Ports of Auckland Annual Review. Moving forward together.

Transcription

1 Ports of Auckland Annual Review City Port

2 Working Port Contents Joint Chairman and CEO s Statement Operational Report Financial Report Working Port Travel Port: A Day in the Life of Cruise Operations People Port: Our People and Culture Community Port Environmental Port Get in Touch with Us ii. 1.

3 Business Port 3.5m tonnes of breakbulk cargo 2.1 % increase to normalised profit Joint Chairman and CEO s Statement The 2010/11 year was a pleasing one for Ports of Auckland, with improving economic conditions resulting in a 2.1% increase in normalised profit to $24.9m (after tax). Port operations EBIT was up 5.3% on increased revenue, up 7.0%. Breakbulk (non-containerised) cargo volumes were up 24.0% to 3.5m tonnes. Volumes recovered across 2. 3.

4 all breakbulk categories with an 11.4% increase in motor vehicle volumes and a 36.0% increase in other commodities. Container volumes were up 27,015 TEU (twenty-foot equivalent unit) or 3.1% to a new record high of 894,383 TEU. Assisted by a strong New Zealand dollar, Ports of Auckland s container division recorded 5.9% growth in full import TEUs. We were also delighted to see, off the back of a strong dairy season, 5.3% growth in full export TEUs through the container division. The trend in recent years towards greater hubbing and trans-shipment of cargo continued, with volumes up by 7.7% on 2009/10. Port operating costs excluding depreciation increased compared to last year by $8.9m (9.5%). This was mainly due to the consolidation of the CONLINXX accounts into Ports of Auckland s. Transport of containers via rail increased by 9.0% over 2009/10, with rail moves now representing 15.0% (13.0% in 2009/10) of total land-side moves, and further growth anticipated. Debt levels reduced by $19.1m to $240.3m as at 30 June 2011 compared with $259.4m for 30 June Net finance costs were down on the previous year by $0.5m. After a challenging year, all-time best crane rates were recorded over the June quarter, contributing to an annual result up 2.4% on the previous year. June quarter rates were 4.1% up on the previous best quarter. An $8.0m project to deepen and extend the northern berth at the Fergusson Container Terminal is on schedule for completion by the end of The project will allow for two ships between 3,500 and 5,500 TEU capacity to be worked simultaneously at the terminal, providing greater berth flexibility and capacity. Looking forward, we expect 2011/12 to be challenging. Volumes of imported vehicles are expected to drop as a result of the Japanese tsunami and new emissions rule. In addition, following recent shipping line changes, we expect overall container volumes for the new financial year to be down on 2010/11 s record high. However, through a focus on revenue improvement and cost control, we believe the Company is well placed to maintain revenue levels. Over the next few months our focus will be firmly on further enhancing productivity, lifting returns, and achieving improved labour flexibility and utilisation. With these goals in mind, the Company is currently engaged in a review of its end-to-end processes. This analysis is intended to identify process improvements as well as to highlight underutilised and untapped revenue streams. Longer term, we will continue to focus on achieving earnings growth in order to provide a platform for further investment and expansion. In an important step forward, a new company vision : has been developed, and is proving a strong motivator for staff. We look forward to serving our customers, city and region in 2011/12 and beyond. Richard Pearson Chairman Tony Gibson Chief Executive Officer 4. 5.

5 Operational Re Port Highlights 894,383 container throughput (TEU) 5.9 % growth in full import TEUs 11.4% increase in motor vehicle volumes 5.7% increase in containers moved by rail 27.4% increase in cruise ship calls 6. 7.

6 > 60 minutes minutes < 30 minutes Container throughput (TEU*) Cruise ship calls Vehicles (units) Truck turnaround** (% trucks turned around in time) 773, , , , , , , , , , ,383 TEU (20-foot equivalent unit) 79 cruise ship calls 144,616 vehicle units * TEU refers to twenty-foot equivalent containers ** To provide information that is more easily comparable with targets set in conjunction with trucking companies, we changed the truck turnaround time graph in 2009/10 to depict the number of trucks turned around within 30, and over 60 minutes. The target is to turn 80% of trucks within 30 mins

7 Bulk and breakbulk cargo*** (million tonnes) Crane rate ( Australian Waterline Standards) Staff hours per container (Index year 2000 = 200) Volume of containers moved by rail (TEU) ,338 83,639 69,017 90,249 95, m tonnes of bulk and breakbulk cargo moves per hour 165 staff hours per container ***Graph shows all bulk and breakbulk cargo as previously reported and including Wynyard Wharf volumes for Wynyard Wharf volume is not included from 2008, following the transfer of the Western Reclamation property holding to Auckland Regional Holdings as of 1 April Previous measurements have been indexed values. This year we have moved to the Australian Waterline Standards of measurement and have restated the previous years to match this standard. 11.

