Port of Auckland Technical Document

PORT
CONTENTS
1 2 EXECUTIVE SUMMARY ..................................................................................................................... 3 RATIONALE ........................................................................................................................................ 4 2.1 2.2 2.3 2.4 3 4 Strategic framework ................................................................................................................ 4 Purpose of the strategy ........................................................................................................... 5 Relationship with other strategic workstreams ........................................................................ 5 The value of the Port ............................................................................................................... 6
PREVIOUS WORK .............................................................................................................................. 6 ANALYSIS ........................................................................................................................................... 8 4.1 4.2 4.3 4.4 4.5 4.6 4.7 Overview of the New Zealand port sector ............................................................................... 8 Shipping trends ..................................................................................................................... 10 POAL competitive advantages and challenges .................................................................... 10 POAL capacity to meet future demand ................................................................................. 12 Scenario analysis .................................................................................................................. 13 Policy framework ................................................................................................................... 17 Opportunities and challenges ................................................................................................ 19 Objectives .............................................................................................................................. 19 Outcomes .............................................................................................................................. 19 Options .................................................................................................................................. 20 Initiatives ............................................................................................................................... 20 Indicative timeline .................................................................................................................. 22
STRATEGY ........................................................................................................................................ 19 5.1 5.2 5.3
ACTION PLAN ................................................................................................................................... 20 6.1 6.2
REFERENCES ................................................................................................................................................ 23 APPENDICES ................................................................................................................................................. 24 Appendix 1 Summary of Port Development Plans .......................................................................... 24 Appendix 2 - Map of New Zealand Ports ........................................................................................... 26 Appendix 3 - Port volumes ................................................................................................................. 27 Appendix 4 - Determinants of port capacity ....................................................................................... 28 Appendix 5 - Container growth and utilisation rates .......................................................................... 29 Appendix 6 - Port Development Plans ............................................................................................... 30
WATERFRONT PLAN_ WORKING PAPER PORT
EXECUTIVE SUMMARY
Ports of Auckland Limited (POAL) is the owner and operator of the seaport facilities at the Port of Auckland (the Port) on the Waitemata Harbour, which occupies 75 hectares of land on the central Auckland waterfront. POAL services New Zealands largest population centre and business hub in a nation highly dependent on export and import trades. It is therefore a crucial component of the efficient functioning of both the regional and national supply chains and economies. An internationally competitive, efficient and sustainable port sector is essential to New Zealands economic prosperity. While POAL is 100% owned by Auckland Council Investments Limited and is, as a limited liability company with its own Board of Directors, required to act commercially, POALs footprint falls within Waterfront Aucklands area of influence. The Port is a key feature of the central Auckland waterfront and is a major component of Aucklands working waterfront and maritime heritage - Auckland has grown and developed as a port city. It also plays an important role for Auckland and New Zealand as a key facilitator of trade, and provides significant economic benefits for the region, and New Zealand. Waterfront Auckland therefore has a strong interest in the nature and extent of POALs future development of its port activities on Aucklands waterfront. Aucklands aspirations, and the vision of the Worlds most liveable city, will only be met with a vibrant and growing regional economy. Ambitious targets for economic growth are being considered in the development of the Auckland Plan. It is unlikely that these economic growth targets can be met without the protection and enhancement of the supply chain efficiency and capacity underpinning the regions trade. This strategy sets out Waterfront Aucklands support for POALs local and international port and logistics activities. Aucklands Port is a crucial part of regional and national supply chain infrastructure that is required for the foreseeable future. We are therefore committed to working closely with POAL to ensure that it retains the ability to facilitate future trade growth as required to support an efficient Auckland and New Zealand supply chain. Ambitions for Aucklands waterfront, which are diverse and wide ranging, have been the subject of much public debate and media coverage over recent years. There has been heightened interest in the port precinct particularly, as it is seen as an opportunity to opening up the waterfront for public access and other activities. Waterfront Auckland believes that it is possible for Auckland to have both waterfront redevelopment and a major and growing port located within its wider CBD waterfront. Balancing these two components is essential to supporting a growing regional economy and creating a sustainable port city. However, further work is required to determine the exact nature of development, and ultimate port footprint that meets Auckland and New Zealands needs while also supporting the strategy outlined in Section 5. We will work with POAL to ensure that future development of the Port area on the Auckland Waterfront is aligned with the objectives of the Waterfront Plan, and the key projects and developments proposed in the Waterfront Plan. These include the Quay Street Boulevard and Captain Cook Wharf redevelopment, which are both dependent on further reclamation and continued intensification of port operations between Bledisloe and Fergusson wharves, enabling the release of other land for alternative uses. This strategy has a strong relationship with the Economic Growth, Cruise, and Transport strategies that underpin the Waterfront Plan. Continuing to manage the environmental effects of port activity, including dredging, pollution, visual impacts and noise are key considerations. Creating new public viewing opportunities, access to the waters edge and additional areas of green space around the port precinct will also be a key focus. The strategy aligns with, and delivers on, a number of key principles and objectives of both the Auckland Waterfront Vision 2040 and the Waterfront MasterPlan (2009), which have gone through extensive consultation process, and therefore represent the broadly agreed desired outcomes for the waterfront. It also delivers on the working waterfront and growing waterfront strategic objectives of the Waterfront Plan (2011). Stakeholder interest in this strategy is extremely high as the Port is considered a strategic asset for the Auckland region, and New Zealand. The existence, footprint, role and functionality of the Port have wide reaching impacts, both within Auckland and for New Zealand as a whole. We will continue to work closely with POAL to seek to agree on a Port Development Plan that meets the needs and objectives of all stakeholders.
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2.1
RATIONALE
Strategic framework
2.1.1 Vision
The 2040 vision for the waterfront is: A world-class destination that excites the senses and celebrates our sea loving Pacific culture and maritime history. It supports commercially successful and innovative businesses and is a place for all people, an area rich in character and activities that link people to the city and the sea. The Waterfront should be a special district of the city and region that aspires to be: a lively and safe destination for all people a place where people want to live, work and recreate an area rich in character and with activities that link people to the city and the sea a place that excites the senses and celebrates our sea loving Pacific culture and maritime history an area which retains the working waterfront character and functions an attractor for commercially successful and innovative businesses
2.1.2 Goals
To achieve this vision and promote sustainability and resilience in both thinking and the outcomes of all our activities and projects, we have set four goals for Aucklands waterfront. These goals are: A public waterfront: A place for all Aucklanders and visitors to Auckland, a destination that is recognised for its outstanding design and architecture, public spaces, facilities and events; a place where we can express our cultural heritage and history, and celebrate our great achievements as a city and nation. Working waterfront: A place for marine industries and businesses, local and international port activities; an attractor of further high value business investment and activity, the location that supports authentic and gritty waterfront activities that must locate here. Growing waterfront: The critical location of sustainable urban transformation and renewal in Auckland, where we must demonstrate international best practice and innovation; achieve a significant lift in Aucklands and New Zealands productivity; the most liveable of New Zealands central city urban communities; a vibrant mix of residents, business and employees, visitors and activities Connected waterfront: A place where people are highly connected locally and with the inner city, to the rest of Auckland and New Zealand; that is highly accessible and safe for pedestrians, cyclists, and passengers, with telecommunications that support connectivity.
2.1.3 Approach
The development of the Waterfront Plan follows a strategic approach which includes identification of key strategic issues, development of key workstreams, and scheduling of deliverables and
processes that address and meet the bold goal, vision, and strategy for the Auckland Region, as well as the vision, mission, philosophy, principles and objectives of Waterfront Auckland.
2.2
Purpose of the strategy

