Napier-Gisborne Shortline Proposal [1] This series of posts will attempt to reach a balanced viewpoint on the subject of the Hawkes Bay Regional Councils proposal to re-open the Napier-Gisborne Line as a regional shortline modelled on similar operations overseas. The HBRC through its subsidiaries has 100% ownership of the Port of Napier, which competes for freight with the Port of Gisborne in which Gisborne District Council has an interest. Port companies in NZ are generally seen as holding natural monopolies in their regions, meaning that they warrant special scrutiny from regulators and the public to ensure that the wider public interest is safeguarded. Traditionally, territorial or regional local authorities have acted as guardians of this interest by holding majority or exclusive ownership of the port companies. One of the valid concerns in relation to port operations is that overseas shipping lines hold coercive power over port companies by their ability to dictate shipping schedules for large volumes of freight and thus play ports off against each other for the best pricing. Since the election of the National Government in 2008, the port companies which can be properly classified as big businesses have shown increasing willingness to exploit this coercive power by aggressively competing for business outside their territorial regions. Usually this is done by building an inland port in another region to act as a freight terminal for the port company. Railways role in this is to help minimise the extra costs of transporting freight the extra distance from the port due to having inherent cost advantages for bulk freight outside of the shipping industry itself. Port of Tauranga was the first to establish an inland port, in Auckland, way back in the late 1990s, which came to prominence during the recent Ports of Auckland strike when they were naturally in a position to capture a large volume of freight from the Auckland area to be shipped through their port. However most of these inland ports established by a port company outside their region have sprung up in the last couple of years and include Port of New Plymouth in Wanganui, Port of Timaru in Rolleston, and Port of Napier / Port of Auckland in Palmerston North. In conjunction with the Napier-Gisborne shortline proposal the HBRC proposes to establish an inland port at Matawhero near Gisborne. As stated above, traditionally the public interest has been safeguarded by local government control of port company operations. However in the last few years there has been an increasing tendency by local councils to get greedy and exploit the monopoly powers of these operations by demanding they maximise their dividend payments. For example Auckland Council is believed to have precipitated the recent POAL strike by demanding very high returns from the port which translated them into a requirement to casualise the majority of its waterside staff. The public interest includes many things including the industrial practices of port companies which are often contracting out or casualising the majority of waterside work and turning a blind eye to the resulting health and safety concerns as well as social justice concerns about the lack of job security and income for the contracted or casualised workers. Given the coercive powers that shipping lines enjoy, the public interest could be restored by reducing the number of distinct separate port operations, by combining some of the individual ports together in joint ventures. This very sensible idea is not getting the hearing it deserves because of the narrow parochial interests of territorial councils who are not willing to share the financial returns of their port operations with other regions. For example in the South Island Port of Lyttelton and Port of Dunedin should be allied as this would enable them to have a stronger position in relation to the majority of business activity in the South Island. In conclusion there are many valid questions about the recent business practices that port companies have adopted, the aggressive competition that port companies are entering into to secure business, and the means they use to reduce their costs when entering into contracts with shipping lines. The next post is going to take a look in particular at the role the railways play in port companies operations. It is fair to say right now that there are very valid ground for public concerns over port companies business and these matters should be able to be freely debated.
Posted on: Thu, 02 Oct 2014 21:48:39 +0000
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