8 14. Trade breakdown 54% Imports 46% Exports $27.83b of trade handled in 2010/ Note: Operational review includes performance at Ports of Auckland s Waitemata sea port. Onehunga seaport and Wiri Freight Hub. 13.

9 Financial Re Port 1. Port operations EBIT $ million Port operations revenue $ million $54.7m earnings before interest and tax $175.4 m operational revenue 15.

10 Shareholder s equity $ million Ordinary dividends paid for the year $ million Interest-bearing debt to debt + equity % Capital expenditure $ million * $400.9 m shareholder s equity $17.6 m ordinary dividends paid for the year 37 % interest-bearing debt to debt plus equity * Shareholder s equity was impacted by asset revaluation changes in 2009 of $59.4m. Note: Financial review includes information on Ports of Auckland s Waitemata seaport, Onehunga seaport and Wiri Freight Hub

11 Working Port Operational Review Business process improvement 2010/11 saw a focus on technology and business process improvement, as the Company worked closely with customers to eliminate barriers to productivity such as late cargo, containers without Customs Export Delivery Orders (CEDOs) and changes in the status of containers once received. In line with this strategy, the development of a new paperless gate process and Container Booking System (InterACT CBS) was a key focus during the year. The new CBS will replace the existing Vehicle

12 Booking System (VBS), Pre-Advice and Express PIN applications with a single, integrated system. It will also enable truck drivers to self serve for the vast majority of transactions, much like domestic check in has become at airports. The CBS software has been developed by Total Soft Bank Limited (TSB), a leading global software solution provider for the maritime and port logistics industry. The new InterACT CBS uses a single set of data aggregated from a range of sources shipping line, Ports of Auckland, cargo owner and road carrier to take waste, paperwork and inaccuracy out of the supply chain. In designing the system, equity and operational efficiency have been the Port s guiding principles, with one key objective being to ensure that all road carriers have fair access to truck slots. Key changes include: Requiring container numbers to be pre-advised in order to secure a pick-up or delivery slot; Introducing Carrier Classes, where a proportionate number of slots are available to carriers in each volume range. Central to the implementation of the CBS has been extensive industry training and consultation, with Ports of Auckland taking on board lessons learnt from supporting the existing suite of applications as well as feedback from road carriers on the changes. In another major IT initiative, the Company commenced an upgrade of the VENUS (Vehicle Entry User System) barcode technology during the year. VENUS is the system used to manage the processing of imported vehicles at the port. Since its introduction in 2007, VENUS has driven significant supply chain efficiencies and has been a key factor in our maintenance of a strong vehicle import market share. The 2011 upgrade has been designed in conjunction with customers to improve accuracy, security and vehicle traceability. The most dramatic impact of the upgrade is in reducing the time it takes to process vehicles. For example, the time it takes a stevedore to download a ship s manifest (cargo listing) to the VENUS handheld barcode reader has decreased from around 15 minutes to 1 minute. Productivity Following a challenging year, all-time best crane rates were recorded in April, May and June 2011, contributing to the best-ever quarterly result, up 4.12% on the previous best in the March quarter Crane rates benefited from a substantial increase in the proportion of containers being twin-lifted, shorter shift changeover times and the recruitment of additional straddle drivers and lashers. Other key factors included the freeing up of space by the demolition of the SeaPack shed and expansion of the Fergusson empty container depot. Particularly pleasing results were generated by the Port s system for measuring straddle driver performance, Sattel. We estimate that Sattel is the key driver behind a 6.0% improvement in containers moved per hour at the port, as it provided staff with defined areas for improvement and goals. While the crane rates were pleasing, the trade off was a decline in productivity as measured by staff hours per container which, due to the recruitment of additional staff, deteriorated by 1.7% compared to the previous year. Dolphin construction under way The Company also began an $8.0m project to deepen and extend the northern berth at the Fergusson Container Terminal during the year. The deepening of the northern berth will allow for ships with a draught of up to 13.0 metres to be berthed at chart datum the lowest of low tides. (The southern berth at Fergusson is already capable of handling ships with a draught of up to 12.5 metres.) The project, which began in January 2011, will allow for two ships of between 3,500 and 5,500 TEU capacity to be worked simultaneously at the terminal. An important step forward, this development will provide greater berth flexibility and capacity, and enable Fergusson Container Terminal to be worked more intensively

