Auckland Port’s Shock $20m Blow

 

Ports of Auckland, in the middle of an industrial dispute, has been shocked to be told today it’s lost a major shipping line service to Tauranga.

Maersk Line announced today it’s permanently shifting its Southern Star container shipping service from Auckland to Tauranga -which will be good for rail.
The Auckland port company will lose nearly $20m in revenue annually as well as 52 ship calls and 82,500 containers.

Maersk containers on Auckland's port

Port of Tauranga Chief Executive, Mark Cairns, said they’ve been working for some time to attract a new import ship call to Tauranga to better balance our MetroPort rail shuttle service to and from Auckland.

The shock news caused Auckland’s port company to postpone today’s mediation with the Maritime Union of New Zealand over its dispute.

 

Auckland Ports CEO Tony Gibson said the Southern Star was one of Auckland’s largest shipping services.

“Maersk have explained to us that the possibility of further industrial unrest has been central to their decision to shift the service to Tauranga. We had already warned the union that their strike action, during one of the busiest times in the shipping schedule, could cost Ports of Auckland a major customer and threaten jobs.”

“However, despite these warnings, a very fair offer on the table and a further offer of a paid stop work meeting, the union proceeded with its strike over last weekend, has already given notice of another strike this Friday, and is continuing to signal the possibility of further strikes, saying publicly it will do ‘whatever it takes.’”

The service loss is effective from this week’s vessel, the Euro Max voyage 126N, which will now call Tauranga on Saturday.

Maersk Line is the world’s largest container shipping line, operating in conjunction with Malaysia International Shipping Corporation Berhad . Its new port rotationwill be : Tanjung Pelapas (Malaysia), Singapore, Tauranga, Lyttelton, Port Chalmers, Tanjung Pelapas.

Port of Tauranga says it’s starting “a significant capital expenditure programme over the next few years to ensure that the Port continues to provide customers with world class levels of productivity.”

The Employers and Manufacturers Association says Auckland importers and exporters can ill afford the extra time and cost of freighting goods to and from Tauranga or via other alternatives.

Kim Campbell, EMA’s chief executive says shifting more containers to and from Tauranga “won’t help our carbon footprint with unnecessary rail freight and more trucks on the road. Longer lead times, and increased costs are not what we need. All businesses need to adopt more flexible work practices to retain their competitiveness, and the law must ensure managers are able to manage a business.

“Any suggestion that a union owns jobs in a workplace is completely outdated.”The longer term implications are that New Zealand’s reputation as a supplier of quality goods, and our credibility as an exporter are being put at risk. “It’s one thing to disrupt the supply of Christmas presents with all the pain that causes our retailers, and another entirely to cause permanent damage to a major part of New Zealand’s supply chain.

“We certainly hope this is not the beginning of an exodus of work from the ports of Auckland.”

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43 Comments

 
  1. Chris says:

    Surely the risk of strike action is present at every port in New Zealand .. is this (strike action) just an excuse for carrying out a decision already in the works?

  2. ingolfson says:

    Nicely timed, union crushers. Of course we will never know whether the strike had ANYTHING to do with the decision (or are Taurangan dockworkers forbidden to strike?) but they can use this cudgel for a long time now.

    The argument that the strike was the decisive element seems pretty ridiculous to me. How much time was lost at POAL during the last 5-10 years due to strikes? I’d be surprised if it was more than, say 1%. Our unions are already totally weak, which is one of the reasons why our Prime Minister can try to position us as a “high quality, cheap wage” country, while in fact, our people move to Australia.

    Rant over.

  3. Patrick R says:

    Great, no need then to further subsidise truck companies servicing the port. In particular the absurd plans to drop $1 billion between the port and Grafton.

    In fact how about we pressure the port company to shift more and more of its land operations to its inland port by rail, thereby saving millions in road damage, upgrades, and death and injury. And other externalities.

