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Thank you very much for inviting me to celebrate the 10th anniversary of the Port of Tauranga Container Terminal with you.

 I want to acknowledge Port of Tauranga chief executive Mark Cairns and Tauranga Mayor Stuart Crosby; and Mark, please pass on my sympathy to your chair John Parker and his family for their sad loss.

 The two years I have been Transport Minister have been extremely busy, but transport is one of the most exciting portfolios I have held. The portfolio provides huge challenges, particularly today as we face the reality of growing worldwide awareness of climate change and the need for our country to be more sustainable.

 One reason the portfolio is exciting is because there is almost endless opportunity, it seems, to address those challenges with bold solutions, and tonight we are, in fact, celebrating one such bold move, from a company that has led the way in port innovation in New Zealand, and that now achieves among the highest productivity rates in the world.

 The Terminal has dedicated road and rail access streamlining cargo movement in and out of the Port, and has developed a key inland container depot link at MetroPort Auckland. In 10 years the volume of containers going through this terminal has increased 500 percent; a reflection of containerisation trends globally over the last 30 years. Since the 1970s shipping has moved from ships carrying a few hundred TEUs (twenty-foot equivalent units) to those now being designed to carry up to 20,000 TEUs.

 The importance of containerisation to the New Zealand economy is immense. While we are here tonight to honour this Terminal, I also want to salute your innovative MetroPort operation in Auckland. MetroPort was New Zealand's first integrated inland port operation, and provides importers and exporters with a strategic hub in the heart of Auckland's industrial belt, as well as a key rail link to Tauranga.

 Much of what I have to say tonight will not specifically be about the Port of Tauranga, but your port, along with the ports sector generally, is vital to our transport infrastructure, enabling international trade and promoting competition and productivity through global supply chains.

 As globalisation increases, and the contribution made by international trade to our GDP, the ports sector will play an increasingly important role in our economy.

 I am sure that everyone here is well aware that the Government has established four broad themes to guide the transport sector.

•  Firstly, transport is critical to economic progress.

 

•  Secondly, transport must be thought about in an integrated way. Each mode must play its part in our long term transport strategy.

 

• Thirdly, transport must be environmentally sustainable.

 

• And fourthly, New Zealand's international transport links cannot be put at risk. We must meet our obligations to be a responsible international participant so that our exporters can compete.

 

These themes need to be the focus of everything we do, and each principle is dependent on the other. In marketing-speak they are ‘critical success factors' - in other words, we have to get them right. I'm sure anyone concerned with ports would tick them all.

 Over the past 20 years, we have witnessed extraordinary growth in container volumes, spurred by closer integration of the international economy and the rapid expansion of emerging markets.  Our economic well-being is inextricably linked to the growth in trade. 

 The movement of freight is vital in sustaining and supporting economic development and providing us with a high quality of life, and the efficiency of our freight system is crucial to our overall competitiveness. It goes without saying that the costs of freight contribute to the overall cost of our exports.  With an open economy, New Zealand's economic fortunes depend more than ever on our access to efficient, reliable and resilient worldwide connections.

 More than 340 million TEUs a year are handled across container terminals globally, with growth in excess of eight per cent annually. To meet this growth, the global industry has responded by increasing the number of ships, and progressively introducing larger capacity ships.

 The largest ship now calling in New Zealand is around 4100 TEUs, while the largest container ship in the world can carry an estimated 11,000 TEUs, with plans, as I said, for a 20,000 TEU ship on the drawing board. At the same time, the global industry has witnessed the acquisition and consolidation of major shipping lines, the consolidation of shipping routes, and the consolidation of port operators to enhance logistical efficiencies.

 More recently, we have seen the effect of fluctuations in the global economic outlook.  Increasing fuel costs are leading to higher container charges, supply exceeding demand has led to over capacity and rationalisation, and all major international freight companies are rethinking their business models.

 New Zealand is not immune to such trends. We have seen the effect of shipping line consolidation on port trade, and Mark and his industry colleagues have done an admirable job of raising awareness. 

 As Transport Minister I am committed to development of an effective supply chain that can adapt to global trends and ensure the best possible service for exporters and importers. Because of our great distance from global markets, we need to pay special attention to our supply chain, reducing costs, maximising utilisation of infrastructure and giving special consideration to environmental impacts.

