Analysis

Port performance

127. There are several aspects to port performance. Individual dimensions, as follow, need to be considered.

Financial performance

128. The previously mentioned report by Rockpoint concludes that, on average, the financial performance of the port sector is lower than that which commercially-motivated owners would demand. Some of the listed ports appear to operate quite successfully (at least within the normal range of companies subject to the vagaries of economic cycles and management performance). Others are failing to provide a return on investment and are struggling to survive.

Operational performance

129. It is hard to find good operational performance data for ports. Some parameters, such as container movements per hour, are easily measured and well reported. However, others, such as handling costs, are regarded as commercially sensitive and are seldom available for scrutiny. Anecdotal reports suggest that ports that allow competition of stevedoring services feature substantially lower handling costs than those that are ‘closed shops’.

Supply chain performance

130. Ports are one small part of a much larger supply chain. It is possible that maximising the efficiency of any specific part of the chain can reduce overall performance. For example, more efficient capital investment from a port’s perspective may result in ships having to wait longer to load or unload.

131. No New Zealand port suffers the congestion problems faced by some ports in Australia, South-East Asia and elsewhere. Truck traffic congestion has occurred at the Port of Auckland, but the recently developed on-line traffic scheduling system and the new Wiri inland port should substantially alleviate this problem. Customer complaints about service, where they exist, are addressed out of the media spotlight. There is active solicitation of new shipping lines to service customer needs, with consequential benefits to New Zealand’s exporters and importers from increased competition among international shipping.

132. A report released by Beca on 31 July 2009 showed that assuming 1.8 per cent traffic growth per annum over the next 12 years (which is considerably lower than the 2.7 per cent average growth per annum over the last 10 years), committed and planned road improvements will result in an overall deterioration in access times to and from the Port of Auckland.[33]

Change in Access Times between Now and 2021 (Port of Auckland)

Source: Beca

Role in regional development

133. One explanation for continued local government ownership in the face of relatively low returns on investment is that LGs regard their ports as strategic assets owned to promote regional development. If so, below-market returns may reflect an implicit subsidy from rate payers to freight owners. A port could be considered as a direct subsidy or as a cost centre, similar to a tourism bureau that is not expected to cover its own costs but that provides value through the business it generates or facilitates elsewhere in the region.

Changes in international shipping

134. International shipping lines often change their schedules in response to world market conditions. This can affect New Zealand in terms of services to exporters and importers, and visits to New Zealand ports. This can have dramatic short-term effects on the efficiency and viability of port infrastructure, especially when visits to some ports might cease. However, international shipping lines face the commercial risk that any such ‘vacuum’ might be filled by their competitors, who have to weigh the trade-offs between gaining new cargoes versus larger volumes of cargo at ports. Given that ports are mainly long-term infrastructure, short-term changes by shipping lines are not necessarily a long-term problem.