The purpose of the Port Strategy is to contribute to the development of the working waterfront and the Waterfront Plans strategic objective of delivering a place that supports local and international port activities. This strategy sets out Waterfront Aucklands support for POALs local and international port and logistics activities. Waterfront Auckland is committed to working closely with POAL to ensure that it retains the ability to facilitate future trade growth as required to support an efficient Auckland and New Zealand supply chain. Waterfront Auckland will work closely with POAL in a collaborative manner to understand the Ports needs, and ensure that POAL can continue to operate efficiently and sustainably, in a manner that aligns with the vision for the waterfront, and the objectives of the Waterfront Plan. The Port Strategy delivers on the following strategic objectives of the Waterfront Plan: Working waterfront The Port is a key component of Aucklands working waterfront and maritime heritage, which contributes to Aucklands distinctive and unique waterfront environment. Sea and maritime interests are integral to Aucklands history, culture and identity, as the waterfront is where our city began. POALs activities include marine services, cruise, container operations, and multicargo facilities including the vehicle trade. These activities continue to provide activation, authenticity and character to our waterfront. The working waterfront activities are public attractions in their own right, and therefore places for the public to view the action will be part of the waterfront experience. Growing waterfront As well as its vital role as a facilitator of trade, the Port plays a major role in the regions economy. The Port has helped to underpin the economic success of Auckland and New Zealand, and will continue to play a vital role in the future. Aucklands aspirations, and the vision of the worlds most liveable city, will only be met with a vibrant and growing regional economy. Ambitious targets for economic growth are being considered in the development of the Auckland Plan, in order to enable achievement of the Plans aspirations. It is unlikely that these economic growth targets can be met without adequate protection and enhancement of the supply chain efficiency and capacity underpinning the regions trade.
2.3
Relationship with other strategic workstreams

This strategy has a strong relationship with a number of strategic workstreams that will be addressed through the Waterfront Plan. These relationships are highlighted below. Table 1 Relationship with other strategic work-streams
Public waterfront Culture & heritage Architecture & urban design Events & activation Working waterfront Marine & fishing Port Cruise Growing waterfront Innovation & sustainability Economic growth Resilient community Connected waterfront Transport network Walking & cycling Integration
Waterfront Auckland is working with POAL to ensure that the future growth and development of the port operations not only meets the companys commercial objectives and customers needs, but is aligned with other key projects proposed under the different workstreams of the Waterfront Plan, and the overall vision for the waterfront. This will be achieved through the relationship that has been established whereby both parties work together in close collaboration and co-operation. The following Waterfront Plan projects will require the continued integration and alignment of Port activities, enabling the release of land over time for alternative uses: Quay Park Precinct redevelopment Teal Park and Point Resolution development Quay Street Axis and related developments Captain Cook Wharf redevelopment
2.4
The value of the Port

POAL is the owner and operator of the seaport facilities at the Port of Auckland on the Waitemata Harbour and at the Port of Onehunga on the Manukau Harbour. POAL owns over 150 hectares of land in total, comprising 75 hectares of land on the central Auckland waterfront, as well as land at the Port of Onehunga, South Head, Pikes Point, Wiri and Gabador Place. While POAL is 100% owned by Auckland Council Investments Limited and is, as a limited liability company with its own Board of Directors, required to act commercially, the Ports footprint falls within Waterfront Aucklands area of influence. The Port is a key feature of the central Auckland waterfront and is a major component of Aucklands working waterfront and maritime heritage. It also plays an important role for Auckland and New Zealand as a key facilitator of trade, and provides significant economic benefits for the region, and New Zealand. Waterfront Auckland therefore has a strong interest in the nature and extent of POALs future development of its port activities on Aucklands waterfront. POAL facilitates significant business activity and trade due to the following: By value, POAL handles 40% of New Zealand's total imports and 21% of New Zealand's total exports, representing 13% of national GDP, or approximately $24.5 billion of trade. POAL is New Zealand's largest container port by volume, handling around 870,000 TEU (20-ft equivalent units), more than 1,600 ship calls and 2.8 million tonnes of break-bulk cargo per annum (including 67% of New Zealands vehicle trade). It is the only New Zealand port company ranked among the worlds top 120 container ports.
POAL services New Zealands largest population centre and business hub in a nation highly dependent on export and import trades. POAL is therefore a crucial component of the efficient functioning of both the regional and national supply chains and economies. POAL is a significant economic contributor to the Auckland region as follows: Since POAL delisted from the share market in July 2005, dividends and in specie distributions paid to its council shareholders have totaled over $500 million. This helps contribute to the development of the regions major infrastructure projects. The benefits, however, flow far beyond the direct income generated by the port and distributions made to shareholders. POALs most recent economic impact study (for the year ended 30 June 2008) estimated the ports overall impact on the Auckland region was $270 million of output, $144 million of GDP, 1,002 full-time equivalent jobs, and $60 million of household incomes. These figures include direct impacts, generated by the ports itself and indirect impacts which are the flow-on effects due to port activity. POAL is also the countrys premiere exchange port for cruises, and will host around 100 calls in 2011/12. Cruise ship visits facilitated by the Port generate an average economic benefit of $1.1 million each.
The Port is also a key feature of the central Auckland waterfront and is a major component of Aucklands working waterfront and maritime heritage.
PREVIOUS WORK
A number of legacy strategic documents have been developed by the previous Auckland councils. These have been through extensive consultation processes with a range of stakeholders in the area, including POAL as well as residents and ratepayers of Auckland. The results of these therefore represent the broadly agreed desired outcomes for the waterfront. This strategy delivers on a number of key principles and objectives of both the Auckland Waterfront Vision 2040 and the Waterfront MasterPlan. It is also consistent with previous port development plans, dating back as far as 1989, that were developed in conjunction with previous councils, and which recognise the important strategic role that POAL plays for both Auckland and New Zealand.
3.1.1 Auckland Waterfront Vision 2040

The Waterfront Vision 2040 was published in 2005 by the Auckland Regional Council and Auckland City Council (ACC). It sets out a number of principles, which provide a long-term guiding framework
that will direct how the waterfront area will be managed, developed and protected in the future. This project delivers on the following key principles: Heritage and local character o Value the working waterfront as a key part of the areas character. Port o Ensure the continued success of New Zealands premier port operation by recognising the pre-eminence of port activity within port boundaries. o Recognise the 24-hour, 7-day nature of the commercial port. o Provide compatible adjacent activities that understand the 24-hour nature of port operations. o Achieve improved road and rail access for freight movements. o Manage traffic and environmental effects associated with port activity. o Provide for future port growth within the regulatory framework. o Recognise that further reclamation is anticipated to accommodate the projected growth in container volumes. o Consider using port land released over time for mixed-use development, recognising that public access to the water is an important feature of any development. Public access and enjoyment o Improving public access, public open space and peoples enjoyment of the waterfront and Waitemata Harbour while recognising the need to restrict public access around the custom-bonded working parts of the port. Views o Identify and protect public visual links and views into and outside the waterfront area, including outstanding public viewing points. Transport and linkages o Ensure future development is within the capacity of the existing road network. Environment o Minimise adverse environmental impacts through leading edge technologies and sustainable design.
3.1.2 Waterfront Masterplan (2009)

The Waterfront Masterplan was published in 2009 by ACC. It translates the principles and actions set out in the 2040 Vision into a physical framework for development that will achieve the vision. The Port Strategy delivers on the following key features of the Waterfront MasterPlan: Recognise the waterfronts key economic role and support the success of the port by ensuring the continued economic viability and efficiency of the ports operations. Consolidate the ports operation over time towards the east - expand the eastern reclamation between Bledisloe and Fergusson wharves for commercial port purposes by further reclamation and creating additional berthage. This facilitates the release of Captain Cook wharf for public access and use. Marsden Wharf shortened to facilitate improved berthage at Bledisloe Wharf. Support the inter-agency study on the Grafton Gully motorway connections, which will help reduce pressure on the city centre road network and improve access to the port (see Sec 3.4 of the Transport Network working paper). Honour local history and character. Stormwater treatment to avoid coastal water pollution will be a focus for all public and private development on the port and the central wharves. New buildings on the central wharves and port will demonstrate best practice sustainable design. Ensuring city views are visible from pedestrian promenades, streets and public open spaces, as well as from most wharves and land promontories.
3.1.3 Port Development Plans

