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Industry insightNew Zealand ports and freight yearbook2017
New Zealand ports and freight yearbook 2017 | Contents
Introduction 01
Glossary 02
Global outlook 04
Global trade 07
Global shipping 10
Global ports 16
Operational challenges and opportunities 17
Industry focus 23
New Zealand Freight Task 28
Port resilience 32
Port performance 38
Port summaries 50
Deloitte financial advisory services 63
Deloitte Infrastructure team 64
Contents
New Zealand ports and freight yearbook 2017 | Introduction
01
Introduction
The Deloitte ports & freight yearbook is a concise snapshot of selected macroeconomic and domestic drivers of New Zealand port and freight activity. It is intended that this publication will serve as a reference point for stakeholders and be updated on an annual basis. As a recent initiative, we welcome your feedback in relation to the content and presentation format, and look forward to future discussion and engagement.
Globalisation has led to an explosion of world trade over the last few decades. As people continue to enter middle income status, consumption patterns increasingly drive demand for traded goods. The political landscape, however, is changing. Global public concern appears to be rising, with the emergence of conservative views driving an increasingly protectionist agenda. New Zealand, as a small open economy reliant on trade, is particularly vulnerable to any major policy shifts towards protectionism.
The shipping industry plays a pivotal enabling role within the global economy and for New Zealand. However, with increases in ship capacity exceeding trade growth, and combined with improved vessel productivity, material excess ship capacity has arisen, sharply driving down shipping rates. This has put severe financial strain on shipping lines and resulted in a significant failure in the form of Hanjin.
According to key shipping observers, 2017 is expected to be characterised by themes of industry consolidation, vessel scrapping, excess capacity, bunker prices and shipping rates.
The global container port and terminal industry is also facing a number of challenges reflecting larger shipping alliance counterparties and vessels. Growth in scale of container vessels is requiring greater investment in capacity and new technology. Larger vessels are also segmenting container terminals based on an ability to cater for larger vessels. Ports in general are facing a range of operating environment driven challenges and opportunities, which are further explored throughout this publication. These include:
• Greenification – the continuous push for greener and more sustainable solutions forcing ports and port companies to consider new approaches.
• Smart ports – data-driven technologies, automation, robotics, analytics and additive manufacturing will redefine the future of ports.
• Integration of supply chains – further integration of traffic flows on both the seaside and the landside requires strategic co-ordination.
• Organisational efficiency – the internal organisation of port authorities needs to be flexible to adapt to the increasingly dynamic environment.
• Safety & security – The digitalisation of transport and logistics combined with the strategic importance of ports emphasises the importance of cyber security.
• Port / city duality – with urbanisation and growing cities, new strategies are required to optimise the port / city ecosystem.
In the aftermath of recent Canterbury and Kaikoura earthquakes, we also consider the concept of port resilience and the balance infrastructure providers such as ports must strike between risk, probability of shocks, the cost associated with these shocks and utility behind decisions.
New Zealand ports and freight yearbook 2017 | Glossary
02
GlossaryCAGR Compound Annual Growth Rate
CNCo The China Navigation Co. Pte Ltd.
EBIT Earnings Before Income and Tax
EIA Energy Information Administration
EU European Union
FIGS Freight Information Gathering System
FTA Free trade agreement
GDP Gross Domestic Product
GFC Global Financial Crisis
IMF International Monetary Fund
ISPS International Ship & Port Security
ITS International Trade Statistics
LNG Liquefied natural gas
LPG Liquefied petroleum gas
MoT Ministry of Transport
NATO The North Atlantic Treaty Organization
NFDS National Freight Demands Study
NIP National Infrastructure Plan
NPAT Net Profit after Tax
NZIER NZ Institute of Economic Research Inc
NZTA NZ Transport Agency
OCR Official Cash Rate
OECD Organisation for Economic Co-operation and Development
RBNZ Reserve Bank of New Zealand
RMA Resource Management Act
ROA Return on Asset
ROE Return on Equity
SCFI Shanghai Containerised Freight Index
SOLAs The International Convention for the Safety of Life at Sea
SSE Shanghai Shipping exchange
STEO Short Term Energy Outlook
TEU Twenty-Foot Equivalent Unit
TPP Trans Pacific Partnership
VGM Verified Gross Mass
VLCC Very Large Crude Carrier
WEO World Economic Outlook
WTI West Texas Intermediate
WTO World Trade Organisation
New Zealand ports and freight yearbook 2017 | Global perspectives
03
Global perspectives
New Zealand ports and freight yearbook 2017 | Global perspectives
04
Global outlook
The era since the Global Financial Crisis (GFC) has been characterised as one of conservative recovery, with central bankers intervening to stimulate and redirect economic activity.
After a lacklustre performance in 2016, the outlook for the global economy is for a modest pickup – according to the International Monetary Fund’s (IMF) January 2017 World Economic Outlook (WEO).
Global economic growth (measured as GDP) is forecast to rise from 3.2% in 2016 to 3.5% in 2017 and 3.6% in 2018 – close to the 3.5% average over the last 35 years. Post-war until 1980, the United States of America (US) and Europe drove global economic expansion. Since 1980 Asia took on that batten, with China averaging 9% growth and India 6.5%, while Australia and New Zealand have achieved 6.9% and 5.0% respectively.
The outlook for advanced economies has been improving, reflecting somewhat stronger activity and projected fiscal stimulus in the US, although growth is expected to remain weak. The emerging markets and developing economies are expected to continue to outperform the advanced economies, although their outlook has worsened due to tightening financial conditions, notably in India, Brazil, and Mexico. Expected policy stimulus has improved China’s outlook.
Since the November election in the US, we have observed a steepening US yield curve, a rise in equity prices, and an appreciation of the US dollar, with some firming of oil prices – indications of improving economic activity. Global interest rates are rising, particularly in the United Kingdom (UK) and US, up 1% since August 2016, partly reflecting the US Federal Reserve’s long-signalled tightening (normalising) bias, whereas the rise in European Union (EU) rates reflect elevated political and banking sector uncertainties.
IMF’s forecasts reflect their most likely scenario. Of note in the IMF WEO Report is the wide dispersion of possible outcomes, with the balance of risks being to the downside.
GeopoliticsThe global economy largely side-stepped the worst-case scenarios following the GFC, due to central banks assuming a supportive fiscal stance, and has since established reassuring if modest growth. The political landscape, however, is changing, with global
mood appearing beset by uncertainty. While comfortably remote from this turmoil, as an open trading nation, these events carry consequences for New Zealand.
Global public concern appears to be rising, with the emergence of conservative views driving an increasingly protectionist agenda. The build-up has been long, characterised by the enduring fight against terrorism, wider Mid-East tensions and austerity-exhaustion. Civil unrest in North Africa and the Eastern Mediterranean has given rise to economic and political refugees, with early EU sympathy and generosity being increasingly replaced with resistance and the closing of borders. More recently Russia has become polarised against the West with its support for Assad in Syria (since 2011), the annexation of Crimea (2014), and China is adopting a more muscular international stance, notably in the South China Sea.
These events have impacted “normal” political patterns, with a new nationalism emerging in many developed, democratic countries (notably within the EU and US) and rising stridency of, and popular support for, right-wing parties. Following a public referendum supporting Brexit, the UK is now struggling with the process of withdrawing from the EU. The belief in cross-border economic integration, which has driven global trade and politics since the 1950’s, is fraying – the geopolitical compass has moved.
GDP growth
18%
12%
6%
0%
-6%1980 20101985 20151990 20201995 2000 2005
World AsiaEurope ChinaUSA India NZ Aust
Asian financial crisis
Global financial crisis
IMF/NZIER forecasts
Source: World Bank
New Zealand ports and freight yearbook 2017 | Global perspectives
05
The Economist article – “League of Nationalists” (November 2016) showed a new and growing public scepticism regarding globalisation and immigration across many developed countries. Polling and elections suggest this shift is now diverting politics and policy. Notably, the US, which has for half a century championed open-market policies and played global referee, appears to be changing its stance, adopting more protectionist policies on immigration and trade.
The change in public attitudes appears strongest in wealthier countries, previously proponents and beneficiaries of globalisation, which post-GFC have endured tighter economic conditions (falling per capita GDP growth), often giving rise to some anti-immigration sentiment. Yet, while protectionism appears popular, economic theory and an IMF study (see next chapter, Global trade) suggests such policies may exacerbate the economic problems.
October–November 2016
Globalisation* is a force for:
goodbaddon’t know
On trade, my country should:
import things it needs from other countriesbe able to meet itsown needs
What effect do immigrants have on your country?
positiveneither positive nor negativenegative
% agreeing by age group:
“My country is the best in the world”
18–3435+
FranceUnited StatesBritainSaudi ArabiaAustraliaNorwayFinlandGermanySwedenHong KongDenmarkSaudi ArabiaSingaporeIndoneisaMalaysiaThailandIndiaPhilippinesVietnam
Source: YouGov / The Economist*The increasing movement of products, ideas, money, jobs, culture and people around the world
25 500 25 500 25 500 0 25 50
Attitudes towards globalisation (% responding)
New Zealand ports and freight yearbook 2017 | Global perspectives
06
60
70
80
100
40
50
90
0–10 10–20 20–40 40–80 80+
-5 0 5 10 15 20 25 30 35
Attitudes towards globalisation (against change in GDP per person)
Glo
balis
atio
n is
a fo
rce
for g
ood.
% a
gree
ing,
Oct
–Nov
201
6
GDP per person at purchasing-power parity, % change, 2011–2015
% foreign-born population:
GDP, 2015, $trn
2010
10.2
Norway
Finland
Sweden GermanyHong Kong
Saudi Arabia
United States
Britain
UAE
Malaysia
Philippines
Vietnam
Indonesia
India
SingaporeThailand
Denmark
France
Australia
While New Zealand seems comfortably remote from these unfolding geopolitical and economic events, we are not insulated from them. Any major policy shifts towards protectionism (of trade and migration) will restrict our trade opportunities and widen global imbalances. We have already observed rising borrowing costs, greater volatility in
currency and commodity prices, and the collapse of key global trade deals. New Zealand, as a small open economy reliant on trade, is particularly vulnerable to these swings.
Source: YouGov/ The Economist; World Bank
New Zealand ports and freight yearbook 2017 | Global perspectives
07
Global trade25 years not out
1992 2017 Multiple
1. World Seaborne Trade (m.tonnes)1
Iron Ore 345 1,478 4.3
Coal 357 1,128 3.2
Grain 224 486 2.2
Minor Bulk 798 1,886 2.4
Crude Oil 1,332 1,937 1.5
Oil Products 381 1,090 2.9
LNG 60 272 4.5
LPG 37 90 2.5
Containers 383 1,798 6.3
Others 783 1,173 1.5
Total Seaborne Trades 4,600 11,339 2.5
2. World Fleet (M Dwt), start year2
Tankers 265.5 554.6 2.1
Bulkcarriers 214.9 794.0 3.7
Combos 32.2 2.6 0.1
Gas Carriers 12.4 59.8 4.8
Containerships 30.7 245.6 8.0
MPP 17.7 29.7 1.7
Ro-Ros 6.7 7.7 1.1
PCC 4.1 12.2 3.0
Reefers 8.1 5.0 0.6
Total Global Fleet 621.0 1,861.9 3.0
25 years not out
1992 2017 +/- = %
3. Vessel Earnings ($/day), start year3
Clark Sea Index 11,700 11,092 -5.2%
VLCC 1 Year T/C Rate 34,000 31,750 -6.6%
Capesize 1 Year T/C Rate 22,000 9,350 -57.5%
4. Asset Values, start year
Newbuilding prices ($m)
VLCC 90.0 84.5 -6.1%
Capesize 56.0 42.0 -25.0%
5 year old price ($m)
VLCC 65.0 60.0 -7.7%
Capesize 42.0 24.0 -42.9%
Scrap price ($ildt)
5. Economic Indicators, start/full year4
Brent Crude ($ibbl) 18.2 54.8 202.1%
Iron One ($/tonne) 33.1 76.3 130.4%
Coal ($/tonne) 39.5 86.7 119.5%
380cst Rotterdam 69.0 312.5 352.9%
US LIBOR (6 mths) 4.2% 1.3%
USD/GBP Exchange Rate 1.83 1.24 -32.1%
Yen/USD Exchange Rate 128.30 115.54 -9.9%
Global Population (bn) 5.5 7.4 35.4%
World GDP Growth 2.3% 3.4%
World GDP ($tn) 25.1 79.5 216.6%
China GDP ($tn) 0.5 12.4 2393.9%
Notes: 1 2017 world seaborne trade basis latest projections. 2. Total global fleet includes vessel types not listed. 3. Vessel earnings as at the first week of the year. 4. Commodity prices basis January average for 1992 and the first week of the year from 2017. Commodity price data from various industry sources: coal spot price basis FOB Australian thermal coat, iron ore spot price CFR China. Interest rates and exchange rates basis start year. Population estimate basis UN population Division data. GDP data basis IMF historical data for 1992 and latest IMF projections for 2017.
IMF report on global trade A recent IMF report (Global Trade: What’s Behind the Slowdown? - October 2016) observes that trade growth has slowed since 2012. The GFC drove a sharp decline and equally sharp recovery in trade. However, the recovery to pre-GFC levels is not yet complete, given trade growth at 3% is just half the preceding three decades, and more notably, now tracks in line with (rather than double) global GDP growth.
This may well reflect a structural shift in trade patterns – as yet not fully understood. Slower recovery in developed (consuming) countries (EU, US) may be a factor, as might China’s shift from investment-led to consumption-led growth. Private investment remains widely subdued, especially by commodity exporters in response to persistently weak or volatile commodity prices, and given investment relies primarily on trade growth over consumption.
Another factor may be the recent retreat from trade liberalisation and a trend towards nationalism and protectionism. Also, possibly, the trend towards global value chains (with fragmented production processes and multiple border crossings) may also have slowed. Yet another explanation may be a maturing evolution towards non-tradables in response to growing wealth and aging populations. In conclusion, it may be some years before the new patterns of trade reach full expression and are understood.
Key findings from the IMF’s study include:
• The decline in real trade growth has been broad based, with few countries spared the pain. This has affected trade for both goods (especially in capital and intermediate goods) and services.
• The key constraints on trade growth are weaker economic activity, especially the slowdown in investment growth, accounting for up to three-fourths of the slowdown.
• In addition, the slowdown in trade liberalisation and rising protectionist measures are restricting international trade in goods, while the apparent decline in the growth of global value chains has contributed.
Source: IMF ‘Global Trade: What’s Behind the Slowdown?’
New Zealand ports and freight yearbook 2017 | Global perspectives
08
0
40
50
60
70
1980 1990 2000 2010 2015
7. Free Trade Agreements by Year of Signature (Number)
10
20
30
0
40
50
60
70
1980 1990 2000 2010 2015
Free trade agreements coverage
10
20
30
Average number of trading partners Percent of global GDP (RHS)
0
25
31
6
12
19
Trade liberalisation (‘globalisation”) has been a key feature of global affairs since WWII, with an increase in free trade deals since 1990. This has accompanied a period of strong economic growth. Since 1980, tariffs have fallen from 10% to 4% in advanced countries, and from 30% to 10% in emerging markets. While the number of new Free Trade Agreement’s (FTA’s) had been declining, the coverage has been getting larger.
Currently a record 25% of global GDP is covered by FTAs. Notably in 2016 some major FTAs were scuttled: Trans-Pacific Partnership (TPP) (12 Pacific rim countries), Comprehensive and Economic Trade Agreement (CETA) (Canada-EU) and Transatlantic Trade and Investment Partnership (TTIP) (EU-US).
Source: IMF report (Global Trade: What’s Behind the Slowdown? - October 2016)
New Zealand ports and freight yearbook 2017 | Global perspectives
09
100
80
60
40
20
90
70
50
30
10
Chin
a
Uni
ted
Stat
es
Japa
n
Sout
h Ko
rea
Indo
nesi
a
Ger
man
y
Thai
land
Taiw
an
Indi
a
Viet
nam
Braz
il
Mal
aysi
a
Saud
i Ara
bia
All O
ther
0
Exports Imports
Full container volumes (million TEU)
Top trade routes (million TEU)25
20
15
10
5
Asia
–N A
m
Asia
–N E
ur
Asia
–Med
Asia
–M E
ast
N E
ur–N
Am
Aus–
Far E
ast
Asia
–EC
S Am
N E
ur/M
ed–E
C S
Am
N A
m–E
C S
Am
0
West bound East bound North bound South bound
Trade trends Global trade volumes continue to grow, impacted only briefly following the GFC.China has dominated the container trade for over a decade, principally as an exporter, while the US at #2 is a net importer.
The importance of Asia (especially China) is exemplified in its participation in the top 4 container trade routes.
We have previously observed that trade, having grown at two times global GDP pre-GFC, has now fallen into line with GDP growth.
Looking ahead, we are seeing a reversal of policies which have underscored global economic expansion for the last half century. Economic theory suggests that protectionism may provoke and compound economic slowdown with associated impacts on trade patterns.
