P&O Nedlloyd decision could boost land transport companies

By NZPA

Tuesday 1st October 2002

P&O Nedlloyd's announcement today that its revamped "eastabout" service will reduce from five to three New Zealand port calls could be a boost for beleaguered land transport companies.

The fleet of 10 super-sized containerships will make weekly fixed-day calls at Ports of Auckland, Port of Napier and Port Chalmers in Dunedin, but Lyttelton Port and Wellington's Centreport lose out on the important shipping service.

Port of Tauranga, New Zealand's biggest export hub, which had also put in a proposal for the service, also missed out but had less to lose than other ports as it did not have the previous Nedlloyd services.

Andrew McDouall of McDouall Stuart Securities said Nedlloyd's decision had significant implications for land transport companies.

Cutting the port calls meant cargo would be aggregated at just three locations, creating more of a hub and spoke operation.

"That is a major shift that will have implications for all of the containerised ports and also for land transport operators such as Tranz Rail and the Owens and Mainfreights of this world amongst the listed entities."

"It's potentially positive for the land transport operators."

The shareprices of Tranz Rail, Owens Group and Mainfreight have all taken a battering this year.

Tranz Rail, beset by profit and capital issues, closed up 1 cent to $1.59 today, having tumbled from a March high of $4.20.

Owens Group, which has slipped 55 cents this year, fell 2 cents to 83 cents, while Mainfreight rose 2 cents to $1.12, having fallen from a year high of $1.52.

P&O Nedlloyd managing director in New Zealand, Tony Gibson, said the company was working with land transport companies, including Tranz Rail, and coastal feeder operators and it would release details in the next few weeks.

"Already we are a large user of Tranz Rail and a large user of road ," he told NZPA.

"We want something that provides our customers who would have had direct calls with opportunities, either with feeders or on our other vessels that call at both Lyttelton and Wellington."

He said Lyttelton's lack of a 24-hour-a-day labour agreement had been a factor in it missing out.

"We would encourage Port of Lyttelton and the labour to work towards finding a resolution as soon as possible.

"There's no question that now, with the investment we and other lines have in these ships, that you require 24-hour-a-day, 365-day-a-year service, which is what we get from other ports around the world."

Lyttelton called an urgent shareholders meeting this morning after its stock fell a further 11 cents to $1.45. The shareprice has plummeted 26 cents, or 15 percent, in the past two weeks to its lowest level in nearly two years.

Lyttelton stood to lose 11 percent of its container volumes if all freight shipped direct to Europe is handled by Port Chalmers.

The blow comes after Lyttelton lost a similar-sized fortnightly service with Maersk Sealand to the Port of Timaru last month.

Mr Gibson said Wellington's Centreport had missed out to Napier because Napier was a greater source of exports.

"There's a lot more potential from the Hawke's Bay region than the lower part of the North Island, but we're not turning our backs on the lower North Island or Lyttelton."

Because of the tightness of the ship's 70-day round trip schedule port visits had to be limited, but if there appeared to be some slack then additional ports might be added. The revamped service, which replaced two existing services connecting New Zealand to Europe and East Coast North America, had been expected for more than a year, Nedlloyd said in a statement.

The $50 million Albatross-class ships had plugs for 1300 integral refrigerated containers, making them the biggest refrigerated ships in the world.

Mr Gibson said the service on a fixed day of the week would benefit refrigerated exporters particularly, giving greater certainty and faster transit.

"Auckland, Napier and Port Chalmers will allow us to serve areas with high import volumes, as well as giving optimal service to areas of increasing export cargo volumes," he said.

Nedlloyd would continue its relationship with Tauranga, Wellington and Lyttelton through other services.

"The fact is there was a commercial necessity whereby three ports had to miss out," Mr Gibson said.

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