The 1989 Port Development Plan was originally established by Ports of Auckland, the Auckland Regional Authority and Auckland City Council and was prepared in keeping with the parameters of the current Auckland Regional Council Plan: Coastal and the Auckland City Council District Plan: Central Area.
In 2008, the Port Development Plan was updated in response to the Auckland Regional Council and Auckland City Council-developed Auckland Waterfront Vision 2040, released in 2005. Like its 1989 predecessor, the 2008 Plan recognises the strategic role the Port of Auckland plays in the citys economy, and how the success of the Auckland region and New Zealand depends to some degree on its ports ability to efficiently handle imports and exports. In July 2011 POAL, in conjunction with Waterfront Auckland, prepared updated port development concept plans for inclusion in the draft Waterfront Plan. These concept plans show at a high level how the port might develop, in five year increments through to 2055 (although timing is subject to a number of variables including the rate of volume growth and the rate of availability of fill material for reclamation). POAL anticipates consulting on and preparing an updated Port Development Plan document in 2012. Refer to Appendix 1 for further details.
3.1.4 Long-term Optimisation of the New Zealand Port Sector Discussion Paper
This report was prepared by Auckland Regional Holdings in 2009 to look at future options for the New Zealand port industry from a national big picture perspective, with a focus on container ports. The report recommends that for New Zealand to remain internationally competitive, there is a need to rationalise our port sector expansion, adopt a coordinated approach to infrastructure planning, and identify and develop potential major hub ports. The report suggests that, given population and industry concentrations, New Zealands largest hub port(s) will likely to be Ports of Auckland and Tauranga.
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4.1
ANALYSIS
Overview of the New Zealand port sector
As a remote trading nation, seaborne international trade is of critical importance to New Zealand.1 An internationally competitive, efficient and sustainable port sector is therefore essential to New Zealands economic prosperity. Increasing trade volumes, consolidation of international shipping lines and the global trend towards larger ships further increases the requirement for an efficient port sector and overall supply chain. New Zealand has 16 sea-ports, ranging from large international ports, servicing major population and trade catchment areas, through to smaller regional ports. Of the 16 ports, 11 have at least some container trade. However, container volumes at Bluff and Northport are negligible. The five remaining ports are non-container ports (i.e. handle bulk and break-bulk cargo exclusively). A map of New Zealand ports is provided in Appendix 2. As shown in Appendix 3, POAL is the largest New Zealand port by value of trade, handling around $24.5 billion of international trade annually. This figure is roughly equivalent to that handled by the ports of Whangarei, Tauranga and Lyttelton combined. The next largest facility by value of trade is Auckland International Airport ($12.8 billion p.a.) followed by the Port of Tauranga (POT) at $12.6 billion per annum. The Upper North Island of New Zealand (comprising four regions Northland, Auckland, Waikato and Bay of Plenty) accounts for the majority of New Zealands population and economic output. The Upper North Island ports (POAL, POT, Northport and Auckland Airport) accounted for 53% of total trade in 2010 by volume and 67% by value as shown in Figure 1 below.
New Zealand is one of the most active trading nations, with import-export trade representing around 70% of GDP (Rockpoint Corporate Finance Limited, 2008); and has a small domestic market that is geographically isolated from many of its trading partners. It is therefore heavily reliant on shipping.
Figure 1 2010 imports and exports by volume and value

100% 90% 80% Tonnes (millions) 70% 60% 50% 40% 30% 20% 10% 0% Import POAL POT
21% 19% 27% 9% 31% 7% 16% 24% 13% 29%
100% 90% Value (billions)

57% 47%
19% 45% 21% 10% 10% 15% 10% 1% 22% 40% 22% 5% 16% 33%
80% 70% 60% 50% 40% 30% 20% 10% 0% Import POAL POT Northport
31%
Export Northport
Total Other NZ ports
Export Auckland Airport
Total Other NZ ports
Source: Statistics New Zealand
Key points to note are: POT is the largest port by total volume, while POAL, which is more container focused, is the largest port by value. The value of exports through each port is similar. Northport is New Zealands largest bulk and break-bulk port by volume (mainly oil and forestry), followed by POT. POAL has relatively small bulk and break-bulk volumes.
Container trade is centred in the upper North Island, with POAL and POT on a combined basis accounting for around 81% of North Island container volumes, and 59% of total New Zealand container volumes. As shown in Figure 2 below, POAL accounts for 51% of North Island volumes and 37% of New Zealand container volumes. Figure 2 2010 Container Market Share by Volume
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% North Island POAL POT New Zealand Other 51% 37% 30% 22% 19% 41%
Source: Port of Tauranga 2010 Annual Report, Ports of Auckland 2010 Annual Review, Waterfront Auckland Analysis
There is intense competition for container trade between POAL and POT as they are high fixed cost businesses located in relatively close proximity (211 km). The close proximity facilitates POTs use of its Metroport facility in South Auckland, through which it competes for Auckland volumes. POALs and POTs market shares of the upper North Island container trade have remained relatively constant at approximately 60% and 40% respectively over the past five years. POAL currently holds a 63% share of the upper North Island container market. Ports are highly capital intensive, requiring significant investment in infrastructure including channels, wharves, berths, cranes and other handling equipment, land, heavy duty pavements, storage facilities, and connections to transport infrastructure. POAL has the largest dedicated container berth length and terminal area, and most advanced port infrastructure in the country. The
WATERFRONT PLAN_ WORKING PAPER PORT 9
long-term global trend towards larger ships will require further investment in dredging and peak capacity of both port and supporting transport infrastructure. New Zealand ports have been achieving inadequate financial returns over an extended period, and typically do not deliver adequate returns on capital to their owners. This was documented in Rockpoints Port Sector Report in June 2008. The poor financial returns reflect the highly competitive environment and low level of bargaining power with the shipping lines. This is due to the large number of ports located in relatively close proximity and the small number of large shipping lines, enabling the shipping lines to exert significant market power and play the ports off against each other when negotiating prices.2
4.2
Shipping trends
The shipping industry is dominated by a small number of large international shipping companies. The recent global economic downturn resulted in poor profitability across the industry, driving the need for shipping lines to improve efficiency and profitability. Major shipping industry trends include shipping line consolidation, vessel sharing, slow steaming, and larger ships and fewer port calls. While these trends may potentially result in cost savings for consumers and increased international competitiveness for exporters though reduced shipping costs (assuming the shipping lines pass on the benefits), there are a number of risks, including: Significant infrastructure investment (port and transport) and efficiency gains required to cater for larger ships and greater peak volumes. Potential for duplication of infrastructure if investment is not co-ordinated Increased risk of losing direct shipping services i.e. the risk of cargo being hubbed through Australia, especially if NZ ports do not invest for larger ships. Downwards pressure on port prices resulting in reduced port profitability due to reduced bargaining power with consolidated shipping lines
The 2011 year has seen some significant changes in the New Zealand shipping market, with the establishment of the Kotahi Fonterra and Silver Fern Farms venture, which increased cargo owners influence in the market and some associated adjustments in shipping line service patterns. These changes have included a shift to smaller ships and increased calls by Maersk, and the establishment of a new service by CMA-CGM, again using smaller ships and providing additional export capacity. It is anticipated that the introduction of significantly larger ships in the New Zealand market is some years away and will probably be undertaken incrementally. As well as changes to international shipping, other global trends including the continuing growth in trade and containerisation, new technology, and changing logistics patterns (including the use of inland ports) also have a significant impact on New Zealand port operations. Ports must constantly adapt and make improvements to their efficiency in order to keep pace with these trends and developments.
4.3
POAL competitive advantages and challenges

POAL has a number of competitive advantages relative to other New Zealand ports, as well as a number of challenges (although many of these challenges are shared with other New Zealand ports). These are summarised in the table below:
By comparison, Australia has only six container ports, with the largest three located approximately 900 kilometres apart. The container ports are able to extract significantly higher prices from the shipping companies. In 2008, average container handling charges in Australia were estimated at around $400 per container, versus $250 in New Zealand (Auckland Regional Holdings, 2009).
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Table 2 Summary of competitive advantages and challenges