Source: IHS Global Insight, World Trade Service
New Zealand ports and freight yearbook 2017 | Global perspectives
10
Global shipping
The shipping industry plays a pivotal enabling role within the global economy. Shaped since the 1960’s by the two mega trends of globalisation and containerisation, both these trends now appear mature, moderating forward trade growth prospects. The shipping industry is constantly evolving, striving for increased efficiency, through innovation with new larger ships, specialised for each trade (especially containers), and adopting emerging technologies to boost efficiency and improve environmental outcomes.
Seaborne trade, which stood at an estimated 4.6 billion tonnes in 1992, is projected to reach 11.3 billion tonnes in 2017, an increase of 2.5 times. Container trade has increased by 6.3 times. Shipping capacity has expanded rapidly to meet this demand, from 621 million deadweight tonnes (dwt) in 1992 to 1.86 billion dwt today, an increase of three times. With growth in ship capacity exceeding trade growth, combined with improved vessel productivity, severe excess ship capacity has arisen, sharply driving down shipping rates.
2016 – A Year of Surprises2016 brought both surprises and challenges for the global shipping industry. On the challenge ledger, profitability remains elusive for shipping lines. Competition saw rates plummet, driving average operating margins below zero. Collectively, the shipping lines are expected to lose USD$10 billion, building on accumulated losses since the GFC.
Amongst the surprises was the bankruptcy of Hanjin. The surprise was less that a shipping line collapsed under the strain of poor returns, but more the fact that Hanjin, #7 ranked containership line, was not saved by its substantial South Korean owners, or its banks. The resultant shockwaves (including shippers having freight trapped in vessels for months during high season), however, may have sown the seeds of a sustainable solution. Shipping rates have since rebounded and shippers are more willing to engage in rate discussions.
Mergers and acquisitions were another key theme in 2016, both the number, and the size of the parties. The top ten shipping lines have now formed 3 dominant alliances.
Seaborne container trade 2010
Seaborne container trade 2030
Major container trade routes (thousand TEU)
Europe–Far East Europe–Latin AmericaEurope–Middle East & South AsiaFar East–Latin AmericaFar East–Middle East & South Asia
Intra–Far EastIntra–EuropeIntra–Latin AmericaIntra–North AmericaNorth America–Latin America
North America–Middle East& South AsiaTrans–AtlanticTrans–PacificAfrica–Far East
5,000 25,0001,000 190,000
Source: Lloyds Register’s Global Marine Trends report (2013)
New Zealand ports and freight yearbook 2017 | Global perspectives
11
4.0
3.0
2.0
1.0
3.5
2.5
1.5
0.5
Mae
rsk
COSC
O
Hap
ag-L
loyd
Yang
Min
g
UAS
C
MO
L
K Li
ne
Wan
Hai
MSC
CMA
CGM
Ever
gree
n
Ham
burg
Süd
OO
CL
NYK
Hyu
ndai
ZimPIL
0
Top 20 container lines (million TEU)
2M Ocean Alliance
Independent Chartered Orderbook
ConsolidationAccording to key shipping observers (Drewry, Lloyds Register, Alphaliner), 2017 is expected to be characterised by five themes; consolidation, scrapping, excess capacity, bunker prices and shipping rates.
The top seven lines will control over 65% of the global container ship capacity in a market where scale economies are considered vital. However, 2016 was distinguished by unprecedented consolidation, with these independent lines forming into three new alliances.
• 2M Alliance: The two largest lines, Maersk and MSC formed the 2M alliance, later adding Hyundai. Maersk subsequently acquired Hamburg Sud (38% share of global containership capacity).
• Ocean Alliance: CMA CGM, COSCO, Evergreen and OOCL, unravelling several preceding pacts. Meanwhile CMA-CGM acquired APL/NOL, while COSCO merged with CSCL (28% share of global capacity).
• The Alliance: Hapag-Lloyd, having merged with UASC, formed an alliance with Yang Ming, Hanjin, K Line, NYK and MOL, and survived the subsequent bankruptcy of Hanjin (15% share of global capacity).
These three alliances collectively control 80% of global containership capacity, 90% of the Trans-Pacific trade, and 96% of Asia-Europe trade.
ScrappingAs new ships are delivered into continued overcapacity, scrapping will accelerate, with forecasts for 2017 ranging from 0.5 to 0.8 million TEU.
In context, in excess of 1 million TEU of capacity is currently idle (at anchor), while the current shipbuilding order book is 2.8 million TEU (to be delivered over 3-4 years). As such, global containership capacity is not falling.
Notably, almost half forecast scrapping will be Panamax-size ships, a class now made largely obsolete since the expanded Panama Canal was commissioning in June 2016. When opened in 1914, the Panama Canal transformed global trade routes, allowing ships to avoid the long perilous journey around Cape Horn. Opening of the expanded Panama Canal in June 2016 is set to again reshape global trade lanes. Ship size had been constrained by the lock dimensions (294m long by 33.5m wide by 12.8m deep – Panamax ships up to 5000 TEU).
The new locks (427m by 55m by 18.3m deep) will allow ships up to 13,000 TEU to transit. It will remove constraints on Asia and Oceania routes to East Coast North America and Europe. The MOL Benefactor (8900TEU) was the first through the new canal, paying a record fee of $841,000. Over 600 containerships have transited the new canal since opening. Source: Alphaliner
New Zealand ports and freight yearbook 2017 | Global perspectives
12
90
70
50
20
80
60
40
30
10
0
Containership demolition activity (2015–2016)
Intermediate (+3,000–7,999 TEU) Feeder (100–2,999 TEU) Panamax (+3,000 TEU)
Oct
16
Sep
16
Aug
16
Jul 1
6
Jun
16
May
16
Apr 1
6
Mar
16
Feb
16
Jan
16
Dec
15
Nov
15
Oct
15
Sep
15
Aug
15
Jul 1
5
Jun
15
May
15
Apr 1
5
Mar
15
Feb
15
Jan
15
6080
100120140160180
02040
OthersChinaEurope
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
World new ship orders 1990–2015 (million GT)
Japan South Korea
Excess capacityPrior to the GFC shipbuilding activity exceeded demand, as shipping lines all pursued the same growth strategy – larger, more efficient new-generation ships. The order book peaked at an all-time record 170 million Gross Tonnes (GT) in 2007 (pre-GFC). Even as shipping line losses continue, the order book remains at historically elevated levels – averaging over 80 million GT since and 77 million GT in 2015.
Shipbuilders are, however, widely reported to be struggling with unutilised capacity, severe competition squeezing prices and rising costs. Yards in China and South Korea are under the greatest pressure, and are seeing the greatest volatility in orders.
Deliveries peaked at 102 million GT in 2011, since falling to 65 million GT in 2014 before increasing to 68 million GT in 2015.
According to Clarkson’s research, the size of all new ships (excluding containerships) delivered between 2000 and 2015 has averaged 20,000 GT. Newly delivered containerships, having averaged 40,000 GT since 2000, started getting materially larger from 2009, to exceed 80,000 GT by 2015, four times larger than other ships. By number, containership deliveries peaked at 15% pre-GFC, and after falling have since recovered to 7%. However, as containerships got larger, their share of delivered GT, having peaked at 28% pre-GFC, have since recovered to 27%. Containers share of the global freight task has risen steadily from 5% to 16% since 2000.
Shipping lines have faced a perfect storm. A sharp decline in trade post-GFC, and a lacklustre recovery followed a period of aggressive shipbuilding. Compounding this, bunker (fuel) prices, representing up to 50% of operating costs, rose sharply. Shipping lines responded in three ways.
First, they lowered prices to keep their ships occupied – but given all mirrored this strategy, the benefit was passed onto shippers.
Second, they instituted slow steaming, primarily to reduce bunker costs but also served to utilise more vessels.
Third, the lines entered new alliances to best manage fleet utilisation. Despite these efforts, idle capacity has risen to over 1 million TEU, increasing to 1.7 million TEU since the withdrawal of Hanjin’s ships following its bankruptcy.
Source: BIMCO, Clarksons*based on the old Panamax design with narrow beams, not exceeding 32.3m in width
Source: Shipbuilding Statistics; March 2016
New Zealand ports and freight yearbook 2017 | Global perspectives
13
8
16
18
20
Dec 06 Dec 07 Dec 08 Dec 09 Dec 10 Dec 11 Dec 12 Dec 13 Dec 14 Dec 15 Dec 16
Global container shipping capacity (million TEU)
10
12
14
Active Idle Demand
Global Financial Crisis
Hanjin
0
40000
50000
60000
Global freight task (billion tonne-miles)
10000
20000
30000
0
20.0
5.0
10.0
15.0
Container Other dry Total oil Container share (RHS)
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
%
0
80
100
120
140
160
Oil price (US$/bbl)
20
40
60
Brent FOB STEO forecast
Dec1987
Dec1991
Dec1995
Dec1999
Dec2003
Dec2007
Dec2011
Dec2015
Dec2019
Bunker pricesAs mentioned, bunker prices peaked pre-GFC, fell briefly (as did prices for many commodities), before firming from 2009 to 2014. Since 2015, aggressive global production (including US shale oil) saw prices fall, although recently Organisation of the Petroleum Exporting Countries (OPEC) has seen prices rise above US$50/bbl. Heading into 2017, the oil price predictions by major
organisations and investment banks are generally not widely diverging. Energy Information Administration (EIA) forecasts Brent crude oil prices to average US$55/bbl in 2017 and US$57/bbl in 2018 (and West Texas Intermediate US$1/bbl less). On 2 February 2017 NYMEX contracts suggest a range for 2017 between $US45/bbl and US$65/bbl.
Source: Drewry Maritime Research, JOC.com, Statista.com, Deloitte analysis
Source: United Nations UNCTAD Review of Maritime Transport 2016 Fig 1.3
Source: EIA, CME Group
New Zealand ports and freight yearbook 2017 | Global perspectives
14
0
800
1000
1200
1400
1600
1800
Global container price indices
200
400
600
SSE – SCFI – Shanghai–Europe Drewry – WCI – Global
11 A
pr 1
4
11 Ju
n 14
11 A
ug 1
4
11 O
ct 1
4
11 D
ec 1
4
11 F
eb 1
5
11 A
pr 1
5
11 Ju
n 15
11 A
ug 1
5
11 O
ct 1
5
11 D
ec 1
5
11 F
eb 1
6
11 A
pr 1
6
11 Ju
n 16
11 A
ug 1
6
11 O
ct 1
6
11 D
ec 1
6
Shipping ratesAnalysts are predicting a US$10 billion industry-wide loss for container shipping operators in 2016. This follows an intense price war for volume which materially depressed freight rates. Pacific rates between Asia and West Coast North America dropped below $750 per FEU (40’ container), and $1,500 per FEU to the East Coast, previously sectors which averaged $2,000 and $3,000 per FEU respectively.
Shipping rates clearly vary for each route, by cargo and client, between shipping lines, and over time. Various indices such as the Baltic Dry Index (BDI, for dry bulk) seek to track price changes over time. In the container markets, two prominent indices are Drewry’s World Container Index (WCI) and the Shanghai Shipping Exchange’s Shanghai Container Freight Index (SCFI). The WCI uses an average of spot rates on 11 key global routes. The Shanghai Shipping Exchange created the Shanghai Container Freight Index in 2005, again a composite of key global routes, although also presented for each key route.
Drewry, having described the prevailing mid-2016 rates as “unsustainable”, observed that rates have bounced by 62% since Hanjin’s bankruptcy (August 2016). As presented, the WCI and SCFI show great volatility. Both faced an overall decline since 2009. The Hanjin Shipping collapse in August 2016 appears to have precipitated a recovery in spot rates, although this will not become fully apparent until contract shipping rates are formally reset.
While shippers (importers and exporters) have been beneficiaries of low rates, the underlying concern is that this is not sustainable.
Source: SSE - SCFI - Shanghai-Europe
Case Study: Hanjin
Hanjin Shipping was the largest shipping company in Korea, and the world’s seventh-largest container shipping company. It operated a fleet of 98 container vessels (2.8% container market share), carried 2.7 million TEU p.a. and employed 6,000 staff across 60 countries. In August 2016 it filed for bankruptcy protection having failed to secure support of its creditors. The receivership stranded US$14 billion worth of cargo. Subsequently (as at March 2017), 11 ships (77,000 TEU, including two 13,000 TEU ships) have been chartered by Maersk, its former 2M Alliance partner, as have another 20 to other lines. In January 2017, 63 former Hanjin ships (460,000 TEU) remained idle.
So, what went wrong? Hanjin chairman stated that the firm lost a “game of chicken”. Following Korean Air Lines acquiring a controlling stake in 2014, Hanjin invested US$1.8 billion in fleet expansion, and priced aggressively to secure market share. However, it lacked the resources of its larger or state-backed rivals. The recovery in shipping rates since August 2016 has been attributed to removal of Hanjin ships from operation. It is too early to assess whether shipping rates will return to sustainable levels.
New Zealand ports and freight yearbook 2017 | Global perspectives
15Source: REUTERS / Lucy Nicholson - stock.adobe.com
New Zealand ports and freight yearbook 2017 | Global perspectives
16
Global ports
Growth continuesThe international port sector appears to be in good heart. Global throughput growth remains positive (except for a decline in 4Q15) although the rate of growth has been falling (per a Shanghai International Shipping Institute publication, below). Throughput growth, a key port measure, was particularly marked across the top 20 ports, averaging 4.1% for the period from 2011 to 2014, then easing to 1.2% from 2014 to 2016. Notably, there are 10 Chinese ports appearing in the top 20 global ports, 15 from Asia, 3 from Europe and only 1 from North America (Los Angeles at #19).
The global container port and terminal industry is nevertheless under pressure from two interrelated factors. First, larger shipping alliances are creating more complex and formidable counterparties. Second, to cater for ever larger containerships, ports are required to invest heavily in more capacity and new technology, driving up capital expenditure requirements and operating costs. Larger ships are segmenting container terminals (into those that can handle larger ships vs those that can’t). Larger ships make fewer visits, creating higher peak workflows (and more downtime), while demanding faster handling, and creating accelerated terminal obsolescence. This is
2%
4%
6%
8%
Global throughput growth
-4%
-2%
0%
48
50
54
56
52
Quarterly port throughput growth rate Global GDP growth rate
Global PMI Index
2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
0
20
30
40
Top 20 ports (Million TEU)
10
2011 2012 2013 2014 2015 2016
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placing greater demands on stevedores, challenging existing labour agreements, and helping accelerate terminal automation. While shipping lines or shippers may wish ports to lower prices, global consultancy Drewry has warned that demands for lower terminal handling charges may put future port investment at risk, and so the ability to handle larger ships. The scale, cost and risk of port expansion is rising.
Source: Shanghai International Shipping InstituteSource: worldshipping.org
New Zealand ports and freight yearbook 2017 | Global perspectives
17
Ports operational challenges & opportunities
An international perspectiveFaced with global trends and challenges, ports are entering a new paradigm, being swayed by disruptive innovations and exponential developments in technology, developments in demography, economy and society. Reconfigurations within the transport supply chain, and the ongoing push towards renewable energy and circularity to fight against greenhouse gases, are pressuring ports to adapt in order to survive, to improve their performance and efficiencies. In doing so they preserve jobs and protect the added value they generate around port activities.
This requires well informed strategic decision making.
The Deloitte Port Services team recently released a paper outlining key challenges and opportunities for port operations. The following is drawn from that report. If you would like access to the full report please contact us for a copy.
Port theme 1 – Greenification / circular economyEnvironmental issues are assuming critical importance in policy as society addresses environmental degradation and pollution, and global climate change. The continuous push for greener and more sustainable solutions forces ports and port companies to face these realities and consider new approaches:
• Environmental: Ports affect city noise, dust and visual amenity. More than half of Hong Kong’s CO2 emissions are shipping related.
• Land Use: Ports occupy what today is considered “prime CBD land”. Antwerp’s port occupies a third of the city’s total land area.
• Congestion: Ports enable trade and supply the cities – largely served by trucks. Port truck traffic accounts for more than 85% of total truck traffic on some sections of Los Angeles’ highways.
The energy and environmental transition could unfold much faster than anticipated requiring strategic preparation from ports.
The share of renewable energy is increasing - Reflecting international climate targets, the world is increasingly transforming the energy-mix, with the share of renewable energy increasing rapidly. Energy efficiency is going up while renewable energy costs are falling fast. With the handling of fossil fuels and chemicals at the core of many of the world’s largest ports, these changes will have a major impact on port operations and its industrial clusters.
The energy transition is happeningPort authorities and businesses that operate within the port area need to strategically prepare for the energy transition. With the ongoing electrification of transport in the most developed countries, total demand for fuels is decreasing in these countries. Developing economies in Asia and Africa are expected to fully offset this downward trend.
Middle distillates and gas are the new fuels - Fuel consumption and carbon emissions are high on the agendas of port authorities and shipping companies, both from a sustainability and operational efficiency point of view. The substitution of middle distillates and gas for bunker oil in fuelling ocean and inland shipping is increasing sharply. This requires strategic action via investment in dedicated port infrastructure.
Biofuels are on the rise - Biofuels are on the rise and bio-based chemical products are becoming more mainstream. Strategic action is required to facilitate the development of local bio-based chemical clusters in the port area, for instance through public private partnerships.