13 Travel Port A Day in the Life of Cruise Operations Long before most of us are up in the morning, Ports of Auckland s Cruise Operations Team are at work, organising the transformation of the north-eastern end of the Hilton Hotel on Princes Wharf into an international cruise facility, ready to welcome guests from across the world. Wayne Mills, General Manager Multi-Cargo & Marine, heads cruise operations at the port

14 The industry has grown exponentially over the last 20 years up from a single cruise ship visit to Auckland in 1991 to 79 in 2011 and 97 calls projected for 2011/12. With each cruise generating around $1 million for the local economy and good business for the port, the growth of this industry is important to both Auckland and its port. Cruise operations are challenging because not only are there time restrictions, as in all areas of shipping, but the team is also responsible for both the physical set-up of the cruise facilities and interacting with the passengers and crew. This is a real people-facing operation and we always endeavour to show Auckland to advantage and put our best bow forward. Mr Mills says teamwork and customer service are key, with a number of different organisations involved in making sure each visit is smooth sailing. The relationships between Ports of Auckland, Customs and Ministry of Agriculture and Fisheries (MAF) are very strong. With the industry booming, service expectations are higher than ever, and we are aware of the need for international-level processing and service for each vessel. Ports of Auckland s involvement starts out in the Hauraki Gulf. Cruise ships are boarded by a Ports of Auckland pilot who brings the vessel around past North Head and, with help from our tugs, down to its berth at the centre of the CBD on the Waitemata Harbour. Linesmen wait dockside to tie up the ship. The tugs disengage, the pilot leaves the vessel and the excitement and activity begins with passengers disembarking and stevedores loading and unloading cargo and supplies. The Hilton Hotel exhibition and banquet halls function as a Customs Controlled Area. Much like arriving at an airport, guests are guided through the arrival process, baggage claim area and duty-free collection. Unlike an airport however, Customs staff members board the vessel at the previous international port to ensure that people are all cleared to enter New Zealand waters prior to arrival. MAF dogs are present, sniffing bags to ensure that undesirable foods, pests and substances are not brought into the country. Once passengers have been cleared, they leave the terminal to enjoy the many attractions in and around Auckland or to connect with international flights. Tour groups are picked up from the entrance of the cruise terminal, while passengers who have chosen not to join a tour are free to enjoy Auckland as they wish. While this leg of the journey may be over for some, the day is not over for Ports of Auckland, with staff members staying on site tidying up and prepping for the next stage of the cruise. The Awanuia bunker barge pulls alongside to refuel the cruise vessel. This is often a point of interest for passing ferry passengers and onlookers. In most cases the ship will be in port only for a very brief period of time less than a day. At the height of the summer cruise season, the port can host more than 20 ships over the course of a month

15 People Port Our People and Culture Although technology is becoming increasingly important at the Ports, people remain at the heart of our business. Staff engagement has been the Company s number one priority during the year, with a series of strategy workshops gathering views and opinions from employees throughout the business about the way forward. One of the outcomes of these workshops was a new Company Vision, developed by a team of staff members as part of an internal competition

