The great, and the good are the Govt’s hand-picked executives just appointed to Auckland’s council-controlled organisations by Transport Minister Steve Joyce and Local Govt Minister Rodney Hide, including a fair number of CCOs which are transport and infrastructure related. Auckland Transport, a statutory entity, replaces nine separate existing transport entities across the city and will be responsible for the preparation of the Regional Land Transport programme. It will have a staff of just over 1000, $1.5bn in assets and annual revenues of $1.36bn.

- - -NOT A SUBSCRIBER? - - - - - - - - - - - - - - - - - - - - - - - - - - -

NEW ZEALAND TRANSPORT INTELLIGENCE BRIEFING
NZ’s freight, transport, distribution and infrastructure news authority. Takes a critical look at understanding and analysing policy and initiatives from Govt and industry. Covers road transport, shipping, rail, air, ports, fuel taxes, supply chain sustainability, security, dangerous goods transportation and warehousing This analysis of news and trends is vital information for all those involved in the import and export sectors. Published every Thursday 46 issues per year.

To subscribe - http://www.nztransport-logistics.co.nz/home/special-introductory-offer

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Transport Auckland’s chairman for its first year of existence will be Mark Ford, who is currently chair of the Auckland Transition Agency, while deputy chair Philippa Dunphy will hold the position for three years. Other appointments include barrister and legal consultant Rabin Rabindran, professional director and former consulting engineer Ian Parton, and director Paul Lockey. Ford earns $105,000 a year, Dunphy just over $66,000 and the directors will earn $52,500 a year, effective from Nov. 1, though the Auckland Council will establish its own remuneration policy for CCOs after its Oct. elections.

Other CCOs include Auckland Council Investments Ltd (ACIL) which will manage the council’s holding in Auckland International Airport, and Auckland Waterfront Development Agency Ltd (AWDA), which will develop and implement a waterfront master plan on behalf of, and in consultation with, Auckland Council. It will also liaise with Ports of Auckland. Hide says all the CCO appointments were from people who are elite in their respective fields, “whose talents would be welcome anywhere in the world. What is more, they are all Aucklanders.”

David Warburton - who is head of a Melbourne consulting firm, has been appointed as interim CEO of the new Auckland Transport Agency. Warburton concedes he faces a stiff challenge sorting out traffic issues in the city and says the new Super City council will need to balance the needs of public transport users and private motorists. He says transport is the most pressing issue the city faces. Warburton holds a doctorate in environmental engineering and is Australia and NZ CEO of infrastructure consulting firm CPG, part of Downer EDI which provides traffic management services among other functions.

He heads a new trans-Auckland agency with more than 1000 employees. His appointment follows a difficult international search for someone to fill the position by the Auckland Transition Agency. Agency executive chairman Mark Ford describes the new chief as “an outstanding candidate for the role.” He adds “his background includes significant infrastructure leadership and he is experienced in working collaboratively with local Govt and other stakeholders.” Warburton says while the city has made some progress on improving traffic flows there is still much to be done. Addressing Auckland’s transport woes will be a “points match” rather than a “knockout punch” and the agency will need to promote a range of choices through the different communities it will serve. He will take up his new job next month with his contract running until June 30, 2012.

About the only good thing in the Govt’s confirmation Road User Charges will increase from October 1 is this time there has been, as promised, a warning to this effect. Two years ago truckers demonstrated in front of Parliament when the then Labour Govt upped RUCs overnight, earning the sector’s ire and a degree of public sympathy. The exact RUC increase will depend on truck size and axle configuration, though typically heavy diesel vehicles will pay between 4-6% more in RUCs and lighter trucks up to 10% more in RUCs. This is in addition to a previously announced increase of 3 cent/litre in fuel excise duty. RTF CEO Ken Shirley says “we’re grateful for the RUC notice. But it also comes along with an increase in GST at the beginning of October, Emissions Trading Scheme cost increases and a massive lift in ACC levies. It makes it tough, when as it is some operators are only just hanging on.”

Shirley says because of their extremely tight margins, transport operators will have no option but to pass the cost increases onto their own customers. He points out, as do economists, freight is always at the cutting edge of economic performance. “Freight permeates all parts of the economy. When there’s a downturn in the economy, there’s a downturn in freight and vice-versa.” Shirley says the past year has been extremely tough on the transport industry and a number of businesses have failed. He expresses the hope there will be no RUC price increases next year, “especially as it is an election year after all.”

If NZ doesn’t move quickly and prepare at least a couple of ports to accommodate large modern container ships, it risks only having a “boutique” shipping service from small and old vessels, considerably adding to costs. The Shippers’ Council’s report “The Question of Bigger Ship: Securing NZ’s International Supply Chain,” compiled by a team of freight sector experts and analysts, recommends of the country’s four large container ports, Tauranga and Lyttelton are first made capable of handling up to 7000 TEU ships, and KiwiRail’s infrastructure also be upgraded to enable an increased number of containers to seamlessly flow from hinterlands to port.