Environmental planning is required to lead the energy transition - Port authorities are increasingly aware that ports are a significant source of emissions and could help facilitate the energy transition. To instigate this, Port Authorities need to pursue targeted clean air programs with the goal of eliminating harmful emissions from port-related sources and companies in the port must incorporate
environmental planning into their development plans. Renewable energies, green charging where environmentally friendly modes are rewarded, waste management, cyclical economies and biofuels are some of the actions undertaken by ports to spare the environment.
Port theme 2 – Smart portsPorts extensively employ data-driven technologies, digitising much of their operations. Ports, ships, shippers and regulatory agencies increasingly operate via integrated systems which monitor, analyse and share data and market information. Combined with advanced robotics and analytics, the functions and responsibilities of ports are being redefined. Such technological advancements offer ports new business model opportunities and the potential to transform into smart ports.
Data-driven technologies and Internet of Things, combined with advanced robotics, analytics and additive manufacturing will redefine the future of ports.
Becoming a smart port to remain relevant Smart ports are capitalising on the ever-expanding universe of connected ‘things’; the Internet of Things. Technology already has a strong impact on ports around the world today, but that impact will further increase. Being disrupted simply translates to not being prepared and to become redundant over time. Preparing implies becoming data-minded; new approaches to data management, new platforms, innovative delivery models and novel governance tactics.
New Zealand ports and freight yearbook 2017 | Global perspectives
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Data is key - Data analytics and data exchange are becoming a new comparative advantage for port players. Capacity sensing, route optimisation, energy management, fault detection & resolution can be done much more (cost) effectively. Advanced data analytics allows for streamlining and optimising existing infrastructure usage and operations by eliminating unnecessary / empty transport.
Robots and sensors will continue to replace people - Increased efficiency of robotics and analytics will drive automatisation even further and the usage of drones for inspection of ports/ ships will increase efficiency of cargo handling. Self-steering ships will become the standard and the usage of sensors will replace the need for towing.
All New Zealand ports employ IT platforms which integrate with government systems for trade, customs and biosecurity, while many assist shipping lines with logistics and load/unload schedules. Automation opportunities are actively being investigated by domestic port operators.
Port theme 3 – Integration of supply chainsThe further integration of traffic flows on both the seaside and the landside requires strategic coordination.
Consolidation in terminals and shipping Globalisation, and the subsequent increase in shipping volumes, have driven the requirement for increased transport efficiency and
additional port capacity. In the last decades, the market has seen a consolidation in terminals and shipping. Shipping companies, logistics providers and terminal operators have become global and a few players gained market power implying a strong bargaining position, giving rise to supply chain rationalisation.
Further evolving hub and spoke network Determined by economies of scale and efficiency, a hub and spoke-network of ports is evolving and competition between ports is increasing. The largest vessels, such as the 22,000-TEU ships which are at the design stage, can only call at a limited number of ports as they require more depth, wider docks, stronger quays and larger cranes.
Hinterland connections are critical - The appropriate player to improve the competitive position of the port is the port authority. Aside from favourable pricing, efficiency of operations and automation can create competitive advantages. As supply chains integrate, hinterland connections are becoming the ports’ most important assets. The port authority should focus on improving hinterland connections, taking the lead in putting together a common investment agenda for required infrastructural improvements. Its role changes from landlord to active participant in (and potentially coordinator of) the supply chain.
Port authorities can facilitate the implementation of technology Better insights into transport flows will help companies active in the port to further optimise their supply chains and make them more flexible. The port authority of the future is assisting companies through port community systems. Technologies like blockchain drive this transformation, cutting the middle man (broker) out of the transaction increasing visibility.
The development of logistics technologies and the integration of supply chains is driving increased transport efficiency, which port authorities have the opportunity to orchestrate.
Domestically ports have invested upstream into inland ports, transport and logistics, facilitating better planning and integration with cargo generators, shipping lines, and rail and road operators.
New Zealand ports and freight yearbook 2017 | Global perspectives
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Port theme 4 – Organisational efficiencyThe internal organisation of port authorities needs to be flexible to adapt to the increasingly dynamic environment. Increased competition between ports provides ports with the opportunity and imperative to focus on organisational efficiency and performance management.
Private sector interest in the port industry Port privatisation and liberalisation is a result of the increased competition between ports and the changed function of ports in the supply chain. Private sector participation in the port industry can improve port operational efficiency and increase adaptability to customers’ demand. This in turn increases port competitiveness. However, the competitive environment of ports favours considerable local autonomy.
Increased co-operation between ports In Western Europe ports are clustered closely together often offering similar services. We see a growing tendency of port co-operation in this market driven by the increased competition and shifting market forces. A recent example is the merger between Dutch Zeeland Seaports and Flemish Port of Ghent.
Ports focusing on traditional operations are at risk - Shifting market forces put traditional key players within ports at risk of delocalisation or even of becoming obsolete. For example, traditional chemical or fuel-based industries.
Port authorities need to focus on efficiency and performance management This challenge requires ports to focus on organisational efficiency and performance management. Ports need to evaluate their talent base as the shift from a landlord port to a cluster authority with facilitating / coordinating function requires a new skillset. Also, the ongoing push for fully integrated supply chain solutions and Internet of Things, requires a high level of IT knowledge.
Port theme 5 – Safety & securityThe digitalisation of transport and logistics combined with the strategic importance of ports emphasises the importance of cyber security.
The dark side of technology - Technological advancements also have a dark side. Cybersecurity and cyber-resilience are becoming more important as a parallel to physical security. Port security has become a top priority for ports worldwide, also because port security (ISPS Code) is becoming a critical location factor for international shipping / transportation companies.
Ports are vulnerable to cyber crime Ports should be prepared to deal with existing and emerging cyber threats that could shut down large pieces of the country’s critical maritime transportation system. A prominent example is the Port of Antwerp where drug traffickers recruited hackers to breach IT systems that controlled the movement and location of containers.
Active risk management is required - Ports and port facilities are required under ISPS Code to implement risk management activities and take numerous precautions, such as drafting security plans, engaging security officers and deploying security equipment. These safety and security precautions now significantly influence many ports’ day-to-day business activities.
Security software technology increases reliability - When developing new ports or port areas, security procedures and processes can be optimised with the implementation of state of the art security software technology. The use of various control systems and increasing automation in general in the port will reduce the risk of human errors and automation increases reliability of the system. The same applies to integrating RFID-technology to increase transparency and detectability.
A secure port requires a risk-aware culture The importance of cybersecurity will only increase when the “Internet of Things” takes a more prominent place in port operations. But the solution to a safe and secure port is not just technological – it requires building a risk-aware culture.
The International Maritime Organisation (IMO) is responsible for developing a global regulatory framework for shipping and related sectors including safety, environmental concerns, legal matters, technical co-operation, maritime security and the efficiency of shipping. A recent initiative is verified gross mass (VGM)
for container shipping where shippers and shipping lines are required to provide authorities with actual loaded container mass.
New Zealand is a member of the United Nations and a signatory to the IMO’s codes.
Port theme 6 – Port / city dualityPorts have played a vital role in the establishment and functioning of cities throughout the world. With ever increasing cities, more and more ports are enveloped requiring new strategies towards port / city ecosystem development.
Port and city are disconnected - The relationship between ports and cities are changing. Port and city have institutionally been disconnected in many cases as port authorities have been privatised in many countries with limited governmental control over port activities. Urban ports remain dominant - However, most of the world’s leading ports are located in and are closely connected to their hosting urban environment. The urban ports maintain their dominance over better located competitive non-urban ports.
Ports can contribute to urban economic development - The increased attention of policy makers towards the development of the port is focused on ports being a key factor in the economic development of local economies.
New Zealand ports and freight yearbook 2017 | Global perspectives
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Port activities and typical urban business activities such as maritime services, insurance, banking, (commodity) trading are increasingly considered to be synergetic.
Waterfront (re)development is an opportunity - Combined with increasing population migration towards cities, waterfront redevelopment of port areas is more topical than ever. Since urban centres have historically evolved around transport hubs, ports are often located in or near the CBD, a challenging location for ‘environmental unfriendly’ port activities.
Combined with high land values, where feasible inner city ports are being relocated to sites with less impact on the city and the people that live in it, whilst former port areas are redeveloped into lively working and living areas (e.g. Sydney Darling Harbour).
In 2010 the OECD published its report, The Competitiveness of Global Port-Cities, which considered the dynamic between ports and their cities. While the historic links between ports and their cities were strong, over time these have been diluted given city economies have grown and diversified. Further, the economic benefits of ports are becoming shared across wider regions, while adverse impacts (disruption, congestion) remain localised. The OECD’s key observations include:
• A well-functioning port brings many economic benefits; a lower cost of trade, employment
and attracting businesses. As a rule of thumb, 1 million tonnes of throughput typically generates US$100 million in economic activity and generates 300 jobs, while catalysing innovation in port-related sectors.
• Many benefits spill over to other/wider regions.
• Ports generate negative impacts: environmental, land use, and congestion.
• Ports must be competitive to fully add value to their cities – by creating employment and urban wealth, and being a good corporate citizen.
• Cities can leverage their ports by creating maritime services clusters, industrial development and port-related waterfront development.
• Supportive city policies, such as master planning, financial mechanisms and education, all help attract high value added companies.
• Public policies can boost port-city performance, covering port, transport, education (port-university-business co-operation).
While all New Zealand ports are local government-controlled, several have facilitated private investment. All ports demonstrate a recognition of their key role in the local economies, while dealing within local and Resource Management Act (RMA) constraints regarding expansion and development.
New Zealand ports and freight yearbook 2017 | Global perspectives
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Domestic environment
New Zealand ports and freight yearbook 2017 | Domestic environment
22
New Zealand ports and freight yearbook 2017 | Domestic environment
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Industry focus
Economic environmentReserve Bank Monetary Policy Statement June 2017On 22 June 2017, the Reserve Bank of New Zealand (RBNZ) left the Official Cash Rate (OCR) unchanged at 1.75%, a record low level.
The RBNZ observed increased and more broad based global economic growth, however, major challenges remain with ongoing surplus capacity and political uncertainty. Commodity prices have risen over the past year with strong global demand. Monetary policy is expected to remain stimulatory, but less so going forward.
NZIER - Quarterly Predictions, December 2016The key message – the New Zealand economy is solid enough to overcome challenges.
The New Zealand economy is in good shape, providing a buffer against recent shocks. Recent Kaikoura earthquakes have disrupted business activity and introduced more than the usual uncertainty into the economic outlook. Further, the US election has led to some uncertainty in global relations. Tourism remains strong, construction activity continues to ramp up, and immigration is surging. New Zealand Institute of Economic Research (NZIER) expects annual GDP growth of >3% over the next five years. With deflation fears subsiding, inflation expectations are rising.
1%
5%
6%
7%
8%
9%
2000 2003 2006 2009 2012 2015 2018
Official cash rate
2%
3%
4%
Source: RBNZ estimates
Projection
New Zealand’s financial conditions have firmed with long-term interest rates rising and continued upward pressure on the New Zealand dollar exchange rate. Economic growth has increased and the outlook remains positive, supported by a low OCR, strong population growth, increased household spending and construction activity. Dairy prices have recovered in recent months but uncertainty remains around future outcomes.
NZIER - Quarterly Survey of Business Opinion, January 2017The key message - businesses continue to expect good times ahead
Business confidence remains high, with 26% of businesses expecting an improvement in economic conditions, higher than a year earlier. This indicates continued solid momentum in the New Zealand economy, which should provide a buffer against the downside risks from unexpected events both here and abroad.Factors include the continued recovery in global dairy prices, confidence in Wellington, and strong building activity. Employment is high, with immigration easing labour shortages. Household demand was solid underpinning retailer confidence. Capacity utilisation rebounded to 92.7% permitting some price rises.
New Zealand ports and freight yearbook 2017 | Domestic environment
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Trade volumes
The Ministry of Transport publishes several statistical databases, such as the National Freight Demand Study (3 over 8 years), and since 2010, the Freight Information Gathering System (FIGS), where it collects, analyses and presents port, trade and transport data.
Freight Information Gathering System (FIGS)This commentary and highlights are drawn from the FIGS release for the period to June 2016.Trade export volumes, having grown strongly over the last decade, have eased since 2014, although selectively. Coal exports were down in 2015, reflecting falling prices and the troubles at Solid Energy (in liquidation), while forestry exports also eased (both price and demand were down in 2015, this trend having subsequently reversed). All other export sectors have continued to expand. For imports, having fallen across the board post GFC, volumes have resumed growing, notably food items, although as with exports, growth has eased since 2015.
45,00040,00035,00030,00025,00020,00015,00010,000
5,0000
02Q4 05Q4 07Q4 09Q4 11Q4 13Q400Q4 01Q4 03Q4 06Q4 08Q4 10Q4 12Q4 15Q414Q4
NZ sea export volume (tonnes ‘000 / rolling 12 month totals)
Forestry Products Other, confidential MetalsMachinery, electrical, transport Chemicals, plastics, rubberMinerals, coal, oil Food, skins, wool Dairy
25,000
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NZ sea import volume (tonnes ‘000 / rolling 12 month totals)
Other Vehicles (road, rail, air, sea) Machinery/electricalMetals Chemicals, plastics, rubber Oil and coal Food
Source: FIGS
New Zealand ports and freight yearbook 2017 | Domestic environment
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National Freight Demand Study (NFDS)The Ministry of Transport has been behind some key initiatives to better understand the actual flows of different trades. In 2008 it initiated the National Freight Demand study (NFDS), providing a best-estimate snapshot of the movement of freight around New Zealand, by commodity, by mode. The NFDS, repeated in 2011 and 2014, provides a unique and valuable resource, and usefully includes 30 year forecasts. The focus on NFDS is on domestic freight flows, although this dataset can be readily adapted to capture imports and exports.
Traffic countsViewing the heavy vehicle traffic counts at key remote SH1 monitoring sites over a longer period reveals steady annual growth beneath the seasonal effects. The Kaikoura earthquake struck on 14th November 2016, resulting in traffic through Kaikoura ceasing immediately, and Blenheim being largely by-passed. Waipara on SH1, still receives all traffic, now being diverted via SH’s 63, 6, 65 and 7 (Lewis Pass), further boosted by displaced rail volumes. The indicated growth is consistent with ANZ’s Truckometer survey, which aggregates all heavy vehicle traffic, and with the NFDS forecasts of 2.5-3.0% annual growth.
90
110115120125130135
Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15
TEU volumes Since 2012, imported TEU volumes are up 14% and export volumes are up 12%. Some of the recent domestic growth is containerised cement.
95100105
Export Import Domestic Transshipment / reexport/
0
2,0002,5003,0003,500
SH1 heavy traffic counts
5001,0001,500
Wellsford Taupiri TaupoSanson Ohau BlenheimKaikoura Waipara Milton
Dec 11 Dec 12 Dec 13 Dec 14 Dec 15 Dec 16
Kaikoura Earthquake Nov 16
Source: FIGS
New Zealand ports and freight yearbook 2017 | Domestic environment
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Container trade expandsThese trends are reflected in the container trades, where imports and exports continue to grow, albeit at lower rates. Coastal volumes have been up markedly since 2014 and paradoxically, transhipments continue to trend down potentially raising a question regarding the capturing of information for coastal and tranship volumes.
Bigger shipsFor several decades containerships have been getting progressively larger. The race to build more and larger ships has maintained a frenetic pace even post-GFC. By 1988 the biggest containership, at 4300TEU, was reaching the capacity of the Panama Canal (the Suez presents no such size restrictions). Yet ships got even bigger, reaching 8700TEU by 1998, and 19,000TEU by 2015. The merit of larger ships reflects scale economies. But to deliver these gains for shipping requires ports to invest in infrastructure and for cargo to be efficiently aggregated.
In 2002 P&O (now Maersk) introduced a fleet of new 4100TEU ships into New Zealand, a step up from the previous largest at 3500TEU. More recently, 5500TEU ships have been rostered in to cater for peak export months.
0%
40%50%60%70%80%
Cargo on ships of 4,000 TEU or more(rolling 12 months)
Ships of 4,000 TEU or more handle a significant share of the import and export containers at the following ports.
10%20%30%
LytteltonCentrePort
Port of NapierPorts of Auckland
Port OtagoPort of Tauranga
Dec 12 Jun 13 Dec 13 Jun 14 Dec 14 Jun 15 Dec 15
Maersk introduced 9500TEU ships onto its Triple Star service in late 2016. Including Tauranga as its only New Zealand port, this service links Asia ( Japan, Korea, China and Taiwan) with South America (Peru, Chile, Panama, Colombia and Mexico). Tauranga is New Zealand’s first port to complete dredging to 14.5m so enabling these larger vessels to visit. Tauranga has also become New Zealand’s first port to handle 1 million TEU.
Coastal shippingCoastal shipping plays a key role in New Zealand’s domestic freight task, being principally specialist bulk ships (such as petroleum and cement) and inter-island RORO ferries. In the general freight market, domestic ship operators are confronted by two key challenges: competition with other transport modes (road, rail and air), and the competition with international ship operators.
While coastal shipping provides slower transit times relative to other modes, shipping delivers lower emissions and prices. Coastal capacity can also be readily expanded and would require limited additional port infrastructure.
