The following article on New Zealand ports and maritime issues was originally published in Foreign Control Watchdog issue 123 (May 2010), the magazine of CAFCA, and is also available online at their site.
Somewhere beyond the sea
somewhere waiting for me
my lover stands on golden sands
and watches the ships that go sailin’ . . .
(Bobby Darin, Beyond the Sea)
Out of sight, out of mind . . .
The control and ownership of the transport sector is a key theme in New Zealand’s economic history. The maritime sector of ports and shipping are central to our economy, but they operate largely out of the public eye.
A hundred or even thirty years ago there were much larger numbers of maritime workers than today. There was a large and thriving coastal shipping industry that employed New Zealanders. Today ports and ships are bigger than ever. But due to technology, political and economic factors, the numbers working in the industry are much smaller. The waterfront is a high technology environment with a shrinking number of workers. New Zealand shipping has been devastated due to the “open coast” policy.
So the contact of the public with the maritime industry is less. Up until the 1960s, immigrants arrived by ship. People fished off wharves at our main ports. Today in the post 9/11 world, ports are secure environments, with neat stacks of containers sealed off behind gates and high fences. People fly, with the exception of the cruise liners, floating resorts that wander around the Pacific.
But New Zealand’s trade has always been based on sea trade. Virtually all of our imports and exports arrive and depart on ships owned by global multinationals.
The size of these ships is growing but crews are a fraction of the size they once were, and sourced from the developing world.
The maritime industry today is a complex beast. It covers fields that are diverse: global shipping lines, ports, the fishing industry, New Zealand coastal and interisland shipping, flags of convenience, yellow (scab) unions, casualization, massive technological change, ongoing militant unionism. The maritime industry is an international industry and the global trends that are first encountered in the maritime industry soon spread onshore.
New Zealand’s ports are a regular feature in the business pages, but are largely out of the public consciousness. Their future is hard to predict but it is likely to be a rocky one as converging pressures come to bear in an unstable industry.
The processes of privatization are a global phenomenon, so it’s worth looking at the international context before examining the case of New Zealand.
Ports of convenience, toolkits and hit men: the mechanics of privatization
The consolidation of power of global terminal operators, as the multinational port companies are known in the industry, goes hand in hand with port privatization.
There are plenty of people ready to help get a port off your hands. The World Bank, for example, have a whole procedure on how to privatize your port which anyone can download from their website (see references for the web address.)
It’s part of their helpful series on how to privatize and deregulate just about anything that moves.
As a major part of national infrastructure, and more importantly part of the global transport and logistics chain, ports are in the sights of that mysterious entity known as the “free market” – in reality, a shrinking collection of predatory corporations working hand in glove with their allies in right wing Governments and neoliberal-dominated bureaucracies.
The goal is to get control and profits out of the hands of democratic decision making and into the realm of profitable, globalized and privately held capital.
Do a Google search on “port privatization” and page after page of results scroll past, from Chile to Mauritania to Malaysia to little old New Zealand.
On the global scale, port privatization is resisted by port unions in general.
The International Transport Workers’ Federation (ITF) is the global federation of 751 transport unions including maritime unions, representing over 4.6 million workers in 154 countries.
The ITF have an entire campaign dedicated to fighting for secure jobs in ports entitled the “Ports of Convenience” campaign, which seeks to resist the erosion of workers rights by Global terminal operators through privatization, casualization and direct attacks on workers rights.
According to the ITF, the “Ports of Convenience” campaign name “deliberately links to the ITF’s long standing fight against flags of convenience, which have long been associated with a general lowering of standards for commercial gain. The aim of the campaign is to ensure that acceptable standards apply in ports and terminals around the world. The terms ‘port of convenience’ and ‘terminal of convenience’ refer respectively to ports or terminals that fail to meet these standards.”
The Ports of Convenience campaign and port privatization are explicitly linked by the ITF.
“The global network terminals are major promoters of privatization, as it offers them new markets. In certain regions, the privatization process is seen as a means of facilitating the elimination of trade unions. Company-based unions and those that only organize specific types of dockworkers rather than all the workers in the port are particularly at risk. In some countries the company union will cease to exist by law if the original company has disappeared.” (http://www.itfglobal.org/transport-international/ti25-ports.cfm)
The ITF identify three main problems with port privatization:
1) Port restructuring and its impact on labour, particularly with regard to retrenchment, consequences for wages and working conditions;
2) Use of non-unionized labour, competing with unionized ports; and
3) The elimination or weakening of unions.
