IN the MATTER of the Resource Management Act 1991

IN THE MATTER of the Resource Management Act 1991

AND

IN THE MATTER of the Greater Wellington Regional Council – Proposed Natural Resources Plan ("Proposed Plan") for the Wellington Region – Hearing Stream Six

STATEMENT OF EVIDENCE OF EDWARD MENZIES ON BEHALF OF STRAITNZ LIMITED

1. INTRODUCTION

Qualifications

1.1 My name is Ed Menzies. I am the General Manager – Commercial for StraitNZ Bluebridge Cook Strait Ferries (Bluebridge). I manage the shore operations for Bluebridge.

1.2 I have been General Manager – Commercial at Bluebridge for 12 years. I have worked for Bluebridge for 23 years holding a number of positions. My current role involves managing the shore side operations of both freight and passenger terminals, freight operations and key relationship management with both port companies CentrePort and the Port of Marlborough. I hold a Bachelor of Commerce and a Master’s Degree in Transport and Logistics.

1.3 On a daily basis I oversee our freight and passenger terminal operations pertaining to check-in, marshalling, disembarkation and loading of our vessels. I work with the port companies to ensure continuity of operations.

2. SCOPE OF EVIDENCE

2.1 My evidence will include:

(a) An overview of Bluebridge's background and operations;

(b) Bluebridge's key concerns with the Proposed Plan; and

3. AN OVERVIEW OF STRAITNZ

Introduction

3.1 Established in 1992, Bluebridge provides a Cook Strait interisland shipping service, covering both the commercial freight and passenger markets. Bluebridge is owned by, and integrated with, one of New Zealand’s largest national transport and logistics groups, StraitNZ, supplying a critical link between the North and South Islands of New Zealand.

3.2 Bluebridge operates two vessels, the Straitsman and Strait Feronia, and provides the only direct competition to the KiwRail owned Interislander Cook Strait shipping service. Attached as Appendix One is a summary of each of Bluebridge’s vessels.

3.3 Bluebridge’s related road transport business includes StraitNZ Linehaul, formally Freight Lines, one of New Zealand’s largest linehaul operators, and StraitNZ Freight Forwarding, formally Streamline, a nationwide freight forwarding transport business. StraitNZ currently employs 500 people, including contracted owner drivers. Staff are split around 50/50 between road freight and Bluebridge. Both the shipping and road businesses procure a significant amount of goods and services, with particular concentration in the Wellington region.

3.4 Bluebridge currently accounts for over 55% of the Cook Strait non-rail freight market and over 30% of the corresponding passenger market. Total passenger numbers annually are circa 1.1m.

3.5 Bluebridge’s customers view its services as strategically important, providing capacity, competition and resilience in the Cook Strait passenger and freight market.

Cook Strait Passenger Market

3.6 According to an economic study prepared by Deloitte Access Economics in November 2017, tourism is New Zealand’s largest export industry and has been responsible for around 20% of the growth in New Zealand’s GDP since 2011.

3.7 Over the last two years alone, the size of the tourism sector has grown 24%. Tourist numbers in New Zealand are forecast to reach 4.9 million in 2023, up 39% from 2016, reflecting an annual growth rate of 4.8% per year. This is expected to inject $15.3 billion into the economy in 2023, up 52% from 2016. 3

3.8 Cook Strait passenger demand is strongly correlated to international visitor arrivals. The Ministry of Business, Innovation and Employment’s (MBIE) forecasts 7% annual growth in international visitors.

3.9 International visitors are classified into four segments, holiday, visiting friends and relatives, business and other. All segments are expected to see noticeable growth in the coming years, but it is the holiday segment that is forecast to experience the majority of growth, with 26% growth in this segment in the coming year.

3.10 Cook Strait passenger travel is particularly seasonal with the peak monthly passengers carried in the summer season up to five times higher than that carried during the winter season.

Cook Strait Freight Market

3.11 An economic study undertaken by Deloitte in 2014, the National Freight Demand Study (NFDS), showed that forecast demand for freight services is expected to increase by 58% by 2042.

3.12 Forecast growth in demand for freight services across the Cook Strait is expected to be even greater than the national and modal average as indicated by this study, due to the concentration of freight flows between the North and South Islands through the Cook Strait channel.

3.13 ‘Just-in-time’ delivery is becoming increasingly important and this supply chain model favours road transport (and therefore interisland ferry services), due to the speed of delivery relative to coastal transport and rail. Publicly available market forecasts, such as the NFDS, along with anecdotal evidence in relation to transport and logistics trends also support a strong rate of freight lane metre growth brought about through increased road transportation demands.

