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Port’s profits climb

Company welcomes annual results but expects supply-chain congestion to remain a problem.
Posted on 30 August, 2021
Port’s profits climb

Port of Tauranga has posted a net profit of $102.4 million for the year ended June 30, 2021, which is 15 per cent higher than the previous year’s figure of $88.7m.

Total trade also climbed to 25.7m tonnes, an increase of 3.8 per cent from 24.8m tonnes in the 2020 financial year, despite the port having to deal with supply chain congestion.

Imports increased four per cent to 9.4m tonnes, and exports were up 3.6 per cent to 16.3m tonnes.

Operating revenue for the year was $338.3m, a climb of 12 per cent, while operating expenses increased 15 per cent to $161.1m.

David Pilkington, chairman, says the results are pleasing considering the domestic and international supply chain challenges of the past year.

“As the world continues to grapple with the devastating effects of the Covid-19 pandemic, there has been major disruption in international supply chains,” he explains. 

“Constrained capacity in parts of the New Zealand supply chain, especially at Ports of Auckland, has exacerbated delays and restricted our ability to adapt quickly to the needs of importers and exporters.

“International shipping capacity is in hot demand and costs for shippers have skyrocketed.”

Pilkington adds the diversity of cargoes at Tauranga has created resilience in terms of revenue, and long-term freight agreements with key customers provides some certainty of cargo volumes.

“However, it is not efficient to run a container terminal at more than 100 per cent capacity and our costs, including straddle carrier diesel use and the related carbon emissions, have grown as a result of the congestion we have had to endure. 

“In recent months, we have also experienced the labour shortages felt by many other industries.”

Surcharges for long-stay containers were introduced in January, which has helped the port to discourage inefficient cargo flows and recover a chunk of the additional costs because of the operation overflow.

Capacity challenges

Leonard Sampson, who took over from Mark Cairns as chief executive at the end of the 2021 financial year, says the port’s team and contractors have done an outstanding job in the face of many challenges.

“We saw 106 fewer container vessel visits between September 2020 and June 2021. However, the average cargo exchange increased 21.7 per cent due to the reduced vessel frequency and shippers maximising available capacity,” he adds.

The port reports that surges of container volumes in October and December, compounded by constrained rail capacity, had caused significant congestion, reduced productivity and weeks-long delays transferring import containers by rail to Auckland.

Sampson predicts congestion issues are unlikely to be resolved permanently until vessels can return to schedule and Ports of Auckland is operating at full capacity, which is not expected until at least March 2022.

He says the problem highlights the need for Port of Tauranga to increase its capacity and it has applied for resource consent to extend its container berths as part of a $68.5m project.

“We are also pursuing our plans to automate some of the container storage at the terminal to increase our capacity within the current land footprint. Our capability will be further extended with the opening of the inland port at the Ruakura Superhub near Hamilton in mid-2022.”

Sampson is confident the port has solved its land-side congestion issues but warns “the disruption to the international supply chain remains, and the challenges in Auckland are unlikely to be resolved soon”.

Covid-19 precautions are also expected to impact efficiency and costs, with the company delaying FY2022 guidance until its annual shareholders’ meeting on October 29.

The port will pay a final dividend of 7.5c a share, taking its total for the year to 13.5c a share.