Subscribe to RSSFreight Report: Let Ports Decide
Transport Minister Steven Joyce today released a new report which looks at several current issues in the sea-freight industry from an economic perspective.
The New Zealand Institute of Economic Research report - commissioned by the Ministry of Transport - looks at the merits and likelihood of three possible future scenarios for international freight services:
- Hubbing New Zealand’s international trade through AustraliaFreight report supports industry-led approach
- Having two main container ports in New Zealand
- A reduction in ship operators servicing the New Zealand market.
The report considers each against the status quo but concludes all are marginally less beneficial to the economy than the natural evolution of the ports sector. It also concludes there is likely to be strong competition in the shipping industry over the next few years as the global economy takes time to recover from recession.
The report proposes that the best approach for Government is to leave final decisions in the hands of shippers and let ports react to those with their own investment decisions.
Mr Joyce says that is consistent with the Government’s view.
“Attempts to pre-empt future likely market developments are unlikely to produce better results for the economy. The best role for Government is to ensure the right price signals are in place and land-based infrastructure such as roads and rail can meet the needs of the freight industry as it evolves.”
You can read the full report here
Employer and Manufacturers chief executive Alasdair Thompson said that it would not be in New Zealand’s best interests for port companies in New Zealand to fail to rationalize if that resulted in New Zealand’s hub container port being in Australia. “So yes, there are issues that need to be addressed.But we have some time on our side to achieve that rationalization.
“But there is a risk in leaving it to our port companies to react to future decisions by shipping lines about where they call, as the necessary commercial decisions may not be easy to make for ports that are largely owned by councils, or in Auckland’s case where the port is wholly owned by the Auckland Council from 1st November.
“The current owner of the Ports of Auckland which is the Auckland Regional Council (ARC), regards the POAL as an investment from which to receive dividends to fund the ARC. The majority of the newly elected Auckland councilors including the new mayor Len Brown, seem to think the same. They see no room for any private shareholding, which could release capital for investment in public transport.
“Nor was the ARC willing to consider rationalization when the Port of Tauranga and the POAL began discussing it some two to three years ago.
“Rationalization could well see the likes of the Auckland Council having to stump up ratepayers money for development capital were it needed to meet the needs of becoming a hub port for the North Island if not for New Zealand. If central and local government part-privatized ports and other important public infrastructure, they would need to commit less ratepayer or taxpayer capital for the development or the rationalization of these assets, and the owners together could make sound commercial decisions about the future of the assets.
“Infrastructure like ports are necessary for a thriving economy and serve business most directly, and ratepayers less directly,” Mr Thompson says.
2 Comments
Joyce forgets that whichever port is the winner will require major govt infrastructure investment to ensure the transport system can cope with the extra volumes.
This investment cannot be done overnight and that is why the govt needs to be involved in pushing this debate along.
‘Market forces’ deciding just means the big shipping lines will play the ports off against each other meaning poor returns.
This was a reason for ARC’s funding problems as POAL was struggling to pay a decent dividend when ARC needed the money.
Off course land infrastructure is not included in this market forces definition hence the cost to the govt will not be fully reflected in the ‘markets’ decision.
Killing off the little ports will decimate efficient coastal shipping which competes well with subsidized road and rail transport.