In short, port privatization fits in neatly with the union busting agenda.
Port privatization may seem boring stuff to many, but the forces pushing privatization will go as far as they can to achieve their goals. Unions often get in the way of this process. For example, the ITF ran a major campaign after the murder of an anti-privatization dockers leader in Guatemala in 2007.
General Secretary of the Guatemalan STEPQ dockers’ union, Pedro Zamora, was shot 20 times by multiple assailants who ambushed him as he collected his sons from a hospital appointment on 15 January 2007.
The ITF reported: “After firing 100 shots, one walked up to the wounded Zamora and shot him at point blank range in the face – in front of his children, one of whom, three year old Angel, was wounded in the attack. Zamora’s last act had been to push the children to the floor to try and protect them.”
The murderers were never brought to justice for this political assassination of a workers leader fighting to protect the rights of workers during a port privatization (http://www.itfglobal.org/campaigns/zamora.cfm).
Rationalization, privatization or integration
There have been increasingly strident demands for “rationalization” of New Zealand ports. The recurrent themes are that New Zealand has too many ports; its ports are inefficient and held back by public ownership; and there is no direction or plan to how New Zealand’s ports operate as part of the transport and logistics chain.
As so often, there is a kernel of truth in many of the conventional capitalist criticisms of the failures of New Zealand ports. The problem is teasing out the real issues, and separating these from the usual self-interested solutions of people who see an opportunity to make a quick buck.
What confuses matters is the hostile factions of the maritime industry whose antagonisms and tribal identity colour the debate. There is no sense of a consensus view, just a whirling melee of competing interests.
There appear to be three broad groups advocating their own strand of thought about how to “sort the ports”. These I have roughly divided into the “finance people”, the “industry people” and the “concerned citizens.”
The “finance people” are the pro-privatization lobby, representing ideological business, the finance sector and their political allies. Numerous reports and think pieces have appeared from this group, who sense an opportunity for getting their hands on a juicy chunk of infrastructure, but who realize the potential of blowback from public resentment, and the instability of the industry.
Secondly, there is the “industry people”, who have a more pragmatic approach, including port company executives, many of the businesses who directly use ports, local shipping companies, and local Government shareholders.
They all have a stake in the current setup, so they are far less gung ho about a major shake up. They do not have a problem with subsidies or public investment as long as it benefits their own interests.
An ongoing irritation for them is how the maritime sector has been left to fend for itself while Government pours cash into other transport modes.
Finally, the “concerned citizens”. This is the public who seek to maintain public ownership and control of the ports, and indeed all our infrastructure.
Many local ratepayers have an instinctive feel for keeping control of such important assets. The political left in New Zealand is in weakened and reactive mode, but has found this issue is one that resonates with the popular mood.
The pickup of the Keep Our Port Public campaign in 2006, instigated by CAFCA, was surprisingly strong.
The unions have far less sway than they once did, but still have more influence in this industry than most others.
Obviously things are not always quite as clear cut as this. Local government owners are all over the place, with some leaning towards public ownership and others keen on privatization in some form. There are shifting and uneasy alliances.
On the sidelines of the debate are the Government, who remain at arms length, perhaps hoping that it will all resolve itself, and distancing themselves from any industry fiasco.
Circling slowly in the deep waters are the shipping corporates and global terminal operators.
The failed Hutchison deal at Port of Lyttelton in 2006 was a dress rehearsal and the interest is still there.
Captain Wei Jiafu, CEO of Chinese shipping line and ports company COSCO, visited New Zealand in October 2008, expressing interest in port investment opportunities.
Captain Jiafu is well connected: reportedly a former president of the China Ship Owners’ Association, and now the deputy chairman of the China Merchants’ Bank, which “is connected to the top echelon of the Chinese government.” (“Cosco boss eyes NZ”, Evening Standard, 16/10/2008)
“If we were looking to expand our port network we would want a port in Australia or New Zealand,” he said, mentioning the free trade deal as a driver behind such a decision.
Inside New Zealand, the “finance people” who dominate New Zealands economic decision making, are also frustrated by what they see as the inertia of the industry.
The New Zealand Port Sector Report 2008 by Rockpoint Finance is an excellent example, with a mass of well-researched data aimed at the potential investors in privatized ports (a copy is available online for free, see references below.)
The authors are well aware “commercial consolidation” may be frustrated by the misguided attitudes of the population.