There has been an increase in coastal shipping post the Kaikoura earthquake. This could represent a sustainable uplift for coastal operators, reflecting lower prices than traditional rail or road freight, demonstrated resilience and increasing frequency of ships.
600,000500,000400,000300,000200,000100,000
0
700,000
Imports Exports Export transhipment total Import transhipment load
Import, export and transhipment movements (TEU)
Port
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Source: FIGS
New Zealand ports and freight yearbook 2017 | Domestic environment
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Coastal bulk volumesCoastal volumes are dominated by bulk trades in petroleum products from the refinery at Marsden Point (Whangarei) and cement (from Portland (Whangarei) and Westport (until Holcim closed its plant in June 2016). The coastal freight task for petroleum products is some 2.5 million tonnes annually, with Tauranga, Lyttelton and Wellington the key destinations. Petroleum product is also piped from the refinery to Wiri (Auckland), while Z-Energy barges product to Auckland. Refined product is also imported to supplement the refinery’s capacity. The refinery itself imports its crude oil feedstock (with domestic crude oil production exported).
0
400,000
500,000
600,000
700,000
Total TEU capacity of ships visiting New Zealand
100,000
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300,000
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1,000–2,499
4,000–4,999
2,500–2,999
5,000+
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500,000
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Source: FIGS
Source: FIGS
New Zealand ports and freight yearbook 2017 | New Zealand Freight Task
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New Zealand Freight Task
New Zealand ports and freight yearbook 2017 | New Zealand Freight Task
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New Zealand Freight Task
This section reproduces elements from Deloitte’s 2016 Port & Freight yearbook. For a full breakdown please refer to that publication.
Each year, 236 million tonnes of freight are moved within New Zealand, some 50 tonnes per person. This task can be classified into four broad groupings: primary produce, energy, construction materials, and manufactured and retail goods.
The primary sector is New Zealand’s key generator of domestic freight, much destined for export. The flows are from source (farm gate or plantation forest) either direct to ports for export (such as logs) or more usually via intermediate processing industries (dairy factories) for both domestic consumption and/or export. Favourable export conditions and a buoyant construction sector have supported the strength in forestry, while dairy has enjoyed rapid expansion (much enabled by irrigation). Dairy alone exceeds the tonnage of all other agricultural commodities: livestock, meat, wool, horticulture, grains, and fish.
Petroleum and coal freight are concentrated on a few key regions where the resources are located and extracted, coal from West Coast and Waikato, and petroleum from Taranaki or Northland where it is imported and refined.
Key construction materials, aggregate and cement, are also produced in high volumes, although generally close to domestic markets given their bulk and relatively low unit value. Manufactured and retail goods, whether domestically made or imported, are usually smaller and of greater unit value, and are observed to be transported greater distances.
Million tonnes (LHS)Billion tonne-kilometres (RHS)
0
20
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New Zealand freight generated by commodity
Source: NFDS 2014
New Zealand ports and freight yearbook 2017 | New Zealand Freight Task
30
Regional freight generationClear patterns are evident in domestic freight flows. Primary producing areas generate flows to export ports, typically via processing facilities. Population is a major driver of both consumption and manufacturing activity. The Golden Triangle (Auckland, Waikato, Bay of Plenty) combines both population and primary industries (forestry and dairy) to account for 45% of all freight tonnage produced.
Canterbury is the dominant freight generator in the South Island producing 15% of the national freight task.
Manufacturing and retail freight tonnage correlate strongly with population, notably in Auckland and Canterbury, which host manufacturing hubs, large scale distribution centres, and receive consumer goods through their ports.
The primary sector locates in regions offering favourable topography, climate, and soil. Waikato, Taranaki, Manawatu, and Southland have proven well-suited to dairy production, as well as Canterbury if irrigation is available, with dairy accounting for over 20% of total freight generated for these regions. This is similar for forestry, where warm climate and lower-value land have attracted substantial plantings in Northland, Waikato, Bay of Plenty, Gisborne, Hawkes Bay, and Tasman/Nelson/Marlborough. Forestry volumes account for over 35% of freight in these regions (excepting Waikato at 16% and Northland at 26%).
Crude oil flows are either direct export (from Taranaki) or direct import (to the refinery in Northland). Domestic transport of petroleum products is primarily from the Northland refinery to coastal distribution, with a rising direct import share, and then by truck to the nation’s service stations. West Coast coal production is principally for export via Lyttelton, while Waikato coal serves a domestic market in the upper North Island. The outlook for coal is overshadowed by low prices and its high environmental footprint. Cement is manufactured at plants in Northland and West Coast for distribution by coastal ships and then road and rail. The West Coast plant is being superseded by direct import. Southland hosts the Tiwai Point Aluminium Smelter, which while generating largely direct import export flows, accounts for almost 10% of the regions total freight flows.
New Zealand regions
Northland (NTH)
Gisbourne (GIS)
Hawke’s Bay (HKB)
Wellington (WLG)
Tasman Nelson Marlborough (TNM)
Canterbury (CAN)
Otago (OTG)
Bay of Plenty (BOP)Auckland (AKL)
Waikato (WAI)
Taranaki (TAR)
Manawatu (MAN)
West coast (WST)
Southland (STH)
New Zealand ports and freight yearbook 2017 | New Zealand Freight Task
TOTAL FREIGHT GENERATED (MILLION TONNES)
Dairy Forestry Other Agri Petroleum Coal Aggregate Cement Manufctrd Goods
Other Retail Other Total
NTH 1.29 4.35 0.72 2.73 0.06 1.69 2.45 0.28 0.03 3.28 16.88
AKL 0.73 1.44 1.58 1.40 0.06 5.76 2.76 9.91 11.77 13.98 49.39
WAI 7.08 5.15 2.72 - 1.77 5.70 1.68 1.02 0.24 6.70 32.06
BOP 1.62 9.80 2.20 1.03 - 1.24 1.57 1.26 0.49 5.83 25.04
GIS 0.02 1.87 0.63 - - 0.27 0.06 0.08 - 0.86 3.79
HKB 0.27 3.57 1.85 0.22 - 0.70 0.93 0.54 0.14 2.07 10.29
TAR 2.69 0.26 0.91 0.49 - 0.42 0.67 0.48 0.01 1.69 7.62
MAN 2.19 1.70 1.64 - - 1.09 0.26 0.51 1.35 1.82 10.56
WLG 0.33 0.89 0.41 0.58 - 1.43 0.69 0.96 0.60 2.52 8.41
TNM 0.39 3.34 1.07 0.27 - 1.02 0.56 0.36 0.07 2.24 9.32
WST 0.65 0.43 0.12 - 2.50 0.03 1.43 0.07 0.04 0.27 5.54
CAN 5.12 1.54 3.97 0.93 0.05 5.30 2.94 3.27 3.26 9.01 35.39
OTG 1.24 1.52 1.05 0.28 0.09 1.84 0.86 0.48 0.24 2.44 10.04
STH 2.79 1.40 1.12 0.21 0.52 0.51 1.11 0.21 0.05 3.77 11.69
TOTAL 26.41 37.26 20.01 8.14 5.05 26.99 17.98 19.45 18.31 56.42 236.02
TOTAL FREIGHT GENERATED (BILLION TONNE-KILOMETERS)
Dairy Forestry Other Agri Petroleum Coal Aggregate Cement Manufctrd Goods
Other Retail Other Total
NTH 0.11 0.61 0.08 2.42 - 0.07 0.24 0.06 - 0.21 3.80
AKL 0.07 0.41 0.11 0.07 - 0.20 0.04 1.77 1.86 0.67 5.20
WAI 0.50 0.43 0.28 - 0.08 0.30 0.14 0.15 0.03 0.39 2.30
BOP 0.17 1.05 0.23 0.12 - 0.03 0.18 0.24 0.09 0.49 2.60
GIS 0.01 0.27 0.13 - - 0.01 - 0.03 - 0.15 0.60
HKB 0.04 0.50 0.19 0.01 - 0.04 0.10 0.13 0.03 0.17 1.20
TAR 0.29 0.03 0.12 0.06 - 0.01 0.13 0.10 - 0.06 0.80
MAN 0.42 0.24 0.21 - - 0.02 - 0.13 0.20 0.08 1.30
WLG 0.05 0.08 0.07 0.05 - 0.02 0.02 0.30 0.25 0.06 0.90
TNM 0.05 0.41 0.15 0.09 - 0.03 0.02 0.11 0.01 0.23 1.10
WST 0.07 0.08 0.01 - 0.86 - 0.29 0.03 0.01 0.04 1.39
CAN 0.41 0.15 0.45 0.05 - 0.07 0.11 0.99 0.49 0.58 3.30
OTG 0.12 0.27 0.20 0.02 0.01 0.03 0.06 0.18 0.03 0.18 1.10
STH 0.22 0.10 0.20 0.02 0.08 0.01 0.09 0.10 0.02 0.16 1.00
TOTAL 2.53 4.64 2.47 2.91 1.03 0.84 1.43 4.32 3.00 2.47 26.30
Source: NFDS 2014, MoT FIGS
Dairy
Coal
Other retail
Forestry
Aggregate
Other
Other Agri
Cement
Petroleum
Manufactured goods
Dairy
Coal
Other retail
Forestry
Aggregate
Other
Other Agri
Cement
Petroleum
Manufactured goods
90%
100% 60
Intra vs Inter-Regional Freight Flows
0 5 10 15 20 25 30 35 40 45 50
NTH AKLWAIBOPGIS
HKBTAR
MARWLGTMNWSTCANOTGSTH
NTH AKLWAIBOPGIS
HKBTAR
MARWLGTMNWSTCANOTGSTH
0.0 1.0 2.0 3.0 4.0 5.0
billion tonne-kms Total freight generated million tonnes
Total freight generated
Dairy
Coal
Other retail
Forestry
Aggregate
Other
Other Agri
Cement
Petroleum
Manufactured goods
Dairy
Coal
Other retail
Forestry
Aggregate
Other
Other Agri
Cement
Petroleum
Manufactured goods
90%
100% 60
Intra vs Inter-Regional Freight Flows
0 5 10 15 20 25 30 35 40 45 50
NTH AKLWAIBOPGIS
HKBTAR
MARWLGTMNWSTCANOTGSTH
NTH AKLWAIBOPGIS
HKBTAR
MARWLGTMNWSTCANOTGSTH
0.0 1.0 2.0 3.0 4.0 5.0
billion tonne-kms Total freight generated million tonnes
Total freight generated
31
Port resilience
New Zealand ports and freight yearbook 2017 | Port resilience
32
New Zealand ports and freight yearbook 2017 | Port resilience
33
Port resilience
In February 2011 Christchurch was struck by a 6.3 magnitude earthquake. In 2017, the city is part way through an extensive, complex $40 billion rebuild.
In November 2016 a 7.8-magnitude quake struck Kaikoura. SH1 and main trunk rail remain closed. Aftershocks caused considerable damage to Wellington, where the container operations at CentrePort remain disrupted.
Both have served to put infrastructure resilience onto the front page.
In this section we present an international perspective of what resilience is, why it is important, how vulnerabilities can be understood and prepared for, and so to create a resilient value proposition. Deloitte Port Services recently presented in relation to Resilience in Seaports internationally, key elements of which are reproduced below.
Resilience in portsResilience is the concept of preparing for, recuperating from and improving after ‘shocks’. As well as the increasing global perception of uncertainty, ports are often located in vulnerable areas, and deal with hazardous activities. There are several factors which may make ports more vulnerable to shocks:
• Dealing with dangerous goods (biosecurity, toxic chemicals)
• Dangerous locations (faults, volcanoes, tsunamis)
• Industrial environments
• Security threats
• Dangerous activities
• Pollution threats
In addition to the shocks caused by hazardous activities and goods, large scale industrial, social and natural shocks or disasters occur regularly. Changing trends in shipping routes and supply chain activities put pressure on ports, with uncertainty rising and traditional hubs being replaced by new, rising hubs. Furthermore, traditional activities and demand for goods may change or decline, putting pressure on port’s large capital structures. Although trends are monitored and predicted, there are always surprises and uncertainty over every potential scenario. Higher uncertainty leads to a greater level of risk and difficulty in decision making.
Resilience is important for ports facing uncertain factors on a macro and micro level. Ports are integral parts of the economy and contribute significantly to local GDP both directly and indirectly. Ports are strategically located, contain strategic goods and stocks, and impact the competitive position of a country. Therefore any disruption to ports can impact productivity and GDP, competitiveness of local industries and local consumers of goods. When investing in resilience, the location, cost and impact of investment needs to be taken into account.
The following chart shows an example of the curve of cost of disruption vs cost of prevention as resilience measures are undertaken. The area where cost of disruption crosses cost of prevention is where resilience strategies become optimised.
Highcost
Lowcost
Low resistance High resistance
Cost of preventionCost of disruption
Cost of disruption vs Cost of prevention
Source: Deloitte port services
New Zealand ports and freight yearbook 2017 | Port resilience
34
How ports can create resilienceStep One: Analysing vulnerabilities – being prepared is knowing what makes you weakA port is subjected to multiple types of shocks
• Industrial (e.g. 2015 explosion at Port of Tianjin)
• Natural (e.g. 2012 Hurricane Sandy, US East Coast)
• Human (e.g. 2015 transport strikes at Port of Calais)
• Not each port is equally susceptible to these shocks, with some being: – Located in vulnerable areas – Focusing on declining activities – Facing a difficult local operating environment
Two main resilience evaluation approaches exist:
• a port specific in depth case study
• a regional benchmark
A port vulnerability assessment may be undertaken, to understand states of susceptibility to shocks, and so guiding normative analyses of actions. Deloitte developed a port vulnerability index, used to benchmark ports in Europe. This revealed a strong link between latitude and port vulnerability, finding that co-operation between ports can reduce vulnerability. These results may have relevance to New Zealand, where each location may carry differing vulnerability to natural, industrial or human events.
Step 2: Analysing causes and reactions to shocksTraditional shock parameters are probability, severity and duration of the event. One can also analyse growth differences and learning capabilities. Deloitte created a framework for the measurement of past shocks, allowing benchmarking of independent events in one port against regional/global shocks affecting multiple ports, using four parameters:
01. Resist – minimise the shock
02. Recover – minimise fallout
03. Renew – maximise bounce back
04. Remember – learn from the shock
To better understand the causes of shocks, studies can observe trends across industries that impact ports and what this may mean for ports.
New Zealand ports and freight yearbook 2017 | Port resilience
35
Step 3: Creating a culture focused on resilienceThe Deloitte resilience study showed critical factors for port resilience include:
01. Proactive landlord function – balanced activity and allowing for innovation. Innovative activities are vital, and may include new transport technologies, ‘Internet of Things’ platforms and innovative cargo groups. By introducing innovative activities, new product lifecycles are added to the traditional set, increasing diversification. A focus on activity portfolio management can also apply to ports. A balanced portfolio allows the port to focus on multiple markets.
02. Regional authority – strategic co-operation, inland hubs and creation of a port network. Port strategies don’t need to be limited by their geographical position. Joint ventures, co-operation agreements and foreign investments can lead to greater co-operation and resilience. Large networks allow ports to increase their value proposition.
03. Community manager – Port as a brand, strong maritime culture, increasing cohesion. Cohesion between institutions, partners and lobby organisations can enhance co-operation at a local level. Creating the notion of a maritime culture can enhance port resilience and is evident in situations such as port waterfront
36
Determine weakness
Assess internal and external environment
Determineindustrial diversity
Assess position on the supply chain
Focus on resilient strategy
Make adjustments based on lessons learntRe-evaluate
Measure shockresponse
redevelopment. Looking beyond cargo flow generation to other factors such as employment and environment builds community support, which is essential when facing shocks.
Step 4: Understanding the needs of the supply chainPorts may be regarded as commodities in the supply chain. Alternatively ports may choose to specialise and stand out, to seek growth and find strength from size. Some ports may choose to strategically focus on industrial activities or may commit more available land area to specific cargo groups.
Step 5: Completing the resilient value propositionA port authority may increase resilience throughout the value chain, in order to facilitate local activities and improve the value proposition. This means each segment in the value chain, from producer through to hinterland transport can have tools for resilience improvement applied to them from the port authority perspective. Each segment of the value chain can be analysed in terms of potential shocks and risks, with tools for resilience applied to these.
The five steps, from assessing the environment to focusing on a resilient strategy combine to produce a roadmap to reduce and learn from shocks.
The figure above shows an example of a typical process to evaluate and monitor shocks.
Source: Deloitte port services
New Zealand ports and freight yearbook 2017 | Port resilience
36
New Zealand context - EarthquakesIn February 2011 Christchurch was struck by a 6.3-magnitude earthquake, resulting in the loss of 178 lives and major damage to property and infrastructure. The port, while quickly operational, was also extensively damaged.
Then in November 2016 a 7.8-magnitude quake struck Kaikoura. Damage around Kaikoura was severe, with major slips and ruptures closing both SH1 and rail. Yet it was the strong aftershocks closer to the capital, Wellington, which raised alarm. Several buildings remain closed while some will be demolished. The port also suffered material damage to wharf structures, pavement and buildings.
