$5m subsidy from Auckland ratepayers’ fails to reduce port freight on roads

Containers at Auckland’s port are increasingly being carried by trucks, despite a just-revealed $5 million ratepayer-funded subsidy for rail freight.

The swing away from rail to road is the opposite of what the mayor Wayne Brown has called for, and comes as a bigger truck fleet cuts prices in order to grab a declining number of import containers.

Council-owned Ports of Auckland has outlined a cocktail of market forces behind the move to trucks, and has also signalled a winding back of the rail subsidy, by charging $20 a container loaded onto trains.

A bigger truck fleet since the Covid-19 pandemic, increased freight charges nationwide by KiwiRail, and periods of unreliability on rail, were all cited by port chief executive Roger Gray.

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“We are also seeing [container] volumes down in the last three months, due to a significant decrease in demand for imports,” said Gray.

In a presentation to the council’s Transport and Infrastructure committee, Gray revealed that the company had subsidised the rail operation on port land to the tune of $5m a year.

A planned Rail Access Charge – initially at $20 a container – would start to claw back that money, and the port would seek guidance from councillors on whether and how they wanted to continue the subsidy.

Gray said rail’s share of container movements to and from the port had fallen from 15% to around 12%, and trains were now carrying about 10,000 fewer containers a year.

A major player in the road transport sector agreed with the port company’s analysis and said there had been a reduction in import containers needing to be taken off Auckland’s wharves.

“We’ve ended up with excess [truck] capacity. It [fewer imports] is part of the broader economic slowdown,” said the industry source, who didn’t wish to be named.

The mayor during his election campaign had insisted a far bigger proportion of port freight could shift in the short term onto rail, reducing road congestion and emissions.

However KiwiRail has outlined a list of reasons why that is not possible, including a lack of rolling stock, locomotives, staff and limited additional access to “slots” on the passenger-dominated network.

Stuff asked Gray – who has been in the role for 15 months – whether the mayor and councillors had previously been aware of $5m subsidy, effectively borne by ratepayers who own the company.

He would say only that there hadn’t been this level of transparency about it.

Ports of Auckland is under political pressure from the mayor and council to deliver more cash into the public coffers, and separately a review of future port options is in its final stage.

Gray acknowledged that the shift of container volumes onto rail was not what had been hoped for, but it was a choice made by cargo owners, not the port company.

“We have to acknowledge as we aspire to decarbonise the supply chain, that there will be costs, and both central and local government need to be transparent about those costs – someone needs to pay for the transition,” said Gray.