“Clearly there remains public and political interest and concern regarding ownership of strategic assets, as has been demonstrated by an untimely political roadblock preventing a benign foreign bidder, the Canadian Pension Plan, acquiring a strategic but minority stake in Auckland International Airport. The debate on ownership of strategic or infrastructural assets is too ideological and increasingly political. We have observed that the economic benefits provided by infrastructure (and its economic utility) are largely independent of ownership.”
(6.3, NZ Port Sector Report, 2008).
There is a certain lack of self-awareness in such statements.
The idea that economic benefits are “largely independent of ownership” leaves one wondering what motive there would be for private investors to want to buy the ports.
But this a common theme in the push for privatization in ports as well as other sectors. Opponents of privatization/corporate globalization are described as blinded by ideology and narrow political obsessions, while the advocates of selling off everything to global corporations are simply approaching things from a rational and logical perspective.
The fact the cheerleaders for privatization will be the prime benefactors is not seen as influencing their objectivity.
New Zealand Ports: who do they belong too
There have been ongoing calls for the “rationalization” of New Zealand ports, an ill-defined term that tends to shift meaning depending on whom is using it. Rationalization will probably involve mergers, some ports growing at others expense, possibly changes in ownership or attempts at privatization, perhaps even the failure of some ports to survive in anything resembling their current form.
There are many criticisms – some valid, some self-serving – about the port sector. These include the number of ports (New Zealand has a large number of ports for its size), the lack of co-ordination, the ownership model and lack of “efficiency.”
Most ports in New Zealand today remain under full or partial ownership by Local Government, a combination of Regional, City and District Councils, with a limited level of private shareholders and in some cases listing on NZX.
Ports previously under the control of local Harbour Boards, many in existence since the 19th century, fell victim to the “Port Reform” process under the Fourth Labour Government. The 1988 Port Companies Act created corporatized ports with a legal obligation to operate as profit-making businesses, with ownership by local government.
This was a blueprint for privatization, but the plan went awry.
“While the original intention of the Port Companies Act (1988) was to facilitate private ownership, every New Zealand port remains majority owned by a council. Of the 15 ports presented in the following figure, seven are wholly owned by a single council, and a further three are wholly-owned by two councils. Ports themselves have also acquired stakes in other ports . . . ” (4.3, Rockpoint Coastal Shipping and Modal Freight Choice Report)
New Zealand’s main ports today are Whangarei/Marsden Point (Northport), Ports of Auckland (Onehunga), Tauranga/Mount Maunganui, Gisborne, Napier, New Plymouth, Wellington, Lyttelton, Nelson, Port Chalmers (Port Otago) and Bluff. There are also several small specialist ports including Westport.
The following is a breakdown of port ownership from north to south, with details drawn from port company websites and annual reports, and Rockpoint’s NZ Port Sector Report 2008 and Coastal Shipping Report (see references).
Northland Port Corporation (NPC)
Whangarei Northport Ltd is the port operating company for the port of Marsden Point, jointly owned by Northland Port Corporation and Port of Tauranga on a 50/50 basis. Northland Port Corporation is majority owned by the Northland Regional Council (53.614%) with a substantial minority shareholding by Ports of Auckland (19.9%) and numerous smaller shareholders (Northport annual report 2009).
Ports of Auckland (AKL)
AKL is New Zealand’s busiest container port. It is 100% owned by Auckland Regional Holdings, on behalf of Auckland Regional Council, after returning to full public ownership in 2005. AKL has a small secondary port at Onehunga used for some specialist domestic shipping.
AKL is highly unionized and has seen ongoing industrial action. Because of its position and value, it is a highly politicized port in terms of the debate that surrounds its future, which we look at in more depth later in this article.
Port of Tauranga (POT)
POT is New Zealand’s largest port by international trade volumes. Historically log exports were the major focus but this is changing with rapidly growing container volumes. POT has an “inland port” Metroport situated in the greater Auckland area (inland ports are basically container processing depots that are connected to old fashioned seaside ports with rail and truck transport). POT is listed on NZX but its major shareholder is the Bay of Plenty Regional Council. It is in a competitor position with Ports of Auckland.
Port Taranaki (TAR)
Trading as Westgate, TAR is New Zealand’s only deepwater west coast port. It’s key strength is oil and gas exports from the offshore industry, together with Fonterra’s dairy exports.
TAR is 100% owned by the Taranaki Regional Council.
Port of Napier (NAP)
NAP is primarily an export port for commodities including logs, agriculture and horticultural exports. Hawke’s Bay Regional Council own 92% of the Port’s shares, with the remaining 8% held by strangely named horizons.mw (formerly Manawatu Wanganui Regional Council). NAP was the scene of major industrial action by the Maritime Union in 2007.
