Volumes up at largest port
Port of Tauranga Ltd experienced improved cargo volumes in the second half of its financial year, “again proving its resilience in the face of economic headwinds”.
Amid significant domestic and international supply-chain challenges, total cargo for the financial year ending June 30 dropped by 4.2 per cent to 23.6 million tonnes. Container volumes decreased 2.5 per cent to 1,147,350 TEUs.
The second half of 2023/24 saw significantly higher volumes than the first, with container numbers increasing by 13.7 per cent and total trade growing 3.3 per cent during the two six-month periods.
The company notched up an underlying group profit of $102.7m for a 12.8 per cent decline compared with $117.1m in the previous year. Group net profit after tax came in at $90.8m, which included a one-off deferred expense of $11.9m due to a change in tax legislation.
An “intense focus” on customer service has seen improved efficiency at Tauranga despite ongoing challenges elsewhere in the domestic and international supply chain.
‘Volatility in demand’
Port of Tauranga chair, Julia Hoare, says the annual results were pleasing after a difficult start to the financial year. Ongoing inflationary pressures and low consumer confidence put pressure on imported volumes.
“We’ve seen a lot of volatility in demand, with big increases in log and kiwifruit exports at the same time as significant decreases in imports,” she says.
“Although the port is still contending with shipping schedule unreliability, outside of our control, the container terminal has continued to improve safety performance and productivity levels.
“The average net crane rate for the year – container moves per hour per crane – increased by 7.9 per cent to 30.1.
“Our team and our service partners have done an outstanding job in ensuring Tauranga is New Zealand’s most efficient port.
“Port productivity is a national issue and is of great concern to importers and exporters seeking efficient access to international markets.
“Currently, less than 30 per cent of vessels arriving at Tauranga as a last New Zealand port are on time.”
The company continues to invest in critical infrastructure to deliver an effective supply chain for New Zealand.
The Ruakura Inland Port in Hamilton, a joint venture with Tainui Group Holdings, is celebrating its first anniversary. Trains running between Port of Tauranga and MetroPort Auckland now call daily at the inland port.
Tauranga has taken delivery of a new container crane and an additional four hybrid straddle carriers as it readies the port for the next stage of growth in a lower-carbon future.
Leonard Sampson, chief executive, says the current economic conditions and operating environment continued to be complex and challenging.
“I’m pleased that our scale and resilience has again come to the fore in the year-end results.”
Counting the numbers
Other results for the past financial year include:
• Total trade: 23.6m tonnes – a 4.2 per cent drop from 24.7m tonnes in 2022/23.
• Earnings before interest, tax, depreciation and amortisation – $203.7m, down seven per cent.
• Operating costs: $218.6m – increase of 3.8 per cent.
• Revenue: $417.4m – 0.8 per cent decrease from $420.9m.
• Imports: 7.8m tonnes – 13.4 per cent decline.
• Exports: 15.8m tonnes – 0.9 per cent increase.
• Ship visits: 1,427 compared to 1,432 in 2022/23.
• Final dividend: 8.7 cents per share compared to 8.8c in 2022/23.
• Total ordinary dividend: 14.7c compared with 15.6c.
The dividend reflects improved trading conditions in the second half of the financial year, the company’s strong balance sheet, return of capital from joint ventures, and delayed capital expenditure.
Earnings from subsidiary and associated companies decreased by 29.3 per cent year on year. Profitability at Northport, PrimePort Timaru, Timaru Container Terminal and Coda Group was affected by reduced volumes due to economic conditions. This was offset by strong performances from Quality Marshalling and PortConnect.
Stella Passage update
The Environment Court has issued an interim decision granting resource consent for part of the port’s planned Stella Passage project. It involves extending wharves at the container terminal at Sulphur Point and the Mount Maunganui wharves. The developments are contained within the existing port footprint.
The consent for a 285-metre extension at Sulphur Point, the most urgent, was approved subject to further matters being addressed to the satisfaction of the court, including the provision of further environmental evidence.
The port adds it is committed to working with iwi and hapu, and addressing the court’s directions. Progress was reported to the court at the end of June and it has appointed an independent facilitator to support the parties involved.
