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Regional ports grapple with ship size, connectivity

Regional ports grapple with ship size, connectivity

By Pam Graham

Aug. 23 (BusinessDesk) – Regional ports are struggling to cope with a rapid rise in the average size of container ships calling in New Zealand.

Larger ports are handling rare one-off calls by 5,000 TEU ships. Vessels that can carry 6,000 TEUs are already calling at Australian ports though New Zealand ports won’t be tested by ships of that size until cargo is consolidated, says Chris Greenough, chief executive of Kotahi, a freight management partnership initially formed by Fonterra and Silver Fern Farms.

“The increasing average vessel size will become problematic for regional ports,” he told BusinessDesk. “As a country we need to find a solution to connect regions to where the bigger ships will call,” he said.

The average size of container vessels calling in New Zealand has risen from just over 2,000 TEU to pretty close to 3,000 TEU in the past two years, he said.

It may rise in 3,500 TEU in the next 12 months and 4,000 TEU in the next two years.

An increase in average size without an increase in the largest size favours larger ports.

“They can handle it without any investment and they will get a consolidation of cargo,” he said.

But regional ports such as Nelson will struggle to service vessels 3,000 TEU or above.

Big ships are cheaper to run per container, but only if you fill them. If you don’t fill them they get expensive very fast, said Greenough.

“No carrier will deploy a big ship (6,000 TEU or more) to New Zealand without reasonable certainty it will be full most of the time,” he said.

“We have to show we are willing to consolidate cargo.”

Freight needs to move better around the country to ports by road, rail and coastal shipping and switch between the modes better.

“Under 150 kilometres road is quite competitive, over 150km and within an island rail is quite competitive, and between islands coastal beats them hands down.”

But coastal shipping lacks scale and most freight is carried by international carriers who will only pickup their own boxes.

Kotahi is open to any models and Greenough isn’t naming where the hub ports will be.

There’s been much talk of over investment by ports to prepare for bigger ships but Greenough can’t see it. “We are unlikely to see over investment.

“We are more likely to see under investment unless we can get collaboration from freight owners.”

The real issue is getting the boxes to and from ports in volumes.

Auckland has pretty good infrastructure inside the port gate “but how do you get possibly 8000 containers into and out of Auckland port inside 48 hours”.

There will probably be one port initially that can handle 6000 TEU ships and long-term there may be four.

The first port is likely to be in the North Island and the jury is out on whether it will be Tauranga or Auckland.

“They both have strengths and it will come down to a number of factors, including ability to invest,” he said.

(BusinessDesk)

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