Port of Gisborne (GIS)
A smaller regional port, GIS is one of a number of businesses owned by the Eastland Community Trust. The main exports are logs and horticultural produce. The Gisborne District Council is the main beneficiary of the Trust.
Port of Wellington (WGN)
Trading as Centreport, WGN has struggled in recent years with the decline of manufacturing but has been helped by interisland shipping and its central city properties. Ownership is with the Wellington Regional Council.
Port Nelson (NLS)
NLS is mainly based around forestry exports. Ownership by Nelson City Council and Tasman District Council.
Port of Lyttelton (LYT)
Port of Lyttelton will be familiar to Watchdog readers as the subject of an attempted privatization that resulted in the Keep Our Port Public campaign.
The current ownership status of the Port is a majority holding by Christchurch City Holdings, with a minority share held by Port of Otago, and some smaller shareholders.
Lyttelton remains the South Island’s largest port by container volume although Port of Otago is catching up. Lyttelton is also the export point for West Coast coal and has benefited from Fonterra’s recent moves to long distance rail their products rather than using Port Timaru.
Port of Timaru (TMU)
Trading as PrimePort, Timaru has certainly been a prime example of how regional ports (and the regional economy that depends on them) can be mugged by shipping companies and market dominating companies.
Over the last couple of years, changing shipping schedules of major shippers like Maersk and Hamburg Sud have hit Timaru, followed by the decision in 2009 by Fonterra to shift the bulk of its dairy products on long distance rail out of the South Canterbury region and through to Lyttelton.
The port has already seen major redundancies and casualization and its future as a regional container port is under some question. Ownership is with local authorities (the main one being the Timaru District Council) as well as some private shareholders.
Port Otago (OTG)
After hard times in the 1990s, Port Otago has been on the up, benefiting from the growth in dairy exports plus its substantial property investments. It is the second biggest port in the South Island and also has an advantage due to its “end of the line” position for container transshipment, acting as a kind of depot for empty containers heading out of the country.
The port is 100% owned by the Otago Regional Council. OTGs blocking move in 2006 to buy into the Lyttelton Port Company quashed the privatization agenda there, and since that time there have been protracted negotiations about how the ports may operate together in the future.
Trading as SouthPort, Bluff services the Southland district. Driving into Bluff past the derelict freezing works, you certainly get a feel for how times have changed for this once thriving port. Bluff is now a much smaller operation, but still has good facilities on its harbour island.
It has several things going for it. The dedicated wharf for the Tiwai Point smelter, another longstanding CAFCA favorite, provides the backbone for the port. Bluff has recently gained a container ship service after a number of years of not having one.
Oil exploration in the Great Southern Basin is also a potential earner for Bluff, although Port Chalmers may muscle in on this as well.
There are also council-owned port facilities in Marlborough (Picton/Shakespeare Bay), Greymouth and Westport.
Lyttelton and Otago: keep your friends close and your enemies even closer
The case of port privatization that Watchdog readers are most likely to be familiar with is the attempted privatization of the Port of Lyttelton in 2006. I won’t give a full history of this as it has been covered extensively in previous editions of Watchdog. References to several specific articles, available online, are listed below.
The Keep Our Port Public campaign wasn’t a new thing, incidentally. Trawling back through some of the back issues of Foreign Control Watchdog (now accessible online at http://historicalwatchdog.blogspot.com thanks to the monumental efforts of Lynda Boyd) I read on page 32 of Watchdog 75 (April 1994) about the Campaign for People’s Sovereignty and their investigations into plans to privatize Port of Lyttelton. The author is unnamed, but I assume its Murray Horton, whose brisk prose style is recognizable even after the passage of time.
In the 2006 privatization bid, the Christchurch City Council through its business arm Christchurch City Holdings attempted to buy up minority shareholdings in the Port of Lyttelton (listed on NZX) in order to sell off half of the port to global terminal operator Hutchison.
The joint venture would have seen CCH retaining control of the land and infrastructure, with Hutchison having a controlling interest in the port operating company.
The deal foundered when Port of Otago launched a surprise raid and bought a blocking share in Port of Lyttelton, preventing the proposed takeover going ahead.
Port Otago wasn’t interested in seeing a global operator plant themselves further up the coast to use their market dominance to hoover up any available shipping.
There was much wailing and gnashing of teeth, along with substantial embarrassment for the Christchurch City Council and the privatization lobby, following this debacle.
