Business reporter Riley Kennedy talks to chief executive Nigel Gear about the year that was and what is ahead for New Zealand’s most southern port.
Working on the border and exporting Southland’s goods to the world during a pandemic is no mean feat, but South Port has done it with record results.
The NZX-listed port company has been tested over the past year, battling a global shipping delay and receiving the Covid-carrying container ship, Mattina.
Despite the challenges, the Bluff port recently announced it achieved a record after-tax profit of $10.71million for the year ended June 30, 2021.
A result chief executive Nigel Gear described as "extremely pleasing" and came about after "a lot hard work" by the team.
The port’s history goes back to 1877 when Port of Bluff was set up. In 1988, when the Port Companies Act was passed, it changed its name to South Port New Zealand Ltd.
In 1994, the port listed on the NZX and is one of three listed port companies in New Zealand, the other two being Napier and Tauranga.
It is Southland’s only listed company.
About 85% of the port’s cargo is bulk — products from the Tiwai Point aluminium smelter, forestry, stock food, fertiliser and fuel — and 15% is containers.
The port also has both cold and dry storage warehouses on site, container handling and marine functions for bringing the ships in and out of the port.
It employs about 107 staff as well as 20 fixed-term seasonal staff.
Over the past year, about 3.45million tonnes of product was moved through the port, an increase of 5.5% on 2020.
The delay had resulted in irregular vessel calls which flowed on to creating period of heavy congestion in the container terminal and, at times, a shortage in container supply, Mr Gear said.
Mediterranean Shipping Company’s Capricorn line is the only container line to operate out of the port and is scheduled to call every week.
The route makes nine calls at New Zealand ports, five in Australia, and one each in Singapore, Malaysia and Indonesia.
Over the past year container vessel calls were 8% and the port handled a record 53,750 containers.
Bulk cargo volumes improved by 5.9%, the two major influencing factors in bulk were a 54% increase in logs to a total of 730,000 tonnes and 19% increase in woodchips.
Global demand in China for grown radiata and woodchips and lower cargo volumes being exported through the port in 2020 due to the lockdown was responsible for part of those increases.
The big challenge
Container ship MS Mattina was due to visit South Port on its normal Capricorn service in July, but that went awry.
About a week before it arrived, port was informed there might be an issue, Mr Gear said.
Any ships entering New Zealand waters have to fill out a health declaration for the Ministry of Health to identify any potential risks.
That process had been in place for "many many years", so the port industry was well prepared when Covid-19 arrived, Mr Gear said.
Mattina’s captain informed the ministry that some crew were displaying flu-like symptoms, which could have been anything, he said.
"It could have been a cold, it could have been the flu, it could have been anything".
With that in mind, South Port did not have any problem letting the vessel berth in Bluff and it was not until the vessel arrived and testing was done that anyone knew the sickness was Covid-19.
The key concern for the port was it was going to be putting a pilot on board and his safety needed to be ensured Mr Gear said.
He boarded after ensuring he was comfortable about the risk.
South Port and most other port companies have been treating every ship as though it had Covid on board.
"Because of that we were well prepared."
In the end, 21 Mattina crew tested positive for the virus and spent nearly a month isolating at South Port.
Mr Gear was pleased with how it was handled.
"The staff did a fantastic job, it was the first case of a container ship with Covid on board to come into New Zealand and there was a lot of media attention and a lot of stress and strain."
He believed the key thing learned from the incident was how important clear communication was between all parties involved, and that communication had to be set up early.
"There was a period where that had to be worked through, customs and health were leading the response but there was a point where we had to be involved in the discussions."
New Zealand’s Aluminium Smelter and the future
The Tiwai Point smelter has been an important part of the Southland and the port for more than 50 years.
The smelter represents about 30% of South Port’s cargo throughput and about 20% of its net profit, excluding the licence fees.
Under South Port’s licence agreement with the smelter (until 2043) for the use of its Tiwai Wharf and associated causeway, South Port is paid an annual licence fee.
Last year, the smelter was threatened with closure, which would mean a big economic loss for the region and the port.
Then, earlier this year the smelter announced a new four-year electricity contract with Meridian Energy to December 2024.
The port was pleased common sense prevailed, Mr Gear said.
"We’ve had a 50-year relationship, a pretty good relationship with these guys and we would like to see them continue because they are a massive employer for the region and they do a lot of good.
"If they were to leave, the key for the region is to keep the electricity in the South," he said.
There were two emerging opportunities under investigation which could provide the region and the port with new business: open water aquaculture and the opportunity of introducing Green Hydrogen production on the smelter’s site.
Mr Gear said the port had been diversifying away from the smelter for about 10 years and was trying to grow other cargo bases.
"If you look back to then, probably 50% of our cargo was out of the smelter, but now it is around 30%," he said.
Part of that diversification was a plan to deepen the port channel, swinging basin and berth pockets from 9.7m to 10.7m.
Mr Gear believed that would provide opportunities for growth in cargo through the port.
An extra 1m in the channel would give a lot of flexibility for ships operating through the port, he said.
"What it could lead to is the ships could put more cargo on board, more logs, more containers and possibly bigger ships."
The port was currently working through the consent process, and provided it could be processed in the next 12 months, the project would start in early 2023.
Within the next six weeks, the port will take delivery of a new $10million, 65-tonne tug, called Rakiwai, from Damen Song Shipyard in Vietnam.
It wanted to build additional capacity in its towing ability because extra capacity would be needed to handle the extra activity a deeper channel would allow.
The port made the announcement it had purchased the tug in March this year, which was the "single largest" capital expenditure decision the company had made.
The port operates two tugs with a combined bollard pull (BP) of 75 tonnes. Rakiwai will increase its total capacity to 105 tonnes BP.
The tug is being sailed to Bluff from Vietnam.
Mr Gear did not know the exact voyage time but that would depend on multiple fuel stops and weather conditions.
All in all, the port’s future was bright, if a little different to its past, but the company was well prepared for the changes ahead.
