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2006 November 22   05:03

NZ's Tauranga port income may dip NZ$1 mln a month

New Zealand's Port of Tauranga said on Wednesday a decision by shipping giant Maersk to concentrate services in the rival Port of Auckland could cost it NZ$1 million a month in lost revenue, sending its shares 8 percent lower.

However, the company said the revenue loss, amounting to around 10 percent of its previous year's earnings, was a worst case scenario and would be limited if its proposed merger with Auckland goes ahead.

Maersk , which handles around 40 percent of New Zealand's trade, said it had decided to use Port of Auckland for the majority of its calls to the North Island.

Port of Tauranga, which is New Zealand's biggest export port, said the decision was not unexpected although it had tried to make a reasonable offer.

"We priced our offer on the basis of providing a long-term sustainable option, which we understood Maersk was seeking," Chief Executive Mark Cairns said.

The business currently represented around 4,600 containers a month and revenue of about NZ$1 million per month.

Port of Tauranga shares, 55 percent owned by a local body, last traded down 50 cents or 8.1 percent at NZ$5.70, albeit on slim volumes.

It said Maersk's decision would allow other container lines to use the port, possibly reducing the impact on revenue, which in the year to June 30 was NZ$122.4 million.

Port of Tauranga and Ports of Auckland, privatised by a local body in 2005, unveiled a plan to merge in October into New Zealand's biggest port operator to counter the entry of foreign operators and declining ship visits.

"We are currently putting a lot of effort into merger discussions and Maersk's decision is obviously neutral to the merged business entity," Cairns said, adding that the first half of 2007 looked a realistic date to achieve the merger.

The two port companies handle about two-thirds of New Zealand's container traffic, with overall cargo volumes of more than 17 million tonnes a year.

Denmark-based Maersk said Tauranga would continue to handle three services.

"We are still negotiating with Ports of Auckland to finalise contractual details, but expect these to be completed next month and for the new schedule to be phased in from mid January," Maersk's New Zealand Managing Director, Tony Gibson, said in a statement. ($1=NZ$1.49)

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