16 28. The new vision, Kia Kaha, Kia Maia reflects the Company s commitment and contribution to the Auckland community and economy. translates as give of your best, be confident in your ability. The company s values, which were also developed by staff, remain the same: We deliver results staff and stakeholders benefit when we deliver results. We are confident about our future We do things better We create future growth, and improve our competitiveness, when we constantly challenge ourselves to look for improvements and innovation We do what we say our word is our bond. We are accountable to deliver what we promise We respect and care for each other we show consideration for, and look after, each other We work together we create better outcomes when we communicate and work as a team. These values provide a framework to guide how we deal with each other and against which to test company decisions and policies. Focus on health and safety With over 70% of our people working with heavy machinery and floating plant in all-weather conditions, training and health and safety are of paramount importance at Ports of Auckland. In July 2010, Ports of Auckland signed the Zero Harm Workplaces pledge, committing to improve health and safety performance in New Zealand. We have retained our tertiary grading in the Accident Compensation Corporation (ACC) audit held in June The tertiary grading is the highest level obtainable and 2011 was the sixth year consecutive year the Company has achieved this, it represents the commitment that employees have in working together to improve our safety record. The audit consisted of a review of Ports of Auckland s Health and Safety Management system with an emphasis on hazard management, training and reporting. A complete audit of the Ports rehabilitation process was conducted. There was a disappointing rise in lost-time injuries (LTIs) in the 2010/11 year, with 11 LTIs recorded a 57% increase over the seven recorded in 2009/10. Reviews of each accident have been conducted and recommendations adopted. However, 2010/11 saw a 36% reduction in recordable medical accidents (accidents that require off-site medical attention). In a new initiative, Hazard Analysis and Safety Observation courses will commence in late This course will address specific safety behaviours by conducting observations of teams, individuals, processes and functions, people on the job, and supports a safety culture through increased dialogue and employee engagement. Much of the work at the Ports is physical and requires our staff to be fit and healthy. All permanent staff members have the benefit of family coverage by Southern Cross medical insurance and a confidential employee assistance programme. Regular visits from our Occupational Nurse enable our people to discuss any health concerns with a trained professional. A staff gym is also available at the main Ports of Auckland Building. In May 2011, the Ports also supported staff participation in the Global Corporate Challenge the world s largest health and wellbeing initiative. Sponsoring 50% of each participant s registration fee, the Port had five groups of seven people pounding the pavement, along with thousands of participants worldwide, on the road to a healthier, more active lifestyle. Meet our Health & Safety Manager Pete Branch. Pete Branch is responsible for the efficient development, implementation and management of Health and Safety processes at Ports of Auckland, ensuring our people work safe and stay healthy. He says the diversity in jobs and people at the Ports is the most enjoyable and challenging aspect of his role. Health and Safety at the Ports is all about people, and I wouldn t have it any other way, he says. Mr Branch works closely with Ports of Auckland s Operational Performance Coaches and has been instrumental in the Ports receiving and maintaining our ACC accreditation. He joined the Port in 2006 after having gained experience in risk management and assessment in his roles as Outdoor Pursuits Instructor and Survival Instructor in the Royal New Zealand Air Force. 29.

17 Staff gender balance* Lost-time injuries (LTIs) LTI frequency rate** Medical recordable injuries % Male 11% Female 2006/ / / / / total employees (FTE*) 11 lost-time injuries 1.18 lost-time injuries in an average working lifetime * The Full-time equivalent (FTE) staff figure is based on hours worked by all employees of Ports of Auckland, including casuals. Figures in the age profile, gender balance and years of service graphs represent the number of individual full and part-time staff employed by the Company. ** Ports of Auckland s LTI Frequency Rate is calculated by multiplying the number of LTIs by 100,000 hours and dividing this by the number of paid staff hours. The figure of 100,000 hours is reflective of a person s time spent at work during their lifetime. 31.

18 5. Staff years of service* 6. Staff age profile* staff with over 15 yrs of service 44 average age * The FTE staff figure is based on hours worked by all employees of Ports of Auckland, including casuals. Figures in the age profile, gender balance and years of service graphs represent the number of individual full and part-time staff employed by the Company. Note: Health and safety metric depicts the numbers at the Waitemata seaport only

19 Community Port 34. We choose sponsorships and activities that enhance our ties with the communities in which we operate and resonate with our people. This is the second year we have sponsored the Ports of Auckland Round the Bays fun run. Starting right on the doorstep of the Waitemata seaport, the iconic and hugely popular event, which attracts more than 40,000 entrants annually, is a great natural fit with the Company. More than 650 Ports of Auckland staff and family members participated in the 2011 event, for which Mayor Len Brown fired the starting gun. The proceeds of this year s event supported charities including the Waitemata Harbour Clean-Up Trust ($40,000), Kidney Kids ($60,000) and Koru Care ($10,000). 35.

