South Port eyes freight changes as shipping landscape changes

TIN news:        South Port is navigating its way through unchartered waters as the New Zealand shipping landscape changes – and is looking at new freight distribution options in the south.
 
South Port announced last week it expected to make up to $1 million more than originally anticipated in the 2014-15 financial year, with a net profit of about $7.5m, which would be a record for the company.
 
This came on the back of the announcement in mid-2014 of a freight alliance between Port of Tauranga, freight management company Kotahi and Maersk Shipping Lines, which South Port chief executive Mark O’Connor said was the first of its kind and had affected the whole shipping landscape.
 
The alliance had led to aggressive pricing among ports, and with an over supply of container space, container rates had crashed to an all-time low, he said.
 
The alliance could push the sector towards container shipping services being concentrated in one or two ports – with Tauranga aiming to be the North Island port and either Lytttelton or Port Otago aiming to be the South Island hub. Other ports could become coastal feeders.
 
O’Connor said that while South Port could never compete to be a hub, it would watch developments carefully and was likely to align with its shipping line customer MSC’s direction..
 
However, there was no certainty about whether the hub and feeder system would happen, and the port was being proactive and looking at a range of new initiatives, he said.
 
South Port was continuing to assess other freight distribution options “outside its gate”. O’Connor said he could not yet confirm what those options were, but was likely to make an announcement when the full-year results were confirmed on August 20.
 
In its 2014 annual report, South Port said it was continuing to evaluate the most appropriate use of a Mersey St section in Invercargill – adjacent to the Invercargill KiwiRail area.
 
“The most likely use of this land is the establishment of a packing/unpacking operation supported by base warehousing activity,” the report says.
 
O’Connor said South Port had had simulations undertaken in 2014 at a state of the art marine simulator in Brisbane to confirm the Bluff port’s ability to accommodate larger container vessels.
 
“Despite a lot of uninformed commentary in the marketplace South Port is positioned to handle larger container vessels should its existing customer MSC choose to introduce larger vessels into the NZ market,” he said.
 
Bluff was the first New Zealand port of call for the MSC Capricorn service, which meant larger ships could visit without issue.
 
“We’re export orientated. Because we’re first call in New Zealand the ships are higher in the water so they can use Bluff.”
 
South Port was already servicing some of the largest container vessels visiting New Zealand shores, he said.
 
Bulk cargo was the port’s mainstay with the export of logs and import of dairy stock feeds and fertiliser featuring prominently. Aluminium smelter imports and exports had remained consistent in 2015, he said.
 
“We originated as a bulk port and that’s what puts the bread and butter on the table.”
 
South Port’s shipping channel was just under 10m in depth and O’Connor said it would take a huge new industry, something larger than the smelter, to warrant investigation of what could be up to a $200m investment to deepen the channel.