Port of Auckland has announced significant price rises and new charges as it pursues a financial and operational turnaround. Photo / Michael Craig
Port of Auckland has announced significant price rises and new charges as it pursues a financial and operational turnaround. Photo / Michael Craig
Auckland Mayor Wayne Brown says he’s okay with the city’s port raising prices for its users in tight economic times if it means the port isn’t leaning on ratepayers to lift its act.
The Auckland Council-owned port has announced significant price rises and new charges as it pursues a financialand operational turnaround from historic poor performance.
“The mayor agrees with user price increases over putting the onus on Auckland ratepayers,” Brown said in statement responding to questions from Herald.
“Struggling Aucklanders have been subsidising importers for too long. Getting a return equivalent to their cost of capital is the least they could aim for and shows that right now, the port is still underperforming.
“However, the mayor doesn’t agree with increasing costs for rail, as incentives are needed here to take big trucks off the road during peak hours,” the statement said.
Included in the slew of price rises for container access and other port use categories from January 1 is a new rail handling charge of $20 per container.
Also from January 1, there will be a charge increase of 7 per cent across the board.
The port is also bringing in a new “authority to work” access permit for all businesses that enter its gates. Effective from January 1, this new charge aims to improve safety at the port, and carries a set-up fee of $750 per application.
More than 900 businesses currently use the port. A major gateway for New Zealand’s imports, its management recently told the council it aspired to be the country’s “premium imports port”.
Chief executive Roger Gray, employed last year to jump-start the under-performing imports gateway, told the Herald the increases were to recover inflation costs on existing charges, but also “to have those people who use the port to make money contribute to the port’s profitability”.
The port group, which has around $1.6 billion of assets, said it ultimately needed to generate an annual return of $80 million to $100m net profit after tax to replace assets.
Port of Auckland CEO Roger Gray. Photo / Dean Purcell
User reaction to the new and increased prices is mixed.
CBAFF, the voice of the country’s freight forwarders, those who manage the movement of customers’ imports and exports, was mindful the increases would impact importers, said chief executive Sherelle Kennelly. But from CBAFF’s talks with the port, it was evident “pricing adjustments” were considered critical to the port achieving a fair return on the asset and to the council, she said.
But container shipping giant Maersk is grumpy.
“We continue to see cost increases being implemented across the port sector despite no notable service improvement [port productivity] contributing to an overall increased cost base to service New Zealand,” Oceania region head My Therese Blank told the Herald.
She said any price increases directly to Maersk would be passed on to importers and exporters. (Freight forwarders can also be expected to pass on the rises.)
Blank said ship waiting time at Auckland had “significantly” reduced since the pandemic, but Maersk still grappled with delays, which rippled to other ports.
Maersk Oceania region head of market My Therese Blank.
CBAFF’s Kennelly said the port did not expect this level of price increases to be maintained. The increases would start to plateau in the next few years, CBAFF had been advised.
Also, the port intended to publish its long-term price changes plan spanning the next five years so customers could plan with certainty, Kennelly said. She noted the port had last year introduced new charges to help change user booking demand behaviour in favour of off-peak access.
The additional charges had resulted in a shift of around 5 per cent to off-peak demand, Kennelly said. The industry needed to support the move to off-peak periods when conditions allowed.
“We also believe if the port is investing wisely and promoting efficiency through continuous improvements, the return on investment will be received.”
Maersk’s Blank said while the shipping line welcomed some of the port’s new initiatives, it continued to experience disruption in the supply chain, with delays and restrictions on the number of container moves per Auckland call.
To deliver on its ambition to be New Zealand’s “premium” import port, Auckland had to recognise productivity improvement and operational stability were the two key requirements, Blank said.
“We require our vessels to be able to berth and depart on time, as per [the] contracted berthing window. Improved productivity would allow us to reduce time at port, increasing schedule buffer for external delays and/or improved lead time for New Zealand importers and exporters.
“To position Port of Auckland as the premium import port, we would also suggest a review of efficiency and connectivity between the terminal and rail.
“In Australia, we are able to discharge containers directly onto the rail, reducing handling costs and improving efficiency, as well as supply chain lead time,” Blank said.
Andrea Fox joined the Herald as a senior business journalist in 2018 and specialises in writing about the dairy industry, agribusiness, exporting and the logistics sector and supply chains.
