Editorial: Shipping trade shift

21:19, Jul 11 2012

The decision of two big international shipping lines, Maersk and Hamburg Sud, to stop calling at PrimePort in Timaru is a hefty blow to the region.

Some 90 per cent of the port's operations staff are involved in container handling and many are expected to lose their jobs. Administrative positions will inevitably follow.

Timaru District Council's commercial arm, which owns 71.4 per cent of the port, will see $6 million sliced off the company's annual revenue. Importers and exporters in the region are likely to face some higher costs transporting goods in and out of the area.

Some of those setbacks are hard, at least in the short term, and practical steps should be taken to soften their impact, particularly on laid-off employees. The negative effects are not the only ones, however. The port of Lyttelton and, to a lesser extent, Port Chalmers are expected to pick up more business.

Three years ago Lyttelton picked up a large chunk of Fonterra's exports when the dairy company switched shipment of its containerised products from Timaru. It will now gain many more container shipments as it emerges as the key hub in the South Island for global shipping company business.

There are more general benefits from the move also. The drive over the last few years by international freight lines for greater efficiency in shipping has forced ports around New Zealand to improve their performance and to compete fiercely for business. Those that resist change and that lag, risk being passed by. The port of Tauranga has been a standout performer in this process, the port of Auckland, shackled by unions, who have fought against reforms, a notable laggard.


The disruption has sometimes been unsettling but the effects are beneficial. More efficient shipping means lower costs, meaning better profits for shipping companies, which will keep them coming to New Zealand, and also lower freight rates for exporters and importers as competition between shipping lines means they can not keep all the financial benefit to themselves.

Unions and parties on the left deplore all this and see it as a sign of the Government's failure to produce a "plan" for ports. Indeed, the Greens go further and suggest that the Government should be working on a plan for all road, rail and sea transport ostensibly to organise it for the benefit of exporters. The aim would be to produce what the Greens inevitably call a "smart" strategy for transport.

That would be disastrous. New Zealanders with longer memories will recall that only a few decades ago the country had a transport strategy that meant, among other things, anyone who wanted to move goods further than 40 miles by any means other than rail had to apply for an exemption.

This led to endless hearings, enormous waste and grotesque featherbedding in the railways. No-one regretted it when the system was abolished.

A government's prime function here is to promote fair competition by ensuring that all forms of transport pay their full costs and no chosen favourite has any advantage. The present National-led Government is going some way towards doing that by, for instance, insisting that NZ Rail is run to produce a return so it cannot offer cheap rates that no properly run business can match.

The result of this fair competition is likely to be better for the nation's economy than anything likely to come from any politicians' and bureaucrats' central plan.

The Press