- - -NOT A SUBSCRIBER? - - - - - - - - - - - - - - - - - - - - - - - - - - -

NEW ZEALAND TRANSPORT INTELLIGENCE BRIEFING
NZ’s freight, transport, distribution and infrastructure news authority. Takes a critical look at understanding and analysing policy and initiatives from Govt and industry. Covers road transport, shipping, rail, air, ports, fuel taxes, supply chain sustainability, security, dangerous goods transportation and warehousing This analysis of news and trends is vital information for all those involved in the import and export sectors. Published every Thursday 46 issues per year.

To subscribe - http://www.nztransport-logistics.co.nz/home/special-introductory-offer

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

The report warns the country has at the most five years to accommodate large ships or else increased container hubbing will occur through Aust’s main ports, with a resulting fall in operational flexibility for kiwi exporters. The development of a North and South Island big-ship-capable port would realise up to $144m a year of net supply chain benefits from 2015/16 on the South East Asia route only and provide a strategic insurance policy which protects the efficiency of NZ’s existing international supply chains, the report says.

It argues enabling larger container ships to access NZ ports will also reduce the nation’s carbon footprint, capture the economies of scale from bigger ships and secure shipping capacity with direct links to key international hubs and markets. It recommends before further port industry consolidation takes place the Govt ensures the legislative framework is not a barrier to bigger ships being introduced, while the two key container ports should prepare the necessary resource consents and prepare to implement appropriate capital expenditure plans.

The Govt’s move towards public-private partnerships (PPPs) for big infrastructure projects such as new motorways is opposed by opposition parties. Labour’s finance spokesman, David Cunliffe, says the policy is a dangerous move. “It’s letting private foxes loose in every crown entity chicken coop - without proper training for officials or central control.” Cunliffe contends it’s a recipe for disaster and will see taxpayer assets pillaged the way they were in the 1990s.The Green Party also opposes the move saying it is privatisation in disguise. Co-leader Metiria Turei says “opening the floodgates to PPPs will simply result in the transfer of large parts of the health, justice, education and transport sectors into private ownership.” She also doubts PPPs will work financially for the tax payer. “All the evidence is PPPs won’t work because taxpayers take all the risk while the private sector takes all the profit.”

The Council of Trade Unions (CTU) also contends the move does not make financial sense claiming the Govt can always borrow more cheaply than the private sector, so it is difficult to see why public infrastructure should be built with private funds. CTU economist Bill Rosenberg says there are big risks in 25 to 30 year projects and not all of them can be transferred to the private sector. “The risks which are transferred will be built into the price of the contract or the ongoing payments for it, increasing the cost. He adds there are also very high costs involved in negotiating the very complex contracts.”

Forcing local authorities to sell their shares in port companies, improved financial disclosure, contestability in stevedoring and separation of asset ownership from operations are four proposals being recommended to the Govt by a powerful business lobby group in order to improve port operational efficiency and initiate restructuring. The report was commissioned by the Local Govt Forum whose members include the Business Roundtable, Business NZ and FedFarmers.

The report has been produced in an attempt to support claims made by the OECD 2025 Taskforce and some industry commentators Local Govt ownership is hindering the rationalisation of the ports sector widely seen as essential to improving the country’s overall economic performance. It claims cutting the link between local authorities and port companies will reduce the extent to which local interests could hinder rational decisions about port investment. It also claims local body politicians may influence port companies to charge discount and uneconomic berthage rates to get shipping companies to call their local port. The report says improved financial disclosure of ports is needed as it claims some port companies are breaching existing regulations surrounding financial disclosure. It also sees boosting waterside competition through stevedoring contestability as a means of cutting costs and improving efficiency while clearly distinguishing between port asset ownership and operations will create a more competitive workplace environment for all above wharf activities. The report will be presented to Cabinet Ministers.

It is testament to a listed company when it can report profit dropped by a third and its shares still rise. Freightways, whose courier and package delivery brands include NZ Couriers, Post Haste Couriers, SUB60, Kiwi Express and DX Mail, posted a 33% decline in full-year earnings, partly reflecting weaker sales and also the impact of tax changes for depreciation which has whacked most companies at the bottom line. The company didn’t give much guidance but it is clear the benefits of a slowly improving economy will be gradual. Managing Director Dean Bracewell says Freightways “will continue to manage its cost base and seek to improve service quality.”

- - -NOT A SUBSCRIBER? - - - - - - - - - - - - - - - - - - - - - - - - - - -

NEW ZEALAND TRANSPORT INTELLIGENCE BRIEFING
NZ’s freight, transport, distribution and infrastructure news authority. Takes a critical look at understanding and analysing policy and initiatives from Govt and industry. Covers road transport, shipping, rail, air, ports, fuel taxes, supply chain sustainability, security, dangerous goods transportation and warehousing This analysis of news and trends is vital information for all those involved in the import and export sectors. Published every Thursday 46 issues per year.

