Call for fewer ports amid ship glut

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Port of Tauranga says the need for port rationalisation in New Zealand has become more urgent.

Chairman John Parker told the annual meeting yesterday that the collapse of world trade meant there was a surplus of container ships with an estimated fifth of container capacity set to be idle by the end of this year.

Global trade was unlikely to experience a big turnaround next year, which meant the surplus of container ships could double, Mr Parker said.

"The move to newer and bigger ships was happening anyway but is accelerated by the surplus of tonnage and the obvious desire of shipowners to idle their older, smaller and less efficient container ships.

"These things make port rationalisation more urgent."

Fonterra has estimated annual savings of $2 billion to $3b a year if bigger container ships came to New Zealand. "The huge savings are tantalisingly within reach," Mr Parker said.

Producers, consumers, exporters and importers would benefit and taxpayer-funded costs for road and rail infrastructure would fall.

But government intervention is probably neither politically sensible nor necessary. "Simply insisting that ports meet the criteria laid out in the Port Companies' Act whereby ports are required to operate `a successful business' would give some focus."

Chief executive Mark Cairns said trade for the first quarter of 2010 had fallen 7.7 percent and container trade was down 24.6 per cent, while net profit was up 0.2 percent from the same time last year.

Although it was pleasing the port had maintained earnings on reduced trade, it would not be wise to extrapolate the earnings position to year end, he said.

Net profit rose 7 percent to $45 million for the year to June.

"Significant turmoil remains in the container shipping market," Mr Cairns said.