    From the POAL website:
    ‘A rail exchange connecting the Wiri Freight Hub with the Waitemata seaport was completed in early 2010, creating significant supply chain efficiencies.

    For example, cargo owners will be able to drop off and pick up their cargo at Wiri instead of trucking it through central Auckland. Once fully operational, the initiative will save an estimated 100,000 truck movements per annum, creating significant community and environmental benefits.’

  4. Owen Thompson says:

    The decision to move had already been made behind closed doors. The strike simply provided an opportunity to kick the striking unionists.

  5. ejtma says:

    According to reports the port offered No redundancies, no contracting out, 2.5% pay rise and $200 signing bonus. The union wanted the same conditions as those on individual contracts, at the end of the day if non union members can negotiate better, fair play to them.

    The average wage of a stevedore is $91,480, 53% earned over $80,000 so there are some very well paid stevedores. They also get Southern Cross for them and their family, 15 days sick leave per annum, 5 weeks annual leave.

    Work practices embedded in the union culture means that the average stevedore only works 5.3 hours for each 8 hours paid.

    These idiots have gone on strike for something that they didn’t need. How many people on here would like a 2.5% pay rise this year, the guarantee of no redundancies, and an average pay of $91,000 per annum, 5 weeks leave, 15 days sick pay and southern cross membership. All they have done is cost themselves their jobs.

    I have little sympathy for them.

  6. Wasp says:

    Definitely smell a rat on that one.

  7. Owen Thompson says:

    Ejtma, where did you get your “facts” from?

  8. Jon R says:

    And this folks, is how business works.

    I would agree, the strike had little to nothing to do with this decision. I think berthage fees / turnaround time had more to do with it.

    Kiwirail should do well out of this new arrangement.

  9. Ejtma says:

    They have been reported in various places on the Internet, a google search shows the ports of Auckland own site, and various blogs reporting them as well. Take it for what it is worth, however, my own enquiries support the numbers.

  10. The Trickster says:

    Definitely smell a rat on this one.

    Ejtma – for what they do I can understand the money – I’ve heard it can be pretty damn dangerous work. I knew a woman who had previously managed one of the wharfs who had some rather gruesome stories of people getting crushed by those moving container cranes.

  11. rtc says:

    Clearly this announcement was timed to kick the striking staff in the gut but to be honest I’m more than happy for pressure to be taken off PoAL such that the ridiculous calls for massive motorways to the ports are quietened. Furthermore, perhaps this will slow their plans to fill in Auckland Harbour to expand their container storage areas.

  12. Jeff H says:

    This is not the first time a shipping schedule has been changed. One less ship per week is hardly likely to put POAL’s commercial viability under threat.

    It might not be a bad thing if the port company’s China-like grandiose, environment degradating expansion plans have some brakes put on them.

    Maersk’s decision is certainly a win for Regional development and resilient decentralisation that will benefit New Zealand.

  13. Patrick R says:

    Jeff H- exactly, this from yesterday’s herald:

    “Maersk’s Gulik said the service changes would not have a material impact on total transit times. Most of the export cargoes shipped out of Auckland originate from the Waikato-Bay of Plenty regions, where exporters’ transport and logistics operations “tend to be port-neutral,” he said.”

    Far better to ship bulk product from the regions to Tauranga than through Auckland…. And better for Auckland, now can POAL stop lobbying for more motorways please? There’s an old habit that’s proving hard to give up.

  14. Donald Neal says:

    “Regional development and resilient decentralisation” isn’t quite the story here, given the proportion of New Zealand’s exports which already travels between Hamilton’s Crawford Street terminal and the Port of Tauranga.

    But moving very large amounts of freight over a small number of routes is something rail is very good at. I look forward to seeing the plan to keep the extra container traffic between to and from Tauranga off roads. Preferably before another billion of public money goes on a new road over the Kaimais.

  15. Owen Thompson says:

    I doubt one less ship a week will spell the end of Ports of Auckland.

