Securing Shipping Services to New Zealand

‘Considering the Environmental Impact’

What is the attraction for shipping operators to call at NZ?

Pros

• High volume of refrigerated cargo (higher freight paying). I.e. Reefer = 25% of NZ’s total containerised exports.

• Fairly balanced trade ratio approximately 40:60 - (Laden Imports Vs Laden Exports).

• Relatively stable trade to New Zealand. Resilient during the GFC.

• Shipping capacity balanced.

0 500 1,000 1,500 2,000 2,500 3,000

APM Maersk

MSC

CMA CGM

COSCON

Evergreen

Hapag-Lloyd

APL (NOL)

CSCL

Hanjin

MOL

OOCL

Hamburg Süd

NYK Line

Hyundai M.M

K Line

Yang Ming

Zim

PIL

UASC

CSAV

TEU '000

Top 20 Shipping Lines

Source: Alphaliner (Sept 2012)

10 of Top 20 call at NZ

Container Shipping Services

Cons• Only 1.6 million TEU’s annually of freight

paying cargo. (2.3 million TEU counting empty containers).

• Isolated location:Steaming distance high.

• High cost area compared to other countries. (Ports, labour, and transport costs).

• Regional import/export imbalance.

• Seasonal cargo stream.

TRG + Metro27%

NPE11%WLG

5%AKL25%

LYT12%

PCH9%

NSN5%

NPL2%

BLU2%

TMU3%

Export Full (TEU)

TRG + Metro15%

NPE3%

WLG6%

AKL52%

LYT17%

PCH2%

NSN2%

NPL1%

BLU0%

TMU1%

Import Full (TEU)

Import / Export Imbalance

Auckland (AKL)

New Plymouth (NPL)

Tauranga (TRG)

Napier (NPE)

Nelson (NSN)

Lyttelton (LYT)

Port Chalmers (PCH)

Wellington (WLG)

Bluff (BLU)

Timaru (TMU)

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

TEU

s

NZ Container (Imp/Exp) - Seasonality (2010)

Imports Exports

Tyranny of Distance

• How far away is NZ from the market really?

Considering:

• New Zealand’s carbon footprint from shipping, compared with other countries/competitors.

• Food miles.

Tyranny of Distance

1 Shanghai, China 31.742 Singapore, Singapore 29.943 Hong Kong, China 24.384 Shenzhen, China 22.575 Busan, South Korea 16.176 Ningbo-Zhoushan, China 14.727 Guangzhou Harbor, China 14.268 Qingdao, China 13.029 Jebel Ali, Dubai, United Arab Emirates 13.0110 Rotterdam, Netherlands 11.8811 Tianjin, China 11.5912 Kaohsiung, Taiwan, China 9.6413 Port Kelang, Malaysia 9.614 Hamburg, Germany 9.0415 Antwerp, Belgium 8.6616 Los Angeles, U.S.A. 7.9417 Keihin Ports, Japan* 7.6418 Tanjung Pelepas, Malaysia 7.519 Xiamen, China 6.4720 Dalian, China 6.4

Source: World Shipping Council

Throughput 2011 (TEUS)

Port, CountryRanking

World Container Port Rankings

Singapore

Lyttelton = 5,113 Nm

Auckland = 4,857 Nm

Tauranga = 4,922 Nm

Av. 10 days at 20kts

Key hub ports (nodes) offer NZ access to the rest of the globe through the shipping line’s global

networks.

Hong Kong

Lyttelton = 5,391 Nm

Auckland = 5,063 Nm

Tauranga = 5,127 Nm

Shanghai

Lyttelton = 5,525 Nm

Auckland = 5,197 Nm

Tauranga = 5,261Nm

Pusan

Lyttelton = 5,432 Nm

Auckland = 5,091 Nm

Tauranga = 5,156 Nm

Lyttelton = 5,988 Nm

Auckland = 5,659 Nm

Tauranga = 5,634 Nm

Los Angeles

Lyttelton = 6,631 Nm

Auckland = 6,603 Nm

Tauranga = 6,501 Nm

Manzanillo, PA

How does NZ compare with Australia?

To/From Hong Kong

Melbourne = 5,036 Nm

Brisbane = 6,656Nm

Auckland = 5,659 Nm

To/From Los Angeles

Auckland = 5,063 Nm

Diff. Only 27Nm

1. Tauranga/Singapore = 4,922Nm (Via Torres Strait)

2. Tauranga/Shanghai = 5,261Nm

1. Rotterdam/Singapore = 8,265Nm2. Rotterdam/Shanghai = 10,409Nm

Rotterdam

Singapore

Tauranga

Shanghai

Destinations

Source: Statistics New Zealand

0

2,000

4,000

6,000

8,000

10,000

12,000

NZ$

mill

ions

Top 20 - Export Destinations

Is NZ well served by the shipping lines?

‘Connectivity’

NZ’s Connectivity - Example• MOL’s services to Singapore. An important node or

network hub port .

• Each service may be 8 or more vessels.

Other Hubs

2nd, 3rd and 4th tier nodes

MOL’s total Network. Just one of many shipping networks.

Slow Steaming

TYO UKB PUS SHA YTN HKG

TRG NPE AKLLYT BNE

Round Trip 13,478 Nm

• 6 x 3500 TEU Vessels• Weekly Service• Round Trip 42 days• Average Speed = 18.3 knots

Economical Speed

Fuel Consumption 1,699 Tonnes/voy

CO2 = 5,389 Kgs/voy SOx = 157 Kgs/voy

11 Port Rotation

431 Nm 349 Nm 447 Nm 766 Nm 20 Nm

4028 Nm

1289 Nm675 Nm335 Nm288 Nm

485

0 N

m

Many NZ services call at Australian ports. This helps make the service

viable.