3.14 Significant import volumes are moved by road and ferry to distribution centres in Christchurch, suggesting that the forecast average national freight growth rate identified in the NFDS understates the Cook Strait growth potential.

3.15 Additionally, strong population growth in the North Island is creating materially increased demand for South Island goods. The Ministry of Transport’s report Transport Outlook: Future State reflects this and estimates that road transport will gain an additional 1.4% share of the total freight market (increasing to 92.8%), bolstering the view that road freight transport will grow faster than the wider freight transport market. 4

3.16 Attached as Appendix Five is a list of supporting statements corroborating the view that the Cook Strait shipping services are of regional and national significance, and critical to the functioning of the New Zealand economy.

Sailing Schedule

3.17 The crossing from Wellington to Picton covers approximately 92 kilometres and under normal service speeds takes around 3.5 hours. Bluebridge essentially operates a 24 hour a day, 7 day a week operation. Its vessels undertake over 2,600 sailings per year.

3.18 During the summer months (November to January) there are 52 scheduled weekly sailings and during the winter months there are 50 scheduled weekly sailings. The sailing schedule also includes dangerous goods and freight only services, which occur daily at 8:45pm and 2.15 am. These sailings are critical for Bluebridge’s freight customers.

3.19 In order to maintain its sailing schedule, it is essential that Bluebridge has efficient port operations to enable the safe and timely unloading and loading of its vessels.

3.20 Attached as Appendix Two is a summary of Bluebridge’s sailing timetable and an illustrative map, which shows the route across the Cook Strait and the approach to Picton through Tory Channel in the Marlborough Sounds.

Wellington Port Operations

3.21 Bluebridge’s Wellington terminal building is located at the entrance of its port operations, at 50 Waterloo Quay. Its Wellington terminal and port facilities are leased under a long term agreement with CentrePort.

3.22 The passenger and passenger vehicle entrance is via Bunny Street, off Waterloo Quay and the commercial freight vehicles access Bluebridge’s port area via Hinemoa Street, also off Waterloo Quay.

3.23 Under its lease agreement Bluebridge is licenced to use Kings Wharf and Glasgow Wharf to berth its vessels. For safety and efficiency reasons, it is essential that passenger and commercial freight vehicles are kept separate during loading, with passenger vehicles marshalled for loading on Glasgow Wharf and commercial freight vehicles marshalled on Kings Wharf.

3.24 Attached as Appendix Three is an illustrative map, which shows the area, location and facilities leased by Bluebridge from CentrePort. This map also 5

shows the footprint of Bluebridge’s operations prior to the 2016 Wellington earthquake.

Earthquake Disruption

3.25 The 2016 earthquake caused major damage to a number of areas of CentrePort used by Bluebridge for its operations. In particular Kings Wharf sustained significant damage leading to approximately two thirds of this wharf being lost from operations due to instability.

3.26 As a result CentrePort has allowed Bluebridge to reconfigure its operations. Currently passenger vehicles are being marshalled for loading on the Interislander Wharf and commercial freight vehicles are being marshalled on Glasgow Wharf and an area behind Kings Wharf.

3.27 Attached as Appendix Four is an illustrative map which shows the footprint of Bluebridge’s operations following the 2016 Wellington earthquake.

Other Important Operational Considerations

3.28 In support of the New Zealand supply chain and consistent with operations in other ports across New Zealand, Bluebridge carries goods that if mishandled or tampered with, could potentially cause serious public harm.

3.29 Safety of the general public, customers and staff is of paramount importance to Bluebridge and accordingly, Bluebridge maintains a number of operational procedures and policies to minimise the related risks.

3.30 This includes restricting access to site with physical barriers, scheduling separate sailings for dangerous goods, restricting passenger access to off- limit area on the vessels, segregation of freight, limiting the total quantity of freight, extensive training of our staff as well as complying with International Dangerous Goods Code (IMDG) and the Regional Dangerous Goods Code (RDGC).

3.31 The ability for Bluebridge to utilise Interisland Wharf when Kings Wharf was significantly impaired post-earthquake is fundamental to Bluebridge's ability to maintain operations. Any limitation on the ability to utilise Interisland Wharf in the near future due to encroachment of sensitive activities nearby, especially without provision of permanent and sufficient wharf space elsewhere, would seriously compromise Bluebridge's ability to provide the level of capacity and resilience required for national freight and passenger demand across Cook Strait. 6

3.32 In addition, Bluebridge vessels operate under ISM (International Safety Management) code, which provides international standards for the safe management and operation of ships and pollution prevention. This is audited by the regulatory authority, Maritime New Zealand (MNZ) and class societies. As passenger vessels, Bluebridge also operates under the International Convention SOLAS (Safety of Life at Sea) and has achieved tertiary level in the ACC WSMP (Workplace Safety Management Practice) programme.

