Port of Tauranga attracts big French contract

By Tamsyn Parker

Competition between Ports of Auckland and Tauranga has stepped up with Tauranga taking a big contract with French container shipping company CMA CGM away from its rival.

The deal, announced yesterday, will see Tauranga add a further 52 container ship visits to its list per year - a nearly 11 per cent increase on the 486 container ships calls it had in its last financial year.

Port of Tauranga chief executive Mark Cairns said the announcement by CMA CGM, which is the world's third largest container shipping line, was "fantastic news" for Tauranga.

The new contract will see CMA CGM's Nemo (New Europe Mascarene Oceania) service swap Auckland for Tauranga as its main North Island port of call from the end of March. The service will continue to stop at Lyttleton Port in the South Island.

The Nemo route was launched in April last year and stops at 21 ports on its way from Europe to Australia and New Zealand.

Cairns said the CMA CGM decision was a consolidation move following its acquisition of US Lines which already has its New Zealand hub in Tauranga.

The deal will increase Tauranga's overall business by around 5 per cent as the majority of its business is bulk and break bulk shipping.

But the announcement was played down by the Ports of Auckland.

Managing director Jens Madsen said the loss to Auckland was disappointing but not unexpected given the competitive nature of the industry.

"Wins and losses of shipping services are an ongoing reality for New Zealand's seaports."

The Auckland port also pointed out that it had recently won a new dedicated transtasman service operated by Gold Star Line and gained Maersk business in 2007.

Madsen said the shipping company churn was just business as usual although he said the key difference now was that the industry was "heading into an intense period of instability and volatility".

"Further rationalisation and consolidation among shipping lines can be expected. Margins are tight for the shipping lines and they are closely scrutinising their Oceania cargo operations and costs."

Cairns said he found Madsen's talk of instability and volatility bizarre and said consolidation had been part of the industry for the past couple of years.

First New Zealand Capital analyst Rob Bode said there were a lot of swings and round-a-bouts in the shipping business.

Bode said if Tauranga were to continue to pick up contracts over Auckland it could see merger talks resume between the two parties although it was far too pre-mature to speculate over that at this stage. In 2006 the ports investigated a merger but rejected it.

Shares in Port of Tauranga closed up 2c yesterday to $6.40.

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