Welcome to our latest newsletter.

Latest Newsletter  May- July 2012

It’s the time of year when we all just want to ‘hunker down’, and get on with our jobs.  Winter is approaching fast, but transport is a 24/7 365 day of the year business, irrespective of the weather, the political situtation  or the state of the economy.   Exports are the lifeline of this country, and transport, freight and shipping are the providers.

Of course everyone can do it better than the current providers. Politicians, unionists, economists, and other ‘experts’ all know how to get better efficiencies out of the current system, or else they want a completely new system.  The latest of the ‘advisers’ to join the commentary are the Productivity Commission. Read what they say further on in this newsletter….

For those of us in the industry, we don’t need to be told how important we are to the national economy. We know that.  We don’t need to be told that efficiency and cost saving are important. We know that too.  What we would like is just to be left alone to get on with doing our jobs to our best abilities, and deliver on what we have promised.  Let the political spotlight fall somewhere else for a change… and get off our backs!

 

NEW PARTNER ON THE WAY: A new tug boat is planned to partner tugboat Tiaki on Wellington Harbour.

NEW TUG PLANNED FOR CENTREPORT

CentrePort plans to purchase a brand new tug boat which expected to be working alongside Wellington wharves next year.

Chief Executive Blair O’Keeffe said the new tug would be capable of pulling 68 tonnes.

Plans were for it to partner CentrePort’s five year old tug Tiaki, to help ‘future proof’ the company and ensure the region could continue to welcome record numbers of cruise ships and cargo freight.

”More than a fifth of cruise liners calling at Wellington next year will be over 300 metres long and the next generation will be 340 metres long.  The Queen Elizabeth, already a regular visitor to Wellington, is 294 metres long,” Mr O’Keefe said.

In 2012 CentrePort tugs assisted in more than 1,300 ship movements in Wellington Harbour.

”This new tug, which will be the same size as Tiaki, will be able to increase our capacity, and will have positive flow-on benefits for our customers and the people of the region through more cargo freight and tourists on cruise ships,” Mr O’Keefe said. Not contract had yet been let for the new tug.

CALLS TO END PRICE FIXING BY SHIPPING LINES

By ROELAND VAN DEN BERGH, Fairfax News.

Pressure is mounting for shipping companies to be barred from price fixing and instead be subject to normal competition laws.

The Productivity Commission has called for the end to the automatic exemption for shipping companies from the Commerce Act, which outlaws price fixing and collusion on capacity unless approved by the Commerce Commission.

Many countries exempted shipping lines from competition laws in recognition that the nature of the industry required some collaboration to ensure a reliable service.

“But this view has been under increasing challenge, particularly since 2008 when the European Union repealed its block exemption for price-fixing agreements,” the commission’s report says. Since then European shipping prices had remained relatively stable and services constant.

“The commission recommends that New Zealand require shipping companies wishing to collaborate to fix prices or limit capacity to demonstrate to the Commerce Commission that there will be a public benefit which will outweigh the anti-competitive effects.”

An automatic exemption would be retained for agreements that were for purely operational purposes. But such agreements should be registered with the Transport Ministry.

New Zealand’s international freight sector is performing well, but there is scope for improvement that would lift living standards, the Productivity Commission says in its final report to the Government yesterday.

There was potential for a significant lift in workplace productivity in some ports, which would lead to higher real wages, better working conditions and more competitive and profitable businesses, the commission says. Ports of Auckland is embroiled in a lengthy dispute with container wharf workers.

Commission chairman Murray Sherwin said the economy was sensitive to international freight costs, which were built into the prices paid for everyday imported goods and also affected the profitability of exporters.

“In total, we pay about $5 billion a year in freight costs. In 2010 that was about 2.7 per cent of our GDP,” Sherwin said.

The commission found that shipping costs of a 20-foot container on routes from Auckland to Singapore, Long Beach in the United States and Shanghai were “considerably more expensive” than for the same routes from Sydney.

Bright future predicted for CentrePort

CentrePort is maligned by some as a blot on Wellington’s landscape, occupying prime waterfront land and sucking the life out of the central city.

But behind the wall of logs beats a heart that pumps nearly $2 billion a year through the region’s economy.

CentrePort boss Blair O’Keeffe said Wellington has the best natural harbour in the country, with huge potential.

“It is deep, it’s wide, it’s sheltered, not withstanding that we get a bit of wind in Wellington. [And] it doesn’t need maintenance dredging.”

