Northport needs to grow container business for Auckland's sake: Port of Tauranga CEO

The Constantinos P docks at Northport with 1000 containers for Auckland. Photo / Supplied

The Port of Tauranga says it wants its Northport joint venture to grow its container operations to get more boxes into Auckland and relieve supply chain congestion.

The NZX-listed port, New Zealand's biggest, owns half the Northland deepwater port with listed company Marsden Maritime Holdings.

Northport, which had a 42 per cent lift in container volumes in FY22 from vessels avoiding congestion elsewhere, particularly at Auckland, is poised to seek resource consent to expand its container port.

Discussing the Tauranga port's FY22 financial results, chief executive Leonard Sampson said an associate business he'd like to see improve was Northport, which the Port of Tauranga views as essential to an integrated upper North Island supply chain.

A slight blip in an otherwise strong earnings year - the Tauranga port beat its own guidance with an 8.7 per cent lift in group net profit after tax to $111.3m - was a 16.2 per cent decline to $15m in the earnings of its subsidiaries and associate companies, which include Northport.

Sampson said the dip was because some operations were more exposed to commodities than others - for example Northport, and Timaru 's PrimePort had variability of log volumes.

Asked which associate business he'd particularly like to see improve, he said Northport, and key to that was the Government's plan to build a rail spur from the main trunk line to Marsden Point.

"I'd like to see Northport look to grow its container business and to support getting containers into the Auckland market to help with some of the congestion. The key opportunity to facilitating container growth in Northland is going to be the efficient movement of bulk volumes of containers, and rail has a big part to play," Sampson said.

Port of Tauranga CEO Leonard Sampson. Photo / George Novak

Despite a 42 per cent jump in its container volumes, Northport's profit was down 13.9 per cent to $7.5m. Breakbulk volumes were down 17.6 per cent, with log volumes declining 518,405 tonnes on the previous year.

A recent independent report commissioned by Northport on the social and economic potential of its growth plans concluded around 1500 jobs could be created around Marsden Point, in Whangārei and in the wider Northland region by expanding the container operation. The report said an additional shipyard and floating drydock suggested by the port on its western boundary could be the catalyst for another 1135 new jobs.

Meanwhile, the Port of Tauranga's FY22 results were better than expected given another challenging year of disruption, Craigs Investment Partners head of private wealth research Mark Lister said. Net profit, ebitda, the final dividend of 8.2 cents per share and operating cashflow were all up on Craigs' predictions, he said.

"Everything stacks up and looks very healthy. Where there was a little caution was around the outlook, which is unsurprising and exactly what we have seen from just about every other company [this reporting season]," Lister said.

"We've seen a lot of good results but [also] caution around outlook because of the level of uncertainty out there."

The port gave no earnings guidance, preferring as usual to wait until its annual meeting in October.

Lister said this was in line with the port company's conservative preference to "get a bit more time under the belt for guidance - they like to under-promise and over-deliver".

It was the third year of severe supply chain and shipping disruption for the Mount Maunganui port, which handles 32 per cent of all New Zealand cargo, 36 per cent of all exports and 42 per cent of all shipping containers.

Sampson said the number one highlight of FY22 for him was the resilience of its staff, port workers, partners and customers.

"I'm proud of our people's resilient operational performance. It's difficult to grow significantly in the current environment because of congestion," Sampson said.

Total ship visits increased for the first time in four years, to 1369 calls.

However total trade was down 0.5 per cent on FY21 at 25.6 million tonnes, and container vessel calls were still 170 fewer than pre-Covid 2019.

Sampson said the reason for fewer container ship calls was a mix of disrupted global shipping schedules and constrained berth capacity.

Delivering its FY22 results, the port continued to voice its frustration at the delay in progress on a container terminal extension, which had been on its planning books since the 1991 inception of the Resource Management Act.

Consultation, design and early contractor engagement started in 2019 for the current extension project. The port warned again it has 2.5 years container capacity left and the extension will take two years to build. After a string of setbacks, including Environment Court deferral of a resource consent hearing in July, the hearing is now pencilled in for March next year. But that has yet to be confirmed.

Sampson said container shipping lines were not able to meet their schedules.

"As described to me by a shipping line, they would normally do a 49-day rotation with six vessels from North Asia to New Zealand. That gives you, with six vessels and a 49 days rotation per vessel, a weekly service. We are still seeing those services being around 55 to 60 days which means you have fewer voyages a year."

Sampson said the container vessels calling had higher loads.

"If we had more berth capacity we'd be able to get them through faster as well."

The port said it handled $30 billion of the country's main export commodities a year, including 70 per cent of dairy exports, 61 per cent of meat exports, 85 per cent of outgoing kiwifruit and 30 per cent of the export log trade.