Maritime Union of New Zealand

The Maritime Union has hit back at “socially irresponsible” Fonterra pulling out of regional ports and says the dairy giant’s profits are being subsidized by the taxpayer.

Maritime Union of New Zealand General Secretary Trevor Hanson says Fonterra has come out with “weak excuses” for its decision to pull out of some regional ports in favour of transporting products by long distance rail.

Mr Hanson says the future of the New Zealand transport industry seems to be in the hands of one man, Fonterra General Manager of Supply Chain Strategy Nigel Jones.

“Fonterra holds the fate of whole regional economies in their hands because of their size and influence, but seem to have no accountability to anyone but themselves.”

He says recent comments by Mr Jones to rural sector media confirmed Fonterra had no interest in working for a stable and secure regional economy.

“Mr Jones says his goal is to put more money in farmers pockets. Yet he has admitted the large public investment in rail has been behind the decision to dump ports. There has been no debate as to whether this vision is correct or dangerously wrong. Regional communities have been ignored.”

Mr Hanson says he does not believe the rates being paid by Fonterra to rail their goods are sustainable and are basically being propped up by the public.

He says there is a real danger if the rail plan fails, there would be a huge increase in container trucks on the road and regional ports would have disappeared.

Mr Hanson says the decision by Fonterra affects all the other producers who send goods through regional ports like Timaru and New Plymouth.

He says public investment in rail is a good thing, but only as part of an integrated transport system, and publicly owned rail should not be used to play off regions and transport modes against each other.

“It is common knowledge that ports such as Timaru and New Plymouth had planned and invested heavily in upgrading infrastructure to cater for Fonterra. Now they are left high and dry because of overnight decisions. There has been no consultation, no social responsibility and no recognition from Fonterra about the wider implications of their actions.”

“People in the regions are paying three times to subsidize Fonterra profits – they are paying for their regional ports to invest in infrastructure that is then made worthless, they are paying to upgrade rail infrastructure to carry Fonterra goods, and they are paying with their jobs and livelihoods when Fonterra makes overnight decisions to abandon regional ports.”

Mr Hanson says the “hands off” approach by Government to ports has led to a dysfunctional situation which was harming regional economies.

“We cannot have a company like this able to dictate terms to regional New Zealand and cause havoc in regional economies through arbitrary and irresponsible decisions.”

He says that the profits made by Fonterra and primary industries are not just created on the farm, they are created by an entire production and logistics chain that includes transport workers, ports and shipping.

“The actions of Fonterra have a massive impact on regional economies, and if they continue to make harmful decisions based entirely on their own short term interests, then regulation is the only answer.”

The Maritime Union says regional ports have been hit hard because of a decision by Fonterra to rail goods to distant ports.

Maritime Union General Secretary Trevor Hanson says the moves have already led to notices of major redundancies in the port of Timaru, greater casualization of the workforce, and was threatening the viability of some ports.

“This issue cannot be dealt with by ports continuing to compete each other into the ground. It must be addressed by national co-ordination of our transport system, not the wasteful, insecure and chaotic mess we have at the moment.”

He says that Fonterra is running for cover on the issue and their explanations have not satisfied people in the regional ports affected by their recent decisions.

Mr Hanson says there are industry concerns that Fonterra may be getting extremely low rates to transport goods by rail.

He says while such a situation might suit Fonterra, regional ports and coastal shipping were being disadvantaged.

As rail was publicly owned, this could mean people and businesses in those communities would be effectively paying for work to be taken away from them.

Mr Hanson says it’s not a case of rail versus sea.

“The Maritime Union is a big supporter of rail being in public ownership, and public investment in rail, but it has to be part of an integrated transport system, not just another way for the big operators to play off ports and transport modes against each other.”

He says the Maritime Union supports the use of coastal shipping and rail working together, rather than the Government’s emphasis on “unsustainable, polluting and inefficient” heavy trucking.

The Maritime Union’s comments on the effect on ports of decisions by Fonterra and shipping companies have featured widely in the news.

TVNZ reports that “the Maritime Union of New Zealand is calling for national co-ordination of port strategy, arguing that Fonterra is exerting such power as a customer it is effectively rationalising the port industry.”

The Taranaki Daily News writes that “Zealand’s waterfront workers and seafarers have savaged Fonterra’s decision to drop Port Taranaki, warning it has the potential to ‘rip the guts out’ of the port” following a “a bombshell decision last week, the dairy giant said it would be railing Whareroa product to Auckland and Tauranga instead.”

The Maritime Union says Fonterra’s decision to stop shipping containerized exports through Port Taranaki and Port Timaru was an example of how entire regional economies within New Zealand were being disrupted.

The recent announcement by Fonterra means the loss of 25,000 boxes of cargo to Port Taranaki in New Plymouth, and the loss of 24,000 boxes to Port Timaru annually.

Maritime Union General Secretary Trevor Hanson says the “overnight decisions” by Fonterra and major shipping companies are harming regional communities and regional ports through a process of “destructive competition” where ports experienced major and unpredictable changes in shipments.

“We have a situation where a major producer Fonterra and global shipping lines are working together for their own interests, but their decisions are wreaking havoc on ports and port communities which are subsidizing the profits of these conglomerates.”

Mr Hanson says the losers in the game are New Zealand ports, which were driven by short-sighted parochial competition and were played off against one another.

“It is a crazy situation. There needs to be oversight and regulation so we have a planned port industry that has stability rather than the massive waste of resources that goes into duplicating infrastructure and machinery for the sake of destructive competition, and the instability that it creates for skilled employment in New Zealand ports.”

He says the Union is arguing for a “KiwiPort” concept, where ports were integrated and nationally co-ordinated with a level of public ownership.

“Ports are New Zealand’s trading connection with the world, and as essential national infrastructure they are far too important to be left open to the short-term manipulations of private corporations.”

Mr Hanson says the big catch cry in the industry for the last 15 years is that smaller regional ports will work with major hub ports to gain efficiencies.

“The recent announcement is a complete change of direction.”

He says Port Taranaki and the Port of Timaru are close to production areas, whereas goods would now be sent hundreds of kilometres away by rail.

“The cost to the Port Taranaki is horrendous. This port when it was advised of the introduction of “4100 type” container ships to New Zealand went ahead and expended $20 million to deepen the port in order to accommodate these vessels.”

Mr Hanson says since port reform in the late 1980s, successive Governments have had a “hands off” approach to ports which has led to an unstable industry.

“There are heavy repercussions for the regions of New Zealand. Ports are surrounded by infrastructure that require the services of ports, ports have invested heavily in plant and port modifications to service container exports from their region, and business decisions in the regions are made on the basis of both these ports in full operational mode.”

But when companies that had virtual monopolies on shipments made overnight decisions that could “rip the guts” out of ports, it was impossible to run a rational long-term industry.

Mr Hanson says because of the dominant position of a company like Fonterra, it was immune to criticism as it could literally hold ports to ransom.

“What we are seeing is the destructive rationalisation of New Zealand ports regardless of national interest, secure jobs, economic development and stable regional communities, to suit global shipping companies and the short term interests of a dairy conglomerate.”