Ports in a storm
Industrial Workplace – August 2020
The industrial sector’s resilience in the COVID-impacted economic environment has been encouraging, as other sectors battle to retain viability in straightened times.
From the source to the door, no part of the supply chain and logistics arena has been immune to the pandemic.
Starting when we first heard the news out of Wuhan, and throughout during New Zealand’s COVID waves, keeping freight moving has been vital to this country’s fiscal well-being.
Looking ahead, New Zealand’s established ports and points of entry are consolidating activity and future-proofing operations, while new infrastructural projects designed to further streamline freight movements throughout the country are in the pipeline.
Joel Buckingham, property manager for Ports of Auckland, said container volumes through the port are now in a recovery phase having drifted lower during the first half of 2020 to be down around six percent for the full year.
“Since July, container volumes have recovered on the back of strong demand for imports from retailers wanting to stock up post-lockdown and ahead of the Christmas rush.”
Buckingham said car volumes dropped nearly 60 percent in the fourth quarter of this financial year as a direct result of lockdown halting car sales and are likely to be down significantly for the year as production lines overseas are slow to come back online.
Putting in place strict controls at both the maritime border and landside to mitigate potential COVID spread and keep the port running according to Government directives, has been the biggest pandemic challenge for the port.
Buckingham said key learnings were the importance of moving all freight to keep the whole supply chain working, and confirmation that New Zealand’s largest centre needs a port right in, or very close to, the city so as not to leave it vulnerable in times of disaster.
Buckingham said COVID-19 has validated the plan the port has in place out to 2050. Automation, deepening Auckland’s shipping channel and the acceleration of digitisation will enhance capacity and efficiencies.
Meanwhile, Ports of Auckland’s new Waikato Freight Hub at Horotiu is charging ahead with around 100 hectares of industrially-zoned land available for development to enable importers and exporters to set up facilities and take advantage of the time, cost and carbon emission-saving benefits.
In February, Auckland International Airport’s Interim Results report spoke to an historic period of transformation with infrastructure projects worth billions under construction – and then the world changed.
Air cargo plays a critical role in supporting New Zealand industry and trade and Auckland Airport currently handles 88 percent of New Zealand’s international air freight volumes.
In the first half of 2020, international cargo capacity through Auckland Airport contracted 25 percent relative to the same period in 2019, while cargo volumes contracted 16 percent.
Mark Thomson, Auckland Airport’s general manager property and commercial, said because of the pandemic, it’s cancelled or deferred projects with a projected completion value of around $2 billion until there’s more market certainty to support higher capital expenditure and associated borrowings.
“Cancelled or deferred projects include the second runway, the Domestic Jet Hub, a multi-storey car park, Park & Ride South, and the international arrivals expansion project.”
Reduced passenger and freight activity during lockdown allowed the airport to bring forward key asset replacements including slabs in the touchdown areas of the runway and various enabling works that will enable it to restart infrastructure projects when passenger volumes recover.
The airport’s investment property business has been less impacted and is performing very strongly growing by 20 percent to $2 billion in the year to 30 June and almost all property development projects that were underway maintained programme despite lockdown.
This included the 85,000sqm Foodstuffs distribution and head office and the multi-unit development on Timberly Road.
“We have also recently started new developments for DHL, Hellman and Interwaste and we are continuing with the two hotel developments under construction – the 310 room 5-Star Pullman in partnership with Tainui Group Holdings, and the 140 room Mercure,” said Thomson.
He said trusted relationships with customers, tenants and suppliers and the scale of the Airport’s portfolio, meant they could support customer needs by providing overflow space or fast-tracking new facilities where required during the pandemics’ challenging times.
Plenty of action in the Bay
At Port of Tauranga, there are no plans to delay scheduled infrastructure investment and work is progressing on several initiatives according to a port spokeswoman.
“We are currently working on a project to add a fourth berth to our container terminal by converting port land to the south of the existing wharves,” she said.
“Our current focus is on maximising efficiency within our current footprint and looking at automation technology to expand our capacity further.
“We are also partnering with Tainui Group Holdings to develop the Ruakura Inland Port in Hamilton, and our cornerstone shareholder Quayside Holdings is also developing a freight hub at Rangiuru south east of Te Puke.”
Read more market insights from Workplace
Subscribe to receive the latest commercial news and insights from Bayleys Workplace