Hamish Fletcher

Hamish Fletcher is a business reporter for the NZ Herald

Auckland, Tauranga ports 'cutting each other's throats' - Mike Lee

Competition between the Ports of Auckland and its counterpart in Tauranga is fierce, but the possibility of a merger has been raised several times. Photo / Dean Purcell
Competition between the Ports of Auckland and its counterpart in Tauranga is fierce, but the possibility of a merger has been raised several times. Photo / Dean Purcell

The country's two largest ports are "cutting each other's throats economically" and need to work together to get better rates from shipping companies, says Auckland councillor Mike Lee.

About 330 unionised workers at Ports of Auckland this week went on their fifth strike since early last month over proposed changes to rosters.

Both parties are due to begin the fourth round of mediation today.

To boost productivity and reduce capital costs, the port company has offered union staff a 10 per cent pay increase on existing wages of about $27.40 an hour (with added bonuses) in return for replacing eight-hour duties with shifts ranging from five to 12 hours.

Maritime Union national president Garry Parsloe said the changes undermined job security and amounted to casualisation of the workforce.

Lee, the Waitemata and Gulf ward councillor, said part of the problem was that the price Ports of Auckland received for processing containers was "significantly lower" than that received by Australian ports.

"That is simply because [of] the astute manipulation by the shipping cartel Maersk and the major shipper Fonterra," Lee said.

"They've been able to keep the price right down by playing Tauranga off with Auckland."

An Auckland Regional Holdings study released in 2009 said Australian ports received on average about 50 per cent more for processing a container than their New Zealand counterparts.

Lee said there was a "race to the bottom" in container pricing between Auckland and Tauranga, which did not benefit the shareholders of either port.

The two companies should collaborate and get a higher rate per container.

"It seems to me that Tauranga and Auckland need to get together, because they are both cutting each other's throats economically, and get a world-market price for processing containers," he said.

However, Port of Tauranga chief executive Mark Cairns said this would require a merger between the two companies, an option neither port was considering.

A Ports of Auckland spokesperson echoed this comment.

Cairns also did not think the price New Zealand ports received for processing containers was behind Auckland's problems.

"We're meeting our cost of capital at those rates, so I don't think the revenue line is the issue. It's that costs are blown and that is something [Ports of Auckland chief executive] Tony Gibson is working on addressing."

Moreover, Cairns said, when comparing prices received per container with the prices fetched in Asian ports, Australian rather than New Zealand ports were the outliers.

Although competition between Tauranga and Auckland is fierce, the possibility of a merger has been raised a number of times.

In 2006, the two parties worked together on a merger proposal, but this was dropped a year later.

Although Gibson said last week that keeping the two entities separate encouraged competition, Cairns said the failure of the 2006 proposal was a "lost opportunity".

- NZ Herald

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