Dec 04 2018
Ongoing globalisation in many of New Zealand’s domestic production industries is anticipated to drive solid revenue growth for operators in the Port and Water Transport Terminals industry over the five years through 2023-24.
New Zealand’s existence as an island nation, geographically isolated from its trading partners, ensures its ports are of high importance to the country’s ability to engage in international trade. Operators in the Port and Water Transport Terminals industry provide a key service by linking New Zealand to its trading partners around the globe. Industry operators are primarily engaged in maintaining, leasing and operating water transport terminals and port facilities, for both passengers and freight.
Rising levels of globalisation in many of New Zealand’s domestic agricultural, forestry and food and beverage production industries have boosted the country’s total mass of exports by sea, driving demand for port services. Furthermore, the New Zealand dollar has depreciated over the five years through 2018-19, boosting the price competitiveness of New Zealand produced products in overseas markets, further increasing export cargo volumes. Despite the depreciation of the New Zealand dollar over the past five years, imports into the country have also risen strongly. Free trade agreements signed with a number of countries over the period, such as Malaysia, have boosted both import and export volumes between New Zealand and its trading partners. Rising trade by sea has increased demand for ports over the past five years, supporting industry growth.
The industry has also benefited from growing tourist activity in New Zealand. Both domestic and international tourist visitor days have risen over the past five years, partly due to the depreciation of the New Zealand dollar. Additionally, promotional efforts by the Central Government advertising the country as a key tourism destination have boosted international travel to New Zealand over the period, with many tourists visiting the country on a cruise ship. Cruise ships require port services, and rising demand from cruise ships has supported industry revenue over the past five years. Overall, industry revenue is expected to increase at an annualised 1.2% over the five years through 2018-19, to total $1.3 billion.
In response to strong growth in demand, many industry operators have expressed concern regarding their capacity. Many of the industry’s larger operators are expanding their port facilities, in order to benefit from rising demand. For example, Port Otago and Port Nelson are currently undergoing expansion upgrades, boosting the number and size of ships they can handle.
Hawke’s Bay Regional Council is currently considering ways to raise capital to invest in port expansion. For example, the council has stated it is considering listing Napier Port on the New Zealand Stock Exchange to raise funds. Industry revenue is projected to rise at an annualised 1.5% over five years through 2023-24, to total $1.4 billion. Ports which fail to ensure they have sufficient capacity to benefit from increased international trade will likely fall behind their competitors over this period.