Once the dust settled, a drawn out mating dance began as the two ports tried to figure out how things would work in the future. We’ve heard about flags of convenience and ports of convenience – this is more of a marriage of convenience.
A memorandum of understanding was signed in October 2008 to “explore a merger of their respective port operations” and in February 2010 the two ports announced they were continuing to work towards a “potential operational merger.” (“Merger Decision Closer, New Zealand Shipping Gazette, 27 February 2010).
After the 2006 Lyttelton deal fell sideways, Hutchison vanished in a puff of green smoke, but not before following up a few more leads and seeing whether perhaps they could pick up another port on their way out of the country (Auckland).
A tale of two Ports: Party Central in the Super City (Auckland)
Fierce competition between Ports of Auckland and their rival Port of Tauranga has built over the last decade, with both positioning themselves as the big New Zealand “hub” port.
Since the failure of privatization in the 1990s, the Ports of Auckland has swung back into full public ownership, albeit through the corporatized model of ownership. The Port operates as a standalone business, as management conflicts with the unionized workforce attest. The Ports of Auckland is very much an import port, servicing New Zealand’s largest city.
Auckland has been a battleground for years between privatizers (or perhaps we should call them privateers) and those who want to keep the ports in local hands. The 1990s saw off the privatization threat and in the last few years the pendulum swung the other way, with the Ports becoming very much a desirable asset for its owners, the Auckland Regional Council.
That’s not too say there haven’t been a privatization campaign slowly bubbling away in the background, mixed up with the battles with Tauranga, industrial strife between management and the large and militant Auckland branch of the Maritime Union, the new “Super City” plan from Rodney Hide, and of course our Prime Minister’s contribution to the future of ports, the “party central” plan to develop Queens Wharf for the 2011 world cup.
The wider issue behind this last issue, and beyond the vacuity of John Key, is actually a big one for central city ports both in New Zealand and around the world. Often their prime position means “waterfront development” is all about real estate potential, as opposed to working ports. The issue has been a big one in Sydney.
The privatizers claim is Ports of Auckland is mismanaged, underperforming and somehow making the people of Auckland worse off.
Yet a short examination of the 2008 annual report of Auckland Regional Holdings (ARH) shows clearly how much benefit this asset brings to Aucklanders. The ARH is required by law to own and manage its assets in the long-term interests of the Auckland region, providing funds to the Auckland Regional Council (ARC).
It is no coincidence that the howls about “underperforming dinosaurs” have arisen at a time of global economic crisis.
Why we should be so surprised at reduced profit levels in the worst global recession since the 1930s? What worse time could there be to promote a firesale of New Zealand assets in a bargain basement style auction?
Deja vu may occur to those who recall the saga of the New Zealand rail system. Sold for a song to asset stripping vultures in the 1990s by the most unpopular Government of the postwar period, the rail system was passed around and run into the ground, before the inevitable realization that it had to be placed back in national ownership.
An article published in the New Zealand Herald (7 April 2009) by the then President of the Union’s Auckland Waterfront Branch Denis Carlisle stated “the interests of New Zealand are in no way served by selling off ports to global operators. Around the world this has led to numerous problems including ports of convenience, notorious for the use of short-term labour imported to displace local workers.”
The Union noted that 99 per cent of our imports and exports as a maritime trading nation move by sea but New Zealand had already handed over the bulk of coastal and international shipping to overseas operators who pay no tax.
“The last thing we want to do is replicate this disaster by handing over control of our ports to overseas monopolies who can then establish a stranglehold over our economy.”
A tale of two Ports: Yellow Unions and Suitcase Stevedores in Tauranga
The Port of Tauranga has been the seeding ground for a new breed of aggressive, anti-union stevedores.
The union situation is not obviously directly related to privatization on the surface. But experience overseas, as noted previously in this article, has shown privatization and anti-worker, union-busting activities are part of the same package deal.
Tauranga has been the source of numerous problems for unions as its rapid expansion and anti-union stevedores have led to deunionization and “yellow associations” (company unions).
It has a fragmented labour force that is highly casualized and as a result the port is portrayed as innovative and forward thinking by the business sector. Talking to some of the casual workers there some years ago, their stories of living on the end of a mobile phone waiting for work from one of several employers, provides a different picture.
It’s a 21st century version of the evils of the old “bull” system, where wharfies used to be picked up for a days work by labour selecting foremen at the wharf gates.
