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Govt should be able to help smaller ports exit business: report

Fuseworks Media
Fuseworks Media

Wellington, Oct 13 NZPA - A report on the future direction of the sea-freight industry suggests the Government should be able to help smaller ports that want to exit the business do so.

That could include reducing exit costs associated with the Resource Management Act and perhaps even help in redundancies, the report, prepared for the Ministry of Transport by the New Zealand Institute of Economic Research (NZIER), said.

Once shut, guarantees should be sought to ensure the ports stayed shut.

In this country ports adopted an approach that defended market share at all costs, the report, made public today, said.

"Ship operators are all too well aware of this and have used these fears to good effect in negotiating new schedules with ports."

For smaller ports, losing ship operators did have a major impact on activities, and that was part of the risk taken for owning a port.

For bigger ports the long term solution was to involve more commercial operations. That did not mean that local government should sell ports and facilities, but it did mean that local politicians should have less say in running ports.

A possible option was to adopt the Australian model, which would require port companies to become landlord ports and allow competition between stevedores for both the break bulk and containerised trades.

Despite the issues with the current shape of the sea freight industry, NZIER concluded that three alternative scenarios it investigated were all marginally less beneficial to the economy than the "direction of travel" it thinks the sea freight sector will take during the next 20 years.

Releasing the report, Transport Minister Steven Joyce said it proposed that the best approach for government is to leave final decisions in the hands of shippers and let ports react to those with their own investment decisions. That was consistent with the Government's view.

"Attempts to pre-empt future likely market developments are unlikely to produce better results for the economy. The best role for Government is to ensure the right price signals are in place and land-based infrastructure such as roads and rail can meet the needs of the freight industry as it evolves."

The alternative scenarios covered in the report, put together under direction of the Ministry of Transport, includes hubbing of New Zealand export and import containers through Australian ports.

Another is a two port strategy involving the development of one large port in the North Island and one in the South Island for container traffic, with the third being a reduction in ship operators willing to service this country.

The Australian hubbing scenario played on fears of increased competition from Australian ports, suggesting that if this country did not follow the Australian example and dredge channels for larger and larger vessels, New Zealand was likely to only be serviced by Australian and New Zealand-based ship operators, NZIER said.

"While we think this is unlikely to happen because of the costs and possible delays associated with trans shipment, there is a need to understand relative efficiency between Australian and New Zealand ports and how efficiency improves or declines over time."

The two ports strategy was a misdiagnosis of the policy problem since it was likely to benefit the ports exerting monopoly power over shippers, while the problem was to ensure sea freight arrived at markets as efficiently as possible, the report said.

With fewer ship operators, a lessening of competition could potentially be a significant drag on efficiency in the sea freight sector.

In the short to medium term that scenario was unlikely, since demand for services between this country and its markets was likely to grow steadily.

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