These events have served to put infrastructure resilience on the front page, and initiate a conversation on preparedness. The Ministry of Civil Defence and Emergency Management, and local authorities, are required to maintain plans in readiness for earthquakes, tsunami, emergency waste management and natural and man-made events.
National Infrastructure Plan (NIP)In 2010 The Treasury produced the inaugural National Infrastructure Plan (NIP), a strategic plan reviewing the major infrastructure sectors: transport, telecommunications, energy, water and social infrastructure sectors, and providing both a stock-take and gap analysis. Subsequent annual editions have updated progress and set out the vision that ‘by 2030, New Zealand’s infrastructure is resilient and coordinated and
contributes to economic growth and increased quality of life’.
Transport fared well, with the NZTA operating strong planning and good budgeting. The NIP recognised resilience as one of its six guiding principles, the others being investment analysis, funding mechanisms, accountability and performance, regulation and coordination. Under the NIP, resilient infrastructure is that able to deal with significant disruption and changing circumstances.
Resilience encompass risk management in anticipation and more particularly the ability to respond promptly and cogently to events which may evolve slowly (such as rising sea levels, changing demographics) or occur dramatically (such as earthquake, flooding, or global oil supply restrictions). Anticipation is not about building infrastructure able to withstand any event, nor building redundancy, unless the consequences of loss or disruption warrant that investment. But it does seek strong business case analysis capturing costs, risks and consequences of various events.
The NIP identified several attributes of resilience.
• Service Delivery – to meet national, business and community needs.
• Adaptation - capacity to withstand disruption, act effectively in a crisis.
• Community Preparedness - understand outage risks and mitigate.
• Responsibility - individual and collaborative.
• Interdependencies - identification and management of risk.
• Financial Strength - capacity to deal with significant disruption.
• Continuous - on-going assurance and anticipation activities.
• Organisational Performance - leadership and culture.
New Zealand ports and freight yearbook 2017 | Port resilience
37
Resi
lienc
e ex
pect
atio
ns
Asse
ssed
re
silie
nce
Des
ired
m
ovem
ent
Indicator sources / points of assurance
Transport global: transport monitoring indicator framework (TIMF)Best practice asset management plans e.g. PA S 55 or IIMM 2011Business continuity management e.g. Standards NZ BCMAnnual financial reportsResilient organisations practices
Local roads
Suburban –
Main arterial with alternate –
Main arterial – no alternate –
Strategic freight routes
National roads
National with alternate –
National – no alternate
Road / rail link span
Cook Strait ferries & terminals –
Rail Suburban (incl rolling stock)
National (incl rolling stock)
Ports Individual ports – Compliance international ship and port security code
Ports with specialist facilities Compliance international ship and port security code
Ports network Compliance international ship and port security code
Airports Regional airports –
Airways NZ –
International airports –
Transport (example only)
Low resilience Medium resilience High resilience
The gap analysis for Transport identified 5 areas requiring improvements. An example of this is presented below.
Resilient infrastructure and specifically resilient transport infrastructure is vital to our modern society and economy. The increased frequency, intensity and awareness of global hazard events mean that building resilience is a justified and important goal.
Source: National Infrastructure Plan
Port performance
New Zealand ports and freight yearbook 2017 | Port performance
38
New Zealand ports and freight yearbook 2017 | Port performance
39
Operations
Source: Annual reports
1.0
0.8
0.6
0.4
0.9
0.7
0.5
0.30.20.1
AKL NPE NSN LYT POE BLUTRG NPL WLG MLB TIU0
NZ container throughput (million TEU)
2013 2014 2015 2016
• Major container ports: TRG and AKL continue to be the dominant players in the market with a combined market share of 62% of all containers handled. – TRG: TRG is now New Zealand’s largest port by container throughput, handling a record 0.95 million TEU in 2016. TRG overtook AKL for the first time in container throughput in 2016. TRG is the only port with capacity for ships >6500 TEU.
– POAL: AKL moved to be the second largest container port in 2016, handling 0.91 million TEU. The Port has several initiatives to boost the Fergusson container terminal capacity, completing the reclamation, building the North berth, and partially automating the terminal.
• Highest growth: TRG container volumes have grown over the last year with TEU increasing 11.76% from circa 850,000 TEU to approximately 950,000 TEU. TIU container volumes continued to grow following its alliance with TRG. NPE, LYT, WLG and NSN also saw growth in container volumes from 2015.
• Other movements: BLU container volumes declined slightly, due to weaker imports for the dairy sector (high-end stock food and fertiliser).
New Zealand ports and freight yearbook 2017 | Port performance
40
Composition
800
1,000
600
400
200
0
400
200
0
100
200
0
12 month rolling TEU totals (thousand TEU)
Domestic Tranship & other Import Export
Ports of Auckland
1713 14 15 16
Tauranga
1713 14 15 16
Lyttelton
1713 14 15 16
Napier
1713 14 15 16
Otago
1713 14 15 16
Centreport
1713 14 15 16
Nelson
1713 14 15 16
Timaru
1713 14 15 16
Southport
1713 14 15 16
• Import volumes: AKL has the highest import volumes in the country, and accounts for close to 40% of the total import volumes. TRG import volumes have increased over the FY14-FY16 period.
• Export volumes: TRG has the highest export volumes in the country and accounts for approximately 40% of total export volumes.
• Domestic: AKL and LYT have the highest domestic volumes, together accounting for 56% of total domestic volumes.
• Transhipment: TRG has the highest transhipment volumes, accounting for 41% of total NZ transhipment numbers.
• Import-Export gap: AKL, TRG, & NPE all have a significant import and export imbalance. AKL import volumes are almost twice as large as export volumes. While TRG and NPE import volumes are almost two thirds of their export volumes. The rest of the ports have an Imports: Exports ratio of between 0.85-1.14.
• Port Taranaki does not have any container shipments.
Source: FIGS Source: FIGS March 2017 data tables
New Zealand ports and freight yearbook 2017 | Port performance
41
NZ port ship rates –containers/hour
FY2014 FY2015 FY2016Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec
AKL 77.2 83.6 74.6 81.4 88.6 91.3 87.0 81.2 85.1 82.8 79.4 79.4
LYT 57.9 58.1 62.0 60.9 59.5 61.3 64.4 61.7 62.5 55.1 68.1 58.7
NPE 50.0 48.3 56.1 58.3 61.3 54.4 60.5 58.4 57.4 54.9 57.0 57.2
OTE 61.1 59.1 59.2 59.3 60.9 58.4 56.4 62.9 62.5 60.0 60.8 61.4
TRG 74.9 76.3 77.1 76.9 80.8 83.0 82.9 86.6 85.7 82.9 88.8 89.8
WLG 65.3 65.6 58.9 58.1 54.4 48.1 51.6 52.8 46.5 52.0 51.3 52.6
NZ 64.4 65.1 64.6 65.8 67.6 66.1 67.1 67.3 66.6 64.6 67.6 66.5
NZ port vessel rates – containers/labour hour
FY2014 FY2015 FY2016
Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec
AKL 68.5 73.7 65.6 72.8 73.4 80.1 77.2 72.3 75.0 72.6 70.1 71.4
LYT 43.5 44.0 45.5 44.4 41.9 42.8 47.3 50.1 51.5 44.5 54.6 47.7
NPE 37.1 36.5 43.2 44.0 45.2 43.1 44.6 45.0 41.0 39.9 41.2 40.6
OTE 49.7 47.5 47.5 48.4 50.1 47.8 45.5 52.5 51.2 49.4 48.6 50.6
TRG 62.3 62.3 61.0 63.7 65.1 52.4 67.5 70.5 66.9 66.1 69.7 70.7
WLG 55.7 58.1 49.3 51.5 47.0 39.1 44.8 47.7 39.4 42.2 43.9 46.2
NZ 52.8 53.7 52.0 54.1 53.8 52.6 54.5 56.3 54.2 52.4 54.7 54.5
NZ port crane rates – crane lifts/hour
FY2014 FY2015 FY2016Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec
AKL 33.3 34.0 33.1 33.3 36.4 37.3 36.7 36.1 37.3 36.2 35.0 34.9
LYT 28.8 27.3 30.1 30.5 30.4 31.4 31.9 31.3 32.7 31.5 33.5 30.4
NPE 23.0 22.3 24.7 23.8 24.2 23.4 24.9 24.4 23.1 22.6 23.8 23.8
OTE 32.3 32.6 34.9 33.6 33.9 32.2 32.7 33.6 34.0 33.0 33.1 34.7
TRG 36.7 37.2 36.2 34.8 36.4 35.6 35.9 35.6 35.7 35.2 35.9 35.9
WLG 34.2 34.5 32.7 32.0 30.9 28.9 29.8 30.0 27.9 31.2 32.7 33.7
NZ 31.4 31.3 32.0 31.3 32.0 31.5 32.0 31.8 31.8 31.6 32.4 32.2
4.0
3.0
2.0
3.5
2.5
NZ port crane rates
80.0
60.0
40.0
70.0
50.0
100.0
90.0
NZ port ship rates
70.0
50.0
30.0
60.0
40.0
90.0
80.0
NZ port vessel rates
AKL LYT NPE OTE
TRG WLG NZ Average
2009 2010 2011 2012 2013 2014 2015 2016
Mar
Sep
Mar
Sep
Mar
Sep
Mar
Sep
Mar
Sep
Mar
Sep
Mar
Sep
Mar
Sep
Container terminal efficiency
Source: FIGS rolling totals (note not year end)
New Zealand ports and freight yearbook 2017 | Port performance
42
Port utilisation
Container ship utilisation:
• Major container ports (AKL, TRG, LYT) had the highest container ship utilisation, followed by POE and BLU.
• AKL has significantly higher crane utilisation than other ports.
• NPL estimate is excluded, due to low levels of containers recorded in FY16
Bulk terminal utilisation:
• AKL had the highest bulk terminal utilisation (Bulk Tonnes/Bulk Terminal ha) and TRG the highest land utilisation (bulk tonnes/ general wharf metre).
Container terminal utilisation:
• AKL had the highest container land utilisation (TEU/Terminal ha)
• AKL and TRG had the highest TEU throughput / container wharf metre
• Estimates for NPL, MLB and LYT were excluded due to a lack of container wharf.
Source: Deloitte, Port, Annual ReportsSource: Deloitte, Port, Annual Reports
Source: Deloitte, Port, Annual Reports
1,600
1,200
800
400
1,400
1,000
600
200
AKL NPE WLG MLB LYTTRG NPL NSN POE BLUTIU0
180,000
140,000
100,000
40,000
160,000
120,000
80,00060,000
20,0000
TEU / Container Ship TEU / Container Crane
Containership utilisation (TEU per year)
1,200
800
400
1,400
1,000
600
200
AKL NPE WLG MLB LYTTRG NPL NSN POE BLUTIU0
25,000
15,000
30,000
20,000
10,000
5,000
0
TEU / Container Wharf Metre TEU / Terminal ha
Container terminal utilisation (TEU per year)
700,000
500,000
300,000
800,000
600,000
400,000
200,000
100,000
LYT0
10,000
6,000
12,000
8,000
4,000
2,000
0
Bulk Tonnes / Bulk Terminal ha Bulk Tonnes / General Wharf Metre
Bulk terminal utilisation
BLUPOETIUMLBNSNWLGNPENPLTRGAKL
New Zealand ports and freight yearbook 2017 | Port performance
43
Financials
250
150
50
300
200
100
0
Revenue ($ million)
2012 2013 2014 2015 2016
BLUPOETIULYTMLBNSNWLGNPENPLTRGAKL
1639 2878
250
150
50
300
200
100
0
Profitability ($ million)
NPAT Tax Interest Depreciation Expenses
BLUPOETIULYTMLBNSNWLGNPENPLTRGAKL
Drivers for revenue increases included improved port operations, container and cargo tonnage volume growth, and increased cruise ship activity.
• Ports with revenue increases: Reported revenue has increased for 6 ports in FY2016. Ports reporting revenue increases include NPE (rising log volumes), WLG (increased container and log volumes), NSN (increased container throughput), MLB (increased cargo tonnes), TIU (revenue up 5% despite lower trade volumes, offset by log exports and cement trade) and BLU (higher bulk cargo tonnages).
• TRG reported the highest revenues for the year at $245.5m despite revenue falling from prior year.
• Ports with revenue decreases: Ports reporting a revenue decrease include AKL (reduced container volumes), TRG (cargo handling & exports down), NPL (trade volumes and vessel numbers down), and LYT (reduced volumes).
• POE remained relatively stable over the 15/16 period with the total revenue of $81m including dividends received and other revenue.
All ports reported positive profits in 2015. In 2016, all ports reported positive profits with the exception of Lyttelton which posted a loss.
• Ports with profitability increases: Auckland saw reported profit increase from $63m to $84m. Centerport Wellington also saw significant increase in profit from $8m to $18m. Other ports with small increases in profit included Timaru and Southport.
• Ports with profitability decreases: Other ports saw lower profitability levels due to factors such as decreased volumes, increased competition for market share and flat or rising expenses such as employees, financing costs, and revaluation changes. Lyttelton reported a significant loss due to an impairment booked at 30 June 2016.
Source: Deloitte, Port, Annual Reports Source: Deloitte, Port, Annual Reports
New Zealand ports and freight yearbook 2017 | Port performance
44
2012 2013 2014 2015 2016
100
60
20
120
80
40
Capital expenditure (Real 2016 $ millions)
0
BLUPOETIULYTMLBNSNWLGNPENPLTRGAKL
All port shareholders received a dividend in 2016.
• BLU announced a 10% dividend uplift after a record year for revenue and profit.
• LYT is in a development phase with paid dividends decreasing to reflect this. Cash is mostly allocated to future capital projects. (LYT website CE statement).
• TRG paid a dividend of $72.1m, in line with increased revenue and profit.
• AKL paid dividends of $42.2m, comprising of the FY16 interim dividend and FY15 final dividend. Total FY16 dividends declared amount to $54.3m after a final dividend was announced following an improved profit in FY16.
70
50
30
80
60
40
20
Cash dividends paid ($ million)
10
0BLUPOETIULYTMLBNSNWLGNPENPLTRGAKL
2012 2013 2014 2015 2016 2012 2013 2014 2015 2016
100
60
20
120
80
40
Capital expenditure (Real 2016 $ millions)
0
BLUPOETIULYTMLBNSNWLGNPENPLTRGAKL
Large capital investments are underway for many of the ports. Port development includes:
• AKL acquired 33ha for a new freight hub.
• TRG approached the end of its $350m capital programme.
• LYT had significant spend on land improvements and harbour structures – Cashin Quay 2 wharf was opened in February 2016 and its second inland port became operational in June 2016.
• POE commenced stage 2 of industrial land development in Hamilton and deepening of the channel to 14m.
Source: Deloitte, Port, Annual ReportsSource: Deloitte, Port, Annual Reports
Financials
New Zealand ports and freight yearbook 2017 | Port performance
45
300
200
100
50
350
250
150
Cash net debt ($ million)
0LYT BLUPOETIUMLBNSNWLGNPENPLTRGAKL
2011 2012 2013 2014 2015 2016
New Zealand ports are investing for the next generation of ships and improving port infrastructure.
Total net debt (interest bearing debt less cash) in 2016 was $937m, up from $810 million in 2015. This excludes LYT, which had negative net debt in both periods.
• AKL interest bearing liabilities increased 20% on FY15.
• LYT remains debt free following an insurance settlement in 2014.
• TRG net interest bearing debt is up 7% on FY15.
• TIU saw borrowings increase by over 400%, in line with increases in fixed assets as it purchased 2.1 hectares of land and extended its Eastern Extension Breakwater.
50%
40%
30%
20%
45%
35%
25%
15%
10%
5%
0
14.0
10.0
6.0
2.0
12.0
8.0
4.0
0
Debt covenants
Gearing (D/D + E) (LHS) Interest Cover (RHS)
LYT BLUPOETIUMLBNSNWLGNPENPLTRGAKL
The above ratios indicate a company’s capacity for additional borrowing and ability to service current debt levels.
• The gearing ratio is calculated as debt divided by debt plus equity.
• The average gearing ratio in 2016 was 17%, up from 15.4% in 2015.
• The interest cover ratio is calculated as normalised EBIT (removal of associate or joint venture earnings and abnormal items) divided by net interest expense.
• AKL has increased interest cover ratio compared to 2015
• WLG has 2.3 times interest coverage, reflecting that its investment property portfolio records the lowest ratio.
• BLU had 18 times interest coverage, with increased operating profit and decreased interest expense.
• POE had increased interest coverage from 6.6 in FY15 to 10.5 in FY16 despite reduced EBIT, due to reduced interest expense from $4.2m to $2.2m.
