KEY POINTS:
The power plays in the port sector took another twist today with Ports of Auckland revealing it has approached Port of Tauranga about buying its container business.
Port of Tauranga fired off a press statement in response, saying "our container business is worth more than your container business."
Last year Ports of Auckland's owner Auckland Regional Holdings, the commercial arm of Auckland Regional Council, rebuffed a proposal to merge the two ports.
Ports of Auckland and Port of Tauranga are arch rivals and the battle has taken on a new dimension as ports contemplate how much they have to invest to be able to accommodate the next generation of container ships, expected to be able to handle 6000 standard sized containers. Currently 4100 TEU (twenty foot-equivalent units a measure of container size) ships are the largest that call in New Zealand.
Ports of Auckland announced an after-tax profit in the year to June 30 of $21.1m today, down from $64.6m last year when there were one-time gains.
"The sustainability of New Zealand's existing port sector investment, the industry's ability to invest in the future, and the global competitiveness of the country's supply chain might be assisted by the purchase of Port of Tauranga's container business by Ports of Auckland," Ports of Auckland managing director Jens Madsen said.
He said though the merger plan was not successful the rationale for changes in the industry in the upper North Island was still strong.
"New Zealand needs world class port infrastructure and a logical approach to future investment in the port and intermodal sectors," he said.
A merger of the container operations of the two ports is seen as a way of stopping over-investment in cranes and dredging for bigger ships as the ports compete to be the country's hub port.
Analysts said a purchase of Port of Tauranga's container business would allow Auckland to use Metroport, the inland hub that Port of Tauranga set up in Auckland to handle containers. Ports of Auckland, which is increasingly expected to use rail to move freight to and from the port, has been developing its own inland hub at Wiri.
Port of Tauranga chief executive Mark Cairns said his port had always held the view that a full merger of Port of Tauranga and Ports of Auckland made good sense.
"That view has not changed."
Port of Tauranga is due to report its profit on August 28. The port is listed but is part owned by Environment Bay of Plenty.
"A rough and ready calculation would suggest that Port of Tauranga's container business would be worth substantially more than Ports of Auckland's container business," Mr Cairns said.
Analysts see the approach by Ports of Auckland as being at an early stage and they are waiting to see how the port would fund a purchase. One option would be to sell shares and relist the company.
Ports of Auckland declared a $7.19m second half dividend to be paid to its council owner. It declared a dividend of $9.5m in the first half. It paid dividends of $22.7m in the year but this figure related to payment dates, not declarations for the period.
- NZPA
