.

Geneva-based Mediterranean Shipping Company, the world’s second largest container line, will begin its Oceania Express service in October, with the Bay of Plenty facility its sole port of call in this country.

The new route links Australasia with the Americas. Beginning in Melbourne, it travels up Australia’s east coast, crossing the Tasman Sea to Tauranga and then to Panama, in central America, and on to Long Beach in the United States, before returning directly to Melbourne.

Craigs Investment Partners analyst Geoff Zame said the service provided justification for Port of Tauranga’s aggressive capital investment plans.

The company intends to invest up to $150 million over the next three years to extend wharves and dredge its shipping channel and berths to accommodate larger vessels.

MSC’s decision to make its stop at the Bay of Plenty port was also an example of a structural change in the New Zealand port sector, with Port of Tauranga positioning itself as a key hub and other ports feeding cargo into the facility for shipment overseas, Zame said.

Last month Ports of Auckland reported a 7.7 per cent lift in full-year trans-shipment (cargo being moved ashore from one vessel and loaded on to another) volumes, while Port of Tauranga’s rose 52 per cent during the same period.

“The type of dynamics that we are seeing don’t really bode that well for Ports of Auckland,” Mr Zame said. “[The new service is] clearly excellent for the long-term prospects for Port of Tauranga and justifies the sort of investments, which are pretty significant, they are making over the next few years to accommodate this sort of growth.”

Ports of Auckland chief executive Tony Gibson said he did not expect the Oceania Express service’s stop in Tauranga to have any real impact on the council-owned firm. “We have other similar services already calling [on] Auckland,” he said.

MSC national operations director Mark Godfrey said the company recognised the Port of Tauranga as an important hub.

“We plan to trans-ship cargo from six other New Zealand ports utilising our three other services currently operating in New Zealand,” he said.

Port of Tauranga said that the Oceania Express service, combined with other new services, meant the company was forecasting container volumes to lift 20 to 25 per cent in the coming year, compared with its last financial year. Around 40 per cent of the increased volume would result from trans-shipped cargo, the company said.

Port of Tauranga chief executive Mark Cairns said the facility’s location, as well as its “superior crane productivity”, meant it made sense as a hub.

“We also have an ability to grow - other ports are quite constrained in their land footprints,” he said.

Port of Tauranga last month reported a record underlying profit of $57.9 million for the year to June 30.

The facility now ships more than three times the export volume of Ports of Auckland, although Auckland is still the country’s biggest port in terms of container volume, shipping 894,383 twenty-foot equivalent units (TEUs) last year, compared with Port of Tauranga’s 590,506 TEUs.

BLUFF COMMITS TO CAPEX OF $6.3 M. ON GOOD RESULT

The Port of Bluff operator, South Port New Zealand Ltd., will spend $6.3 million in the next financial year on new cargo-handling facilities in the largest commitment of capital spending since the company was formed in 1988.

South Port reported a net profit after tax of $5.98 million in the year to June 30, a 15 % improvement on the
the previous year as every major cargo category, including logs, processed sawn timber, meat and dairy-related exports and imports, and a record year of shipping from the Rio Tinto aluminium smelter at nearby Tiwai Point.

“In the port industry, it is unusual for almost all cargo sectors to be either growing or maintaining their existing tonnage levels at the one time,” said chairman John Harrington in a statement to the NZX. Total tonnage through the port had increased from 2.17 million tonnes in the previous financial year to 2.674 million tonnes, and the port had “at times been stretched with its existing resources to service an elevated base level of cargo.”

Consequently, despite forecasting profits 15% to 20% lower in the current financial year, Mr Harrison said the port was committing $5.8 million to a new, larger mobile harbour crane, and $700,000 on an additional heavy lift container forklift.

At the same time, South Port is lifting its total dividend payout for the year to 20 cents a share, compared with 17 cents last year. A final, fully imputed dividend of 14.5 cents a share, payable Nov 2, with a record date of Sept. 23.

The result was built on record revenues of $25.1 million, up 11% on the previous year, while earnings per share lifted from 23.9 cents to 19.9 cents on a normalised basis, which ignores non-cash impacts of changes to rules governing capital asset depreciation.

The reduced profit outlook owed to the strength of the New Zealand dollar, weakening dairy commodity prices, and debt-constrained European and American economies, along with a substantial increase in insurance premiums because of the Canterbury earthquakes.

At balance date, the port had only managed to replace some 80% of its expiring reinsurance cover, although the remainder had been purchased since then. With just 26.2 million shares on issue and issued capital of $9.4 million, the thinly traded South Port shares were unchanged today at $3.20.

