Working group says move Auckland port freight operation to Marsden Pt

The Upper North Island Supply Chain Strategy Working Group has recommended moving the Ports of Auckland’s freight business (but not the cruise trade) to Marsden Point.

It’s not yet Government policy, but is a recommendation from an independent group that Cabinet asked to undertake a comprehensive review.

The working group’s chair, Wayne Brown, said in the group’s second interim report out yesterday that, in its final stage, the group would consider how to transition from the current state to this preferred option: “Our recommendations will include priorities for infrastructure investment, optimal regulatory settings, future challenges on which Government & industry will need to work together and key actions to be taken over the next 5 years & beyond to implement a 2-port strategy for the upper North Island.”

Mr Brown said a number of key themes emerged during the working group’s discovery phase, including:

• inefficiencies of the network, encompassing rail, road, ports, inland ports & freight hubs
• complex & inefficient owner relations between the ports, network infrastructure & assets
• the importance of social licence & working within the communities that the network is there to serve, particularly in Auckland but also in Tauranga
• infrastructure investment by different parties & their rationales
• the wider context within which the Upper North Island supply chain strategy is being conducted, with a particular emphasis on optimal land use.

The group’s preferred option

“Based on the multi-factorial analysis undertaken, we believe that option 2 – the managed closure of the Ports of Auckland freight operations (with the exception of the cruise ship operation), the development of Northport and continued operation of the Port of Tauranga – provides the greatest level of benefit to the upper North Island & New Zealand. The benefit:cost ratio for this option is 2:1.”

This scenario also includes development of landside infrastructure consisting of:

• a rejuvenated North Auckland rail line & spur to Northport, and
• a new inland freight hub in the north-west of Auckland complementing Metroport in the south.

Reasons:

• It promotes resilience in the supply chain by providing 2 distinct north & south entry points for international freight originating in & destined for Auckland
• It reduces levels of friction in the Auckland cbd, which is currently a congested entry point for freight out of Ports of Auckland, and provides 2 alternative entry points into the city
• Friction with urban personal transport & regional deliveries could be further reduced by a dedicated freight rail line through the Avondale corridor connecting the 2 main freight hubs
• It allows for alternative use of the Auckland waterfront land, and returns the harbour to the people, which helps Auckland achieve its ambition of becoming a more “liveable city”; 62% of Aucklanders, polled on behalf of the working group, believe moving the port would make Auckland a better place to live, work & visit
• It potentially improves road safety by increasing rail freight capacity
• It promotes opportunities for regional development & employment in Northland and supports further growth in the Bay of Plenty
• It maintains levels of competition in the upper North Island supply chain, fosters innovation & cost effectiveness/efficiency of freight delivery
• It maximises the use of the existing port system and the availability of surrounding land at Northport, noting potential alignment with other strategic projects such as a new drydock & rail staging for NZ refinery in west Auckland.

“We consider the upper North Island can be effectively serviced by the existing ports without the need for the significant capital investment & development required to create a new port.

“Time & budget constraints have meant that our economic analysis does not consider wider, potentially significant, benefits to Auckland from changing the use of the port land, for example uplift in land value in areas adjacent to the port.”

The working group’s members are Mr Brown, Vaughan Wilkinson, Susan Krumdieck, Shane Vuletich, Gregory Miller & Noel Coom.

Options & analyses

The group has undertaken an economic & multi-criteria evaluation of a range of potential future options for the configuration of the upper North Island supply chain. Combining this with its stakeholder consultation and additional research undertaken (polling activity & other advice), the group identified a preferred option for the design of a future upper North Island supply chain. We will expand & develop the requirements for this option, including potential implementation plans, as it progresses its final report due later this year.

Under the direction of the working group, a consortium led by Ernst & Young, including experts from Advisian, Warren & Mahoney and WT Partnership, undertook the analysis.

Strategic principles

The group built on the key themes that emerged in its discovery phase to develop a range of strategic principles to assist in the evaluation of options for a future supply chain:

1. Cost efficiency in moving freight: Moving freight is critical to the New Zealand economy and we believe that we must present a future supply chain that allows the costs of moving freight to be kept as low as possible. This is particularly important in considering any reconfiguration of the supply chain, as we do not have the ability to direct freight. Freight will flow in the most cost-efficient way possible as the market allows
2. Maintaining the level of competition in the supply chain: We do not consider a strategy that promotes monopolism to be in the best interests of New Zealand. Healthy competition between ports & transport providers in the supply chain is a good driver of innovation & cost effectiveness. We think that preserving the current level of competition in the upper North Island supply chain, particularly in relation to the number of ports, is critical for the success of the supply chain
3. Reducing the ‘friction’ between freight & passenger movements: It is important that the strategy reduce friction between freight & people as much as possible. We therefore have considered a future supply chain that favours the provision of infrastructure that limits the degree to which freight activity impinges on public areas, and reduces the interaction between freight & passenger movements, particularly in congested areas. We are therefore prioritising freight modes such as rail, and coastal shipping where possible, and place particular emphasis on optimal land use
4. Maintaining or improving the resilience of the supply chain: We believe the strategy must provide confidence that the upper North Island supply chain has the ability to continue moving freight in the event of a natural disaster or other events that impact areas of the upper North Island. We therefore think that as a minimum, a 2-port system is needed for the upper North Island. Given the significance of the upper North Island supply chain to the rest of the country, we do not think that a strategy that relies on one port is in the best interests of New Zealand
5. Contributing to overall government objectives: We are committed to developing a strategy that contributes to overall Government objectives. We are therefore giving priority to a future supply chain with focus on road safety, reducing CO₂ emissions, and economic development of the regions (in particular Northland).

The strategic scenarios & options the group considered:

1. Maintaining the current status quo, whereby the upper North Island is serviced by Port of Tauranga & Ports of Auckland, and Northport to a lesser extent
2. Managed closure of the Ports of Auckland freight operations (assuming cruise liner operations will remain at Ports of Auckland), Northport develops to capacity equivalent to the Ports of Auckland, including appropriate levels of landside infrastructure & capacity to grow as levels of freight increase; Port of Tauranga continues its planned development
3. Managed closure of the Ports of Auckland freight operations, Port of Tauranga expands capacity to be able to accept the freight of the Ports of Auckland in addition to its own, including appropriate levels of landside infrastructure & capacity to grow as levels of freight increase; no major development at Northport
4. Managed closure of the Ports of Auckland freight operations, both Northport & Port of Tauranga expand capacity to be able to accept the freight of the Ports of Auckland in addition to their own, including appropriate levels of landside infrastructure & capacity to grow as levels of freight increase, and
5. Managed closure of the Ports of Auckland freight operations, a new “super” port in the upper North Island is built that can handle the Ports of Auckland freight task, along with appropriate landside infrastructure & capacity to grow as levels of freight increase.

Link:
Upper North Island Supply Chain Strategy Working Group, second interim report, 3 December 2019

Attribution: Working group report.