Competitive Advantages Proximity to New Zealands largest and fastest growing regional population and economy New Zealands cruise hub Advanced port infrastructure Scale of operations Channel depth suitable for up to 6,500 TEU ships Inland port facility at Wiri Challenges Land constrained Inflexible labour structure Public pressure to access waterfront land Container dominant very competitive and lower margins compared to break-bulk Traffic congestion on State highway network, particularly in peak hours Long term rail capacity competition from passenger rail
It is important to note that given imports are generally high value, time sensitive products, there is considerable advantage in bringing these in through Auckland rather than another Upper North Island port. Auckland is the major population and distribution centre, and therefore it is naturally the first port of call as ships drop off the lighter import containers before loading up with heavier export containers which are positioned towards the bottom of the ship. A certain proportion of export containers will then naturally flow out of Auckland due to the cost advantage to shipping lines of calling at ports with balanced import and export volumes. A 300-hectare inland port and commercial hub being is being planned by Hamilton-based Tainui Group Holdings for this decade to serve Auckland, Bay of Plenty and the Waikato. Its location in Ruakura means that exports from this location are equidistant between POAL and POT. Other possible regional inland port developments, in the Waikato and further south, have also been mooted. Supply chain patterns and market shares have evolved as a consequence of importers, exporters and shipping companies making informed choices in order to optimise their supply chains. Preserving and enhancing those choices will ensure the efficiency and cost effectiveness of supply chains continues to be maximised. Moves which constrain future capacity and options will, conversely, reduce supply chain efficiency, with flow on economic impacts. One of the major challenges for POAL, is to maintain efficient road and rail transport links to the port. This is critical to the efficient functioning of the port, given the rationalisation of shipping services and larger vessels, which will likely result in volumes being diverted from smaller ports to POAL, as well an increase in peak flows. The National Freight Demands Study (2008) predicted total growth in the national freight task of around 75% over the next 25 years (however these forecasts were prepared prior to the recent global economic downturn). Forecast growth in total freight movements in the Upper North Island area over the period is between 60%-65%, with the largest share of growth expected to be in the Auckland region.3 This will place pressure on already heavily used parts of road and rail network. Expansion of inland port facilities will also place greater emphasis on the reliability of transport services connecting these to the port. POAL is concerned about the economic impact of deficient transport capacity in Auckland. Approximately 85% of container movements to and from the Port are by road, with 15% by rail. It is expected that the proportion moved by rail will continue to increase over time, perhaps reaching 30% or more in the longer term. However, ongoing volume growth means that road movements will continue to increase in real terms, and an efficient road network will remain critical to the ongoing operation of the Port. Completion of the strategic motorway network is therefore necessary.4 Of similar concern and importance to POAL is the need to protect and enhance the rail network to accommodate the expected growth in rail freight movements. Given that most volume growth in rail freight will be carried on existing lines, in planning for growth in passenger rail in Auckland, it will be important to counterbalance the impact of increased passenger rail movements on rail freight capacity. It is also vital that the Auckland seaport itself retains sufficient land space for on-port rail grid capacity to service the increased forecast growth in rail freight.
3 4
Upper North Island Freight Study (August 2010).
In 2009, study by Beca, showed that if then-planned road improvement projects were completed, travel times on all but one of the key routes to the port would not be materially worse in 2021 compared to 2006.
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POALs low levels of labour utilisation and container dominance have significant impact on the ports profitability. Land constraints and public pressure to access waterfront land have significant implications for POALs port development options, as will be discussed later in Section 4.5.
4.4
POAL capacity to meet future demand