NEW FONTERRA CEO IS THEO SPIERINGS

Fonterra Co-operative, a global leader in dairy nutrition has announced the appointment of Mr Theo Spierings as its new CEO.

Mr Spierings, who led the Dutch farmer dairy co-operative, Royal Friesland Foods, into a merger with Campina in 2008, will take over from Fonterra’s departing CEO Mr Andrew Ferrier, effective September 26. Mr Ferrier announced his resignation from Fonterra last March.

Fonterra’s Chairman Sir Henry van der Heyden said Mr Spierings would bring to Fonterra 25 years of knowledge of the global dairy industry.

“Mr Spierings has a wealth of experience in managing dairy businesses across Asia, Latin America, Africa, the Middle East and Europe,” Sir Henry said. “Most importantly, Mr Spierings has an in-built respect for the co-operative structure and for farmers and their commitment to co-operative principles. He is well recognised by his peers for his people leadership, delivery of results and strong strategic skills.”

Sir Henry said as well as a 25 year history in the global dairy industry, Mr Spierings had held a variety of general management, operations and supply chain and sales and marketing positions across a number of geographies.

Mr Spierings, aged 46, holds a Bachelor of Arts-degree in Food Technology/Biotechnology and a Masters in Business Administration. He is married with three children and currently lives in The Netherlands.

Sir Henry said that 2011 would be a record financial year for the co-operative and therefore it was most appropriate for Mr Ferrier to announce last year’s financial results before he handed over to Mr Spierings at the end of September.

ARATERE RETURNS HOME AFTER REFIT AND EXTENSION

Interislander’s Cook Strait ferry Aratere has returned home to Wellington, after a five month extension and refurbishment in Singapore. aratere extended

Interislander general manager Thomas Davis said Interislander staff were delighted to see their ship back home, welcomed with a glorious spring day and a water spray from Centreport tug Tiaki. He congratulated master Bob Nixon and crew on bringing the ship home safely and speedily.

“There have been a lot of people who have worked very hard on this project for a long time, and who had spent a lot of time away from home working in difficult conditions for a sustained period of time. I want to formally put on record my thanks and the thanks of all at Interislander for that effort.

“It has been worth it to watch Aratere arrive in glorious sunshine, showing off the new length and bow.”

Aratere berthed at Aotea Quay upon arrival to perform Customs and MAF clearances.

The ferry ‘s extension and refurbishment at the Sembawang Shipyard in Singapore involved a new 30-metre mid-body being installed in the ship, as well as a new stern profile, a new bow, new generators, and a total internal refurbishment.

The extension increases Aratere’s capacity by about 30 per cent for rail freight, trucks, and cars, and 100 per cent for passengers. New facilities for the public will be available onboard, including a new Aratere-Plus lounge, new food and beverage outlets, and new facilities for commercial drivers.

Mr Davis said the extension of the Aratere was an effective way to create more urgently-needed capacity. “This is a major project for KiwiRail’s Turn Around Plan, increasing capacity for rail between Auckland and Christchurch.”

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KEEP CHECKING BACK AT OUR WHAT’S NEW PAGE LINK!

We hope you enjoyed this newsletter. Our Archive newsletter page holds all the previous newsleters from 2010, and 2011. For the latest though, click on our “The latest” link on the home page masthead… This is updated at least weekly with industry related news items and commentary on current issues.

Latest Newsletter: August-October 2011

Welcome to our latest newsletter.

Winter has bought some of the coldest snaps ever to parts of New Zealand. Farming has been affected, and so to are the people of Christchurch, many of whom are living in quite primitive temporatry conditions as they await decisions of whether to rebuild their homes, and if so, where…

The dollar continues to ride high which is not helping exporters, but export prices are also up and the ‘trickle down’ effect of this will find its way through the New Zealand economy. The cautious conservative approach taken by many New Zealanders as a result of Government’s calls for ’savings - not spending’ has dampened the retail economy - retail and tourism too are still officially in recession.

The arrival of Spring though brings with it usually some optimism. The prospect of a general election in November, followed by Christmas and Summer are all good news. Those warmer times bring with them often a more positive economy… and growth whch we so desparately need.

Spring time also brings with hope. We are all needing plenty of that for the future.

Commission puts ports ownership under spotlight

By Owen Hembry, Business Writer.

Local authority ownership of ports is to be scrutinised as the Productivity Commission puts New Zealand’s international supply chain under the microscope.

The commission wants public submissions on an issues paper released yesterday to shape an inquiry into the performance of international freight transport services.

