Brexit and the China-United States trade tensions continue to dominate the global economic scene, the former showing little sign of resolution but the latter seemingly making some headway in recent weeks.
The global economy has softened: gross domestic product (GDP) was at 3.7% in 2018, which was in line with 2017 growth. For 2019 and 2020 that looks to be easing to 3.5% and 3.6% respectively.
During 2019, the US' GDP is projected to be lower than previous years at 2%, while China is projected at 6.2%, continuing its downward trend of recent years.
"China's ongoing trade dispute with the US is of particular importance with a current halt on tariff increases in place," Deloitte's New Zealand Ports and Freight Yearbook 2019 report said.
Global growth predictions during 2019 are primarily attributed to China's slowdown and its unresolved trade tensions; just as Brexit casts further uncertainty over global markets.
New Zealand has been a strong advocate of free trade and is at the forefront of negotiating bilateral and multilateral free trade agreements.
"New Zealand's trade policy is important for the port sector as it has the capacity to affect imports and imports moving around New Zealand," the report said.
Two "mega trends" since the 1960s were globalisation and containerisation of goods, with new larger, specialised ships.
Globally, from 2000-16, almost $US69billion ($NZ104billion) was spent across 292 ports to assist servicing the larger ships.
"Healthy but slower [container] volume growth is forecast through 2019," the report said.
The report predicted freight rates would "remain steady" this year, as supply and demand was balanced by a dip in the number of new ships scheduled for delivery during the year.
However, the global container shipping outlook was "largely negative", with risks from trade protectionism, slower than expected economic growth, rising fuel costs and incoming sulphur regulations.
"Long haul mainline trades are critical to the overall health of the shipping industry," the report said.
The top seven container shipping lines, headed by Maersk, control almost 70% of global container ship capacity; and the three largest lines have formed three alliances.
The first alliance is Maersk and MSC which has a 38% share of global container capacity, then CMA CGM, COSCO, Evergreen and OOCL have a 28% share.
The third alliance of Hapag Lloyd, Yang Ming, Ocean Network Express and MOL has 15%.
"The immense bargaining power in relation to ports and terminals that alliances lend to carriers serves to depress rates for port services and allow carriers to exert increased pressure on ports for additional public infrastructure," the report said.
China's importance is underlined: of the 20 largest container ports, 10 are in China; a total of 15 are in Asia, there are three in Europe and one each in North America and the Middle East.
While there is an over-capacity of TEU (20-foot equivalent units/containers), shipping lines are continuing to invest in new, larger ships.
The ships' order book includes eight which can carry 14,000 TEU's, six carrying 20,388 TEUs and 12 carrying 23,000 TEUs each; most for delivery from mid-2020 to mid-2021.
In 1956 the first container ship carried 58 TEUs, which steadily rose to 9200 TEUs by 2005, then steadily rose through 14,000 to a class carrying 21,413 in 2017.
The report said Drewery Maritime Research remained critical of the continued ordering of ultra-large ships. The two key requirements for sustained profitability were capacity management and industry consolidation, Drewery said.
"One of the most significant determinants of container line profitability is fuel prices," the report said.
They had risen from $US170 per tonne of bunker fuel in 2015, up to $US350 in 2017 and at times more than $US420 ($NZ634) towards the end of 2018.
The report noted the new low-sulphur fuel oil, required to be used from January 2020, was being priced at up to $US650 per tonne.
Environmental concerns over ship emissions have prompted the change, lowering the sulphur cap on fuel content from 3.5% to 0.5%.
The report said New Zealand ports need to be effective and productive and must deliver value to other network participants, or risk being bypassed.
"New Zealand ports do not have the scale of their global trading partners," the report said.
On the supply side, New Zealand ports were physically and fiscally restrained, while on the demand side they did not have an endless backlog of ships waiting to berth.
New Zealand ports had to look to the smart use of information; knowing what, where and when then acting on that information to deliver value, the report said.
The report considered document management, in the form of blockchain, which attracted as much hype as it did scepticism, "but its application in shipping is very real".
The report noted New Zealand's primary sector was its key generator of domestic freight, much of it destined for export.
The flows were from farm-gate or plantation forest, either direct to ports for export or more usually via intermediate processing industries, such as dairy, for both domestic consumption and/or export.
"The volume of primary sector exports has continued to increase over time with dairy, fish and produce exports all increasing steadily over the last decade," the report said.
While Ports of Auckland, Port of Tauranga and Lyttelton Port of Christchurch eclipse Port Otago and South Port in volumes, the two smaller southern ports reflect the strength in the primary sector in recent years.
At Port Otago in 2018, TEU throughput increased almost 15% to 204,7000, bulk cargo increased 10.5% to 1.69million tonnes and log exports rose 12% to 1.06million tonnes.
South Port hit three records in 2018, with log volumes up 20% to 671,000 tonnes, woodchips up 21% to 343,000 tonnes and total cargo rose 13% to 3.44million tonnes. TEU throughput was up 4%, at 24,200 containers.
The freighting "golden triangle" of Auckland, Waikato and Bay of Plenty accounts for 45% of all freight tonnage, while Canterbury produces 15%.
The ports of Auckland and Tauranga combined shifted more than 2.1million TEUs in 2018, while Port Otago and South Port combined shifted 243,000, and Lyttelton 424,600 TEUs.
New Zealand's proximity to Asia, with its rising middle class and shift to consumer-driven growth in China, represented a significant opportunity to New Zealand, the report said.
"However, a trade war represents a threat to this opportunity," the report said.
China and New Zealand's two-way trade was more than $NZ28billion in 2018, with $NZ17 billion exports and $NZ12 billion imports; or 20% of New Zealand's total trade.
