Lyttelton halts trading on report it dips out on P&O Nedlloyd

By NZPA

Monday 30th September 2002

Lyttelton Port today halted trading in its shares pending an announcement.

The halt was called after an article in The Press on Saturday reported that Lyttelton had missed out on P&O Nedlloyd's new "supership" line.

Nedlloyd had been expected today to announce its choice of ports for the weekly "supership" container line -- the largest capacity service to call on New Zealand yet -- but the announcement has been delayed until midweek.

Only three out of the six port companies, which have been desperately trying to dredge up a reason why the shipping company should call on them, are expected to get the nod and there has been strong speculation Lyttelton would lose out to Dunedin's Port Chalmers.

P&O Nedlloyd is restructuring its lines, bringing in a fleet of 10 Albatross-class container ships to provide a large-scale, streamlined "eastabout" service.

A spokesman for Nedlloyd said today he expected the company to make an announcement in London on Tuesday morning (UK time) and a local announcement on how it affects New Zealand ports is likely on Wednesday.

Lyttelton Port shares closed on Friday at $1.55 and were quoted at $1.50/$1.53 this morning before the halt.

Every week from early December an export laden, 280m-long container ship will depart New Zealand, travelling first to the east coast of the United States and then across to Europe, before returning via the Suez Canal and Australia to complete a 70-day round trip.

The fleet of 4100 TEUs (20 foot container equivalent) ships, of which seven are owned by P&O Nedlloyd and three by Contship Containerlines, replaces the two separate streams to the US east coast and Europe.

With plugs for 1300 integral "reefer" containers, they are the biggest refrigerated ships in the world.

Industry experts predict that at most three New Zealand ports will get the nod to host the new $50 million ships, leaving the others scrambling to fill gaping holes in their wharves.

Shipping Gazette commentator Dave MacIntyre said that to ensure the massive 4100s did their round trip on time and maximised productivity, they could not hop between too many ports.

"The idea is to get into key ports and get the import cargo discharged, the export cargo loaded, and get off again as quick as possible."

Lyttelton recently failed to secure an agreement with unions to work around the clock, a requirement for Nedlloyd to achieve the necessary quick turnaround.

The existing P&O services call at Auckland, Napier, Wellington's CentrePort, Lyttelton and Port Chalmers, but Port of Tauranga, New Zealand's biggest export hub, has also put in a proposal for the "eastabout" route.

Mr MacIntyre expected Nedlloyd to knock the number down to three, which was the fewest number of ports viable economically.

The geographical pairings of Auckland and Tauranga, Napier and Wellington, and Lyttelton and Port Chalmers were fighting it out, he said. In the north, Tauranga was at a slight disadvantage but had less to lose as it did not have the current services.

"One of Napier or CentrePort will miss out and that will be a blow to them."

Centreport yesterday published a news release confirming it had missed out on the Nedlloyd contract but said the release may have been premature.

Chief executive Ken Harris said the company had been advised by Nedlloyd yesterday that it had missed out but had since been advised that the notification may be wrong.

Nedlloyd had sent a "deepest regrets" e-mail yesterday and two hours later sent a "hold everything" e-mail, but by then Centreport had already published its news release.

He said he had been told that "that's not necessarily the final decision so we have been ambushed by putting out a press release that may in fact be completely wrong".

Napier Port had also been informed it had won the Nedlloyd contract.

Nedlloyd's business was considerably less than 10 percent of Centreport's business and it would mean even less on the bottom line, he said.

Nedlloyd ships had made an average of one call a week to Wellington. The company earned $40.4 million in profit in the year to June.

Mr Harris said it was crucial to central New Zealand that the port was able to retain shipping services to and from Europe and North America and "we are very hopeful over time that we make sure that happens".

Nedlloyd comprises around 10 percent of Lyttelton's container traffic. The port recently lost about the same to Timaru when Danish line Maersk Sealand shifted its services.

Pacifica Shipping chief executive Rod Grout said Lyttelton had only itself to blame if it lost Nedlloyd for its failure to win round-the-clock agreements with unions as other ports had done.

He accused the port of putting profits before the interests of other stakeholders such as port users.

Nedlloyd does not currently visit Tauranga and it says that failure to win the contract would not result in a loss of business.

Tauranga chief executive Jon Mayson (correct) said it had been informed but was constrained on what it could say until Nedlloyd made an announcement.

"If we miss out, we have lost nothing," Mr Mayson said.

Even if Ports of Auckland won the business, it would lose out because of the reduced number of vessel calls. Nedlloyd business makes up over a quarter of Ports of Auckland container business.

Mr Mayson said that if Ports of Auckland were successful, and he had no reason to believe it would not be, it had still been exposed for having the threat of losing such a high proportion of its business in one contract.

Ports of Auckland shares were down 5 cents to $6.20 today while Port of Tauranga shares were down 10 cents at $8.30 after closing on a year high on Friday.

Ports of Auckland, which handles 68 percent of New Zealand's imports by volume, has been very successful in attracting large ship services.

It had recently spent $18.5 million on two more gantry cranes, increasing its capacity to move cargo to more than 100 containers per hour.

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