  16. Matt L says:

    Donald – It won’t be a $1b road over the Kaimai’s, the RTF has been pushing for a $2b tunnel under them.

  17. greenwelly says:

    @Jeff H
    One less ship per week is hardly likely to put POAL’s commercial viability under threat.

    While I agree it is unlikely to cause POAL to go under, It is not just the loss of one ship, it is a fairly big ship.

    According to the media it is a loss of 80k TEU a year, that is nearly 10% of Aucklands 800K total TEU.
    That is a fairly big loss…

  18. Anthony says:

    I bet Tauranga and Kiwirail will be very pleased by this news. It will definitely put more freight onto the trains and increasing the usage of the line.

  19. Ben says:

    Time to be devils advocate

    Nice for the Port of Tauranga and KR. How about Port of Tauranga pay 50% of the total cost of the third rail line between Papakura and its Southdown Base just north west of Westfield as well as 25 new crossovers between Pukekohe and Westfield so passenger trains can run around them and do “Wrong Line Running” more effectively then now.

    While I applaud PoT’s initiative to get the increase onto its Metro Port Trains I do not look forward to the increased phone calls from Train Control Wellington saying an MP ((Metro Port Freight Train) being pulled by those cursed new DL class locomotives) service crapped out on the main line – resulting in “here come delays and cancellations to passenger metro services”…

    Going to increase the load in the Southern Line, then give us the redundancy capacity on that piece of network. And this problem will only get worse when we move to 10minute metro frequencies and the EMUs.

    So while an understandable win on one side, there is a inconvenience on the other if we (Auckland) are not careful.

    BTW, we did have an MP service stall at Manurewa this morning just after the morning peak. Although that was to a gas leak in the cargo, it still caused enough headaches this morning to commuters…

  20. Owen Thompson says:

    Ben, thanks for the news update re the gas leak. I was told it was at the Manurewa shops.

  21. Roger says:

    Taking a wider view, this could be good for Aucklanders’ future access to the waterfront.

    Presumably Sydney had a downtown port in the past before operations moved to Botany Bay by the airport. Auckland should have a long term plan to transfer wharf operations elsewhere, even if it is Tauranga.

    I would like to see our waterfront hosting more people and less industry.

  22. Ben says:

    @Owen

    Ok, two different accounts there…

    <_< :P

    Ah well…

  23. Ben says:

    @Roger

    Last I heard there was a stirring (which is simmering away but will “boil up”) away amongst a few people myself included on the merits and consequences of either the following

    1) Status Quo at Port of Auckland

    2) Relocate entire port to a new site (I had an idea where)

    3) Close port entirely and have operations moved to Port of Tauranga and/or Marsden Point.

  24. Mark says:

    the other problem here is that POA is an import port and POT the export port. Eventually that’s too costly. While timber is different POT also export a lot of conatiners. The growth of processesed milk powder etc, but also Tauranga/Hamilton manufactured products will only increase.

    All of that hits POA long term viability – along with transport issues and the flow on costs to the wider area.

    Also in my view teh Auckland Plan has failed to grasp manufacturing properly. No real land use planning, and affordability is a key issue. It’s to focused on residential growth – often at the cost of small businesses – many of whom do actually export.

    Longer term we may see more manufacturing moving to Tauranga – cheaper business land, easy transport, 1/4 section lifestyle/ good schooling etc. Also Hamilton is another growing manufacturing/engineering base.

    There will be some interesting trends to watch over teh next few years – expecially with the new plan and affordability issues.

  25. Ben says:

    @Mark, right on the money (err bad pun) right there in your comment.