To subscribe - http://www.nztransport-logistics.co.nz/home/special-introductory-offer

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

The company did note a pickup in volumes in the second half in its express package business, which makes up 78% of earnings. Overall volumes “have improved in recent months” to about match levels seen in 2009, though the recovery isn’t yet broadbased. To add value to its existing businesses, Freightways has launched Pass the Parcel, a delivery service aimed at users of the TradeMe website, and Stuck, a web-based delivery firm that specializes in “hard to deliver express freight jobs.”

Potential and existing customers are doing it tough but the transport sector per se has held up remarkably well. The BNZ - BusinessNZ Performance of Services Index for July shows while the services industry has slowed to a “snail’s pace” transport and storage showed the strongest results, with a reading of 56.6 on a scale where 50 marks the difference between expansion and contraction. Shares of Freightways have shed a fifth of their value this year as a slower-than-expected economic recovery reduced volumes of express parcels for existing customers.

Ticketing system providers and other transport organisations have given the green light to the NZ Transport Agency’s development of a set of national standards for integrated public transport ticketing by the end of the year. The agency’s aim is to provide a system for public transport consumers, transport operators, regional councils and the Govt. National operating standards will define how the central core of a national system will function, as well as how operator equipment such as on-board bus ticketing machines will interact with the system. NZTA group manager of regional partnerships and planning, Dave Brash says “this standards approach will enable us to establish a long-term integrated national system that regions throughout New Zealand can cost-effectively link into. It opens the door to contestability on transport ticketing equipment while ensuring the development of a cost-effective, nationally-integrated system.”

Auckland will be the first region to adopt the national integrated ticketing system, to be followed by other regions, which will also have the ability to collect formal strategic information about public transport usage. The process is being assisted by Dutch consultants Collis, who have helped develop other multi-modal integrated card systems in Europe and Dubai. Organisations involved in defining the standards are ARTA, the Bus and Coach Association, Environment Canterbury, Electronic Ticketing Systems, Greater Wellington Regional Council, Init Pty Ltd, KiwiRail, Snapper, Thales and HTS Group.

Port Taranaki hasn’t heard whether Bathurst Resources Ltd, managers of the Buller Coal Project, are likely to barge the high quality coking coals from the West Coast to its New Plymouth facility for export. The Aust-based miner recently revealed a significant upgrade in estimates of the quantity which can be extracted from its 10,000ha exploration permit. Following exploratory drilling under a “definitive feasibility study,” Bathurst has announced a lift to 42.2m tonnes of coal from a May announcement of 7.3m tonnes.

Port Taranaki CEO Roy Weaver says feasibility for the project is as much about transporting the coal as mining it. One Bathurst option is to use KiwiRail to transport the coal across the Southern Alps for shipping out of Lyttelton, the other to load barges at somewhere like Westport, and then trans-ship the coal at New Plymouth. There are no deepwater ports on the West Coast capable of accommodating Panamax ships which require a 12 metre draft. Weaver says “the fact Pike River and Solid Energy with its Strongman mine have already had to face the issue of transport means this isn’t a first.”

Port Taranaki has had informal talks with Bathurst, but Weaver says the Aussie company is carrying out its own feasibility study. Bathurst MD Hamish Bohannan says the company aims to be in production by the end of 2011 from an opencast mine with a lifespan of more than 30 years at an eventual 2m tonnes a year removal. Lyttelton Port is already in the process of preparing for larger coal shipments, with consent to enlarge its coal yards.

There’s been an independent consultant’s report compiled on the proposed operational merger between the Port of Otago and Lyttelton Port Company, and the latter’s major shareholder, Christchurch City Holdings, has provided support in principle to the combined functions of the two competitors. But there’s no word out of either party. Negotiations continue between the two ports, and have continued to do so since a stock market announcement at the end of April, but there’s only speculation to go on in the meantime as the rivals try to figure out how a marriage could work.

- - -NOT A SUBSCRIBER? - - - - - - - - - - - - - - - - - - - - - - - - - - -

NEW ZEALAND TRANSPORT INTELLIGENCE BRIEFING
NZ’s freight, transport, distribution and infrastructure news authority. Takes a critical look at understanding and analysing policy and initiatives from Govt and industry. Covers road transport, shipping, rail, air, ports, fuel taxes, supply chain sustainability, security, dangerous goods transportation and warehousing This analysis of news and trends is vital information for all those involved in the import and export sectors. Published every Thursday 46 issues per year.

To subscribe - http://www.nztransport-logistics.co.nz/home/special-introductory-offer

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

The Commerce Commission, which would have to approve any merger, hasn’t received any application, which would be expected to be heard under its authorisation process. The Commission uses this course of action when a proposed merger or acquisition may result in a substantial lessening of competition in a market “if it finds the public benefit directly attributable to the transaction outweighs any detriment.” As well as ComCom approval, shareholders in both ports would have to support the move. The proposed merger would see the operations combined, but assets would remain with the respective organisations.