The capacity analysis below illustrates POALs ability (refer Appendix 1) to cater for future demand. Determinants of port capacity are outlined in Appendix 4. Two useful measures of how efficiently a port is extracting capacity from a given quantity of physical infrastructure are:
Yard utilisation (annual throughput / land area); and Berth utilisation (annual throughput / total berth length).
The analysis in this section assesses POALs container capacity and its ability to meet future demand in 2040 under various scenarios as follows: Container terminal area and berth length current, future planned; Berth length current, future planned; Utilisation rates POAL, Australian ports, world class; and Annual compound container growth rates 3%, 4%, 5%.
This is illustrated in Figures 3 and 4 below. The bars show existing and planned land and berth capacity at POAL based on the July 2011 concept plans as at 2040. The different bars (from left to right) represent a range of levels of efficiency of utilisation of the port infrastructure. These range from the current scenario, to a scenario where efficiency of utilisation matches that of Hong Kong and Singapore, which are significantly more efficient than New Zealand ports. The coloured horizontal lines show the freight demand in 2040, based on varying assumed growth rates. Where the bars exceed the horizontal lines, available capacity is sufficient for the assumed level of demand. In looking at future capacity and demand scenarios for POAL, we recognise that growth rates and utilisation rates (which are dependent on technology advancements) are extremely difficult to predict with any degree of certainty, and are based on current economic projections. Appendix 5 contains notes in relation to projecting future container growth and land / berth utilisation rates. Figure 3 - POAL container terminal capacity vs. demand in 2040 at a range of land utilisation rates
4,500
utilisationrates
4,000
POAL2040ContainerVolume,5%Growth
AnnualContainerYardCapacity(000TEUs)
3,500 POAL2040ContainerVolume,4%Growth 3,000
1,500 POAL2010ContainerVolume 1,000
500
20,000 (e.g.Auckland, Tauranga,Sydney) 30,000(e.g. Melbourne) 40,000 50,000 (e.g.Aucklandin2040) 60,000 (e.g.Singapore) 70000(e.g.Hong Kong)
ContainerYardUtilisation(TEUs/ha) CurrentArea(46.5ha) Plannedadditionalarea(12.5ha)
Note: The port utilisation rates noted in the charts above have been rounded.
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Figure 4 - POAL container berth capacity vs. demand in 2040 at a range of berth utilisation rates
4,500
utilisationrates
4,000
POAL2040ContainerVolume,5%Growth
AnnualContainerBerthCapacity(000TEUs)
1,500 POAL2010ContainerVolume 1,000
500
1,000 (e.g.Auckland, Tauranga) 1,250(e.g.Melbourne) 1,500 1,750 (e.g.Aucklandin2040) 2,000 (e.g.HongKong) 2,250(e.g.Singapore)
BerthUtilisation(TEUs/m) CurrentLength(840m) PlannedAdditionalLength(770m)
Note: The port utilisation rates noted in the charts above have been rounded.
As is illustrated in Figure 3, POALs current container terminal area is insufficient to meet future container demand, even at modest growth rates, unless a significant increase in utilisation is achieved. This will require staged but significant investment in more technologically advanced equipment. Key points to note here are: Assuming a growth rate of 4% per annum, based on projected productivity levels, both POALs planned land area and berth length for containers are likely to be adequate to meet projected 2040 volumes (approximately 3 million TEUs per annum). This shows that the PDP provides for a good balance between berth and land area for containers. The required increase in land utilisation to meet 4% growth in volumes to 2040 is achievable only with investment in automated stacking cranes, as well as planned reclamations. Growth beyond 4% p.a. would require greater utilisation rates. At this stage it is uncertain whether these would be achievable. It is possible that technology increases over time will result in higher utilisation rates being achieved than are currently anticipated. The trend towards hubbing is likely to divert some future growth to POAL from the smaller regional New Zealand ports, which will further increase growth in containers going through Aucklands port. Previous analysis performed by Auckland Regional Holdings in the report Long term optimisation of the New Zealand port sector (2009) indicated that excess containers could not simply be diverted through Tauranga. Assuming the majority of North Island container volumes over time get hubbed through Auckland and Tauranga, both ports would need to operate at significantly higher productivity rates and utilise all their current, plus planned container terminal land and berth extensions to meet projected container volumes, even at relatively conservative growth rates (and this is only to 2040). This underlines the importance of protecting current and future port capacity in Auckland.
4.5
Scenario analysis
Ambitions for Aucklands waterfront, which are diverse and wide ranging, have been the subject of much public debate and media coverage over recent years. There has been heightened interest in
13
the port precinct particularly, as it is seen as an opportunity to opening up the waterfront for public access and other activities. There are essentially four main scenarios for POALs future port development on the Auckland waterfront: 1. Continue to grow and develop port operations in existing waterfront location through intensification and reclamation 2. Reduce waterfront port footprint to enable release of further waterfront land areas for alternative uses 3. Relocate the port to another location within the Auckland region 4. Relocate Aucklands port capacity to Tauranga and/or Northport
4.5.1 Scenario 1
POALs current plans for future port development involve continued growth and development of the Waitemata sea-port operations. These plans are cognizant of the vital importance of retaining enough land to run an efficient port with the capability of handling Aucklands own trade as well as a portion of the countrys trans-shipment volumes, and thus meet the needs of the New Zealand supply chain. Auckland has the nations largest container port not by chance, but because of a combination of circumstances - including proximity to major concentrations of people and business activity, and long term investment in facilities and infrastructure. Importers/exporters and shipping companies are free to choose which port best meets their needs, and they do this taking into account the capacity, service frequency, land transport costs and a range of other factors in commercial business decision-making. For a substantial proportion of businesses that rely on imports, or that produce exports, POAL is currently the best option for them, otherwise they would be using other ports. The role and significance of POAL is likely to further increase in the future, given its proximity to New Zealands largest and fastest growing regional population and economy. With rising population forecasts and expectations that Auckland will increasingly contain a greater share of New Zealands population,5 it stands to reason that imports too will continue to rise, as will the proportion destined for the Auckland market. Furthermore, New Zealands total freight task is expected to increase by 75% over the next 25 years.6 New Zealands port sector and supply chain will face significant challenges meeting this growth, and POAL will need to expand and intensify its operations in order to meet regional and national demand, particularly as the trend to trans-shipment of container volumes through a small number of large hub ports will increase the proportion of volumes through POAL. Indicative capacity analysis undertaken by Auckland Regional Holdings in 20097 shows that potential container volume growth (which over the longer term is expected to be significant), combined with future capacity constraints at both Auckland and Tauranga, means that both ports (rather than one) will be required to grow and develop into the foreseeable future if the projected long-term increase in freight demand is to be met without unacceptable constraints being placed on New Zealands supply chain. This was confirmed by the NZ Shippers Council in their August 2010 The Question of Bigger Ships report. It is also unlikely that Aucklands economic growth targets, including growing the local export sector, can be met without adequate protection and enhancement of the supply chain efficiency and capacity underpinning the regions trade. However, in recognition of the demand for prime waterfront Auckland land, and to enable Auckland to have both waterfront redevelopment, and a major international port within its wider CBD waterfront, POAL is committed to consolidating its activities and development focus in the eastern port (from Bledisloe to Fergusson). To facilitate this, POAL has relinquished over half of its land and wharf space in the centre and west of the CBD waterfront over the past 15 years.8 This includes the
5
Auckland is projected to account for around 38% of the national population by 2031 (compared with 34% currently), increasing by over 480,000 people. National Freight Demands Study, Ministry of Transport, 2008. ARH Discussion Paper, Long-term optimisation of the New Zealand port sector (October 2009).
6 7 8
Since 1996, POAL has reduced its waterfront footprint in the Auckland CBD by nearly half, from 140ha to 75ha. While remaining the largest landowner in the area, POAL now.
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land at Wynyard Quarter which has enabled the recent delivery of increased public access to the waterfront on Halsey Wharf, North Wharf and Karanga Plaza. In the longer term, further areas of Wynyard Quarter will be opened up, including Headland Park. Another recent example is POALs sale of Queens Wharf to the Government and Auckland Regional Council to enable the development of public space and a primary cruise terminal. POAL also plans to make Captain Cook wharf available for redevelopment and public use at some point in the future. POALs remaining waterfront footprint, which now occupies less than 2km of the 15km stretch between the Harbour Bridge and St. Heliers, is shown in Figure 5 below. Figure 5 - Ports of Auckland waterfront footprint
4.5.2 Scenario 2
There have been calls for further port operational space to be given up for alternative uses, specifically suggestions that port operational space on Bledisloe Wharf (Bledisloe) be replaced with public infrastructure including a convention centre, cruise terminal and tourist facilities to enable direct public access to more of the waterfront. The rationale offered to support such a proposal is that additional tourism activity would generate higher earnings and be a superior alternative to the import-export role of POAL, while the Port of Tauranga could expand to handle the trade diverted from Auckland. We note that there is an absence of published analysis supporting these propositions. However, POAL believes that Bledisloe will need to remain a vital element of port infrastructure in order to fulfil its current and future role as a major container and vehicle import port for the following reasons: Without Bledisloe, POALs ability to service the vehicle trade would effectively be terminated, and its capability to service container trades significantly curtailed. Material changes to regional and national logistics and supply chain efficiency would result and in the long term, New Zealands ability to service its freight needs would be at risk. The need to retain Bledisloe in its entirety within the port precinct has been further reinforced by the recent sale of Queens Wharf, and potential future release of Captain Cook Wharf, resulting in the requirement to transfer cargo currently handled there to other parts of the port. Future development of the port is planned to be constrained within Port Management Area 1A. This means that Fergusson Terminal cannot be expanded further north or east once the current reclamation there is completed. The bulk of the future development potential of the port is based on Bledisloe, and without Bledisloe, the long term development configuration and the necessary balance of berth capacity and land capacity would not be achievable. As a result, the bulk of the port's future capacity development potential would be eliminated. The flow on consequence of removing Bledisloe from the port precinct would be to effectively halve POAL's future capacity, and would have a negative impact on productivity levels. This would result in substantial negative effects for its efficiency and
15
competitiveness, as well as having widespread direct and flow on adverse effects for the capacity and resilience of the national supply chain. This would fundamentally change and reduce the port's role in the regional and national supply chain and create significant downstream economic consequences. Due to the above factors, establishing a convention centre or tourist facilities on Bledisloe is not likely to meet the Coastal Plan policy for future use or development in Port Management Areas, other than for port activities. As will be described later in Section 4.6.2, non-port uses may be considered appropriate where they meet a number of criteria including the following: the area proposed to be used or developed is no longer entirely needed, and is not likely to be needed in the foreseeable future, for port activities; the use or development will not adversely affect the primary function of any established structure, or the use of the area for port activities; and the use or development has a functional need to locate in the coastal marine area and cannot be accommodated within or on any existing structures in the coastal marine area.
It is important to note that any future extension of Bledisloe Wharf by POAL would need to go through a resource consent process, which would consider all environmental effects including visual impacts. It is also important to factor in the likely future demand for CBD waterfront space for desirable alternative uses. Waterfront Auckland is currently planning and developing other waterfront areas including Jellicoe Street Precinct in Wynyard Quarter, and Queens Wharf, which constitute around 6 hectares of land and wharf space. In addition, approximately, a further 23 hectares remains to be incorporated and developed in the total Wynyard Quarter precinct over the next 20 years or so. It is not certain that a city of Aucklands size could sustainably activate additional areas on top of those already earmarked, while still achieving optimal economic outcomes.
4.5.3 Scenario 3
Scenario 3 is to relocate the port to another location within the Auckland region. This is often suggested, as container port relocations further from the city centre have been observed in cities such as Brisbane and Sydney. However, removing Aucklands port from the waterfront is unlikely to result in a new port being developed within the Auckland region as, unlike Brisbane and Sydney, Auckland has no feasible alternative sites for a deep water port in the region from both a cost and environmental perspective.9 The costs involved in building a new port and providing the supporting land transport infrastructure, combined with potential dredging requirements and costs of disruption to business activity would mean it would inevitably be cheaper to add to port capacity at Tauranga and Northland. Displacement of Aucklands port from the waterfront therefore means there would likely be no major port in the Auckland region. The closest alternative ports, Port of Tauranga and Northport, are located approximately 150-200 kilometres away, which is a significantly greater distance from New Zealands major coastal city than is typical for successful international coastal cities. Requiring a lesser port role for POAL through intervention in key economic infrastructure to achieve other objectives, and the consequent changes to import and export flows, would be less efficient for all or some of the current users of the port. This could thereby increase the cost of the New Zealand supply chain to the detriment of the New Zealand economy. The importance of having container port capacity located close to major production and consumption bases is supported by international benchmarking,10 which shows that of the worlds top 100 cities (ranked by GDP), all of the 42 major coastal cities analysed have a container port within 100 kilometres of the city centre, 88% have a container port within 30 kilometres and 62% have a container port located within 10 kilometres. 51% have a major container port (defined as >500,000 TEU p.a.) within 10 km of the central business district, including 17% within 3 km of the CBD.
Report commissioned by Ports of Auckland in 1999 entitled "Port Development Options for the Auckland Region." ARH Discussion Paper, Long-term optimisation of the New Zealand port sector (October 2009).
16
10
While there are a number of observed examples of port relocations, or the establishment of new facilities outside the city centre, particularly within Europe,11 the distance of the new port from the city centre was typically only 5 20 kilometres. There are also a number of recent examples of large cities deciding to establish or relocate major container port capacity closer to the city (including Stockholm, London and Taipei), demonstrating the value in having a significant container port close to the nations economic and population hubs. London Gateway Chief Executive, Simon Moore, commented on the planned London port expansion that:
We will get the biggest ships in the world as close as we can to the UKs largest consumer market in combination with significant warehousing capacity. This is precisely how the Port of London used to work 12 and was the foundation stone on which the city prospered.
Displacement of the port would also result in the viability of cruise ship visits being undermined, as the economies of scale which support the necessary navigational, pilotage, towage and dredging infrastructure and activities would not be available.
4.5.4 Scenario 4
Scenario 4 is to relocate Aucklands port capacity to Tauranga and/or Whangarei. This is problematic due to the need for both POAL and POT to continue to grow and develop in order to provide sufficient port capacity to meet future demand. The issues that undermine the practical feasibility of this scenario include:
How the capacity re-located from the Auckland port could be handled in the long term, taking into account the significant expected future growth in freight volumes. The potential that Auckland exporters and importers would not be served as efficiently by the Port of Tauranga (210km away by road) or Marsden Point (150km away); and would likely relocate to those areas away from Auckland, to the detriment of the citys economy. The potential for additional transport costs and the impact this would have on the price of imports and exports. The implications for traffic volumes on road and rail links. The impact on the manufacturing and tradable sectors. The risk that moving the port would merely shift issues from one location to another and / or create other issues. The viability of cruise visits to Auckland would be undermined, because of the loss of scale supporting the necessary marine services and infrastructure. The additional investment in supporting regional infrastructure required to accommodate the resulting relocation of industry and population. This creates considerable barriers to new entry.
4.6
Policy framework
4.6.1 District Plan Central Area Section
Part 14.8 of the District Plan Port Precinct recognises that the primary activity of the Port Precinct is one of strategic importance affecting the region and the country and that provision must be made for the continued operation and development of port facilities and activities. The expansion of the port has the potential to be managed in such a way that public access to the harbour and particularly the central wharves is not compromised except where it is necessary to restrict access in order to protect public health or safety. It also recognises the need to avoid, remedy or mitigate any significant adverse environmental effects on views, noise, light spill, traffic and pedestrian amenity caused by the current or future operations of the Port. In general, only port activities and those activities which are related to port activities are allowed to locate in the Port Precinct.
11 The main reason for port re-locations observed in Europe is the increase in volume of container trade and larger container ships requiring deeper water and land for port expansion. 12
Historic day for UK economy and ports, DP World Press Release (7 May 2008).
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4.6.2 Auckland Regional Plan: Coastal