    I was thinking yesterday this:

    This Port business has me thinking. IF Auckland was to relocate the port, the area in black could be an option. However it would be the most ambitious project in NZ I have ever seen building a new port with infrastructure (road and rail on scratch). Flip side it could be one heck of an economy changer too if industry, commerce and residential opened up along the Papakura-Clevedon Road Corridor between Papakura and this possible port site. On the other-side, the biggest White Elephant since (can’t think of one that large).

    http://i124.photobucket.com/albums/p5/Palpatine001/PortRelocationPicOverview.png

  26. Matt says:

    One question I have, what’re the limitations associated with expanding Onehunga? I’m assuming there’d need to be some dredging to make the channel and port deeper, and there’s obviously the impact of it being a west coast port so less useful for coastal shipping (but not much of a problem for international shipping, since it’s just a course deviation), but is there something that makes it completely impossible to turn it into Auckland’s major port? It’s pretty much right next to the Southdown inland port, it’s got ready access to quite a bit of nearly-vacant land, the rail corridor to the south would be immediately adjacent which would connect it through to the Wiri hub…

  27. Patrick R says:

    Ben, no idea why we’ed want to do that; Tauranga and Marsden Point are clearly better alternatives.

    I don’t expect to see Auckland cease but there certainly seems little point in schlepping product from the Waikato, Naki, or BOP through AK instead of sending it to Tauranga. And using the rail network to bring to reverse cargo up to Southdown. Better to distribute form south AK than the waterfront and there is still capacity in the rail network I believe. And if this brings forward the need for a third line through South AK, all the better. Or even electrification of the North Island network…! All of this would be better than ruining a new bit of the coast and all its associated works, it’s not like the water is deep there either.

  28. Owen Thompson says:

    Matt, the trouble with Onehunga is the bar at the entrance to Manukau Harbour. Remember the Orpheus.

    http://en.wikipedia.org/wiki/HMS_Orpheus_(1860)

  29. Matt says:

    Owen, ah, yes, a bar would certainly do it. Though they can be dredged out, I suspect the work involved in keeping it gone would be cost-prohibitive.

    It’s a real shame that this happened under National’s watch, because it’ll be seen as justification for building a motorway under the Kaimais as requested by the RTF, instead of a justification for upgrading the rail link as a major priority.

  30. Ben says:

    Oh well, will have to wait and see what happens in this entire saga.

  31. westbound says:

    Very interesting reading. Many differing observations: Onehunga wharf, Metroport rail, Hamilton inland depot, using Marsden Point. Exp Imp points. My observations are, Marsedn Point is a no go as you will still have to truck/rail cargo through Auckland. Onehunga is a no go due to the draft required by container ships and cost to dredge the channels and bar is to high, hence Manukau harbour was never established as NZ’s main port 100yrs ago. Rail gauge in NZ is a joke, double stacked high container trains are the norm in Europe, why not here? A depot in the Waikato is the first good argument, all they need is kiwiwail and metroport to be able to service it. Here’s another thought, how about turning Port Waikato into a wharf for containers, build a break water and less area to dredge, direct entrance into NZ on the Tasman Sea for cargo ex Europe, Asia and Australia, no need to go round the top of NZ and past all our pristine northland beaches for cargo from Asia and Europe, keep Tauranga for export/imports out of the Americas and Pacific Islands?

    Maybe (my tribe) Tainui can look into that one instead of owning a hotel/casino on the river?

  32. JC says:

    Well these things happen when you strike.
    If you are that dumb and you cannot stand up for yourself and have to hide behind a union, you deserve everything you get. Grow some balls and go negotiate your own contract like most people.
    Look after yourself and your own family before worrying about the other guy.

  33. ejtma2003 says:

    This has not got worse with the port now losing its biggest customer

    http://newstalkzb.co.nz/auckland/news/nbnat/994972862-Ports-of-Auckland-loses-largest-exporter

    At least the media are now getting behind the port company and reporting this rediculous industrial action for what it is, with some suggesting the port take the Qantas solution and bust the union once and for all.

    http://www.stuff.co.nz/dominion-post/comment/editorials/6211983/Editorial-Courage-needed-to-change-our-ports

  34. Owen Thompson says:

    JC, how many people really are in a position to negotiate directly with the boss? My “negotiations” consisted of being given a contract, sign it or don’t.