 Our success in globalised markets depends partly upon the ability of ports to adapt and operate efficiently as gateways to international trade, and this Government has taken important steps to support the supply chain industry:

 Our purchase of Kiwirail enables us to invest to further rail's potential to contribute in a much more meaningful way to an integrated economy. We all know that rail is under-utilised. It won't ever have the same flexibility and accessibility of road transport, but there are particular benefits to using rail for long distance freight movement, and we aim is to move rail's share of longer distance freight from 18 percent of tonne/kilometres at present to about 25 percent by 2040.

 In late 2007, we commissioned work on a National Freight Demands Study because we need to understand thoroughly what is happening in the freight sector, and the volumes of different commodities transported by different modes between different locations. No information on the domestic freight sector is now collected regularly and crucial baseline information does not exist. This study will build up a comprehensive picture. The first report is due late in August.

 And then in May the Government committed $36 million over four years to Sea Change, the domestic sea freight strategy. The funding is designed to encourage domestic sea freight activities, which will help manage the expected growth in freight demand. We expect total domestic inter-regional freight to more than double by 2040, and that fact alone compels us to revitalise domestic sea freight.

 While funding criteria has not been finalised, there is already great interest from the sector. I am told the Ministry has so far received 18 expressions of interest --- for new coastal shipping services, training and recruitment and for infrastructural support at ports.

 New Zealand has long been underutilising sea transport, although coastal shipping was vital to the country's early prosperity and development. Sea transport is now again seen as an environmentally friendly, energy efficient and cost effective alternative for moving freight around the country.

 Next week I will launch the updated New Zealand Transport Strategy 2008, providing the strategic framework for the whole transport sector for the next 30 years. It will be a framework for future development of ports and sea freight every bit as much as for the road or rail network.

 A key objective of the long-term strategy is to provide greater certainty for the overall sector, giving the private sector greater confidence in making investment decisions.

 The visionary decision to invest in Port of Tauranga 10 years ago was perhaps made more difficult by a lack of clarity then over where the transport sector was going, and the role government saw for ports and shipping as compared to roads and rail. In the future, because of a strategic government approach, such decisions will become easier.

 A number of people here have contributed valuably to the strategy update, and I want to thank them. In the future I envisage much closer partnership and collaboration between government, local authorities and the private sector to tackle some of the hugely challenging issues facing transport.

 Officials have also begun a study to improve our understanding of transport costs and charges, including the true costs to society of different forms of transport, and whether current charging and funding arrangements reflect these costs. This work will initially update a previous study, but will then move on to into further work that will for the first time include coastal shipping.

 I am sure it will reinforce what we already know - that in terms of carbon emissions and effects on local communities, sea freight is one of the most efficient and low-impact ways to transport certain types of freight. In other words it has low "externality" costs.

 The targets in the updated strategy highlight the need for integrated transport modes to make sure that the most efficient and appropriate form of transport is used for each freight journey.

 We will need to continue to do more work, building on both the freight and costs studies, to understand future challenges and opportunities. The Government also needs more and more dialogue with key freight players, including your port, to help develop an evidence-based, multi-modal freight policy approach that informs future government investment decisions. We all know there is more to do.

 We must consolidate our thinking so that the industry can make best use of existing port capacity and invest appropriately, within a clear policy framework, to respond to demand in growing sectors.

 I am not announcing new policy initiatives tonight, but I have asked officials to look at scoping further work to follow on from Sea Change and early results of the Freight Demand Study. Except for safety matters and port charges, most port policy issues have received little attention since the Port Companies Act was passed in 1988, but such policy work will receive priority from officials over the next three years.

I would ask you all to think about your contribution to this policy debate.  As experts you can make an enormous contribution, particularly in a ‘collective' way, with a ‘whole of industry' view from a NZ-inc perspective. I have spoken to many of you before, and I know there is no shortage of ideas.

 

Congratulations again to everyone who has helped make Tauranga Container Terminal such a triumph. You can be proud of what you have achieved, and the people here tonight testify to your success.

 

Ports have always been places of interchange and connecting, conduits for incomings to a region and outgoings to the world. Ports are gateways to prosperity. They are dynamic places. Let's work together to keep them that way. Thank you again for inviting me to celebrate with you.

 

 

 

 

 

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