Section 25 of the Coastal Plan, which contains objectives, policies and rules relating to Port Management Areas (PMAs), recognises that they play an important economic role in the regional and national economy, generating employment and income. The relevant policies include the following: A wide range of appropriate berthage facilities should be provided for in the PMAs to accommodate vessels of different types and sizes and with different berthage requirements. Reclamation is recognised as an option for port development to meet necessary future cargo handling, passenger and other needs within the PMAs. Where practicable the fill for any such reclamation should be dredged material from the PMAs. Any application to reclaim land in any PMAs needs to demonstrate that: o o o there are no practicable alternatives to the proposed reclamation, it is the most appropriate form of development. and adverse environmental effects will be avoided, remedied or mitigated.
Buildings and other significant structures in PMAs shall be designed and located as far as practicable, so as to avoid, remedy or mitigate significant adverse effects on views from and to the adjoining land and water. Any future use or development in the PMAs, other than for port activities, may be considered appropriate where: o o o o o the area proposed to be used or developed is no longer entirely needed, and is not likely to be needed in the foreseeable future, for port activities; and the use or development has a functional need to locate in the coastal marine area; and the use or development will not adversely affect the primary function of any established structure, or the use of the area for port activities; and the use or development will, where appropriate, significantly enhance amenity values and public use and enjoyment; and the use or development will not result in either increased pressure for the expansion of the existing port outside the PMAs, or the establishment of a completely new port outside of those areas; and the use or development cannot be accommodated within or on any existing structures in the coastal marine area; and any landward development associated with the use or development can be accommodated; and adverse effects on the environment can be avoided, remedied, or mitigated.
o o o
4.6.3 Waitemata Local Board (Draft Local Board Plan)

Aucklands local board plans are currently being consulted with the public. The draft plan recognises the importance of an active international seaport on the Waitemata harbour and supports the ongoing operation, development and continued intensification of operations in eastern part of the port from Bledisloe Wharf to Fergusson container terminal. The draft plan also supports the need for the port to provide certainty over its footprint on the Waitemata Harbour to enable it to plan for the long term, ensure easy access for freight to and from the port, as well as provide planning controls for key transport corridors and areas neighbouring the port to ensure the port can continue its operations.
4.6.4 Draft City Centre Masterplan

The Auckland City Centre Masterplan will be open for public consultation in September 2011. The draft plan assumes that the Port will be remaining largely on its current footprint and will work with Ports of Auckland and NZTA to determine preferred State Highway connection to the port, including facilitating rail freight. The intent and proposal are quoted as follows:
A reliable freight and business related trip network will ensure reliable and efficient movement of goods and services in and out of the city centre, enabling continued economic growth. Strong connections to the state highway network will be maintained and improved, particularly to the port area, with a comprehensive plan to be developed with NZTA, Kiwirail and other stakeholders to improve port access via Grafton Gully in a manner that supports surrounding land uses at Quay Park.
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4.7
Opportunities and challenges

There is an opportunity for Auckland to develop as a sustainable port city through: Improving integration of the Port with the wider waterfront, the CBDs urban environment and the Waitemata Harbours natural environment Providing opportunities for improved public open space and access to the water Increasing understanding, interest, and support of local residents, visitors and tourists to port activities through increased provision of information and opportunities to view and experience port activities Increasing efficiency of port land use through technology, car parking buildings, and other measures Making greater use of the rail link to reduce impact of port on traffic within the CBD Balancing the need for the port to operate efficiently and grow to facilitate future trade growth with the desires for increased public access to the waterfront, protection of views out over the harbour and reduced traffic through the CBD Developing the areas surrounding the port in an appropriate and complementary way that does not hamper the ports efficiency or operations Maintaining efficient transport links to the port (both road and rail)
The key challenges for future development of the port and its surrounding areas are as follows:
5
5.1
STRATEGY
Objectives
The main objective of the Port Strategy is to support the operations of Ports of Auckland in order to improve port efficiency. Specifically, it seeks to: 1. Ensure that people recognise, understand, and value the Ports important role for Auckland and the New Zealand supply chain and to Aucklands economic success, maritime heritage and character. 2. Provide for the seamless integration of the port with Aucklands road and rail network. 3. Advocate for solutions that help increase the ports operational efficiency to reduce the need for further reclamation. 4. Balance the urban need between port growth and public access to the waterfront.
5.2
Outcomes
Economic Ability to provide the necessary capacity to facilitate future trade growth as required to support an efficient Auckland and New Zealand supply chain Ability to meet customers needs and operate in a manner that is commercially viable and efficient in line with international best practice Serviced by efficient road and rail connections, preferably with a reduced impact on the CBD road infrastructure Not hampered by surrounding land uses i.e. activities that are not compatible with the Ports operations Environmentally sustainable port operations Efficiency in utilising available land enabling, where possible, discrete or specific land and/or facilities to be released for alternative uses (where that is identified as being of overriding value), and protecting views of the harbour where practicable Operating as an integral part of the wider working waterfront, adding activity, authenticity and interest, whilst blending with adjacent activities in an integrated manner Increased public access to the waterfront Increased public awareness of the importance of Aucklands waterfront port New and safe public amenities within the areas surrounding the port
Environmental Social
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5.3
Options
It is recommended that all of the following options be implemented: Table 3 Options for consideration
Options Further research 1 Investigate further opportunities for integration with the city centre. Objectives achieved 1 2 3 4
Advocacy 2 3 4 5 Support for port activities and future development (Scenario 1). Work with POAL to agree on Port Development Plan. Support external initiatives that contribute to improving port efficiency. Support to develop projects that assist in increasing port efficiency and public amenity.
Waterfront Plan projects 6 Develop projects that increase public amenity in areas surrounding the port.
6
6.1
ACTION PLAN
Initiatives
6.1.1 Investigate further opportunities for integration with the city centre
Waterfront Auckland will formulate an action plan for improving integration of the Port with the CBD and wider waterfront. This will include: improving the public realm interface with the Port along Quay Street further opportunities for improved public open space and access to the water e.g. Eastern Fergusson Wharf, Teal Park, and Captain Cook Wharf (once this is no longer needed for port operations) increased provision of information and opportunities for the public to view and experience port activities e.g. information plaques, viewing points, interactive activities, tours, events etc. This will help increase public awareness of the ports significant role to Auckland and New Zealands economy.
6.1.2 Support for port activities and future development (Scenario 1)

For the reasons outlined earlier in Section 4.5.1, and recognising the vital role that POAL plays in both the Auckland and national supply chains and economies, Waterfront Auckland supports Scenario 1, i.e. continued growth and development of the Auckland port in its current location on the waterfront. We believe that it is possible for Auckland to have both waterfront redevelopment and a major port, located within its wider CBD waterfront. Balancing these two components is essential to supporting a growing regional economy and creating a sustainable port city. However, further work is required to determine the exact nature of development, and ultimate port footprint that meets regional and national trade needs while also supporting the strategy outlined in Section 5. Continuing to manage the environmental effects of port activity, including dredging, pollution, visual impacts and noise are key considerations. Adopting leading-edge environmental techniques and practices is encouraged. Creating new public viewing opportunities, access to the waters edge and additional areas of green space around the port precinct will also be a key focus.
6.1.3 Work with POAL to agree on Port Development Plan