    My conditions are thanks to earlier union members who fought for them eg minimum wage, sick leave, annual leave, et al. Right-wing employers did not just hand these benefits over, without union activism.

  35. Geoff says:

    I’m not sure if it’s good news for KiwiRail, as the change just means hauling the product from Hamilton to Tauranga instead of Hamilton to Auckland, so not really a gain or a loss in tonne/kilometres.

    It will however put added pressure on the single track between Hamilton and Tauranga, while making less use of the already under-capacity double track between Hamilton and Auckland. So it might actually be a negative for KiwiRail.

  36. Matt says:

    Geoff, it does give weight to any business case to upgrade the HLZ-TGA link, though. Even Joyce supports that particular segment being improved.

    JC, what Owen said. Your employment rights were won by unions, not by individuals negotiating. You’re entitled to sick leave, holidays, reasonable hours, and all the rest, because of unions. Most people don’t have the negotiating leverage to get a really good deal, especially when they’re working in jobs that don’t require a huge deal of training. The only thing that protects them is a union, especially in the face of NZ’s traditionally shitty employers, who begrudge their employees every last cent of pay and perks. We have precious few enlightened employers here, and for many of the remainder the only thing keeping them honest is the threat of union action.

  37. Jon R says:

    “They also get Southern Cross for them and their family, 15 days sick leave per annum, 5 weeks annual leave.”

    So what, I live in a first world country called Switzerland.

    Medical Insurance by company – Standard
    5 weeks holidays – Standard (many offer 6)
    22 days sick leave, if needed – Standard

    So, some right winger wants conditions to stay in the dark ages for NZ? When I left NZ I forgot to turn the light out!

  38. Ian says:

    Well put JC. Things were so much better when workers had to wring their caps as they stood before the bosses. It must be great living in that libertarian paradise that is your mind.

  39. don says:

    So far in this dispute we have heard much about how much it has cost POA in lost customers. We have yet been told what the actual cost to POA the union demands are and how that compares to the value of lost traffic. Without this comparison I suspect that this dispute is driven by a “union busting” ideology on behalf of POA . I have seen this attitude in another industry and the result is that the customers have suffered along with the workforce and the greatest beneficiary being the company owners.

  40. Matt says:

    I want to hear from someone other than POAL what the average hours worked are and what the average income is. We’ve heard 26 hours a week and the thick end of six-figures, but the union says to get the latter someone must be working a lot of overtime and public holidays; which I’m quite willing to believe occurs, but also doesn’t mesh with a 26-hour working week.

    A big problem with the coverage of this whole thing is that both Fairfax and APN are strongly anti-union, and thus are not in the least inclined to give the union’s side a fair hearing.

    I do accept that Tauranga has lower labour costs, but they also don’t have a single, dominant union. POAL is not so lucky. It is not, however, the fault of the ownership structure that this is the case.

  41. The Trickster says:

    Matt McCarten has finally come out with the Union side of the story. Interesting read and it doesn’t surprise me – whole thing smells pretty bad!

    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10777330

  42. ejtma2003 says:

    And for all those who doubted the numbers I posted here on 6 December they have today been posted on a union sympathetic blog. As for Matt McCarten, obviously being a bit economical with the truth being fed to him by his union mates.

    http://thestandard.org.nz/ports-paid-propagandist-says-cut-workers-pay/#comment-423977

    Goto comment 18.

  43. JC says:

    Guys , I am really happy for you guys to jump up and down on me , however how many of the workers have gone to management and said, “hey I dont want to be apart of the strike, I want to work however I would like to negoaite my own employment contract, this is what I would like to have included………

    If they haven’t done that and gone out of their way to protect their own income, then really they are not helpping themsleves are they.

    Everyone at every job has the right to ask the question about their own employment.

    There is nothing stopping them asking the question or putting a case discussion through to their management.

 

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