Ports of Auckland ends automation project and loses $65m

Ports of Auckland has decided to end the automation of the Fergusson Container Terminal, leaving NZD $65 million worth of investment down the drain.

The capacity and automation project started in 2016 to future-proof the capacity of the port. The targeted delivery date for both the infrastructure and the automation projects was late 2019, or early 2020. The project included the automation of some of the straddle operations to increase capacity.

Ports of Auckland says the automation involved a complex integration project involving multiple vendors, equipment, and software applications to design and implement an operation with targeted productivity levels and the necessary level of system safety assurance.

The infrastructure capacity upgrade work was delivered as planned. This included the new Fergusson North wharf and cranes, major pavement upgrades, a new truck loading area, new refrigerated container capacity, and other upgrades.

But the automation project is now two years over the initial delivery date and is continuing to be unable to meet operational targets.

Ports of Auckland board chair Jan Dawson says the decision was made after careful consideration of the project's current status, advice from independent experts, and the work required to achieve full terminal automation.

"Our review indicated that despite the best efforts of our team and our supplier, the project is experiencing continuing delays to full terminal roll out, the system is not performing to expectations, and we do not have confidence in the projected timeline or cost to completion," she says.

"With these uncertainties and the need to transform the Port's performance, the board has determined the best course of action is to cease automation of the Container Terminal."

The board commissioned two independent assessments from qualified experts as part of its review. Both advised that a lot more money and time was needed to make the system fit for purpose, although neither could confidently say how long or how much investment that would take. In addition, there was an expectation of ongoing disruption to our customers throughout this development and implementation period.

Based on the analysis and options available, the board has determined that it is in the company's best interests, its people, customers, and shareholder to discontinue the current automation project and return the Fergusson Container Terminal to a fully manual operation.

Chief Executive Roger Gray says the decision will be a relief to many at Ports of Auckland and in the wider supply chain.

"It gives us certainty about the future and allows us to focus on our core job: safely providing a great service to New Zealand importers and exporters. It will also help us get the business back to the level of profitability we have delivered in the past," he says.

"The end of automation does not mean the loss of all the investment and work that went into it. The new infrastructure built as part of the project – for example the new wharf and cranes – provides extra capacity which is essential for future growth."

"We will, however, have to write-off approximately $65 million in investments which will no longer be used, mainly the automation software and guidance system."

Gray says Ports of Auckland attempted automation for the right reasons: to lift capacity, productivity and profitability without further port expansion or reclamation.

"I am confident we can still meet those aims; we will just take a different path. It was a bold and innovative project, but one that – despite the hard work of many - was unable to be delivered," he says.

"I would like to thank the board for making this decision, as it lays the foundation for the long-term success of our business."