POAL anticipates preparing and consulting on an updated Port Development Plan document in 2012. We will continue to work closely with POAL to seek to agree on a Plan that meets the needs and objectives of all stakeholders.
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6.1.4 Support external initiatives that contribute to improving port efficiency

Waterfront Auckland will participate in determining solutions to help improve efficiency of the port. Among the initiatives include the following: Grafton Gully Stage 3 (NZTA and many stakeholders) support to strengthen the connection/relationship between the port and the citys road and rail network to improve efficiency of port operations. This is now being considered under an inter-agency Eastern Grafton Access Strategy as discussed in Sec 3.4 of the Transport Network working paper. Additional Waitemata Harbour Crossing (NZTA) advocate for the development of an additional crossing across Waitemata Harbour to provide for increased overall network efficiency, resilience and capacity, including freight.
6.1.5 Support to develop projects that assist in increasing port efficiency and public amenity
Waterfront Auckland will support the development of projects by other Council agencies that will help increase efficiency of the port, in terms of freight handling and transport with the regional and national supply chains. Quay Street axis and related developments (AC) transforming Quay Street into a grand, civic pedestrian-orientated boulevard and the primary organising element of the waterfront in order to reduce congestion and vehicular conflict with freight truck traffic. Fanshawe Street Foreshore Avenue (AT) establishing an arterial corridor that provides an east-west connection along the original foreshore through road development, to reduce vehicular congestion on Quay Street and realign to coordinate with Grafton Gully Stage 3, in order to increase efficiency for transporting freight through the motorway and rail network. Quay Park precinct development (AC) providing opportunities for public space and portrelated amenities across Quay Street.
6.1.6 Develop projects that increase public amenity in the port area
Waterfront Auckland will sponsor the development of projects that will help increase public amenity and waterfront access in the areas surrounding the port. These projects include: Captain Cook Wharf development providing additional public open space Walkway and cycleway from Herne Bay to Teal Park (and on to St Heliers) providing continuous public access to east portside and with a continuous public walkway and cyclweway from Harbour Bridge to Teal Park Teal Park and Point Resolution beach and fishing wharf creating the east bookend public environment that can provide a working port character for the waterfront
Interpretative signs, markers, sculptures, or any port-related details can be installed in specific areas of these projects, to make the public aware and understand the ports traditional role and economic importance.
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6.2
Indicative timeline
Table 4 Indicative timeline
Initiatives 1 2 3 4 5 Investigate further opportunities for integration with the city centre. Support for port activities and future development (Scenario 1). Work with POAL to agree on Port Development Plan. Support external initiatives that contribute to improving port efficiency. Support to develop projects that increase port efficiency and public amenity. Quay Street axis and related developments Fanshawe Street Foreshore Avenue Quay Park precinct development 6 Develop projects that increase public amenity in the port. Walkway and cycleway from Herne Bay to Teal Park Captain Cook Wharf development Teal Park and Point Resolution beach and fishing wharf
Legend: WW Waterfront-wide WH Westhaven WQ Wynyard VH Viaduct CW Central wharves PQ Port+Quay Park
Char Area WW WW WW WW
Cosponsor AC
Timeframe (years) 3 5 10 20 30
POAL
CW WW PQ
AC AT AC
WW CW PQ Private
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REFERENCES
Auckland City Council (2005). District Plan Central Area Section. Auckland City Council (2009). Waterfront MasterPlan. Auckland Council (2011). Draft City Centre Master Plan. Auckland Regional Council (2004). Auckland Regional Plan: Coastal. Auckland Regional Council and Auckland City Council (2005). Auckland Waterfront Vision 2040. Auckland Regional Holdings (2009). Long Term Optimisation of the New Zealand Port Sector. Covec (2008). Economic Impact of POAL. DP World Press Release (7 May 2008). Historic day for UK economy and ports. Ministry of Transport (2008). National Freight Demands Study. Ports of Auckland (1989). Port Development Plan. Ports of Auckland (1999). Port Development Options for the Auckland Region. Ports of Auckland (2008). Port Development Plan. Ports of Auckland (2010). Annual Review. Ports of Auckland (2011). Port Development Plan. Ports of Auckland (2011). Submission on Auckland Unleashed: The Auckland Plan Discussion Document. Port of Tauranga (2010). Annual Report. Richard Paling Consulting (2010). Upper North Island Freight Study. Rockpoint Corporate Finance Limited (2008). New Zealand Port Sector Report. Waitemata Local Board (2011). Draft Local Board Plan. Waterfront Auckland (2011). Statement of Intent.
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APPENDICES
Appendix 1 Summary of Port Development Plans
In 1989 POAL, ACC and Auckland Regional Authority produced a Port Development Plan for Auckland, with a key theme being intensification and expansion of port facilities in the area from Bledisloe west to Fergusson. POAL published a Port Development Plan (PDP) in 2008 for the period to 2040 (refer to Appendix 6 and POAL website for further details). This involved intensification and expansion of the eastern port area to provide capacity for over 4 million TEUs p.a. by 2040 (if required) plus break-bulk. Additional capacity would be provided through:
New terminal operating equipment (to increase capacity per hectare of container terminals by 250%) Reclamation the total area of the sea-port would increase around 110 ha, with 1,700m of container berthage (vs. 840m currently). Car stackers Inland ports
Updated port development concept plans were prepared in July 2011, setting out POALs latest thinking on how the port might develop in five year increments through to 2055 (although timing is subject to a number of variables including the rate of volume growth and the rate of availability of fill material for reclamation). Key reasons for the changes from the 2008 PDP are as follows:
The updated layout allows for larger multi-cargo operations, and a more appropriate balance between berth length and land area. It also better enables continued operations during the construction phases. The 2008 PDP envisaged that materials for the reclamation would be primarily sourced from dredgings and other materials mixed with cement (mudcrete). This is a slow and costly process, and would not have provided sufficient quantities of material for the reclamation in the required timeframes. The updated PDP envisages a different construction method whereby mudcreted dredgings are used to build bund walls and create compartments into which materials from other construction sites around Auckland can be deposited, without mudcreting, and without risk of contamination to the harbour. This could create a win-win proposition for Auckland, reducing the costs of disposal of construction materials, reducing the environmental impacts of landfill expansion, and accelerating the reclamation, especially if materials from major projects that are planned to take place within the same timeframes such as the CBD Rail Loop and Harbour Crossing can be utilised.
The current total area of POALs waterfront port operating land is 72 hectares comprising Fergusson and Bledisloe container terminals (45.7 hectares), multi-cargo operations (21.5 hectares), and other supporting infrastructure13 (4.7 hectares). POAL has working berths across eight wharves measuring a total of 3,447 metres, of which 3 berths totaling 840 metres are available for use by container ships. By 2040, POALs 2011 PDP envisages a total port area of 82 hectares. The land area of the container terminals will increase from 46 to 59 hectares. Total berth length will increase by an additional 805 metres, increasing total container berth length from 840 metres to 1,610 metres. Note that the ultimate port footprint (2055 and beyond), which is beyond the horizon of the Waterfront Plan, sees a total port area of 95 hectares (i.e. an additional 13 hectares from 2040), providing for container terminal areas increasing further to a total of 70 hectares (refer Appendix 6). POAL can currently handle ships with a maximum draft of 13.9 metres at high tide, which would be sufficient for ship sizes of approximately 6,500 TEU. The largest ship that has visited a New Zealand port to date is 5,500 TEU. Given the trend towards larger ships, by 2040 POAL may deepen the channel to accommodate vessel drafts of 14.5 metres (high tide), which would enable the port to handle ships of over 7,000 TEU. POAL has consents in place to deepen a berth at
13
Includes engineering, administration and common areas, and infrastructure tenants
24
Fergusson to 15.5m (low tide) and also construct a new deepwater berth at the north end of Fergusson to cater for larger ships. Other key assumptions underpinning the July 2011 concept plans include:
Current break-bulk operations will be maintained Automated Stacking Cranes will increase container land capacity per hectare to around 45,000 TEUs per annum. This compares to the current straddle operation which provides land capacity per hectare of up to around 23,000 TEUs per annum if fully utilised. Container berth capacity is currently estimated at 1,500 TEUs per metre if fully utilised. This is likely to increase to around at least 1,750 TEUs per metre by 2040. Captain Cook wharf can be released during 2015 to 2020 for public sale and access, subject to replacement capacity being constructed at Bledisloe. o This will involve relinquishing the premium car ship berth at Captain Cook Wharf. This is further to the sale and transfer of Queens Wharf in April 2010, whereby approximately half of POAL's capacity to handle the car trade was removed. The southern part of Bledisloe now caters for this trade, along with Captain Cook and Marsden wharves. In the medium term, the ability to keep extending POAL's vehicle servicing area into the northern part of Bledisloe is constrained by the need to maintain its functional third container berth capacity. The car trade will be accommodated in the future by demolishing the northern end of Marsden wharf enabling extension of the Bledisloe West berth both to the north and south, to accommodate a car berth at the southern end and a container berth at the northern end, and builidng a car parking building at the southern end of Bledisloe terminal. This will be sufficient to facilitate future growth in the car trade.
The expansion of the Fergusson container terminal, when completed, will provide the eastern limit of the port. Any further reclamation will be within the regulatory frameworks and subject to resource consent. None of the projects proposed in the PDP have been subject to a detailed study of potential effects, but rather represent a strategy and conceptual plan of how the strategy may be implemented.
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Appendix 2 - Map of New Zealand Ports
Northport (1) Auckland Tauranga Taharoa(1)