Source: Deloitte, Port, Annual Reports Source: Deloitte, Port, Annual Reports
Financials
New Zealand ports and freight yearbook 2017 | Port performance
46
Du Pont analysis
AKL TRG NPL NPE WLG NSN MLB LYT TIU POE BLU NZ
Net Profit Margin 30.5% 31.5% 19.9% 15.8% 27.1% 9.5% 14.8% -82.9% 22.3% 24.6% 23.2% 14.1%
Asset Turnover 20.8% 18.6% 24.8% 24.0% 22.0% 22.7% 15.0% 21.2% 20.7% 16.3% 69.3% 20.6%
Return on Assets 6.4% 5.8% 4.9% 3.8% 6.0% 2.2% 2.2% -17.6% 4.6% 4.0% 16.0% 2.9%
Equity Multiplier 1.58 1.49 1.34 1.61 1.62 1.37 1.41 1.06 1.60 1.24 1.49 1.42
Return on Equity 10.0% 8.7% 6.6% 6.1% 9.7% 2.9% 3.1% -18.7% 7.4% 5.0% 23.9% 4.2%
Source: Annual reports, Deloitte
Du Pont analysis breaks down Return on Asset (ROA) and Return on Equity (ROE) into their components making it possible to identify the causes of variation in ratios between ports based on company specific factors.
Definitions of metrics:
• ROA is a firm’s asset turnover multiplied by its net profit margin.
• The equity multiplier is the ratio of assets divided by equity.
• ROE is the product of ROA and a firm’s equity multiplier.
• Asset turnover measures how well a company utilises its assets to generate sales (sales divided by assets).
• Net profit margin (net profit after tax divided by sales) measures how much of every $1 of revenue a firm converts into net profit.
Port comments:
• AKL and TRG show the highest net profit margins across all ports with margins over 30%. LYT generated a significant net loss as a result of property, plant and equipment impairment.
• Excluding the outliers (AKL, TRG and LYT), the remaining ports have an average net profit margin of 20% (12.8% - 27.1%).
• BLU exhibited the highest asset efficiency compared to other ports.
• Equity multiplier ratios are influenced by the gearing level of the ports. The ratio continues with the same nationwide average around 1.4 as 2015. AKL, NPE, WLG and TIU, which all have relatively higher levels of debt compared to the other ports consequently have higher equity multipliers.
• BLU once again has the highest ROE, which is attributable to an exceptionally high asset turnover rate (more than double the next highest rate).
New Zealand ports and freight yearbook 2017 | Port performance
47
New Zealand port summary – NZ$ million
FY 2016 AKL TRG NPL NPE WLG NSN MLB LYT TIU POE BLU
Income Statement
Revenue 211.1 245.5 44.7 72.7 76.2 45.5 25.8 105.7 16.1 81.0 36.7
Revenue - Port 204.9 207.9 44.7 72.6 72.5 40.3 16.0 105.7 13.1 63.9 36.7
Expenses 103.5 115.8 25.0 42.2 53.7 27.2 13.8 82.3 9.7 49.9 21.1
Gross Profit 107.6 129.7 19.6 30.4 22.5 18.3 12.1 23.4 6.4 31.1 15.6
Associate Earnings 1.2 13.4 - (0.0) 13.3 - - - - 0.3 -
One-Offs 27.2 (0.0) - - (3.8) (3.4) (2.7) (99.5) 0.2 19.7 0.2
EBITDA 135.9 143.2 19.6 30.4 32.0 14.9 9.4 (76.1) 6.5 51.1 15.8
Deprn&Amort 24.5 23.7 6.0 10.3 6.9 5.3 3.4 14.4 1.2 8.1 3.0
EBIT 111.5 119.4 13.7 20.1 25.1 9.6 6.0 (90.5) 5.3 43.0 12.8
Net Interest Expense 11.5 16.3 1.3 4.2 6.8 1.6 3.3 (8.2) 0.5 2.2 0.7
Taxation Expense 15.9 25.8 3.4 4.5 0.4 2.7 0.8 (22.4) 1.3 6.7 3.4
Reported Profit 84.0 77.3 8.9 11.5 17.9 5.3 1.8 (59.8) 3.5 34.1 8.7
Other Comprehensive Income 67.6 (8.4) 7.4 (2.3) - (1.6) 20.6 (0.2) 0.6 (0.3) -
Comprehensive Income 151.6 68.9 16.3 9.2 17.9 3.6 22.5 (60.0) 4.1 33.8 8.7
Normalised Profit 64.6 77.3 8.9 11.5 20.6 4.3 3.8 (87.7) 3.6 19.9 8.5
Cashflow Statement summary
Net Operating CF 78.6 88.1 13.7 23.1 18.7 12.0 6.9 20.4 5.0 18.2 12.0
Balance Sheet
Total Assets 1,013.1 1,322.4 180.0 302.6 345.8 200.6 172.3 498.6 77.5 497.1 53.0
Net Debt 255.2 308.6 34.9 79.2 101.9 29.2 31.2 (165.2) 25.6 61.3 9.8
SHF 642.0 885.7 134.5 188.2 213.1 146.6 121.9 469.1 48.3 401.7 35.6
Ratios
Share of NZ Sales 22.0% 25.5% 4.7% 7.6% 7.9% 4.7% 2.7% 11.0% 1.7% 8.4% 3.8%
Gearing (D/D+E) 28.4% 25.8% 20.6% 28.4% 32.3% 16.6% 20.4% 34.6% 13.2% 21.6%
Gearing ex Revaluations 35.5% 44.4% 31.2% 37.6% 40.4% 34.3% 15.2% 44.9% 13.2% 21.6%
EBIT Margin 52.8% 48.6% 30.6% 27.7% 32.9% 21.0% 23.0% -85.6% 33.1% 53.1% 34.8%
ROE 10.0% 8.7% 6.6% 6.1% 9.7% 2.9% 3.1% -18.7% 7.4% 5.0% 23.9%
ROA 6.4% 5.8% 4.9% 3.8% 6.0% 2.2% 2.2% -17.6% 4.6% 4.0% 16.0%
Source: Annual reports, Deloitte
Port comparator tables
New Zealand ports and freight yearbook 2017 | Port performance
48
Port facilities & capacity comparison
AKL TRG NPL NPE WLG NSN MLB LYT TIU POE BLU
Port Harbour Type Natural Natural Breakwater Breakwater Natural Natural Natural Natural Breakwater Natural Natural
Draught (m) (min) 12.5 14.5 12.5 12.41 11.4 10.3 13.5 12.4 11.6 13.5 7
Port Operating Land (ha) 77 190 65 67.1 70 45 10 90 40 25 40
Container Terminal Area (ha) 34 75 2 24 24 9 0 14 10 15 3
Total Wharf Length (km) 3.27 2.83 1.72 1.61 3.40 1.17 0.62 2.70 1.51 2.83 1.92
Container Wharf Length (km) 0.65 0.77 0.42 0.39 0.59 0.48 0.00 0.59 0.46 0.60 0.43
Quay Cranes 5 8 0 2 4 0 2 0
Mobile Cranes 0 0 3 6 0 3 2 3 0 2
Forklifts/Stackers 13 0 4 31 15 24 8 14 5 7
Straddles 39 46 0 12 24 0 15 0
Reefer Slots 1,467 2,090 192 1,111 450 765 546 750 1,850 200
Tugs 4 3 3 2 2 3 2 2 3 3
Pilot Launches 2 2 2 1 2 1 1 1 2 1
Rail Connection Yes Yes Yes Yes Yes No Yes Yes Yes Yes Yes
Bulk Tonnes Handled (millions) 5.8 20.1 5.2 2.03 2.0 1.4 0.8 5.8 1.4 1.3 2.7
Bulk Ship Calls (est) 780 1,482 522 263 291 651 186 726 316 178 268
TEU Throughput (000) 907.1 954.0 257.4 131.6 96.5 387.7 84.4 172.4 35.1
Container Ship Calls (est) 599 845 0 380 234 210 391 130 208 49
Bulk Tonnes / Bulk Terminal ha 725,000 173,552 116,854 132,008 43,792 38,889 78,691 46,667 134,300 72,973
TEU / Terminal ha 24,117 12,788 10,725 5,417 10,722 8,440 11,493 11,700
Bulk Tonnes / General Wharf Metre 773 9,771 4,000 1,667 711 2,003 1,269 1,340 601 1,811
TEU / Container Wharf Metre 1,315 1,239 660 225 203 654 183 289 82
Bulk Tonnes / Ship 19,333 13,549 9,962 7,700 6,873 2,151 4,231 4,430 7,545 10,075
TEU / Container Ship 1,336 1,130 677 563 460 992 649 829 716
TEU / Container Crane 160,020 119,251 42,900 65,823 32,166 96,925 28,133 86,200 17,550
Ship Rate 81.5 86.9 56.5 50.7 60.5 61.2
Vessel Rate 72.2 68.5 40.6 43.5 49.1 50.0
Crane Rate 35.8 35.7 23.3 29.7 31.9 33.7
Source: Company Reports, Deloitte, MoT, Port Management
New Zealand ports and freight yearbook 2017 | Port summaries
Ports of Tauranga (TRG)
Ports of Napier (NPE)
CentrePort (WLG)
Lyttelton Port of Christchurch (LYT)
PrimePort Timaru (TIU)
Port Otago (POE)
Northport (NTH)
Ports of Auckland (AKL)
Port Taranaki (NPL)
Port Marlborough (MLB)Port Nelson (NSN)
Southport (BLU)
Eastland Port(EST)
New Zealand ports and freight yearbook 2017 | Port summaries
50
Port summaries
New Zealand ports and freight yearbook 2017 | Port summaries
51
Ports of Auckland – AKLOverview
AKL’s key facilities comprise its container and multi-purpose cargo terminals on the Waitemata Harbour (adjacent to Auckland’s CBD), and inland ports at Wiri, Mt Maunganui, and Longburn. The port also has ownership of NZX-listed Marsden Maritime Holdings, pilotage providers North Tugz, and commercial marine fuel supplier Seafuels. Auckland is the first port call for a number of international services, receiving full import containers and generating a strong flow of empty containers destined for export.
Port development • Lifted freight capacity following Kaikoura earthquake with daily
rail link between the port, inland hub at Wiri and Longburn in Palmerston North
• Acquired land north of Hamilton and has begun work to build Waikato freight hub
• A new 300m container wharf at Fergusson container terminal will be completed in 2017
• Investigating providing electricity to cruise ships to reduce carbon emissions
• Work has begun on partially automating Fergusson container terminal • Developing North Island supply chain network • Investing in container terminal infrastructure, wharves and cranes • Announced strategic alliance with Napier Port
Trade • Container TEU: 907,099 (6.7% ↓) – in line with industry reduction in
container throughput • Vehicles: 248,065 (1.7% ↑) • Total Breakbulk: 5.79m tonnes of (2.2% ↓)
Financial performance • Revenues: $211.1m (3.3% ↓) • Expenses: $103.5m (21.9% ↓) – cost management and accounting
adjustments • Investment Property Valuation increase: $12.2m – improvements to
Wiri freight hub • Net Profit after Tax: $84m ($21m ↑ 32.9%) • Dividend of $54.3m paid to Auckland Council
Interim results • Revenue up 4% to $110.5m • Trading profit before income tax $36.9m, up 5.89% • Net profit after tax $29.3m compared with $31.6m for the same
period last year
Port Auckland – AKLIncome Statement FY14 FY15 FY16
Revenue 220.8 218.3 211.1
Revenue Port Operations 216.1 217.3 204.9
Operating Expenses 115.3 132.5 103.5
Gross Profit 105.5 85.8 107.6
Associate/JV Earnings 3.1 2.0 1.2
One Offs / Other Items 4.2 15.5 27.2
EBITDA 112.7 103.3 135.9
Depreciation & Amortisation 23.8 21.1 24.5
EBIT 88.9 82.2 111.5
Net Interest Expense 11.3 11.2 11.5
Taxation 3.6 7.8 15.9
NPAT 74.0 63.2 84.0
Other Comprehensive Income 4.5 17.8 67.6
Comprehensive Income 78.5 81.0 151.6
June Balance DateBalance Sheet FY14 FY15 FY16
Current Assets 35.7 30.2 60.9
Fixed Assets 617.3 666.6 752.9
Intangibles 15.3 17.2 19.0
Deferred Tax Benefit - - -
Investments 4.1 9.6 6.0
Other Assets 103.9 126.4 174.3
Total Assets 776.3 850.1 1,013.1
Current Liabilities 34.9 48.0 47.8
Debt 186.9 212.9 246.8
Other Non Current Liabilities 61.2 67.8 76.6
Shareholders’ Funds 493.4 521.3 642.0
Total Liabilities/SHF 776.3 850.1 1,013.1
Cashflow
Operating Cash Received 257.7 266.5 233.7
Operating Cash Paid 163.9 182.3 155.1
Net Operating Cash Flow 93.8 84.2 78.6
less Asset Purchases 29.2 43.3 82.4
less Dividends Paid 51.0 54.8 42.2
Funding Surplus (Deficit) 13.6 (13.9) (46.1)
Proceeds of Asset Sales 3.3 2.2 0.1
Increase in Net Debt (16.9) 11.7 46.0
Equity Raised - - -
Funding Provided (13.6) 13.9 46.1
Source: Company Reports, DeloitteRevaluation reserves
1,000
600
200
1,200
800
400
0
Balance sheet – Auckland
SHF (ex revals) Debt
Liabilities Total assets
1998 2001 2004 2007 2010 2013 2016
250
150
50
300
200
100
0
Income statement – Auckland
Reported profit InterestTax
Depreciation RevenuesExpenses
1998 2001 2004 2007 2010 2013 2016
New Zealand ports and freight yearbook 2017 | Port summaries
52
Port of Tauranga – TRGOverviewTRG’s key facilities include the Mount Maunganui bulk terminal, Sulphur Point container terminal, MetroPort and its South Auckland inland container port. The port has a high degree of vertical integration with interests in other ports, stevedoring, and freight transport.
Port development • Completed its dredging programme to widen and deepen port channels.
• This was part of its $350 million capital expenditure programme.
• First 9,500 TEU ships to start calling at Port of Tauranga in October – after channel dredging (12.9m to 14.5m inside harbour, 15.8m outside)
• Two additional cranes and 13 additional straddles delivered
• Timaru Container Terminal reached an all-time record in container volumes – of 84,402 TEUs (↑ 18%)
Trade • Container TEU: 954,006 (12.1% ↑)
• Total Cargo Handling: 20.1m tonnes (0.3% ↓)
• Total Exports: 13.1m tonnes (1.2% ↓)
• Largest port in New Zealand
Financial performance • Revenues: $245.5m (9% ↓)
• Operating Expenses: $115.8m (15% ↓)
• Net Profit After Tax: $77.3m (2.4% ↓)
• Gearing Ratio: 24%
• Fully imputed special dividend paid of 25 cents per share
Interim results • The port announced an 8.5 per cent lift in group half year net profit to $41.9 million.
• Revenue is up 2.8 per cent to $125.3 million. • Soon to become the first port in the country to handle more than 1 million containers in a year.
Port of Tauranga – TRGIncome Statement FY14 FY15 FY16
Revenue 266.3 268.5 245.5
Revenue Port Operations 189.7 200.1 207.9
Operating Expenses 134.3 136.0 115.8
Gross Profit 132.0 132.5 129.7
Associate/JV Earnings 9.4 10.3 13.4
One Offs / Other Items 0.1 0.7 (0.0)
EBITDA 141.5 143.5 143.2
Depreciation & Amortisation 22.4 23.2 23.7
EBIT 119.1 120.0 119.4
Net Interest Expense 14.3 14.8 16.3
Taxation 26.6 26.2 25.8
NPAT 78.3 79.1 77.3
Other Comprehensive Income 3.3 64.5 (8.4)
Comprehensive Income 81.6 143.6 68.9
June Balance DateBalance Sheet FY14 FY15 FY16
Current Assets 41.2 59.0 53.2
Fixed Assets 998.7 1,097.4 1,127.4
Intangibles 43.9 21.4 18.4
Deferred tax benefit
Investments 71.1 119.0 123.3
Other Assets - 0.3 -
Total Assets 1,155 1,297.0 1,322
Current Liabilities 31.8 33.8 42.4
Debt 256.3 305.4 320.2
Other Non Current Liabilities 54.3 70.3 74.1
Shareholders’ Funds 812.4 887.6 885.7
Total Liabilities/SHF 1,155 1,297 1,322
Cashflow
Operating Cash Received 262.8 270.9 249.1
Operating Cash Paid 180.4 180.3 161
Net Operating Cash Flow 82.4 90.6 88.1
less Asset Purchases 97.2 66.0 60.7
less Dividends Paid 63.0 69.4 72.1
Funding Surplus (Deficit) (77.8) (44.8) (44.7)
Insurance Proceeds - - -
Proceeds of Asset Sales 4.4 2.6 11.0
Dividends from Associates 8.2 8.5 8.7
Increase in Net Debt 65.3 33.5 25.0
Equity Raised 0.0 0.2 0.0
Funding Provided 77.8 44.8 44.7
Source: Company Reports, Deloitte
250
150
50
300
200
100
0
Income statement – Tauranga
Reported profit InterestTax
Depreciation RevenuesExpenses
1998 2001 2004 2007 2010 2013 2016
1,250
750
250
1,500
1,000
500
0
Balance sheet – Tauranga
1998 2001 2004 2007 2010 2013 2016
Revaluation reservesSHF (ex revals) Debt
Liabilities Total assets
New Zealand ports and freight yearbook 2017 | Port summaries
53
Port Taranaki – NPL
Overview NPL is the only deep water port on New Zealand’s western seaboard and services bulk liquids (serving the region’s oil and gas industry), dry bulk (logs, fertiliser, stock feed) and project cargo.
