Chair & CEO’s Report (continued)

Integrated freight hub network gains momentum

Due to our location near a big city, Ports of Auckland has traditionally been import-heavy. Our goal is to balance our volumes so that we are shipping out more New Zealand exports rather than empty containers. Our strategy is to develop a rail-connected North Island freight hub network, which will allow us to aggregate freight in the regions and then transport it north on currently under-utilised freight networks. This will enable us to balance freight flows around the North Island and eliminate the unnecessary movement of empty containers.

It also provides exporters with choice, improves access to overseas markets and reduces exporters’ costs due to supply chain efficiencies. Our hubs provide better international freight links to benefit regions, encouraging additional investment and employment opportunities. All our hubs are port neutral as we want shippers to use the most natural, efficient supply chain that best fits their business needs and we back ourselves to offer a competitive alternative.

This year our integrated freight hub network has really gained momentum. To complement our hubs in Manawatu, Bay of Plenty and South Auckland, we bought 33 hectares of land at Horotiu, just north of Hamilton to develop a Waikato freight hub. The site is ideally located in the heart of the busy Waikato region with excellent road and rail connections to Auckland and Tauranga.

Our recently announced strategic alliance with the Port of Napier builds on our existing partnership with them in the Manawatu. The partnership allows us to work together to find ways to optimise services for freight customers and achieve further scale and efficiencies in the supply chain.

There is a natural fit between our two ports. We share similar values and a way of working, common customers and supply chain opportunities and we have similar ownership structures. We look forward to working with Napier to create greater value for our customers and the country.

This year we will complete development work at our South Auckland Freight Hub in Wiri. In December 2015 we opened a new cold store at Wiri, developed in partnership with Polarcold Ltd. The $33 million cold store incorporates a range of technologies to ensure it is as green and sustainable as possible. This includes water harvesting for the refrigeration cooling system, a bio-retention device for storm water & wastewater management, automatic sensor LED lighting and an energy efficient refrigeration plant.

We have also started construction of a new cross-dock at Wiri which will open in December 2016. The cross-dock is designed for import and export cargo owners and freight forwarders and allows efficient transfer of freight to and from containers, and the port.

We will also start work to develop our Waikato hub, with the focus being on getting consent for the works required to connect the site to road and rail. Our development of the site is a multi-year project which will be phased to meet the needs of our customers.