20 Free public boat tours of the port and inner harbour are a central part of the Company s Community Relations programme. Special weekend tours on the historic steam tug boat the William C Daldy were offered during the Auckland Heritage Festival and Auckland Anniversary Weekend, with free weekly boat tours for the public and schools running throughout the year. In total, nearly 5,000 people attended a boat tour during the year. The biannual SeePort open-day-style event was held in November 2010, with approximately 400 Aucklanders taking a bus tour of the Waitemata seaport guided by Ports staff. In Onehunga, Ports of Auckland supported the Onehunga Community Festival, and developed our relationship with Te Papapa School under the Committee for Auckland s Schools and Business programme, which is led by Chief Financial Officer Wayne Thompson. This programme provides a mechanism for low-decile schools to draw on business expertise. Among other initiatives, Ports of Auckland partnered with design company Insight to sponsor new signage for the school. In South Auckland, we continued our relationship with Wiri Central School, with a highlight being our participation in the school s open day, which was held with the aim of getting parents more involved in their children s schooling. Chief Information Officer Pieter Bakker is now leading the Company s relationship with Wiri Central School. The Ports of Auckland Community Reference Group (CRG) continued to meet quarterly. The CRG is a forum for dialogue about upcoming projects, waterfront activity and any issues of concern. Topics discussed included noise and whale strike in the Hauraki Gulf. Two new relationships were developing during the year, with Ports of Auckland agreeing to sponsor the following: the Excellence in Exporting award in the inaugural 2011 Westpac Central Business Awards, which is organised by the Auckland Chamber of Commerce; and the Committee for Auckland s Future Leaders programme, an initiative which aims to develop young business leaders who are passionate about Auckland. Looking to 2011/12, Ports of Auckland has a key role in the opening ceremony of the 2011 Rugby World Cup and the ITU Triathlon World Cup in November, both of which are being held on the Auckland waterfront. The Company will also partner with Ngati Whatua to support the Atamira Maori in the City event ( during October

21 Environmental Port Responsible environmental management means taking steps to further increase the sustainability of our operations and that s exactly what we re doing. Fuel and Energy Management: Being an organisation that works heavy machinery and floating plant, emissions on the ports are related mostly to our use of diesel and electricity. Research on best practice in fuel and energy management is being conducted. Ports of Auckland is currently in the information-gathering phase of this study. Our Waitemata seaport operations recorded a small increase in electricity used by port operations (2.3% over 2009/10). Diesel usage by port operations also

22 40. increased marginally (1.5%). Growth in container volumes and an increased amount of development work around the port are the reasons for these increases. Diesel used by our Marine division increased to 589,138 litres, reflecting the 13 additional vessels that called at Auckland in 2010/11 compared to the previous year. Transport of containers via rail increased by 9.0% over 2009/10, with rail moves now representing 15.0% (13.0% in 2009/10) of total land-side moves. The number of containers transported by road reduced by 8.0%, from 593,113 (2009/10) to 546,108 TEU (2010/11). Waste Management: Ports of Auckland s reusing and recycling policy ensures that most waste is first looked at as something of value before discarding it. A full waste management review is under way to identify our waste stream and further expand the programmes that are already in place. In addition to recycling paper, cans and bottles, we endeavour to also reuse or recycle many of our operational construction materials such as oil, scrap metal, dredgings and pavement, with 0.5 hectares of pavement being recycled in construction works across the Ports during 2010/11. In January 2011, Ports of Auckland began a berth-deepening and extension project at the northern berth of the Fergusson Container Terminal. The dredgings from this project are being collected to be used in the reclamation works which will extend the Fergusson Container Terminal. We estimate that 50,000 cubic metres of dredging will be used in reclamation works by December Efficient Footprint: Following the sale of Queens Wharf and the loss of its berth space in 2010, we have continued to intensify and develop operations in the eastern port, from Bledisloe Wharf to Fergusson Container Terminal. Further efficiencies were gained by the closure and demolition of the SeaPack facility. This has allowed for the consolidation of the two Empty Container Depots and has been a key factor in productivity gains at Fergusson Container Terminal. Environmental Management: Ports of Auckland takes feedback from our community seriously. Our public feedback helpline is managed 24 hours a day, seven days a week by Ports employees. Every effort is made to respond to feedback in a timely manner and find a solution to the issues raised. Noise from vessels visiting the Port has been the most frequently raised issue. Measures taken have included engaging sound experts Marshall Day Acoustics to measure ship noise, working with shipping lines to understand why some vessels are noisier than others, and choosing to berth some vessels bow south, when harbour conditions permit this manoeuvre to be undertaken safely. Berthing selected vessels bow south enabled sound from the vessels generators to be directed away from residential areas bordering the port. Starting in September 2010, shipping line service changes saw a change in the vessels visiting the Waitemata seaport, with quieter vessels introduced. The number of complaints received about ship noise has dropped significantly since then. Also, in 2010, Ports of Auckland received a 35-year Industrial or Trade Process Consent to discharge stormwater run-off into the Waitemata Harbour. As a result, new processes and procedures have been put in place to minimise the risk of spills on Port property being discharged through the stormwater systems into the harbour. Ports of Auckland has also received a similar consent for the Port of Onehunga. Much of the work being undertaken in the Waitemata seaport will be replicated in Onehunga to standardise environmental performance and behaviour across both sites. As required under this consent, in May 2011 Ports of Auckland appointed an Environmental Health and Safety Officer, to implement source control measures to ensure stormwater run-off into the harbour is compliant with the relevant consents. 41.

