Port of Tauranga's frustration at red tape delays spills over at annual meeting

Port of Tauranga, the country's biggest cargo gateway, expects earnings lift for FY23. Photo / Supplied

Today's legislation and policy does not encourage infrastructure investment and the consenting process is complex and costly and hinders the adoption of beneficial new technology, says Port of Tauranga chair Julia Hoare.

Addressing shareholders at the annual meeting of the country's biggest and busiest port, Hoare made plain the NZX-listed company's frustrations with the red tape that's delayed the start of an urgently needed, long-proposed container vessel wharf extension and challenged the freight network.

"Our frustration with the delayed resource consent process is well documented. Detailed planning and consultation began in early 2019," she said, noting the construction cost of the berth extension had lifted by $20 million from the original $68.5m during the delay.

On supply chain congestion and challenges, Hoare noted there had been 26 reports and reviews of aspects of the freight network to date, and the Ministry of Transport was currently drafting a national supply chain strategy.

"Our preference has always been for commercial pragmatism and fact-based analysis to lead solutions, rather than any politically-motivated or interest-driven proposals. Our vision involves enhancing existing assets, while investing in supporting infrastructure such as new rail connections and coastal shipping."

Acknowledging there had been progress on increasing coastal shipping, she said an integrated, efficient, resilient supply chain could be achieved with the help of government.

"It is our belief that current legislation and policy does not encourage nor facilitate investment even when it is environmentally sound and nationally significant.

"The consenting process is complex, time consuming and costly. It hinders adoption of new technology with its economic and environmental benefits, ensures we are always playing catch up with capacity and stops existing assets from being used to their full potential," she said.

"We will continue to press government to address these issues."

While the port company had been navigating the "seemingly endless maze" of unsuccessful applications to the Government for consenting and an Environment Court hearing delay, the cost of construction of the container wharf extension had ballooned.

Government funding had not been sought for the project. The Environment Court hearing for resource consent had now been delayed until March, nine months after it was scheduled to be heard.

"The development is critical to New Zealand Inc. Without it, the port and the country will face capacity constraints in a few years," Hoare said.

Leaders of some of the country's biggest exporters had expressed their concern at the delays.

Chief executive Leonard Sampson said the port had completed an $11m electricity upgrade in anticipation of the wharf extension, which would feature automation proven at ports around the world.

"Our automation project will unlock additional capacity within our current footprint. It will also help us improve safety, reduce fuel consumption and carbon emissions," he said.

"Our existing container terminal has the annual capacity to accommodate up to 1.4 million 20-foot equivalent units [containers]. With automation and the new berth, we will have the ability to grow to nearly double that volume."

Sampson said based on FY23 first quarter results, and notwithstanding any significant changes to market conditions, the port expected full year earnings to be in the range of $115m to $120m.

The company's FY22 group net profit after tax was $111.3m.

Total trade in the first quarter was down 7 per cent on the previous corresponding period to 6.4m tonnes, reflecting a weaker log market and a challenging end to the kiwifruit export season, Sampson said.

Container volumes increased 1.8 per cent on the previous period, supported by a 7 per cent increase in dairy volumes.

Cruise ships had this month returned to the Bay of Plenty for the first time since March 2020, with 103 vessels expected this season.

The port hoped for a return to fixed container vessel schedules to ease supply chain congestion, Sampson said.

Only six out of 16 weekly services were currently arriving on time at Tauranga.

"We will not be able to achieve schedule reliability alone and require all New Zealand ports to return to normal container operations and productivity. We are eager to see this happen in early 2023," he said.

(Ports of Auckland, the country's main imports port, has said it plans to return to fixed container vessel schedules in March.)