The main port covers 46 hectares, extending from the undeveloped Kaiwharawhara land reclamation north of the Interislander ferry terminal around to Waterloo Wharf, opposite New Zealand Post’s head office.

Across the other side of the harbour, CentrePort’s 23ha Seaview site houses one of the largest oil import hubs in the country, as well as the overflow for logs.

Other wharves along the waterfront, including Queens Wharf, are rented from Wellington Waterfront Development as required.

Port detractors point to the vast area of prime waterfront land the port occupies that could be better put to public use. The latest proposal is for a 12,000-seat concert venue on land used to store logs. This goes to the heart of the lack of understanding of how a port functions, Mr O’Keeffe said..

“A lot of people look at our business and just see land and they don’t see the economic role necessary for the business. Because, over time, the size of the land attached to the business has compressed, I think some people think that the port itself has shrunk in terms of its relevance, but it is quite the opposite.

“We are doing more than ever before on a small piece of land through technology and changes in the way things work.”

Just 10 per cent of a port’s land consists of wharves; the rest is used to store and marshal cargo. The port uses this land to “breathe”, he said.

The port should be seen as an “economic muscle rather than a land mass”.

Port turnover has grown more than 40 per cent in the last four years to $71 million and underlying profit is up 43 per cent to nearly $15m over that time. Last year, a dividend of $4m flowed back to ratepayers via the port’s two owners, the Greater Wellington regional council and Horizons Regional Council.

Before taking up the helm at CentrePort three years ago, Mr O’Keeffe spent 16 years with BP in a variety of senior roles around the world.

The 41-year-old joined the energy conglomerate as a graduate and left as vice-president of marketing for North America Gas and Power. In between, he built the AA Rewards loyalty programme in which BP is a key partner, sold BP’s LPG and commercial gas company in New Zealand, and was involved in the takeover of oil company Castrol.

At 32 he was sent to Europe to head Castrol Commercial in Britain and Ireland. A stint on the European leadership team for Castrol followed, overseeing a portfolio of 42 countries and a brief to find US$100m (NZ$122m) in benefits for the company through better pricing and cost-cutting within a year.

Family, and a desire to apply his skills in a different, albeit smaller organisation, drew Blair O’Keeffe and his wife, Kate, home from his final United States posting.

“One of the things that I have discovered through my career is that the scale of the numbers doesn’t matter that much. It is actually about what you are doing and the business itself. This is the best job I have ever had. There is just so much going on at any given point in time with it. We are literally plugged into nearly every part of the economy in one form or another.”

The last year has been one of records for the key trading parts of the port, including the number of containers moved, logs exported and cruise ship visits.

About 100,000 containers crossed the wharf last year, accounting for about a third of the port’s revenue. The container terminal is one of the most productive in Australasia, via the use of technology and a flexible workforce.

Container terminal staff are employed by CentrePort on a guaranteed number of hours. A callup system means staff work when work is there to be done. Casual labour pools can be called on to cope with peak demand. Labour for all non-containerised cargo is contracted out to third parties.

Ship diversions during the Ports of Auckland industrial dispute proved that the port could handle the equivalent of 260,000 containers a year using existing facilities, he said.

With more master planning and adding new technology, the container terminal could handle up to 400,000 containers a year. That capacity to grow may be needed if the use of irrigation is expanded in the Wairarapa and the Manawatu to convert more land to dairying, and a strategy to develop a national distribution hub at the port succeeds.

The log trade is experiencing a “bit of a perfect storm” due to huge demand from China and plenty of supply from lower North Island forestry firms. Log volumes have grown threefold in recent years to 600,000 tonnes a year and are expected to “keep chunking up”.

Last month, the first logging train arrived from the Wairarapa, after years of planning. Eventually about a fifth of all logs will be delivered by rail. It is hoped to develop a similar service from the Manawatu.

By far the most spectacular success story of the last five years has been the five-fold growth in visits by cruise ships.

About 180,000 passengers and crew passed through the port this season, spending $30m. That could be boosted by up to another 20,000 people next year, with 91 cruise ship visits already confirmed, Mr O’Keeffe said.

The public perception is one of valuable cruise tourists being forced to disembark on a wind-swept wharf surrounded by logs, cars and containers, rather than at one of the inner-city wharves.