Port development
• NPL will get a new $12 million tug in 2018.
• Purchased second set of ShoreTension units to dampen the motion of vessels while berthed.
• Purchased Omata tank farm.
• Purchased terminal on Centennial Dr and signed deal with BP NZ to allow increased fuel supplies to be shipped to Taranaki rather than being trucked in.
Trade
• Total Trade Volumes: 5.15m tonnes (8.1% ↓)
• Cargo vessel arrivals (24.9% ↓)
• 357,000 JAS logs exported (70% ↑)
Financial performance
• Revenues: $44.7m (10.6% ↓) – due to reductions in volumes of exports, imports, bulk dry volumes and bulk liquids.
• Operating Expenses: $25.0m (3.8% ↓)
• Net Profit After Tax: $8.9m (22% ↓)
• Gearing Ratio: 25.0%
Interim results
• Port Taranaki Ltd post a net half-year profit after tax of $4.57m, up 1.5%
• Revenue from operating activities dropped by 4% to $21.3 million.
Port Taranaki – NPLIncome Statement FY14 FY15 FY16
Revenue 55.2 49.3 44.7
Revenue Port Operations 49.4 46.8 44.7
Operating Expenses 30.5 26.0 25.0
Gross Profit 24.7 23.3 19.6
Associate/JV Earnings - - -
One Offs / Other Items (0.2) 0.0 -
EBITDA 24.5 23.3 19.6
Depreciation & Amortisation 6.2 6.0 6.0
EBIT 18.3 17.3 13.6
Net Interest Expense 1.9 1.3 1.3
Taxation 4.6 4.6 3.4
NPAT 11.7 11.4 8.9
Other Comprehensive Income 0.7 (1.8) 7.4
Comprehensive Income 12.4 (1.8) 16.2
June Balance DateBalance Sheet FY14 FY15 FY16
Current Assets 8.4 6.4 10.8
Fixed Assets 151.5 155.6 167.6
Intangibles 0.5 0.8 0.7
Deferred Tax Benefit 0.6 0.7 0.9
Investments - - -
Other Assets - - -
Total Assets 162.3 163.5 180.0
Current Liabilities 11.5 8.8 7.6
Debt 32.0 30.0 35.2
Other Non Current Liabilities 1.5 31.9 2.8
Shareholders’ Funds 117.3 122.8 134.5
Minority interests - - -
Total Liabilities/SHF 162.3 163.5 180.0
Cashflow
Operating Cash Received 59.9 60.1 50.8
Operating Cash Paid 41.1 41.8 37.1
Net Operating Cash Flow 18.8 18.4 13.7
less Earthquake Costs - - -
less Asset Purchases 11.0 11.3 15.4
less Dividends Paid 3.7 4.1 4.5
Funding Surplus (Deficit) 4.1 3.0 (6.2)
Insurance proceeds - -
Proceeds of Asset Sales 0.0 0.3 0.1
Dividends from Associates - - -
Increase in Net Debt (4.2) (3.3) 6.1
Funding Provided (4.1) (3.0) 6.2
Source: Company Reports, Deloitte
50
30
10
60
40
20
0
Income statement – New Plymouth
Reported profit InterestTax
Depreciation RevenuesExpenses
1998 2001 2004 2007 2010 2013 2016
120
240
180
60
0
Balance sheet – New Plymouth
1998 2001 2004 2007 2010 2013 2016
Revaluation reservesSHF (ex revals) Debt
Liabilities Total assets
54
Port of Napier – NPE
Overview NPE is New Zealand’s fourth largest container terminal by total TEUs. The port’s productive hinterland and outreach initiatives drive its throughput with key trades including agricultural produce and forestry.
Port development
• Announced deal with KiwiRail to run dedicated log service from Wairoa to port next year.
• Port alliance between Ports of Auckland and NPE.
• Proposing to build a new wharf at northern end of container terminal.
Trade
• Container TEU: 257,380 (0.4% ↑)
• Total Volume: 3.9m (3.8% ↓)
• Log Volume: 1.21m tonnes (8.7% ↑)
• Bulk Cargo: 2.025m tonnes (3.6% ↓)
Financial performance
• Revenues: $72.7m (0.8% ↑)
• Operating Expenses: $42.2m (0.2% ↓)
• Net Profit After Tax: $11.5m (11.3% ↓)
• Gearing Ratio: 30%
Port of Napier – NPEIncome Statement FY14 FY15 FY16
Revenue 67.0 72.1 72.7
Revenue Port Operations 67.0 72.0 72.6
Operating Expenses 38.2 42.3 42.2
Gross Profit 28.8 29.7 30.4
Associate/JV Earnings - - (0.0)
One Offs / Other Items 0.5 - -
EBITDA 29.3 29.7 30.4
Depreciation & Amortisation 7.2 7.6 10.3
EBIT 22.1 22.2 20.1
Net Interest Expense 3.6 4.2 4.2
Taxation 5.0 5.1 4.5
NPAT 13.4 12.9 11.5
Other Comprehensive Income (0.1) (2.2) (2.3)
Comprehensive Income 13.3 10.7 9.2
June Balance DateBalance Sheet FY14 FY15 FY16
Current Assets 6.6 8.1 8.4
Fixed Assets 260.0 288.7 288.1
Intangibles 0.9 1.2 1.9
Deferred tax benefit
Investments 7.2 2.9 3.8
Other Assets 0.3 0.7 0.4
Total Assets 275.1 301.5 302.6
Current Liabilities 9.9 8.5 9.6
Debt 62.8 84.3 79.7
Other Non Current Liabilities 18.9 21.8 25.0
Shareholders’ Funds 183.6 186.9 188.2
Minority interests - - -
Total Liabilities/SHF 275.1 301.5 302.6
Cashflow
Operating Cash Received 68.9 73.3 73.4
Operating Cash Paid 45.5 52.4 50.3
Net Operating Cash Flow 23.4 20.9 23.1
less Earthquake Costs - - -
less Asset Purchases 19.2 35.1 10.5
less Dividends Paid 7.0 7.4 7.9
Funding Surplus (Deficit) (2.9) (21.6) 4.7
Insurance Proceeds - - -
Proceeds of Asset Sales 0.2 0.1 0.2
Dividends from Associates - - -
Increase in Net Debt 2.6 21.5 (4.9)
Equity Raised - - -
Funding Provided 2.9 21.6 (4.7)
Source: Company Reports, Deloitte
75
45
15
90
60
30
0
Income statement – Napier
Reported profit InterestTax
Depreciation RevenuesExpenses
1998 2001 2004 2007 2010 2013 2016
Revaluation reserves
250
150
50
300
200
100
0
Balance sheet – Napier
SHF (ex revals) Debt
Liabilities Total assets
1998 2001 2004 2007 2010 2013 2016
New Zealand ports and freight yearbook 2017 | Port summaries
55
Centreport – WLG
Overview Wellington services a diversified cargo base spanning containers, bulk trades (oil, logs), cruise, and interisland ferries. This activity is supplemented with other on-Port services including cold storage, and vanning / devanning.
Port development
• A number of its port buildings and commercial buildings were damaged in the 7.8 magnitude earthquake on 14 November 2016
• Regular container shipping is returning to Wellington, with weekly visits by a geared ship linking central region businesses with international markets
• Work is underway to secure the gantry cranes, as the Port develops plans to resume modified container operations within four to six months
• CentrePort’s key trades of ferries, fuel, logs, cars, and cruise ships continue to operate successfully
• CentreRail is a scheduled daily train service that links all of the key trade areas in the lower North Island and upper South Island with CentrePort. CentreRail - Waingawa Log Hub in Wairarapa completed.
• Interislander infrastructure improvements completed.
Trade
• Container TEU: 131,645 (23% ↑)
• Log Trade: 1,044,248 JAS cubic meters (19% ↑)
• CentrePort, its customers and suppliers support approximately $2.5b in GDP.
Financial performance
• Revenues: $76.2m (9.2% ↑)
• Expenses: $53.7m (11.9% ↑)
• Net Profit After Tax: $17.9m (27.9% ↑)
• Gearing Ratio: 32.6%
Centreport – WLGIncome Statement FY14 FY15 FY16
Revenue 65.9 69.8 76.2
Revenue Port Operations 60.8 66.2 72.5
Operating Expenses 44.3 48.0 53.7
Gross Profit 21.6 21.8 22.5
Associate/JV Earnings 1.8 7.6 13.3
One Offs / Other Items (8.5) (1.3) (3.8)
EBITDA 14.9 28.1 32.0
Depreciation & Amortisation 6.5 6.5 6.9
EBIT 8.4 21.6 25.1
Net Interest Expense 8.2 8.2 6.8
Taxation 2.1 (0.7) 0.4
NPAT (1.9) 14.0 17.9
Other Comprehensive Income (2.6) (0.4) -
Comprehensive Income (4.5) 13.7 17.9
June Balance DateBalance Sheet FY14 FY15 FY16
Current Assets 10.8 8.9 18.3
Fixed Assets 182.7 180.7 185.5
Intangibles 2.9 3.1 3.0
Deferred Tax Benefit - - 0.0
Investments 133.3 134.1 138.9
Other Assets - - -
Total Assets 329.8 326.8 345.7
Current Liabilities 11.1 8.9 9.8
Debt 114.8 103.0 102.9
Other Non Current Liabilities 8.7 12.8 20.0
Shareholders’ Funds 195.2 202.0 213.1
Total Liabilities/SHF 329.8 326.7 345.8
Cashflow
Operating Cash Received 68.6 74.3 81.3
Operating Cash Paid 54.3 57.0 62.6
Net Operating Cash Flow 14.3 17.3 18.7
less Asset Purchases 12.8 11.2 12.3
less Dividends Paid 3.5 6.9 6.8
Funding Surplus (Deficit) (2.1) (0.8) (0.4)
Proceeds of Asset Sales 0.0 11.5 -
Dividends from Associates - - -
Increase in Net Debt 2.1 (10.7) 0.4
Equity Raised - - -
Funding Provided 2.1 0.8 0.4
Source: Company Reports, Deloitte
75
45
15
90
60
30
0
Income statement – Wellington
Reported profit InterestTax
Depreciation RevenuesExpenses
1998 2001 2004 2007 2010 2013 2016
Revaluation reserves
375
225
75
450
300
150
0
Balance sheet – Wellington
SHF (ex revals) Debt
Liabilities Total assets
1995 1998 2001 2004 2007 2010 2013 2016
New Zealand ports and freight yearbook 2017 | Port summaries
56
Port Nelson – NSN
OverviewNSN occupies a sheltered corner of New Zealand, secured by a productive hinterland, topographical isolation, and the absence of a rail link. It owns a portfolio of properties within the Port area, with ongoing demand for industrial development. The port is heavily focused on export of the regions primary production, with key trades being wine, fish, fruit and forestry. Reflecting limited import demand, most import containers are empty. While its key trades are international exports, Nelson records a high level of transhipments.
Port development
• NSN is spending $60 million on consolidating cargo storage areas over the next three years in response to projected growth.
• Dredging of Caldwell Basin
• A new 13.000 square meter warehouse opened in February 2017
Trade
• Cargo Volumes: 2.7m tonnes (3.9% ↑)
• Container TEU: 96,497, record volumes (6.7% ↑)
• Increased demand following Kaikoura earthquake - NSN service
• QuayConnect handled 40% extra wine freight across the north of the South Island since the earthquake.
• Largest cruise ship to visit Nelson docked at port.
Financial performance
• Revenues: $45.5m (7.8% ↑)
• Expenses: $27.2m (10% ↑)
• Net Profit After Tax: $5.3m (29%↓) – includes Caldwell Basin dredging and stabilisation expenses of $2.7m and asset impairments of $0.7m
• Gearing Ratio: 17%
Port Nelson – NSNIncome Statement FY14 FY15 FY16
Revenue 43.3 42.2 45.5
Revenue Port Operations 36.8 36.3 40.3
Operating Expenses 24.5 24.7 27.2
Gross Profit 18.8 17.5 18.3
Associate/JV Earnings (0.2) (0.1) -
One Offs / Other Items (0.1) (0.1) (3.4)
EBITDA 18.5 17.3 14.9
Depreciation & Amortisation 5.5 5.2 5.3
EBIT 13.0 12.2 9.6
Net Interest Expense 2.2 1.8 1.6
Taxation 3.3 2.9 2.7
NPAT 7.6 7.5 5.3
Other Comprehensive Income 0.3 (1.0) (1.6)
Comprehensive Income 7.9 6.5 3.6
June Balance DateBalance Sheet FY14 FY15 FY16
Current Assets 7.9 7.1 11.4
Fixed Assets 169.0 164.6 171.7
Intangibles 0.5 0.4 0.3
Deferred tax benefit
Investments 12.9 15.0 16.6
Other Assets 0.2 0.1 0.6
Total Assets 190.5 187.1 200.6
Current Liabilities 7.8 9.2 15.7
Debt 27.0 22.1 29.5
Other Non Current Liabilities 8.7 8.1 8.8
Shareholders’ Funds 147.0 147.8 146.6
Minority interests - - -
Total Liabilities/SHF 190.5 187.1 200.6
Cashflow
Operating Cash Received 42.9 40.9 44.5
Operating Cash Paid 29.0 29.7 32.5
Net Operating Cash Flow 13.9 11.2 12.0
less Earthquake Costs - - -
less Asset Purchases 2.0 3.6 15.3
less Dividends Paid 5.2 4.7 4.7
Funding Surplus (Deficit) 6.7 2.9 (8.0)
Insurance Proceeds - - -
Proceeds of Asset Sales 3.3 0.5 -
Dividends from Associates - - -
Increase in Net Debt (10.0) (3.4) 8.0
Equity Raised - - -
Funding Provided (6.7) (2.9) 8.0
Source: Company Reports, Deloitte
50
30
10
60
40
20
0
Income statement – Nelson
Reported profit InterestTax
Depreciation RevenuesExpenses
1995 1998 2001 2004 2007 2010 2013 2016
Revaluation reserves
250
150
50
300
200
100
0
Balance sheet – Nelson
SHF (ex revals) Debt
Liabilities Total assets
1995 1998 2001 2004 2007 2010 2013 2016
New Zealand ports and freight yearbook 2017 | Port summaries
57
Port Marlborough – MLB
OverviewMLB remains New Zealand’s most diverse port company, spanning property, inter-island ferries, general wharves, a deep water bulk terminal, marinas, and aquaculture. Notably, MLB does not have a container terminal. The port’s primary trade is log exports.
Port development
• Hosted 35 cruise ship visits during 2015-16 season.
• Port’s tug Maungatea underwent significant refit.
• MLB trade negatively impacted post Kaikoura earthquake with freight shipped direct from Auckland to Lyttelton.
Trade
• Ferries: 3,534 (1.1% ↓)
• Log Volumes: 705,547 JAS cubic metres (0.4% ↓)
• Cement Volumes: 9,763 tonnes (56.3% ↑)
• Fish Volumes: 10,357 tonnes (22.1% ↑)
• Other Cargoes Volumes: 34,141 tonnes (4.6% ↑)
Financial performance
• Revenues - Port Installations and Services: $15.97m (5.8% ↑)
• Revenues - Investment Properties: $9.0m (4.6% ↑)
• Revenues - Marine Farm Facilities:$0.76m (6.8% ↑)
• Operating Expenses: $13.8m ( 6.2% ↑)
• Net Profit After Tax: $1.8m (65.1% ↓) – due to investment property devaluation
• Gearing Ratio: 20%
Port Marlborough – MLBIncome Statement FY14 FY15 FY16
Revenue 22.5 24.5 25.8
Revenue Port Operations 14.3 15.8 16.0
Operating Expenses 12.0 13.0 13.8
Gross Profit 10.5 11.4 12.0
Associate/JV Earnings - - -
One Offs / Other Items 0.0 0.4 (2.7)
EBITDA 10.5 11.8 9.4
Depreciation & Amortisation 2.1 2.3 3.4
EBIT 8.4 9.5 6.0
Net Interest Expense 1.2 2.9 3.3
Taxation 1.6 1.4 0.8
NPAT 5.6 5.2 1.8
Other Comprehensive Income - - 20.6
Comprehensive Income 5.6 5.2 22.5
June Balance DateBalance Sheet FY14 FY15 FY16
Current Assets 4.0 4.7 3.7
Fixed Assets 64.9 65.4 92.9
Intangibles 0.9 0.8 0.7
Deferred Tax Benefit - - -
Investments 74.0 75.8 75.0
Other Assets - - -
Total Assets 143.8 146.4 172.3
Current Liabilities 3.1 3.7 2.9
Debt 33.5 31.5 31.5
Other Non Current Liabilities 8.8 9.7 16.0
Shareholders’ Funds 98.5 101.6 121.9
Total Liabilities/SHF 143.8 146.4 172.3
Cashflow
Operating Cash Received 22.5 24.2 25.7
Operating Cash Paid 15.9 16.2 18.8
Net Operating Cash Flow 6.6 8.0 6.9
less Asset Purchases 6.8 3.8 6.0
less Dividends Paid 1.8 2.1 2.1
Funding Surplus (Deficit) (2.0) 2.2 (1.2)
Proceeds of Asset Sales - 0.0 -
Dividends from Associates - - -
Increase in Net Debt 2.0 (2.2) 1.2
Equity Raised - - -
Funding Provided 2.0 (2.2) 1.2
Source: Company Reports, Deloitte
25
15
5
30
20
10
0
Income statement – Marlborough
Reported profit InterestTax
Depreciation RevenuesExpenses
1995 1998 2001 2004 2007 2010 2013 2016
Revaluation reserves
150
90
30
180
120
60
0
Balance sheet – Marlborough
SHF (ex revals) Debt
Liabilities Total assets
1995 1998 2001 2004 2007 2010 2013 2016
New Zealand ports and freight yearbook 2017 | Port summaries
58
Lyttelton Port of Christchurch – LYT
OverviewLYT is positioned as the South Island gateway port, facilitating bulk trades, vehicle imports, and containerised trade. Key facilities include the Cashin Quay container terminal, specialist liquid, bulk and vehicle terminals, and a coal export facility. The CityDepot inland port in Woolston offers off-port warehousing and container park services.
