One Big Port?

Auckland Container Terminal

The Ports of Auckland Company has revived the idea of a merger between itself and the Port of Tauranga in the Bay of Plenty. It’s opening gambit came in a comment by Jens Madsen, its managing director, that a takeover by Auckland of Tauranga’s container business would improve New Zealand’s supply chain, permitting ports to engage in new investment in port infrastructure.

About half of New Zealand’s exports by value are shipped through the two ports authorities, with Tauranga gaining a slight edge in 2007 (24.9 percent). On the import side, Auckland handles almost 50 percent of merchandise entering New Zealand. Together, based on 2007 data, a combined Auckland-Tauranga ports company would handle almost 57 percent of all international trade.

Port consolidation is being driven by pressure on port companies from large shipping lines such as Maersk, to counter rising costs with increased productivity generated by operating hub ports in the two or three major ports. Maersk carries about 60 per cent of New Zealand's container trade. Fonterra, New Zealand’s dairy cooperative multinational, which exports the bulk of dairy produce is one of Maersk’s top ten global customers. Maersk has been rumoured to be seeking an ownership stake in New Zealand ports in recent years.

In the South Island, the Ports of Lyttelton and Otago have held negotiations in recent years on possible takeover or merger deals. These were seen as defensive moves to counter Maersk’s perceived intent to select either one or the other port as its South Island hub. Smaller ports in both major islands would either serve as feeder ports to the hub ports, or lose significant traffic.

While concerns are being raised in New Zealand over the impact of an Auckland-Tauranga ports merger or takeover on competition, there seems to be little discussion of the role of a foreign-owned shipping conglomerate pressuring New Zealand port companies to engage in anti-competitive practices with consequences for both exporters, importers, and ultimately the average citizen. This is unremarkable, perhaps, given the historical context in which the shipping conference lines that carried the bulk of New Zealand’s exports in the past century acted as a cartel in setting shipping rates. More of the same (cosy deal), you might say.

Lyttelton - Container Cranes in far distance, inter-island coastal shipping,
Pacifica's Spirit of Competition roll-on, roll-off vessel in foreground.