Upper North Island Ports Study

The final report of the independent ports technical study produced by PwC (PricewaterhouseCoopers), and sponsored by the Upper North Island Strategic Alliance (UNISA) has been completed.

The primary objective of the study was to develop a credible and consistent understanding of the upper North Island’s freight and port supply chain system.  It is a technical, evidence based demand and supply study conducted by an independent supplier, which has had regard to existing relevant studies, information or research previously undertaken.

UNISA is a collaborative group of seven member councils who have committed to a long-term collaboration for responding to and managing a range of inter-regional and inter-metropolitan issues.  A particular focus of UNISA is taking a ‘New Zealand Inc’ approach and perspective, to ensure the Upper North Island and New Zealand as a whole remains internationally competitive and prosperous.

The independent ports technical study conducted by PwC has concluded that:

• There is strong growth projected in the three Upper North Island (UNI) ports over the next 30 years.  All three UNI ports (covering the Port of Auckland, Port of Tauranga and the Whangārei Ports) will be required to meet the projected freight task.
• A rapid and ongoing increase in trans-shipping means that pressure is likely to be more on port infrastructure than on distribution networks and land transport infrastructure to these ports.
• Pressure on land transport infrastructure is likely to be driven by non-port traffic, competing land uses, and (potentially) reverse sensitivity.  General congestion may be a factor in the medium to longer term, which will impact ports as users of the network.
• The UNI port network has the capacity to meet the projected freight task, provided that efficiency gains, incremental investments in infrastructure and the uptake of already consented works are undertaken in a planned and timely manner.  The greatest opportunities for efficiency gains to access additional capacity are in relation to container trade. 
• In a properly functioning market, prices charged at different ports can play a role in directing customers to where spare capacity exists in the UNI ports system, and in prioritising investment choices.  Furthermore, the development of inland ports can help drive efficiencies in the distribution network, and aid competition and substitutability between ports.
• A third rail line between Southdown and Wiri (dedicated to freight) is at the strategic planning stage and if it were to proceed could provide additional capacity to address emerging rail congestion issues.  This portion of the network is currently under pressure as it must cope with rail freight between the Port of Auckland and Wiri, Port of Tauranga and Metroport, as well as commuter traffic from both branches of the southern line.  
• Substantial, systemic change to the UNI port system within the next 30 years (for example, establishing a new UNI port) is likely to be significantly less cost effective than incremental change.
• Over the next 30 years, the most efficient and cost effective options for meeting the projected freight task are likely to be based around improved efficiency, incremental growth at each port, planned improvements in the land transport system, complemented by changes in relative prices that direct customers to where spare capacity exists in the UNI port system. 

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Due to the size of this document it has been split into sections.

Part 1 - pages 1-50

Glossary
Executive summary
1 Introduction
2 Context for this study
   2.1 The role of ports in an economy
   2.2 The role of trade in the New Zealand economy
   2.3 Growth in world trade
   2.4 Recent economic and population trends in the UNI
3 Background to projections
   3.1 Definitions
   3.2 Current trends in UNI international trade

Part 2 - pages 51-91

   3.3 Current port and shipping trends and their effects
4 The future Upper North Island port task – our projections
   4.1 Revisiting definitions
4.2 Summary of our projections

Part 3 - pages 92-132

   4.3 Key assumptions and drivers of demand
   4.4 Import and export growth
   4.5 Domestic coastal freight
   4.6 Import and export transhipment
   4.7 International transhipment (re-exports)
   4.8 Allocating aggregate UNI growth by port and by container and non-container
5 The ability of the Upper North Island ports to cater for the future trade task
   5.1 The current infrastructure

Part 4 - pages 133-end

   5.2 How we assess whether current infrastructure can cope with greater volumes
   5.3 Northport and Refining NZ
   5.4 Ports of Auckland
   5.5 Port of Tauranga
   5.6 The role of prices
6 Potential changes to the Upper North Island ports system
   6.1 Establishing a container terminal at Northport
   6.2 Limiting Ports of Auckland’s growth
   6.3 Establishing a new port in the UNI
   6.4 The value of retaining options
7 The potential situation beyond the end of our study period
8 Conclusions

Appendix A References
How can we meet increasing demand for ports in the Upper North Island?

Appendix B Domestic freight costs
   8.1 Data sources
   8.2 Detailed supply chain cost tables

Appendix C Technical notes on trade task projections by port
   8.3 Data sources
   8.4 Projected growth
   8.5 Working with port data
   8.6 Allocating UNI trade growth between ports
   8.7 Allocating growth by container and bulk cargo

Appendix D Restrictions