In comparison, the Ports of Auckland has strong union membership through the Maritime Union of New Zealand. The history of the port was that the former Harbour Workers Union joined up with the Waterfront Workers Union in Auckland in 1990 (and in turn the WWU amalgamated with the Seafarers Union into the Maritime Union in 2002.)
Apart from Auckland, the old Harbour Workers Union merged into the RMTU.
In the Port of Tauranga, as in most ports, both MUNZ and RMTU represent workers, and the relationship has been historically bumpy.
But Tauranga has a greater threat which both Unions are well aware of. There are several privately owned stevedores which operate in-house Unions. One stevedore, ISO, also operate throughout New Zealand as a “suitcase stevedore” and were at the centre of major industrial conflicts with MUNZ (prior to 2002 the WWU) throughout the 1990s up until the present day. These have included Tauranga, Auckland, Gisborne, Nelson, Timaru, Bluff, and Port Chalmers, and more recently Napier.
These in-house unions are officially registered and a condition of such registration is that they operate at “arms length” from the employer. How this independence is monitored is one of life’s great mysteries.
In any case, these unions are referred to by the genuine worker-controlled unions by a variety of names including “yellow associations” to reflect their real nature. They have no relationship with any other bona fide Union or union body such as the Council of Trade Unions.
Such stevedores operate with a core workforce supplemented by casual workers. The casualization is the key as any casual who decided to join a genuine union, as opposed to the company union, would have dim prospects for their future career.
Despite these outward differences between Auckland and Tauranga ports, and fierce competition, there have been attempts at some kind of merger from both sides. The most recent in late 2008 saw Ports of Auckland make an approach to Tauranga to buy its container business, an offer that went nowhere (“Auckland-Tauranga Port merger founders”, NZ Herald, 26 February 2009).
Double or nothing: Duplication of infrastructure
The result of many ports operating without central direction or strategy has created an environment of parochial competition. Ports compete to see who can capture the big trade of the shipping companies. There are winners and losers, and often this years winner is next years loser. Ports sink large amounts of money into creating infrastructure to attract trade away from their competitors,
An elegant case was the “$20 million hole” at New Plymouth, where the Port of Taranaki carried out a channel deepening to facilitate a deal that would have seen Pike River coal barged from Westport and exported from Port of Taranaki.
“The trouble was that at the time the Port of Taranaki made the investment decision, it and its partners did not have a contract signed with Pike River. Subsequently, Pike River elected to ship its coal through Lyttelton, leaving the Port of Taranaki with a deeper channel that it didn’t need.” (Dominion Post, 25 June 2008)
Pike River Coal, a 2007 “Roger” award finalist, also left the Port of Greymouth high and dry with their wheeling and dealing.
“A multi million dollar revamp of Greymouth’s port has been scuttled after a decision was made to send millions of dollars of coal to Lyttelton instead. After two years of planning, Pike River Coal has abandoned its plans to revamp the Port of Greymouth, instead opting for Solid Energy’s proposal to send more coal by rail to Lyttelton. Pike River was going to start exporting the coal via Greymouth next year but now the deal is off after the company got a better deal.” (TVNZ, 28 November, 2007)
New Zealand’s new “hub” port: Brisbane
A report entitled “Long term optimisation of the Port Sector” was released in October 2009 by Auckland Regional Holdings, the business arm of the Auckland Regional Council. It described developments in an “intensely competitive industry dominated by a few large international players.”
The report suggested that the port rationalization process could result with a centralized “hub” port for New Zealand on the other side of the Tasman. The idea is not as strange as it first sounds. After all, the distance many New Zealand ports is fairly big anyway, and the vast size new generation container vessels now coming online require equally massive port infrastructure.
The retiring CEO of Pacifica Shipping (one of New Zealand’s last coastal shipping companies), Rod Grout, gave the issue a blast on his way out earlier this year. In an NZPA interview he lambasted the Government’s “apathy towards domestic shipping” and raised the issue of an Australian hub as a potential outcome.
The large international shipping lines could say “we’re now hubbing in Sydney, please make sure you arrange to get your cargo to that port”, he said. “When you allow international shipping lines to take their share of domestic cargo they’ll pick the eyes out of it.”
The debate about whether Tauranga, Auckland, Lyttelton or Dunedin could become hub ports was “small fry” compared to the bigger picture.
“People tend to take a hands off approach and let the market dictate. The market could easily dictate Sydney or Melbourne.” (“Aust ports could become hubs for NZ: industry leader”, Otago Daily Times online, 22 January 2010)
Downstream from this comes the crunch. The power of the shipping companies will become greater, and their ability to put the screws on New Zealand ports will be increased even more. With no collective bargaining power or national plan, individual ports will continue to savage each other.