But Mr O’Keeffe says there is not enough room to manoeuvre the big ships safely in strong wind close to the city, and at an average length of 250 metres, they are too long even for the Overseas Passenger Terminal wharf.

“By next year we will have over 20 per cent of the cruise ships calling being over 300 metres long, and the next generation is going to be 340 metres long. They are floating cities, basically.”

Similarly, both inter-island ferry operators will eventually move to Kaiwharawhara, where much-needed space can be developed to cater for the growing Cook Strait freight demand and bigger ferries.

Mr O’Keeffe wants to take advantage of Wellington’s strategic position in the centre of the country to develop a domestic distribution hub, competing with Auckland and Christchurch.

“When you look at the international and domestic demands, the freight task in New Zealand is expected to double over the next 20 years,” he said. “Wherever anyone goes in New Zealand, we are on the way. So I think we are really well situated to have a highly relevant role in both the domestic and international supply-chain solutions for the future.

“We are in the middle of the country. We are probably one of the most blessed ports in the country in terms of intermodal access. We have got the national rail, the national road system that docks across the road or on our property.”

In 2006, CentrePort also became a commercial property developer, with the 6ha Harbour Quays project fronting Waterloo Quay. The project features three top-grade office buildings leased to the Bank of New Zealand, Customs and Statistics New Zealand. ACC has bought a 50 per cent stake in those buildings. The NZ Rugby Union and TelstraClear have also taken up residence in refurbished buildings.

The development is expected to take 20 years to complete, at a total cost of about $500m, with the area’s population growing from about 3500 now to about 6000.

But rival property developers and retailers say the development will draw the life out of the city centre.

“Our view is that we are meeting the needs of the market,” Mr O’Keeffe said. “Fundamentally, people want large, new, close-to-the-waterfront offices where they can consolidate into one location.”

A new master plan for the port, looking out 50 years and including land and infrastructure development requirements, is due to be completed later this year. - © Fairfax NZ News. This story was edited for space considerations.

NEW CRANE FOR TAURANGA

Port of Tauranga will buy a seventh ship-to-shore gantry crane for its Sulphur Point fleet to handle the growing container volumes.

Container numbers increased 17.1 per cent to 344,081 twenty foot equivalent units for six months ended December in the half-year, compared with the same period the previous year.

The port will also expand its fleet of straddle carriers and increase the capacity of its rail terminal at Sulphur Point.

The announcements are on top of nearly $150 million of capital works already under way or planned, including a 170m wharf extension, the port says.

AIRPORT IMPROVEMENTS HERALD NEW PLANES

By Tamsyn Parker

The shape of things to come at Auckland Airport will become clearer as consultation on a new domestic terminal nears its conclusion.

Outgoing Chief executive Simon Moutter said that consultation with airline partners and independent experts was continuing and an outcome was expected in the next few months.

Mr Moutter said the heart of the terminal was built more than 40 years ago and it is becoming increasingly inadequate in terms of space and capacity for handling passengers, especially with the increasing use on domestic routes of larger aircraft such as the A320.

The current basis for consultation is broadly similar to that announced last August for a two-stage process, although the final outcome is yet to be determined.

At that time stage one was envisaged to be delivered in about three years from last August and see the first part of a new integrated terminal, with associated aprons and taxi-ways, built alongside the international terminal at a cost of about $100 million to $150 million.

Stage two would be a few years later and would see the completion of the integrated terminal, aprons, taxiways, a new runway of at least domestic jet length capability and the closure of the existing domestic terminal.

An integrated domestic and international terminal is better for the smooth and happy transfer of valuable overseas tourists out into the country.

The arrival of Boeing’s hi-tech 787 Dreamliner aircraft into active service in New Zealand is finally drawing near after delays, including supplier and production problems, set delivery of the aircraft back years.

But the promise of improved passenger comfort, 20 per cent greater fuel efficiency and fewer emissions compared to similar sized aircraft still tantalises the industry.

The first delivery was made to All Nippon Airlines last September.

Air New Zealand is due to be the first customer for the 787-9 version of the aircraft with delivery in 2014. Jetstar expects its Dreamliners in August next year but Continental looks like being the first New Zealand service through the gate.

Auckland Airport drew attention to comments made in January by United Airlines chief operating officer Pete McDonald who said the airline was getting the plane in the middle of this year “and one of our first routes will be Houston-Auckland, which we’re very excited about.”

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.  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….

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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.