To ensure construction can start as soon as possible, the company has applied for the entirety of the project to be included in the government’s fast-track consenting legislation. It is now awaiting the outcome of select committee deliberations on the bill.
“No matter which path the consent applications ultimately follow, the port remains committed to the conditions and mitigations it has proposed to the court,” it says.
Trends with cargo in
Imports into Tauranga during 2023/34 decreased by 13.3 per cent in volume overall to 7.8m tonnes. Exports increased by 0.9 per cent to 15.8m tonnes, largely due to rises in log, kiwifruit, meat and pulp exports.
Log exports increased by 7.5 per cent to 6.7m tonnes, the second highest year on record largely due to a one-million-tonne boost to volumes post-Cyclone Gabrielle.
A large number of trees in central North Island forests were damaged in the severe weather event, and had to be harvested and exported earlier than planned.
Direct dairy exports decreased 3.4 per cent in volume and transhipped dairy volumes were down significantly. Total meat exports rose by 19.7 per cent reflecting strong US demand and trans-Tasman transhipments via Tauranga.
Direct kiwifruit export volumes climbed by 8.5 per cent compared with the previous year.
Commodity price pressure saw dairy inputs reduce with imported fertiliser volumes dropping by 16.7 per cent, while stock-feed imports fell by 17.2 per cent. Imported oil products remained steady, down by 0.8 per cent. Steel exports saw significant increases in volume.
Transhipments decreased by 12.1 per cent in volume due to changes in coastal shipping services. A total of 109 cruise ships visited over the summer, close to the record of 116 visits prior to the Covid-19 pandemic.
However, this is forecast to drop to around 91 visits in 2023/24 due to a number of factors affecting all New Zealand ports.
Safety and green credentials
“Improved productivity has not been at the expense of safety performance,” says Port of Tauranga in its statement to the NZX.
“Our safety record improved significantly for combined employees and contractors. The total recordable injury-frequency rate reduced 36.2 per cent to 13.2 incidents per one million hours worked.
“The focus in the past year has been on increasing health and safety training, with completed training courses more than tripling to 2,491, compared with the previous year.”
The company says it takes its social licence seriously and is committed to continuous improvement in its environmental performance.
It undertakes an air and water quality-monitoring programme. There were no exceedances of national standards or resource-consent conditions during the year.
Dust mitigation and management efforts, including increased sweeping, wind fences and improved cargo handling, have resulted in a “significant improvement” in air quality since 2019.
The use of methyl bromide for cargo fumigations has long been of concern to residents. Since early 2022, its use has dropped to less than 25,000kg per year – down 92 per cent from its peak in 2013 – thanks to greater restrictions on its use, including recapture technology and increased incentives for de-barking of export logs prior to arrival at the port.
Total greenhouse gas emissions reduced in 2023/24 by 13.5 per cent compared with the previous year. Total emissions per cargo tonne dropped 9.1 per cent.
Outlook for the future
Congestion in Asia caused by ships avoiding the Red Sea has worsened, with delays plaguing ports in Singapore, Malaysia, China, Sri Lanka and the United Arab Emirates.
The threat of escalating conflict and global economic conditions are also influencing cargo volumes and costs globally.
Port of Tauranga expects export log volumes to return to pre-2023 levels due to lower international prices. The domestic economy is also likely to have a continuing effect on imported cargo volumes.
The company has recently increased its weekly train programme between Tauranga and Auckland to 54 trains per week, up from 48, but still lower than the 92 trains per week at the end of last financial year.
While increased rail costs have proved challenging, the port is working with KiwiRail to ensure the rail option remains well-utilised and viable for its import customers.
“Port of Tauranga is prepared to respond to New Zealand’s energy crisis, including the import of alternative fuel sources such as coal,” it says. “The port has a purpose-built, enclosed coal-handling facility via rail to Genesis Energy’s power station at Huntly, avoiding the need to transfer imported coal via truck from other ports.
“Despite the many challenges, the board and management remain confident of its resilience into the future due to the port’s operational strength, diverse cargoes and multiple income streams.”
The company will provide guidance for the 2025 financial year at its annual shareholders’ meeting on October 25.
