Cruise ship The World berthed at Port of Auckland. Photo / Michael Craig
With the Port of Auckland having put its own house in order, chief executive Roger Gray is thinking about what Auckland needs to do to help the port fulfil its potential as an import and export gateway leader.
His wishlist is short and sharp.
Bring in congestion charging, as Mayor Wayne Brown wants; persuade the downstream supply chain to operate 24/7 like the port to alleviate congestion; extend the optimisation project for The Strand that is now under way so it joins the port to the motorway; and enable the development of an “amazing welcome front door” to Auckland.
Gray has just been discussing the Auckland Council-owned port’s solid financial results for the first six months of FY25 and welcomes the chance to explore with Project Auckland what its future might look like now the uncomfortable choppy swell about its management, ownership and survival in Auckland’s CBD has settled.
Calmer waters prevailed last year when Brown, a fiery critic of the port’s poor productivity and financial returns to the city, binned his idea for a 35-year lease to a global port operator, in favour of an agreement with port leaders and the Maritime Union that the company would contribute $1.1 billion of profits to the council over the next 10 years.
Brown didn’t have enough support around the council table for his plan. And the port’s steadily improving financial results since Gray came on board in 2022 undermined the previously vociferous support in some city quarters for the port to be moved, sold or leased to a commercial party that knew what it was doing.
Contrast these financial results:
● Full-year 2022, net loss $10.3 million; revenue $265.2m, dividend to council $14.2m.
● Half-year 2025, net profit $42m, revenue $195m, interim dividend to council $25m.
Announcing the HY25 result, the port upgraded its FY25 earnings guidance to $75m-$80m after tax and said the full-year dividend was expected to be at least $45m.
Back to the port’s ambitions and how it plans to contribute to Auckland.
“We expect us to be here for at least the next 40 years,” Gray says. “I think that was confirmed by the decision on the proposal by the mayor to sell a 35-year operating lease. There’s an acknowledgment we’re here for the future.
“Our potential is to become New Zealand’s most efficient and effective import port for what is effectively the third of the country’s population which lives close by. We also want to ensure that we facilitate exporters within the area getting their product out.
“[There’s also] the potential for us to invest in tourism, making sure this is an amazing cruise ship destination. But also to make sure that the car importers and the steel for the cities to be built get here, that the aggregates needed for big city construction and growth are here.
“We see a very good future. We’ve got plenty of capacity. This is a relatively small port in comparison to others from a hectare perspective but that smallness makes us highly efficient.”
Gray asserts Port of Auckland is “by far the most efficient port in the country” if its cargo throughput, particularly that of containers, is compared to others per hectare.
“16,000 TEU (20-foot equivalent boxes) is a quiet week for us now. When I arrived, if we were doing 10,500 we thought we’d had a good week.”
So what does the port need from Auckland to accomplish its aims?
With traffic congestion being a major city issue in Gray’s book, he says the supply chain is at a “tipping point” where the downstream supply chain needs to transition from operating five days a week, 12 hours a day, to being a 24/7 operation – like the port.
“We’re committed to being a 24/7 operation – shipping arrives 24/7 – and we’re encouraging our customers to start running their supply chain at night and on weekends, rather than [just from] Monday to Friday, 9 to 5.”
He says the company is working with supply chain players such as KiwiRail, Nexus Logistics and Port of Tauranga to facilitate use of the new Ruakura Superhub inland port, designing solutions for big importers like Kmart.
“And we’re using pricing to influence that with our peak and off-peak [charges] and alternate rail charging. We’re working very hard to make sure we push trucks into the evening and night and get cargo off trucks.”
To fast-track that work, the port needs two actions from other infrastructure providers, Gray says.
“One is significant investment in The Strand and the completion of that link to the motorway. We think Auckland Transport and NZTA should finish The Strand properly. There’s a minor upgrade going on but it really needs to be turned into a motorway from the port to the motorway.
“The second, which is about to be enabled by central government, is congestion charging. We support the push by the Mayor of Auckland to introduce congestion charging. We think that will add to the effectiveness of the work we’re doing with peak and off-peak charging.”
Gray makes no bones about higher charges being a cornerstone of the port’s financial improvement, now and in the future.
“We’ve been very public about this … in our view, as a leadership team and the board, importers and exporters were not paying a price that matched with the investment being made here.”
He says the previous pricing model was a historic result of competition between Auckland’s port and Port of Tauranga.
“We’ve started to change the pricing [model] and move it up. We’re basically aligning our pricing with regional pricing throughout the Australian and New Zealand markets and we’re doing that in order to improve the profitability of the port.
“We weren’t making our weighted average cost of capital [Wac], we weren’t investing in the infrastructure needed and off the back of that, the city wasn’t getting a fair return.
“We will target a return of equity in excess of our Wac, which is at 8.5%.
“In our view importers and exporters, particularly the container trade, were being subsidised by the ratepayers.”
But Gray thinks the “most important aspect” of the port’s turnaround has been its new partnership with the unions who represent its employees.
“Moving from combative conflict and aggression to high performance, high engagement and partnering has enabled us to unlock a significant number of initiatives.
“There’s been a massive improvement in safety and the rollout of the approved code of practice, which is standardised port loading and unloading of ships across the country.
“It’s allowed us through the operational improvement team to lift the capacity of the container terminal to handle cargo.”
The new relationship with the unions has also helped the port with one of its main objectives — developing career paths and leadership at the port.
Last, but certainly not least, what the port needs from Auckland is the green light to develop “an iconic welcome entry point” to the City of Sails, he says.
Tourism via cruise ship visits is a significant part of the business, but the entry point is “substandard”.
“They either come in on Princes Wharf through the Hilton Hotel or through a temporary set-up that’s done in Shed 10, which is also used for events.
“What Auckland needs is an amazing welcome front door and we plan to build that at Bledisloe [Wharf].”
The port continues to work with Auckland Council on implementing its 2024-34 long-term plan, lodging a consent application to complete the Bledisloe North and Fergusson North wharves.
Gray says the work will make the port big ship-capable and provide long-term, fit-for-purpose port infrastructure. It will also create more waterfront access for the public, reduce vessel congestion in the ferry basin and meet the increasing freight requirements of the city, he says.
“We want to work with iwi to ensure that the front door provides an amazing cultural welcome and shows off the wonders of Auckland and New Zealand.
“If we create that kind of great experience, it has a flow-on effect for businesses that really appreciate the summer cruise trade. And with some of those facilities, we’d explore ways the community can access them in the off-season.”
Gray says his main message to Auckland is that “the port is here”.
“We are building the infrastructure, be it through dredging or wharves or a cruise terminal, to service the city for the next 40 years.
“It’s a privilege being on the doorstep of this country’s largest city.
“We don’t take that privilege for granted in any way and will continue to work closely with all stakeholder groups to be a good corporate citizen for Auckland and New Zealand.”
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