(1)
Key: Container Port Non-Container Port
Taranaki
Eastland (Gisborne) Napier
Marlborough Nelson Westport Greymouth
CentrePort (Wellington)
Lyttelton (Christchurch) PrimePort (Timaru) Otago Southport (Bluff) (1) Note: (1) There are four specialist ports in NZ, where trade is largely based around one or two bulk commodities : Northport oil & forestry Taharoa iron sand Taranaki oil Bluff - aluminium
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Appendix 3 - Port volumes
27
Appendix 4 - Determinants of port capacity

Capacity in container port terms has two main elements, both of which are essential and need to be balanced:
Landside capacity, which is a function of: o o land area available and container layout (determines the number of ground slots); and slot utilisation (dependent on stack height14, container dwell time and vessel arrival patterns).
Quayside (berth) capacity, which is a function of: o o berth length (determines the size and number of ships that can berth at any one time); and berth utilisation (impacted by productivity and vessel arrival patterns).
Because of the unpredictable nature of shipping services, port infrastructure must be sufficiently large and flexible to process irregular and fluctuating levels of throughput. The peaking factor is further exacerbated by the trend towards larger ships and fewer port calls. Therefore, even an efficiently configured operation will have some surplus capacity to meet peak requirements. Improved productivity and efficiency can extract more capacity from a given quantity of physical infrastructure. Potential sources of productivity improvements include increases in:
Berth occupancy; Container handling rates; Crane intensity; Stack height (requires investment in terminal operating equipment and systems); Efficiency of yard layout (increasing the number of ground slots per unit area of terminal); Proportion of 40 foot (vs. 20 foot) containers; and Efficiency of port and transport interface e.g. vehicle booking systems, reduced dwell times etc.
Assuming that POAL and other New Zealand ports that are candidates to become major international container ports have the potential to achieve world class efficiency and productivity, are able to fund the purchase of equipment such as straddles and cranes as required, and can dredge berths and channels to the required depth to accommodate the increasing size of ships, the key physical capacity constraints are:
Land area available; and Berth length.
Two useful measures of how efficiently a port is extracting capacity from a given quantity of physical infrastructure are:
Yard utilisation (annual throughput / land area); and Berth utilisation (annual throughput / total berth length).
While greater stack heights result in increased container storage capacity, it can cause a reduction in productivity, for conventional straddle operations. Other technologies exist (e.g. Automated stacking cranes (ASCs)) which can increase productivity and stack height.
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14
Appendix 5 - Container growth and utilisation rates

The following should be noted in relation to future container growth and land / berth utilisation rates. Historical container growth: In every decade since 1980, NZ shipping volumes have doubled (compound annual growth rate of 7.2%); POAL and Port Botany (Sydney) port development plans assume 5% growth rate; Shipping industry rule of thumb is shipping volume growth = 2.5 times GDP growth; and POALs container volumes grew by 2.8% in FY2010. Yard utilisation depends on a number of factors including container dwell times, choice of handling system / stacking density and proportion of trans-shipment containers (counted twice in the throughput statistic): o o Hong Kong is a large trans-shipment hub and stacks containers up to 12 high; Singapore is the world's busiest trans-shipment hub which handles around 25% of the world's total container trans-shipment throughput, and 6% of global container throughput; Port of Melbournes 2006-2035 Port Development Plan states that by 2035, the ports international container terminals will be operating at a terminal productivity of up to 45,000 TEU per hectare; Patrick Terminals designed yard utilisation for its terminal operations in Melbourne and Sydney is around 30,000 TEU per hectare; and New terminal stacking operations using automated stacking cranes (ASCs) could significantly increase the capacity per hectare of POALs container terminals to around 50,000 TEUs per hectare by 2040 by enabling increased stack heights (up to six full containers vs. three currently, and nine empty containers vs. seven currently) and a more efficient yard layout. Singapore Port can currently handle up to 11,000 TEU ships compared to the maximum vessel size of 4,100 TEU currently calling at New Zealand ports; Patrick Terminals designed berth utilisation for its terminal operations in Melbourne and Sydney is around 1,250 TEU per metre; and Port of Melbournes 2006-2035 Port Development Plan states that productivity at Swanson Dock berths is forecast to increase.to almost 1,500 TEU/m by 2017. This is comparable with rates currently being achieved at the worlds most efficient container terminals with similar vessels and exchanges. By 2035, the ports international container terminals will be operating at a berth productivity of up to 2,000 TEU/m.
Utilisation rates:
o o
Berth capacity increases with ship size; o o o
It is expected that berth productivity will improve more than land productivity over time with larger ships, faster cranes, quad lifting, increasing use of 40-foot containers etc.
Despite significant improvements in berth utilisation rates over time, berth capacity is likely to be the greatest constraining factor over the long-term given that inland ports can be used to increase terminal capacity by reducing container dwell time, whereas additional berth length involves expensive reclamation requiring resource consent.
29
Appendix 6 - Port Development Plans

1989 Port Development Plan
30
2008 Port Development Plan
31
2011 Port Development Plan 2012 - Current
2012 - 2015
2015 2020
32
2020 2025
2025 2030
2030 2035
33
2035 2040
2040 2045
2045 2050
34
2050 2055
2055 +
35

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PORT

STRATEGY ........................................................................................................................................ 19 5.1 5.2 5.3

ACTION PLAN ................................................................................................................................... 20 6.1 6.2

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Purpose of the strategy

Relationship with other strategic workstreams

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The value of the Port

3.1.1 Auckland Waterfront Vision 2040

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3.1.2 Waterfront Masterplan (2009)

3.1.3 Port Development Plans

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Figure 1 2010 imports and exports by volume and value

100% 90% Value (billions)

Total Other NZ ports

Export Auckland Airport

Total Other NZ ports

Source: Statistics New Zealand

POAL competitive advantages and challenges

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Table 2 Summary of competitive advantages and challenges

Upper North Island Freight Study (August 2010).

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POAL capacity to meet future demand

3,500 POAL2040ContainerVolume,4%Growth 3,000

2,500 POAL2040ContainerVolume,3%Growth 2,000

1,500 POAL2010ContainerVolume 1,000

ContainerYardUtilisation(TEUs/ha) CurrentArea(46.5ha) Plannedadditionalarea(12.5ha)

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3,500 POAL2040ContainerVolume,4%Growth 3,000

2,500 POAL2040ContainerVolume,3%Growth 2,000

1,500 POAL2010ContainerVolume 1,000

BerthUtilisation(TEUs/m) CurrentLength(840m) PlannedAdditionalLength(770m)

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4.6.2 Auckland Regional Plan: Coastal

4.6.3 Waitemata Local Board (Draft Local Board Plan)

4.6.4 Draft City Centre Masterplan

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Opportunities and challenges

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6.1.2 Support for port activities and future development (Scenario 1)

6.1.3 Work with POAL to agree on Port Development Plan

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6.1.4 Support external initiatives that contribute to improving port efficiency

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Includes engineering, administration and common areas, and infrastructure tenants

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Appendix 2 - Map of New Zealand Ports

Northport (1) Auckland Tauranga Taharoa(1)

Key: Container Port Non-Container Port

Eastland (Gisborne) Napier

Marlborough Nelson Westport Greymouth

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