The debate about which New Zealand ports should handle bigger container ships shifted up a gear today with the New Zealand Shippers' Council anointing Tauranga and Lyttelton, according to Otago Daily Times.
The online version of the report quoted the council’s report saying container ships capable of carrying 7000 twenty-foot equivalent (TEU) containers would logically call at one port only in the North Island and one port in the South Island.
Lyttelton and Tauranga were the logical candidates the council said, recommending that state-owned KiwiRail should, as a priority, ensure the $750 million of government funding earmarked for its turn-around plan is targeted at parts of the rail network that will support a bigger ships future.
The report said shipping companies may hub through Australian ports if New Zealand did not develop ports capable of handling 7000 TEU ships.
The biggest container ships currently calling at New Zealand ports can carry 4100 TEU.
New Zealand's four largest ports, Auckland, Tauranga, Lyttelton and Otago can handle ships in the range of 4500 to 5000 TEU.
The council was comfortable with any of the big four developing but said the investment in Tauranga needed was $50 million to $80 million, while at Auckland it was $200 million.
Decision making for the council-owned Ports of Auckland was also highly political, and Tauranga was further ahead with the process of obtaining resource consents. Auckland's port also suffered from creeping urbanisation, the report said.
In the South Island, the ports at Lyttelton and Otago had similar levels of investment readiness. It would cost $40 million to $80 million to develop Otago and $100 million to develop Lyttelton.
"Because Tauranga and Lyttelton are also the largest bulk ports in New Zealand, there is a opportunity for these cargo owners to leverage off investments at these ports," the report said.
It said New Zealand could realise up to $144 million per year of net supply chain benefits from 2015/16, if bigger ships operated here.
When taking into account $194 million of detrimental costs if ports here could not handle bigger ships, the real value to New Zealand of bigger ships is $338 million per year by 2015/16 and $391 million by 2020.
"If New Zealand's ports are not bigger-ships-capable within five years, there is a risk services could become 'boutique' in nature, where only relatively small and old vessels with a higher operating cost per container can be accommodated by the ports," the report said.
The council is an association of major New Zealand-based cargo owners. Its members include Fonterra, Solid Energy, Carter Holt Harvey, and New Zealand Steel.
The report recommended that, before further industry consolidation takes place, the Government should ensure that the legislative framework is not a barrier to bigger ships being introduced.
It also recommended that it take steps to ensure anti-competitive behaviour such as cartel pricing or capacity restrictions, whether by ports or carriers, did not result due to increased use of vessel-sharing arrangements and or port consolidation.
Port of Tauranga Ltd welcomed the report.
"It is time for New Zealand to make some tough decisions on infrastructure investment to ensure that our exporters remain competitive globally," said Port of Tauranga chief executive Mark Cairns.