Transport costs highlighted in report

Northport is best suited to continue handling bulk freight only, according to the Upper North Island Strategic Alliance. Photo / File

Issues around conflicting demands for Auckland's waterfront and comments made in the media by Northland MP Winston Peters in regards to the role Northport should play in New Zealand's marine transport network have once again put the spotlight on how sea freight should arrive or leave our shores.

A 2013 report commissioned by the Upper North Island Strategic Alliance - UNISA - entitled How can we meet the increasing demand for ports in the Upper North Island? examined future freight demand and infrastructure demand for the ports of the upper North Island over the next 30 years.

It provides an interesting contextual framework for future discussions as to what opportunities exist for regional ports and also what challenges may first need to be overcome.

Possibly one of the more significant issues arising from the report - at least from a Northland perspective - is the large cost of domestic freight relative to sea freight costs. Often much of the supply chain costs incurred by businesses are incurred domestically rather than sea freight.

The report highlighted that the transport costs from Whangarei to Auckland, and to other parts of the upper North Island, could well be a barrier to developing Northport as a container terminal, unless there was significant investment in other parts of the land transport supply chain.

Rail and inland ports are considered as two integral elements of this supply chain as they allow for consolidation of freight volumes and result in reduction in domestic freight costs. They also act as an attractant for manufacturing enterprises.

The report stated that in the immediate future the ports of the upper North Island only need incremental change in capacity to meet growth in demand and that Northport was best suited to continue handling bulk freight only.

This does not mean the discussion should not be had as to what is best for the future marine transport network of New Zealand Inc - rather than individual regions - as the 30-year time projection that the report covers is not long when planning for future infrastructure needs.

We do need to recognise the difficulties of the governance and ownership structures that exist between the ports of the upper North Island and the geographic competitive advantages that exist in the Bay of Plenty.

It is also my understanding that a large percentage of containers that are landed at Auckland are transhipped and if this is the case they do not leave the terminal by land which would lessen the argument of increased land transport costs being incurred by improving Northport's container capacity.

- Tony Collins is chief executive of New Zealand Chambers of Commerce Northland.