Larger ships

135. The last decade has featured a significant increase in the capacity of new vessels, driven by increasing trade volumes and the lower per-unit operating costs of larger vessels. The largest container ships now carry 11000 TEUs[34]. However, these vessels are being committed to the major trade routes and are unlikely to visit New Zealand in the foreseeable future. The largest vessels currently visiting New Zealand are around 4100 TEU capacity but some ports are preparing for 6100 TEU ships. There is debate about the costs of accommodating these ships. Several ports claim they already have this capability, or could be made compliant with readily achievable levels of investment[35]. However, some commentators suggest that the costs could reach into the hundreds of millions and that duplication of this investment in competing ports would be wasteful from a total New Zealand perspective.

136. The Chief Executive of Maersk New Zealand recently commented that the chances of larger ships visiting New Zealand in the near future are relatively small[36].

Hub and spoke shipping

137. There is an increasing trend towards the hub-and-spoke model in overseas markets, with major ports (the hubs) aggregating freight from smaller centres (the spokes). This model uses economies of scale in both the shipping and port-side facilities. From the customer perspective hub and spoke models are a trade-off between speed and cost. The ideal service is low-cost and runs from the port nearest to the freight owner to the port nearest to the customer (‘point to point’). Hub and spoke reduces cost but usually at the expense of speed or complexity.

Supply chain integration

138. There is a global trend towards increasing integration of supply chains, with service providers seeking to provide more comprehensive ‘supply chain solutions’ covering more of the span between the freight owner and the final customer. This creates competition to control more of the supply chain. Three directions are apparent within this trend. Trucking companies are expanding into warehousing and stevedoring (e.g., the Toll group in New Zealand and Australia), shipping companies are expanding into port services (e.g., Maersk/APMoller), and specialist port operating companies are taking over port operations from local authorities (e.g., Hutchison Whampoa).

139. Port companies have found themselves squeezed in this contest. They face a choice of accepting the trend (and therefore a role as a passive landlord) or competing to hold on to ‘their share’ of the supply chain.

Future freight demands

140. It would in theory be possible to look at past trends and future projections, and then form a view about the likely size and location of the future freight task. Such a view could then inform port planning. However, such analysis may not give a robust result. The speed and unpredictability of past commodity cycles suggests that long-term central planning is unlikely to be helpful. Twenty to thirty years ago few would have foreseen the current export volumes of dairy products, coal or wine. Conversely meat and wool volumes have declined substantially. Imports of CKD cars for assembly in NZ have been replaced by second-hand Japanese imports and Asian-manufactured goods have replaced many local products. Overall, globalisation has created a huge surge in freight volumes. It is difficult to predict whether these trends will continue or be replaced by new trends.