Question facing the Auckland Development Committee on Thursday
The main item for the Auckland Development Committee this Thursday is what to do with the Central Wharves at Port of Auckland.
Bob Dey of Property Report has a piece on the conflicting situation which you can read here: Council gets second of competing reports on wharf use
The Port of Auckland report I have embedded at the bottom of this post. But minus the Committee muddling itself as per normal the question comes down to what does Auckland Council want with the Central Wharves: People or Freight.
The question is that simple especially when it comes the pure economics of the situation.
- Cruise Industry: $160m/year to the economy and some 3,000 jobs
- Bulk/General: For cars and machinery: At least $380 million and some 3,500 jobs mostly in South Auckland. Note this is for two sectors of general and bulk and there are plenty of others that come through the port.
Bob did pick up these conclusions if Council goes for the people option:
- Ferry development plans will result in a 50% growth in patronage by 2026. This growth is limited by the availability of ferry berths at the Downtown terminal and the inefficiency of the terminal facilities. The proposed option allows growth in ferry berths to meet demands
- Cruiseship visits currently contribute $160 million to the Auckland economy, delivering nearly 3000 jobs. Cruise ship visits are projected to grow from 100 to about 150/year by 2030, and passenger numbers from 200,000 to 350,000. Cruise ships are getting larger, but the new larger ships are not able to berth in Auckland. Cruise lines are indicating that these ships will come to Auckland within 5 years. The projected increase in annual value to the Auckland economy to $300 million will not occur without additional infrastructure. It is noted that other New Zealand cruise ports need Auckland to be able to accommodate these ships, otherwise they will not come to the country and hence a lost benefit nationally
- Tourist services on the harbour and in the gulf are increasing. Anticipated growth in the range of tours offered will add to Auckland’s visitor attractiveness, but these services are spread across the waterfront. Consolidation in a ‘tourism hub’ will enable visitors to readily access these services
- Superyachtvisits are restricted by limited infrastructure both for larger vessels and for the growing demand. Superyachts contribute about $30 million/year to the Auckland economy, three-quarters of which is spent with the marine sector.
While from the Port of Auckland report:
Value of cruise ship visits and vehicle imports/wholesaling
Cruise ship industry
The 2013-14 season had 88 cruise ships visits which brought 186,200 visitors and 63,900 crew to New Zealand. Market Economics (ME) spatial estimate this resulted in over 1.08 million passenger port days and 455,100 crew port days across the country. They estimate the total value added by the industry across all New Zealand regions was $365.3 million, with Auckland accounting for over $159 million (44%) of the total. The ME spatial estimate is equivalent to a value added of $1.8 million per ship visit in Auckland. At the time of writing this report, 92 cruise ship visits were booked for the 2014-15 season.
Typically, cruise ships visit multiple New Zealand ports as part of a wider circuit including the South Pacific and Australia. Together with other Australian major ports, Auckland uniquely within New Zealand functions as an exchange port where passengers and crew start or end their journeys. Exchange ports generate additional economic value by providing services that support the exchange of passengers and crew, and the resupplying of cruise ships. Services include bunkering, providoring, hotel stays, airline bookings, airport activity and transportation. If berth facilities are inadequate or unavailable in Auckland, the cruise ship industry will respond by either:
continuing visits but with smaller ships, resulting in Auckland receiving fewer passengers per visit or an increased frequency of visits
reducing ship visits as the size of ships increases by limiting visits to a port of call rather than an exchange of passengers or crew. There is also the possibility that, if Auckland cannot accommodate larger ships, visits might be reduced nationally. It is beyond the scope of this report to examine these potential impacts.
The value of the vehicle imports and wholesaling industry
Around 90% of light vehicle imports in New Zealand come through the Ports of Auckland Ltd. Import data from Statistics New Zealand suggest that these vehicles were worth around $3.2 billion in 2013/14.
Ownership rates relative to the population fell during the global financial crisis as people put off major purchases, but have begun to grow again. Vehicle ownership trends are a good indicator of demand for vehicle imports and for businesses that manage vehicle wholesaling, warehousing and distribution in Auckland.