23 Emergency Marine Spills: As major users of the harbour, Ports of Auckland and the Auckland Council s Harbourmaster s office work closely together to identify and clean up any hazardous spills that might occur. We have an Emergency Spill Response Plan in place to manage any major spill and there are spill kits located around the port to be used in the event of a minor spill. In 2010/11, none of the seven spills recorded were caused by Ports of Auckland. Reducing, Reusing and Recycling Indicator FY FY FY FY Diesel used by port operations (litres) 3,413,842 3,397,390 3,319,269 3,372,107 Diesel used by port operations (litres) per TEU* Diesel used by port service Marine (litres) 709, , , ,138 Water used by port operations (cu m) 89,440 77,929 74,825 87,657 Water used by port operations (cu m) per TEU* Total dredgings used as environmentally friendly-fill, including mudcrete (cu m) 40,000 30, Total pavement recycled for reuse at the port (ha) Energy used measurements refer only to the Waitemata seaport * TEU refers to 20-foot equivalent containers. Meet our Environmental Health and Safety Officer Gillian Somerville. Gillian Somerville joined Ports of Auckland this year as Environmental Health and Safety Officer, taking on the responsibilities of implementing source control measures across the port to ensure stormwater run-off into the harbour is compliant with consents held and working with contractors to ensure that our safety and environmental standards are met. Transport Indicator FY FY FY FY Total containers moved by truck (TEU) 600, , , ,108 Containers trucked off-peak (TEU) 246, , , ,723 Containers trucked off-peak as % of total containers moved by truck (TEU) Total containers moved by rail (TEU) 83,639 69,017 90,249 98,385 Rail moves as % of total land-side moves to/from the Port Volumes refer to the Waitemata seaport only. Off-peak refers to 7pm 7am weekdays and all day on weekends Complaints Indicator FY FY FY FY Ms Somerville joins us with a wealth of international experience having worked in Network Rail, London Underground and Tubelines Ltd and Lloyds Register Rail in Sydney. In New Zealand, she has worked for Air New Zealand, 3M and Fletchers. Noise and other complaints Spills Indicator FY FY FY FY Environmental spills Note: Environmental measurements are currently only made at the Waitemata seaport. 43.

24 Physical Address Level 1 Ports of Auckland Building Sunderland Street Mechanics Bay Auckland 1010 Mailing Address Ports of Auckland Limited PO Box 1281 Auckland 1140 New Zealand Phone: Ports of Auckland Public Feedback Line or feedback@poal.co.nz Ports of Auckland Annual and Half-Year Reviews can be accessed online on our website: Hard copies are available on request from: Corporate Affairs Ports of Auckland Limited PO Box 1281 Auckland 1140 New Zealand or info@poal.co.nz This report has been created primarily for the web in a bid to save both costs and the environment. The financial statements are also available online

25