Such a situation should make concerning reading for the Minister of Transport, Stephen Joyce. The fact that he has amiably declined to get involved in the minor matter of the future of New Zealand’s ports has now got to the point where even the traditionally crusty and conservative maritime industry bosses are scratching their heads.
Crisis? What crisis?
Going back a few years, there were high hopes the Clark Labour Government would deliver for the maritime sector. Yet Labour did not deliver on cabotage or even some kind of regulation for New Zealand shipping.
Towards the end of their term, some minor concessions were offered.
In their last term of Government, the much-vaunted “Sea Change” strategy was rolled out which proposed an integrated transport system and offered $36 million of funding for developing coastal shipping over four years.
But it appeared there was some confusion about what it was all for in practical terms. There was little uptake and shortly after the election of National in 2008, the Sea Change strategy sunk without a trace.
After sniffing the wind on the Lyttelton deal in 2006, some local Labour MPs lined up to sign a statement calling for the port to remain in public hands. Typically, the Government itself was mute.
The SeaChange strategy put some seeding money towards coastal shipping and there was talk of integrated transport systems.
Casualization of the maritime workforce was going to be looked into by Ruth Dyson and Peter Brown, the New Zealand First MP with a maritime background. But they must have known that these initiatives were doomed before they even began, as they were finally rolled out in the last days of the Fifth Labour Government. A cynic might wonder if they were intended as a political sop to jolly along some of the long suffering maritime unionists.
The approach of the current National Government has been to dump even these limited initiatives, pump cash into roading, and to keep a safe distance from the port sector.
The Port Strategy website reported on 22 January 2010 that “New Zealand’s future port scene will be shaped by natural market forces and not influenced by direct Government intervention.”
“Resisting calls from some within the sector to ‘encourage’ the predominant council shareholders to view assets commercially, Transport Minister Steve Joyce says shippers and the next-generation of vessel callers will already provide sufficient ‘drivers’.”
Joyce told media he was taking a “watching brief” (whatever that means) and wanted to “encourage those who are shipping the goods and the logistics companies and port companies to work together” (in other words, do nothing.)
Our favorite dairy giant even came in for a scratch behind the ears
“I don’t believe there is anything stopping them from doing that and we are seeing developments in that area with some of the decisions that Fonterra has taken this year and I think we’ll see further developments.”
Running against the tide: resisting the privatization agenda
The big problem with the current debate is how the agenda is set by default. The same failed mantra of privatization and deregulation doesn’t sound very convincing, but has every chance of going over the line in the absence of a clear alternative.
In that sense, the crisis in New Zealand ports is a reflection of our society as a whole. The current direction will lead to disaster but the loudest and most confident voices are those representing the aggressive finance sector, pro-privatization, anti-union, scornful of democratic institutions and the public interest.
The Minister of Transport Stephen Joyce is obviously hoping that “the market” will decide in order to get the Government off the hook, hoping to ride out the inevitable shakedown of the industry and avoid any collateral damage to his Government.
These local concerns are no doubt watched by the global shippers, but New Zealand is probably just a minor nuisance to them. This is a mixed blessing. Our ports are small time to them, and there is a sense that the moves by Hutchison and the talk by COSCO are more about tidying things up than any great financial incentive.
Global shippers might be happy to forget all about New Zealand and just bundle our products in from a major Australian hub. Why worry about a small customer who can’t get their act together?
The alternative path, towards a planned and integrated transport system, would have to acknowledge that the transport chain for New Zealand is not just “another business” but the infrastructure on which our business depends.
This means taking on the dominant finance sector attitude with its short-term outlook. It is entirely possible to have a profitable port wheeling and dealing in waterfront property, yet doing a third rate job in getting our products to the world.
Just as dangerous is the lack of appreciation of the role of ports. You can see this in how many people see ports as an ugly inconvenience to trendy urban lifestyles, sitting on valuable real estate.
In opposition the Labour Party has campaigned on an anti-privatization platform with the Super City moves in Auckland, but the contradiction between Phil Goff’s free trade cheerleading and Labour’s new found zest for people power is obvious.
The Greens and the Alliance have followed port and maritime issues from a left wing perspective, and NZ First had an interest in it. Yet two out of three of these parties are no longer in Parliament. The Greens are experiencing a transition period and their most effective advocate for industrial and maritime issues, Sue Bradford, has left Parliament.