Commission chairman Murray Sherwin said New Zealand was the most remote developed country in the world and the way it got products to and from international markets was critical to success.

“New Zealand exporters and importers currently spend about $5 billion on freight each year,” Sherwin said. “We’re looking at whether these costs can be lowered and the services improved.”

Better performance in freight transport should result in lower prices for imported goods, higher profits for exporting industries and quicker freight turnaround, he said.

International evidence suggested a 10 per cent reduction in transport costs could lead to a 1 to 2 per cent rise in trade, equivalent to about $1.25 billion a year of extra imports and exports. A reduction in transport times for both imports and exports by one day would yield an estimated $670 million of benefit every year, the commission said. New Zealand ranked 21st among the top 30 countries in a World Bank logistics performance index 2010 list, the paper said.

The inquiry would look at all components of the international freight supply chain, including regulation, port and airport ownership, customs, technology and market trends.

The commission said the paper asked whether council ownership was getting in the way of ports and airports performing more efficiently to help exporters and importers and if ports needed to be more collaborative and innovative to improve performance, which was lagging behind that of ports in some other countries. Ports were an important part of the efficiency of the supply chain, Sherwin said.

A report last year by the New Zealand Shippers’ Council said all four major container ports of Auckland, Tauranga, Lyttelton and Otago would need to increase capability to support projected cargo growth. However, not all four ports would need to invest initially, and it was logical for two to invest to become 7000 twenty-foot equivalent unit capable within a five-year period - one each in the North and South Islands.

The commission’s issue paper also asked if regulatory arrangements were adequate to deal with anticompetitive behaviour in the international freight industries and whether the Minister of Transport should pass certain regulatory functions to the Commerce Commission. productivity commission “The inquiry will help ensure that New Zealand has the best regulatory framework and the right incentives to achieve best practice across the industry,” Mr Sherwin said.

The commission is due to release its draft recommendations for improving the performance of international freight transport services in December.

Sally Davenport and Graham Scott, centre and right, have been appointed as commissioners to work with chairman Murray Sherwin, shown above at left. Dr Davenport heads Victoria University’s management school, at Victoria University and is an affiliate researcher for the MacDiarmid Institute for Nanotechnology and Advanced Materials. Former Treasury secretary Dr Scott is executive chair of Southern Cross Advisers Ltd, a public sector reform company. Mr Sherwin is a former CEO of the Ministry of Agriculture.

UNION HAS STRONG VIEWS ON PRODUCTIVITY INQUIRY

The Maritime Union says it intends to make sure a Government inquiry into transport and logistics is not just about promoting privatisation in the ports sector.

Maritime Union of New Zealand General Secretary Joe Fleetwood says the Union will be taking an active and critical approach in its contributions to the Productivity Commission’s inquiry into International Freight Transport Services.

“We won’t be accepting any status quo thinking and ‘free market is best’ assumptions that sometimes accompanies these reports,” he said.

Key issues for the Union include keeping control of New Zealand ports in New Zealand hands. Mr Fleetwood says any move to privatise ports would quickly result in the control of New Zealand’s logistics infrastructure passing to GNT (global network terminal) operators and shippers, who would operate the system for their own benefit, not New Zealand’s benefit.

He said many problems with New Zealand ports currently come from lack of planning and co-ordination, not through lack of competition.

“The Maritime Union is proposing a KiwiPort concept where port ownership remains in community control but national co-ordination is used to minimize disruption and end the duplication of infrastructure we currently see.”

The Maritime Union had been arguing for years that secure permanent jobs, a career path for young people entering the industry, and world leading health and safety had to underpin any productivity gains.

“There is no point expecting productivity from casualised workers who are not properly trained and for whom there is no career path. But this is the approach used by many employers in the industry.” We will be making sure that productivity is not just an accounting term for employer profit, but refers to the wellbeing of workers in the industry.”

He said the Union questions some of the assumptions suggested by the Productivity Commission, including a concept of competition as an intrinsic good.

“In the maritime industry, excessive competition has driven corner cutting on health and safety which has led to deaths and injuries, downwards pressure on wages and conditions resulting in casualization, and a lack of national co-ordination in the port sector. We are looking at the real world situation, not an economics textbook. We are the people who are out there being productive around the clock and we expect our voices to carry some weight.”

The Maritime Union is also promoting a much greater role for coastal shipping as an important part of the low-impact, environmentally sustainable transport mix of the 21st century. Coastal shipping and regional ports also provide an important security and civil defence function, as had been seen during the Christchurch Earthquake disaster, when ports provided the main emergency logistics link for relief supplies.