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Port warned not to recoup loss through price hikes

Port warned not to recoup loss through higher prices

Lyttelton Port Company has been warned not to increase prices for its remaining customers to make up for lost revenue after it failed today to win the business of P&O Nedlloyd/ANZ Alliance for new Europe and East Coast North America (ECNA) services.

Paul Nicholas of the Captive Port Customers Group, warned that Lyttelton was being placed on special watch to ensure it did not try to keep up its profits by increasing prices and other costs for its captive customers (customers who have little choice but to use a particular port).

“Bloated by its excessive charging regime over the years, the Lyttelton Port Company may try to wring even more from those customers who have no choice in the port they use.

“The CPC Group also warns all other New Zealand ports that they cannot react to competition in some parts of their business by extorting even more from those customers who have no choice in the port they use.

“When competition bites, ports might think they can turn to the monopoly parts of their business to retain profits.

“So the CPC Group wants the Government to initiate a Commerce Commission pricing inquiry into ports, and to introduce light regulation that would expose pricing practices, and set up a method for arbitrating disputes,” Mr Nicholas said.

He said the special watch condition would mean that the CPC Group would be alerted to absolutely any fiscally related moves by the company, such as changes to port operations, or reviews of prices or conditions.

Mr Nicholas said the latest announcement raised a question over whether Lyttelton Port Company had invested the excessive profits it had generated over the past decade into making the port attractive to new business.

“Had the port company focused on investing in its infrastructure, listened to its customers and adopted a fair business-like approach to its dealings with its customers, its current problems may not have arisen.

“It is ironic that the Christchurch City Council used cashflow from its shareholding in the port to subsidise rates, rather than reinvest it in the business. It may now be regretting some loss to its ‘golden egg’,” Mr Nicholas said.

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