Auckland’s motor vehicle wholesale industry stands to gain the most from the growing demand for vehicle imports. This industry employs about 3,500 people and accounts for 48% of total motor vehicle wholesale employment in New Zealand. Figure 8 shows that motor vehicle wholesale businesses (and jobs) are concentrated around the residential suburbs in South Auckland.
Job creation is significant for South Auckland because it suffers higher unemployment rates than other parts of Auckland and New Zealand. For example, the unemployment rate in the Otara-Papatoetoe local board area was 14% according to the 2013 Census. Unemployment in the Auckland Region as a whole was 8%.
Our estimates suggest that, during the financial year April 2013 to March 2014, the motor vehicle wholesale industry contributed $380 million dollars to the Auckland’s Regional Gross Value Added (RGVA).22 Of this amount, $200 million was paid as wages/salaries.
Other bulk cargo
As noted above, the non-homogeneous nature of the balance of the cargo landed at the Port renders an analysis of the precise economic contribution made by each of the cargoes fragmentary and less valuable than the discussion of the dominant cargo (vehicles). Nonetheless, some general observations can be made. The largest discrete cargoes after vehicles are cement, sand, road metal and gypsum. It is reasonable to conjecture that the bulk of the consumption of these items will take place in the expanding Auckland region. It follows that there is value in landing such items near where they will be used, and that diverting the landing of such items to other ports is inefficient in as much as extra costs will then be incurred in transporting them to the Auckland region.
So those are the simple economics – Now for the complex stuff
The way I see it is flip Captain Cook Wharf over to Development Auckland (replaces Waterfront Auckland, and Auckland Council Property Limit), demolish Marsden Wharf, and extend Bledisole on piles by an extra 200 metres. If that is not possible then demolish Marsden, extend Captain Cooks Wharf but retain it for Port use and look towards Wynyard Quarter which still has a liquid bulk terminal there (although not for much longer).
This presents another question to Port of Auckland on whether they could shuttle general/bulk freight by rail economically to their Wiri site like they do with containers. If not then we risk more trucks on the road which presents other problems in itself.
Now to shift general and bulk to Northland or Tauranga while it might seem like a good idea it certainly isn’t. The rail lines to both ports are not in the best situation to handle the increased freight and some serious coin will be needed:
- Third Main from Pukekohe to Westfield on the Southern Line so the freighters do not mixed with the increasing amount of passenger trains
- East Coast Main Line from Hamilton to Tauranga needs the Kaimai Tunnel upgraded to removed a 25km/h restriction as well as more passing loops to the point of double tracking to handle the increased freight loads especially the Metro Ports (Port of Tauranga to Southdown)
- The North Auckland Line between Swanson and Whangarei is in very poor condition with the line threatened to be mothballed. The entire section of the NAL would need upgrading, the Marsden Point Line needing to be built, and the Avondale-Southdown Bypass needing to be built so the freighters can bypass the busy Mt Albert-Newmarket-Westfield sections of the Western and Southern Lines.
The above needs to happen regardless but it will take serious coin as I mentioned and neither National and Labour are committed to such state building projects. So that means increased road traffic and already State Highway 1 in both directions is congested as is especially at Welsford-Puhoi in the north, and Drury and Mt Wellington in the south.
So as well extra costs of shipping the freight to Auckland you have inefficiencies as well owing to the road congestion and rail lines not in a state to handle the loads. Those costs come back to the consumer directly and of course JOBS! I should not need to point that South Auckland is acutely affected by any changes to Port of Auckland structure and handling.
I do know about you but I am in no mood for messing with some 3,500 jobs in the South where four of the five heavy industrial complexes are just so you can have some play space on a central wharf. Remember those 3,500 jobs are just dealing with cars let alone the rest of the bulk trade.
Weighing this all up I am inclined to be more pro freight with the central wharves for the next 20 years at least. If and when our inter regional rail freight can handle freight being moved seamlessly which out overt effects to our industrial bases then maybe I might go pro-people.
Port of Auckland Part II Study
This study was not related to a Port of Auckland submission to the Unitary Plan that included a look at port relocations. You can see that submission and commentary on it here: PORT OF AUCKLAND – RELOCATION AND THE UNITARY PLAN
As for how will the Port move all that stuff from its main facility to South Auckland? Well this might help: PORT OF AUCKLAND INCREASE PORT RAIL SHUTTLE SERVICES