Port development
• Officially opened its inland port at Rolleston.
• LYT is proposing to dredge the channel, deepening and widening it to allow larger ships access to the port. The resource consent is being processed.
• Building a new marina at the inner harbour pile moorings. First stage of a wider regeneration plan.
• Alliance formed with Ports of Auckland, KiwiRail and LYT in response to Kaikoura earthquake, moving freight between Auckland and Christchurch.
Trade
• 361,812 TEU
• 678,871 Bulk
• Crane rate 31.4
• Ship rate 59.8
• Coal load out rate (tonnes per day) 26,692
Financial performance
• Revenues: $105.7m (3.1% ↓)
• Operating Expenses: $82.3m (3.7% ↑)
• Earnings From Operating Activities: $-90.5m (623.1% ↓) – asset write-down
• Net Profit After Tax: $-59.8m (390.3% ↓)
• Gearing Ratio: no debt
Lyttelton Port of Christchurch – LYTIncome Statement FY14 FY15 FY16
Revenue 115.8 109.1 105.7
Revenue Port Operations 115.8 109.1 105.7
Operating Expenses 82.9 79.4 82.3
Gross Profit 33.0 29.6 23.4
Associate/JV Earnings - - -
One Offs / Other Items 336.8 - (99.5)
EBITDA 369.8 29.6 (76.1)
Depreciation & Amortisation 11.0 12.4 14.4
EBIT 358.7 17.3 (90.5)
Net Interest Expense (3.2) (12.2) (8.2)
Taxation 18.7 8.9 (22.4)
NPAT 343.2 20.6 (59.8)
Other Comprehensive Income 0.7 0.2 (0.2)
Comprehensive Income 343.9 20.8 (60.0)
June Balance DateBalance Sheet FY14 FY15 FY16
Current Assets 343.9 210.6 193.5
Fixed Assets 248.9 327.9 296.5
Intangibles 4.2 10.8 7.7
Prepayments - - 0.8
Investments - 40.0 -
Other Assets 0.4 0.2 0.1
Total Assets 597.5 589.5 498.6
Current Liabilities 28.0 23.8 23.9
Debt - - -
Other Non Current Liabilities 36.4 34.0 5.6
Shareholders’ Funds 533.1 531.7 469.1
Total Liabilities/SHF 597.5 589.5 498.6
Cashflow
Operating Cash Received 118.3 118.3 111.3
Operating Cash Paid 91.6 93.9 90.9
Net Operating Cash Flow 26.6 24.4 20.4
less Earthquake Costs 15.1 - -
less Asset Purchases 43.2 98.0 79.1
less Dividends Paid 2.0 22.2 2.6
Funding Surplus (Deficit) (33.7) (95.8) (61.4)
Insurance Proceeds 385.3 - -
Proceeds of Asset Sales 0.1 0.1 0.1
Dividends from Associates - - -
Increase in Net Debt (351.7) 95.7 61.3
Equity Raised - - -
Funding Provided 33.7 95.8 61.4
Source: Company Reports, Deloitte
200
400
300
100
0
Income statement – Lyttelton
Reported profit InterestTax
Depreciation RevenuesExpenses
1995 1998 2001 2004 2007 2010 2013 2016
Revaluation reserves
600
200
800
400
0
Balance sheet – Lyttelton
SHF (ex revals) Debt
Liabilities Total assets
1995 1998 2001 2004 2007 2010 2013 2016
New Zealand ports and freight yearbook 2017 | Port summaries
59
PrimePort Timaru – TIU
OverviewTIU is owned 50:50 by Timaru District Holdings Limited (TDHL) and Port of Tauranga Limited (POTL) acquired its stake for $21.6m in 2013 to implement a hub and spoke model. The sale included a 35 year lease of the container terminal to Timaru Container Terminal Limited (TCTL). The port services a range of regional primary industries including meat, fish, and forestry exports, as well as imports of fertiliser, stock feed, petroleumand cement.
Port development
• The Council is proposing merging a section of road and land to support future development of the port.
• A Council proposal to secure access to the port over KiwiRail land was rejected due to only a 10 year tenure being offered.
Trade
• Container volumes: 84,402 TEU (18.9% ↑)
• Gross Registered Vessel Tonnage: 6.1m (4.7% ↓)
• Total Cargo excluding containers: 1,335,100 tonnes (3% ↑)
• Log exports (12% ↑)
Financial performance
• Revenues: $16.1m (4.5% ↑)
• Revenues – Port Operations: $13.1m (0.3% ↓)
• Operating Expenses: $9.7m (6.7% ↓)
• Net Profit After Tax: $3.5m (12% ↑)
• Gearing Ratio: 30%
PrimePort Timaru – TIUIncome Statement FY14 FY15 FY16
Revenue 15.8 15.4 16.1
Revenue Port Operations 12.6 13.1 13.1
Operating Expenses 12.8 10.4 9.7
Gross Profit 2.9 4.9 6.4
Associate/JV Earnings - - -
One Offs / Other Items 0.2 0.3 0.2
EBITDA 3.2 5.2 6.5
Depreciation & Amortisation 1.0 0.9 1.2
EBIT 2.2 4.3 5.3
Net Interest Expense (0.0) 0.0 0.5
Taxation 0.3 1.1 1.3
NPAT 1.9 3.2 3.5
Other Comprehensive Income 0.6 0.8 0.4
Comprehensive Income 2.5 4.0 4.1
June Balance DateBalance Sheet FY14 FY15 FY16
Current Assets 6.8 4.4 4.0
Fixed Assets 31.8 32.9 67.1
Intangibles - - -
Deferred Tax Benefit 1.9 1.5 0.8
Investments 3.3 3.5 3.7
Other Assets 0.6 13.1 2.0
Total Assets 44.3 55.4 77.5
Current Liabilities 2.2 2.4 2.0
Debt - 7.5 27.0
Other Non Current Liabilities - - 0.2
Shareholders’ Funds 42.2 45.5 48.3
Minority interests - - -
Total Liabilities/SHF 44.3 55.4 77.5
Cashflow
Operating Cash Received 15.5 15.0 16.7
Operating Cash Paid 13.6 11.1 11.7
Net Operating Cash Flow 1.9 3.8 5.0
less Earthquake Costs - - -
less Asset Purchases 0.8 13.9 23.3
less Dividends Paid 12.6 0.6 1.3
Funding Surplus (Deficit) (11.5) (10.6) (19.6)
Insurance Proceeds - - -
Proceeds of Asset Sales 24.1 0.1 -
Dividends from Associates - - -
Increase in Net Debt (3.2) 10.6 19.6
Equity Raised (9.5) - -
Funding Provided 11.5 10.6 19.6
Source: Company Reports, Deloitte
25
15
5
30
20
10
0
Income statement – Timaru
Reported profit InterestTax
Depreciation RevenuesExpenses
1995 1998 2001 2004 2007 2010 2013 2016
Revaluation reserves
60
45
75
15
90
30
0
Balance sheet – Timaru
SHF (ex revals) Debt
Liabilities Total assets
1995 1998 2001 2004 2007 2010 2013 2016
New Zealand ports and freight yearbook 2017 | Port summaries
60
Port Otago – POE
OverviewPOE operates two port areas, with Port Chalmers handling containers and bulk (largely forestry) cargoes, while the upper harbour Dunedin wharves handle lower draft vessels. The port’s catchment provides it with primary products for export from much of Otago and Southland, particularly dairy from Fonterra’s Edendale plant. POE has also built a significant $296m industrial property portfolio spanning Auckland, Hamilton and Dunedin.
Port development
• Dredging to deepen the Otago Harbour to 13.5metres chart datum has been completed.
• Dredging work is underway to deepen the harbour to 14.0 metres. This is expected to be completed in December 2017.
• Planning is underway to extend the wharf by 140 metres to accommodate larger vessels. Work on the wharf extension is expected to get underway in June 2017.
Trade
• Container TEU: 172,400 (0.2%↓)
• Log Exports: 813,000 tonnes (3.2%↓) – making up ~60% of total conventional tonnage
Financial performance
• Revenue: $81m (0.7% ↓)
• Operating Expenses: $49.9m (10.6% ↑)
• Net Profit After Tax: $34.1m (34.9% ↓)
• Gearing Ratio: 13%
Port Otago – POEIncome Statement FY14 FY15 FY16
Revenue 77.9 81.6 81.0
Revenue Port Operations 63.3 62.9 63.9
Operating Expenses 43.8 45.1 49.9
Gross Profit 34.1 36.5 31.1
Associate/JV Earnings 0.3 0.3 0.3
One Offs / Other Items 16.2 34.6 19.7
EBITDA 50.6 71.5 51.1
Depreciation & Amortisation 7.7 8.7 8.1
EBIT 42.9 62.8 43.0
Net Interest Expense 5.6 4.2 2.2
Taxation 5.5 6.2 6.7
NPAT 31.8 52.4 34.1
June Balance DateBalance Sheet FY14 FY15 FY16
Current Assets 35.6 46.4 37.7
Fixed Assets 159.9 158.6 179.2
Intangibles 5.8 6.4 5.4
Deferred Tax Benefit - - -
Investments 283.3 248.8 273.3
Other Assets 9.8 1.6 1.5
Total Assets 494.4 461.8 497.1
Current Liabilities 12.0 13.5 13.0
Debt 119.6 54.7 62.4
Other Non Current Liabilities 17.9 18.5 20.0
Shareholders’ Funds 344.8 375.2 401.7
Total Liabilities/SHF 494.4 461.8 497.1
Cashflow
Operating Cash Received 77.9 82.6 77.5
Operating Cash Paid 57.2 53.9 59.3
Net Operating Cash Flow 20.6 28.8 18.2
less Earthquake Costs - - -
less Asset Purchases 48.2 31.4 40.3
less Dividends Paid 7.1 8.4 7.3
Funding Surplus (Deficit) (34.7) (11.0) (29.4)
Insurance Proceeds - - -
Proceeds of Asset Sales 9.9 96.1 2.0
Dividends from Associates - - -
Increase in Net Debt 24.8 (85.1) 27.4
Equity Raised - - -
Funding Provided 34.7 11.0 29.4
Source: Company Reports, Deloitte
Revaluation reserves
500
300
100
600
400
200
0
Balance sheet – Port Otago
SHF (ex revals) Debt
Liabilities Total assets
1995 1998 2001 2004 2007 2010 2013 2016
75
45
5
90
60
15
0
Income statement – Port Otago
Reported profit InterestTax
Depreciation RevenuesExpenses
1995 1998 2001 2004 2007 2010 2013 2016
New Zealand ports and freight yearbook 2017 | Port summaries
61
Southport – BLU
OverviewBLU is New Zealand’s southernmost commercial port. Operating from a 40ha man-made island in Bluff harbour serving a productive hinterland yielding forestry, fish, and meat exports. BLU services imports of oil, fertiliser, and stock feed, as well as NZAS’s Aluminium Smelter (imports of alumina and exports of aluminium). BLU is listed on the NZX and is majority owned by the Southland Regional Council.
Port development
• Construction of Intermodal Freight Centre which opened in July 2016
• New Reach Stacker purchased
Trade
• Cargo Volumes: 3.05m tonnes (6.6% ↑) - *Record high*
• Container TEU: 35,100 (2% ↓)
• Stock Food & Molasses Imports: (25% ↓)
Financial performance
• Revenue – Port & Warehousing: $36.7m (6% ↑)
• Operating Expenses: $21m (4.5% ↑)
• Net Profit After Tax: $8.7m (12.6% ↑)
Southport – BLUIncome Statement FY14 FY15 FY16
Revenue 31.3 34.6 36.7
Revenue Port Operations 31.3 34.6 36.7
Operating Expenses 19.1 20.2 21.1
Gross Profit 12.2 14.4 15.6
Associate/JV Earnings - - -
One Offs / Other Items 0.0 0.0 0.2
EBITDA 12.2 14.4 15.8
Depreciation & Amortisation 2.5 2.7 3.0
EBIT 9.7 11.7 12.8
Net Interest Expense 0.4 0.9 0.7
Taxation 2.7 3.0 3.4
NPAT 6.7 7.7 8.7
Other Comprehensive Income (0.2) 0.2 0.0
Comprehensive Income 6.5 7.9 8.7
June Balance DateBalance Sheet FY14 FY15 FY16
Current Assets 11.0 6.6 5.6
Fixed Assets 34.7 40.6 47.4
Intangibles - - -
Deferred Tax Benefit - - -
Investments - - -
Other Assets - - -
Total Assets 45.7 47.2 53.0
Current Liabilities 3.6 5.1 5.9
Debt 10.3 8.2 10.7
Other Non Current Liabilities 0.4 0.6 0.8
Shareholders’ Funds 31.4 33.3 35.6
Total Liabilities/SHF 45.7 47.2 53.0
Cashflow
Operating Cash Received 30.9 34.8 36.3
Operating Cash Paid 22.1 22.8 24.3
Net Operating Cash Flow 8.8 12.0 12.0
less Asset Purchases 3.4 6.7 9.4
less Dividends Paid 5.6 6.0 6.4
Funding Surplus (Deficit) (0.2) (0.7) (3.8)
Insurance Proceeds - - -
Proceeds of Asset Sales 0.1 0.0 0.2
Dividends from Associates - - -
Increase in Net Debt 0.1 0.7 3.6
Equity Raised - - -
Funding Provided 0.2 0.7 3.8
Source: Company Reports, Deloitte
75
45
15
90
60
30
0
Income statement – Southport
Reported profit InterestTax
Depreciation RevenuesExpenses
1995 1998 2001 2004 2007 2010 2013 2016
Revaluation reserves
75
45
15
90
60
30
0
Balance sheet – Southport
SHF (ex revals) Debt
Liabilities Total assets
1995 1998 2001 2004 2007 2010 2013 2016
New Zealand ports and freight yearbook 2017 | Port summaries
62
Marsden Maritime Holdings – MMH Eastland Port – EST
OverviewMMH (formerly Northland Port Corporation) is an NZX-listed company, with its largest investment being a 50% stake in Northport (NTH) (with TRG also holding 50%). MMH’s portfolio interests currently include a 50% interest in NTH, 50% interest in North Tugz, 180ha of industrial zoned land, and the Marsden Cove Marina. Port development NTH investment activities include:
• Completed construction of 4,200sqm warehouse on industrial estate for storage of bulk commodities, which has been let.
• Construction of new factory premises for an Auckland based plastics manufacturer.
• Construction of three new units including a recreational boat sales yard.
Trade
• Cargo Volumes: 3.4m tonnes (6.3% ↓)
• Log Exports: 2.7m tonnes (steady)
Financial performance
• Revenue: $11.9m (10.5% ↑)
• Net Profit After Tax: $12.1m ($3.7m ↑)
Interim Results
• Profit up 21%
• Net Profit at $5m (up from $4.1m for the same 6 months last year)
• Revenue $6.8m (↑ 20%) – bigger return from its share of Northport where cargo volumes are up 12% to 1.85mt.
OverviewEastland Group is wholly owned by Eastland Community Trust (ECT) and has interests in key infrastructure of the Tairāwhiti region. These comprise Eastland Logistics (Eastland Port and Eastland Airport), Eastland Electricity (lines network), Eastland Generation, and Eastland Investment Properties. EST is located at the mouth of the Taruheru River in the city of Gisborne. EST is solely an export port.
Port development
• $12 m investment into the expansion of Eastland Port’s upper log yard.
Trade
• Cargo Volumes: 2.3m tonnes (1.86% ↓)
• Log Exports: 2.3m tonnes (3.6% ↑)
Financial performance Not available for port performance only.
New Zealand ports and freight yearbook 2017 | Port summaries
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Contact usWith the focus and capabilities to manage transactions from start to close, Deloitte Corporate Finance specialises in a range of advisory services including buying or selling a business and raising debt or equity finance. We utilise our skills and experience to assist our clients on a range of transactions including valuations, financial modelling, business cases, strategic reviews, litigation support and other corporate finance related matters.
Deloitte’s Shipping & Ports team provides advice and services to the water transportation industry. We have an established track record in the sector and offer real value by combining specialist skills with market knowledge to help clients at all stages of their business development.
New Zealand ports and freight yearbook 2017 | Section title goes here
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