Herald found it 'improbable ' that strike action played a part in the Maersk shipping line's recent decision to switch ' />

In last Friday's editorial the Herald found it "improbable" that strike action played a part in the Maersk shipping line's recent decision to switch the $20 million Southern Star service from Auckland to Tauranga. That view called into question Maersk's integrity and my own.

I stand by my public statements that the industrial action was central to the loss of the service, as does Maersk, who has been widely quoted as saying industrial unrest was the catalyst for its decision.

Even Mark Cairns, Port of Tauranga chief executive, has described the industrial action as "the straw that broke the camel's back".

The union's suggestion that the decision was based on export flows out of Hawkes Bay and Waikato is either naive or a weak attempt to deflect blame for the loss of the service.


The Southern Star is predominantly an import call (70 per cent) servicing the Auckland region, and as such its loss simply represents a handing over of part of Auckland's core business to a rival port. The issuing of further strike notices is deeply concerning to the port and our customers, who are looking for surety and continuity of service.

The two 24-hour strikes the union plans over December 22-25 promise to be even more disruptive for consumers, importers and exporters. This is because the union has chosen to strike when KiwiRail is about to shut down its rail network for electrification works.

Because of this, the capacity of the key rail corridors between Auckland, Tauranga and the Waikato to handle trade diverted from Auckland to other ports, and to work through any backlogs in Auckland, will be significantly constrained.

Extended delays and ongoing congestion in the supply chain are likely.

All this over pay and conditions offered to a handful of staff on individual employment agreements, and the outsourcing of four jobs in 2010 (all of which were offered redeployment).

The Herald also mused on the benefits of a merger between Ports of Auckland and the Port of Tauranga. Undoubtedly there could be benefits in such an alliance, especially around the staging of "lumpy" capital investment.

However, commentators are mistaken in thinking that a merger, or the loss of a major shipping service to Tauranga, would free up port land on the Auckland waterfront for other uses.

The magnitude of the freight challenge facing the upper North Island over the next 20-30 years is such that, under any conceivable scenario, Auckland will need its port and it will need its port to expand to the fullest extent currently envisaged to meet demand.


It is also important for Aucklanders to understand that, contrary to the Herald's assertion, the respective values of the two companies are such that Tauranga would currently be a significantly more powerful partner in any merger than Auckland.

Tauranga's high value is underpinned by extensive property holdings, a strong hold on hinterland markets for logs and kiwifruit, low debt and world class productivity.

Auckland is still New Zealand's largest port by value of trade handled, but our property holdings have in the main been divested, and our core container business is subject to strong competition from Tauranga.

Our annual profit is around half Tauranga's and productivity lower by about 20 per cent.

A merger may or may not happen, and in any case there would be significant competition hurdles to be addressed. In the meantime, our challenge is to improve the business so that we are recovering our cost of capital, providing adequate dividends to Auckland region and increasing the value of the company.

This will require a single-minded focus on resolving, once and for all, the labour issues that have dogged the port for decades. As well as regular disruptions from industrial action, a wide range of inflexible work practices are a drag on efficiency.

Labour utilisation here is about 65 per cent compared to more than 80 per cent at Port of Tauranga, meaning that for every 40 hours a stevedore is paid, they can work as little as 26 (and let's remember that average remuneration for a fulltime stevedore is $91,000).

Inflexible rosters, skilled tasks allocated based on frequency rather than performance, overtime rorts based on "job and finish" and restrictions on working weekends are holding us back.

Our preference has been to work with the union to achieve a settled collective agreement that will deliver the certainty and flexibility our customers need, while still respecting our employees' preferences about when they work, and providing fair terms and conditions.

I urge the union to act responsibly, withdraw their strike action, and work with us to address the very significant issues facing the company in the wake of the loss of the Southern Star service. If we are unable to reach agreement with the union, we will need to explore all our options, including the possibility of contracting out labour to other companies.

We're out of time and change is critical to the port's future. Without making fundamental changes now, the port, its employees, the union, Aucklanders and New Zealand will be worse off.

Tony Gibson is chief executive of Ports of Auckland.