CAFCA has kept a watching brief on the issue and obviously appreciates the importance of this sector, with its ongoing support for public ownership of ports and the New Zealand shipping industry. But CAFCA has a broad agenda and one busy organizer. It can serve as an information clearing house, provide a national network of interested people, and as has been proved can jump start an effective local campaign.
The once powerful maritime unions no longer have the ability to simply press the button and walk off the job in support of a political principle. Non-union and scab labour outfits are openly operating in key ports.
The Maritime Union of New Zealand is a small union that enjoys a high profile and has actively advocated against port privatization but is faced with attacks on several fronts. The uneasy relationship between MUNZ and the RMTU (and the fact there are two unions on the waterfront) is an ongoing saga that will have to be resolved before a consistent position can come out of the unions.
The Maritime Union has proposed the concept of a “Kiwiport”, with a view that ports throughout New Zealand should come under a co-ordinating structure.
Despite the efforts of the current Government to lock New Zealand further into a fossil fuel dependent economy at a time of peak oil and climate crisis, coastal shipping offers a ready made solution.
The regeneration of a regulated domestic shipping industry would lead to the stability of regional ports, providing an alternative to the large vessel syndrome promoted by global shipping operators whose arbitrary changes to calling schedules have ports on the hop.
Ports could be put under local ownership and control, but rather than being left to parochial competition, they would have to operate in an integrated framework.
A national ports plan and Government shareholding could carry out port rationalization based on the public interest. Ports would be operated on a basis of facilitating trade. The savings on wasteful competition would be enormous, and the transition to hub and feeder ports could be managed to ensure regional ports were not disadvantaged.
The casualization of the industry could be turned around, and secure jobs and a career path would make waterfront work a more attractive option for young people in an ageing industry.
The New Zealand mindset is still dominated by the idea that farmers are the sole wealth creators on the basis that they grow and milk the cows. This is of course true, but a cow udder is only the first step in the complex trade and logistics process.
Ports and the maritime industry are seen as an afterthought or a problem, or possibly something that could be hocked off to make some short term cash. There are more exciting things to think about, like tourism.
There is little appreciation that if we get our ports wrong, we will be in the unusual position of being a remote maritime trading nation that has lost control of its transport and logistics chain.
New Zealand will become one step closer to becoming a paddock with a golf course attached to the side. There will be winners, but the people of New Zealand will not be amongst them.
References and bibliography
“TI Briefing: The ports of convenience”, Transport International Magazine, International Transport Workers Federation (Issue 25, October 2006)
“Time to sort port sector” by Bruce McKay (Dominion Post, 25 June 2008)
“Selling the port still doesn’t float” by Denis Carlisle (New Zealand Herald, 7 April 2009)
“NZ port reform left to market forces”, Port Strategy website (22 January 2010)
“Port decision shock for Greymouth”, TVNZ (November 28 2007)
“Cosco boss eyes NZ”, Dominion Post (16 October 2008)
Coastal Shipping and Modal Freight Choice, Rockpoint Corporate Finance Limited, Richard Paling Consulting Limited and PIC and Associates Limited (2009) (Prepared for the New Zealand Transport Agency)
“Rock the Boat”: New Zealand Port Sector Report 2008, authors C. Stone, J. Marker, J. Davis, T. Forrow, Rockpoint Corporate Finance Limited (2008)
“Long Term Optimisation of the New Zealand Port Sector” Auckland Regional Holdings (2009)
“British Capital, Antipodean Labour: Working the New Zealand Waterfront, 1915–1951” by Anna Green, University of Otago Press, 2001
“The Big Blue: Snapshots of the 1951 Waterfront Lockout” edited by David Grant, University of Canterbury Press, 2004
World Bank Port Reform Toolkit
“Pigheaded Christchurch Council Unrepentant On Thwarted Lyttelton Port Sale” by Murray Horton (Foreign Control Watchdog 115, August 2007)
“Christchurch Wants To Flog Off Lyttelton Port Company To Hong Kong TNC” bu Murray Horton (Foreign Control Watchdog 111, April 2006)
“Lyttelton Port Company Sale Dead In The Water: We’ve Won The Battle But Not Yet The War” by Murray Horton (Foreign Control Watchdog 112, August 2006)
“Maritime Union calls for pro-active port policy from government”, National Business Review, 25 January 2010
Call for whole of supply chain approach to transport, NZPA, 6 June 2009
Aust ports could become hubs for NZ: industry leader (Otago Daily Times online, 22 January 2010)
Auckland-Tauranga Port merger founders, NZ Herald, 26 February 2009