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Ports of Auckland council owner yet to be told of likely automation delay

Ports of Auckland has not informed its Auckland Council owner of any potential delay to full automation of its container terminal – despite advising others it will likely miss a time undertaking made by the port chief executive.

Tony Gibson in March said the controversial automation project, under way for five years at a cost the port and the council refuse to reveal, would go live in June or early July.

While a port spokesman late last week would only say the timing had not changed, the Herald obtained an advisory from the port which said there was a strong likelihood full automation would not start until August some time.

The advisory attributed the delay to terminal pavement work being 45 per cent completed and weather dependent, and “risk assessments and independent peer reviews” Auckland Council wanted done first.

The Herald asked Auckland Mayor Phil Goff, who with councillors recently demanded answers from port leaders about the much-delayed automation project, to respond – and to identify the progress-delaying assessments and reviews claimed by the port.

A spokesman for his office said the port company had not told the council of any potential delay.

“The mayor expects the automation project to be completed as quickly as possible and would expect a transparent and frank explanation from the board if there was to be further delay.”

The only reviews the council had sought were a recently delivered independent health and safety report on the port which identified systemic failures, and an independent review of the automation project after its full implementation, the mayor’s office said.

“The council’s governing body did resolve in April to request that prior to full rollout of straddle automation at Fergusson Wharf, Ports of Auckland provide Council with a copy of its completed safety assurance framework for this major project …

“This safety plan was deemed essential by the CHASNZ (independent health and safety reviewer) report prior to full implementation of automation.”

The port’s failure so far to fully implement automation means it is still operating both manual and automation container systems, which along with a shortage of crane operators and stevedores at a time of global shipping congestion and heavy import demand, means its productivity has come under scrutiny.

For nearly eight months this has led to container ships diverting Auckland-destined cargo to the Port of Tauranga, resulting in congestion there, and contributing to general North Island supply chain issues.

The port’s latest operational update continues to say its container terminal status is “severely degraded, major delays”.

Meanwhile, the port has delivered Auckland city councillors a mixed bag of performance results for the third quarter of FY21.

The profit forecast for the full year was expected to be slightly above the $20.4 million budgeted, with unfavourable revenue offset by costs coming in under budget.

The council-controlled organisation oversight committee will hear on May 18 that third quarter revenue was $166m against a budget of $170.9m, but net profit after tax was $17.2m, ahead of a target of $14.3m.

The port spent $19.3m less than budgeted on capital expenditure, while maintaining focus on funding its automation project.

Port operations ebit for the quarter was $32.5m, against a budgeted $31m, while total ebit was $36.6m against a budget of $34.2m.

Budgeted revenue for FY21 is $232m and total ebit $47.7m.

The $4.4m revenue fall on budget in the third quarter was due to a drop in container terminal revenue, council papers show. But costs at $134m were $5.9m less than budget. Total budgeted costs for the full year are $188m.

Budgeted net profit after tax of $20.4m compares to an actual $23m in FY20.

New Zealand’s main imports gateway, did not make an interim dividend. It was still forecasting a final dividend in line with a target of $4.1m. This compares to $4.9m last year.

For six of its seven key financial performance measures, the port’s third quarter year to date results were on track to achieve annual targets, the committee papers said.

However on revenue increase, the third quarter produced a result of -8.4 per cent against a target of 0.3 per cent.

Several non-financial performance indicators were also not on track.
On health and safety the port had already failed to meet the target, crane productivity measures and target were significantly below last year. The port blamed this on additional safety controls, a labour shortage, yard capacity constraints and operating both manual and automated terminals.

Truck grid productivity measures were below last year and target due to yard congestion issues.

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