TYO UKB PUS SHA YTN HKG

TRG NPE AKLLYT BNE

431 Nm 447 Nm349 Nm

4028 Nm

766 Nm 20 Nm

1289 Nm335 Nm288 Nm 675 Nm

485

0 N

m Round Trip 13,478 Nm

• 7 x 3500 TEU Vessels• Weekly Service• Average Speed = 16.2 knots• Round Trip 49 days Additional week

Slow Speed

Fuel Consumption 852 Tonnes/voy

CO2 = 2,703 Kgs/voy SOx = 79 Kgs/voy

Most of the fuel saving is achieved on long haul

legs.

Vessels 6 7

Frequency (Annual) 52 52

No. of Calls Per Year Per Vessel 8.67 7.43

Complete Round Trip Voyage Nautical Miles 13,478 13,478

Round Trip Bunker Consumption Tonnes 1,699 895

Total Annual Steaming All Vessels Nautical Miles 700,856 700,856

Annual Bunker Consumption Nautical Miles 88,348 46,540

Bunk Costs (US$700) / Tonne Tonnes $700 $700

Total Annual Bunker Cost (US$) Millions $ 61.8 $ 32.6

Vessel Hire - (US$) / vessel Annual $ 6.8 $ 6.8

CO2 Emissions (Kgs) Annual 280,063 147,532

Nominal /Actual Conversion (1.36) 1.36 1.36Annual Cargo Volumes TEUs 133,824 133,824

ECO Speed 6 x Vessels

SLOW Speed 7 x Vessels

(Av. Speed 18.3) (Av. Speed 16.2)

Slow Steaming Table

Fuel Costs

0

100

200

300

400

500

600

700

800

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Av. Bunker Prices (US$)

2009 2010 2011 2012

Source: Drewry Shipping Insight

MOL’s Annual Fuel Consumption

Bunker oil = 5.5 million tonnes Diesel oil = 75,000 tonnes

(All vessel types: Bulkers, Tankers, Containerships, Car Carriers etc)

Slow Steaming - Issues• NZ importers & exporters will have to adjust.

• So called ‘premium services’ with quicker transit times may not exist in the future.

• Acceptance by importers/manufacturers of more inventory in transit.

• Exporters of perishable goods may have to look to new technologies to improve ‘shelf life’.

• Slow steaming may not be all bad from NZ’s viewpoint in terms of reducing our total transport emissions.

Slow Steaming - Issues• Slow steaming is difficult to implement due to port

congestion on a global scale.

• Larger ships have added to congestion problems, as they are required to stay in port for longer periods.

Slow Steaming - Issues• In NZ there is the opposite problem. Several carriers have

been introducing smaller ships – increasing congestion at some NZ ports.

• Although Tauranga is increasing it’s capacity now, Lyttelton is further way as earth quake repairs take priority.

Refrigerated (Reefer) Cargo

Refrigerated Cargo• Few reefer imports to NZ. 90% of containers are

imported MT.

• Most exporters prefer 20’ reefers because you cannot load double the weight of a 20’ into a 40’. – Max payload 20’ reefer = up to 27.5 tonnes– Max payload 40’ reefer = up to 30.5 tonnes

• Reefer cost US$20k / 40’ approx. Only $2k less for a 20’ reefer. Lines building mostly 40’s.

• Increased bunker consumption to carry reefer. (either by shaft or auxiliary generators)

A case study of NZ refrigerated imports and exports in 2007 by maritime transport, estimated that vessels were required to generate 280 GWh

electricity, which produced 190 kt of CO2 emissions.

Source: University of Otago Study (2011)

Refrigerated Cargo• Exporters are demanding better cargo care. Cargo

that previously moved in DRY containers is now moving to reefers.

• Produce – onions, squash etc now requiring humidity control. Better outturn especially for long haul to Europe.

Door-off onions less common

Refrigerated Cargo• Refrigerated container technology

is constantly improving.

a) More features – Customersb) More energy efficient – Shipping lines

• C/A (controlled atmosphere) containers becoming more common.

• More in transit care by vessel crew required. (Temp, vent, changes in transit etc)

Transport Efficiency at a Local Level

Local Network Efficiency• Crawford Street Hub – linking Waikato sites with the

ports of Auckland and Tauranga.

Network Efficiency (Golden Triangle)

Network Efficiency (Crawford St. Dairy Hub)

• According to Waikato Regional Council Report (2011) Crawford Street hub achievements are:

Av. haul distance reduced by 45% in truck-kilometres.

Reduction of 751,000 litres of diesel from 2005 to 2010.

This provided 1989 tonne reduction in CO2 emissions.

Waikato Road maintenance fell by 53%.

Reduction in truck movements by 9,000 p.a between Waikato sites.

According to Fonterra, total truck movements reduced by 65,000 p.a.

Network Efficiency

Crawford St.

Auckland

TaurangaFull (EXPS) = 38,000 TEU

MT (Supply) = 38,000 TEU

M

T (S

uppl

y) =

7,0

00 T

EU

Full

(EXP

S) =

7,0

00 T

EU

MT Repo = 35,000 TEU

CO2, SOx, NOx...cough!

DRY containers only.

Innovations

Improving Shipping Efficiency

Innovations• Super slow-stroke engines, similar to those used in bulk ships,

are now being fitted in large container vessels.

• Engines in containerships are not designed for slow steaming. (Engine damage/decreased efficiency/increased emissions)

Innovations

Innovations

End