4. KEY CONCERNS WITH THE PROPOSED PLAN

4.1 Bluebridge's primary concern with the Proposed Plan, as set out in our original submission, is the change in zoning Interisland and Waterloo Wharfs from Commercial Port Area to Lambton Harbour Area (Northern Zone).

4.2 Bluebridge has two key concerns with the change in zoning:

(a) The Proposed Plan provides protection for those activities that fall within the definition of Regionally Significant Infrastructure. Activities within the Commercial Zone Area are expressly included in the definition of Regionally Significant Infrastructure, whereas those within the Lambton Harbour Area (Northern Zone) are open to interpretation.

(b) The Lambton Harbour Area (Northern Zone) does not sufficiently enable ongoing port-related activities.

Recognition of Bluebridge's operations as Regionally Significant Infrastructure

4.3 The Proposed Plan appropriately provides protection for Regionally Significant Infrastructure. For example, Objective O13 of the Proposed Plan provides that:

The use and ongoing operation of regionally significant infrastructure and renewable energy generation activities in the coastal marine area are protected from new incompatible use and development occurring under, over, or adjacent to the infrastructure or activity.

4.4 Further, Policy P14: Incompatible activities adjacent to regionally significant infrastructure and renewable electricity generation activities provides that:

Regionally significant infrastructure and renewable energy generation activities shall be protected from new 7

incompatible use and development occurring under, over or adjacent to it, by locating and designing any new use.

4.5 Both of these provisions emphasise the protection of Regionally Significant Infrastructure from the encroachment of more sensitive activities within close proximity of their operations.

4.6 The definition of Regionally Significant Infrastructure in the Proposed Plan includes:

Regionally significant infrastructure includes:

 […]

 Commercial Port Area within Wellington Harbour (Port Nicholson) and adjacent land used in association with the movement of cargo and passengers and including bulk fuel supply infrastructure, and storage tanks for bulk liquids, and associated wharflines.

4.7 The Proposed Plan expressly provides that the Commercial Port Area is Regionally Significant Infrastructure. As Regionally Significant Infrastructure, it is protected from the encroachment of incompatible uses or development. This is on the basis that Wellington Harbour Port's strategic location, the significant investment in Port Infrastructure within the Commercial Port Area, and its provision of infrastructure and facilities is fundamental to the operation of the wider region and nationally.

4.8 Bluebridge believes strongly that its operations are Regionally Significant Infrastructure:1

(a) Bluebridge's operations provide a crucial connection between the North and South Island, providing freight and passenger services from the central location of the Commercial Port Area across the Cook Strait. Bluebridge currently accounts for over 55% of all Cook Strait non-rail freight market and over 30% of the corresponding passenger market.

1 Appendix Five contains a list of supporting statements corroborating the view that the Cook Strait shipping services are of regional and national significance, and critical to the functioning of the New Zealand economy. 8

(b) The provision of freight and passenger shipping across Cook Strait is vital for the national freight network. As noted by the New Zealand Shipping Federation:2

The Cook Strait services transport 4 million to 5 million tonnes of freight across Cook Strait annually. The value of these goods has been similarly estimated using a range of public and private sources at $15 billion to $20 billion per year. This is equivalent to 30% to 40% of New Zealand's total value of goods exports.

(c) This was reiterated after the November 2016 earthquake, where it was clear that a loss of resilient facilities (ie wharves and surrounding infrastructure) for ferries would have catastrophic impacts on the movement of freight throughout New Zealand. As noted in CentrePort's Annual Report 2017:3

The earthquake highlighted CentrePort's importance as a key strategic asset for the Central New Zealand economy, contributing $2.5 billion a year to its GDP.

CentrePort is more than a transport hub near central Wellington. It is a network of partnerships that reaches across Central New Zealand.

(d) Understanding how crucial the Cook Strait ferry connection is - both regionally and nationally - puts Bluebridge's contribution to the New Zealand economy into context, and underscores why its operations, and the wharves it occupies must be recognised accordingly; as Regionally Significant Infrastructure.

4.9 Bluebridge's concern is that the definition of Regionally Significant Infrastructure does not expressly include Bluebridge's activities if they do not take place within the Commercial Port Area (due to the proposed removal of Interisland and Waterloo Wharfs from the Commercial Port Area in the Proposed Plan). While the definition of "adjacent land used in association with" could potentially include the newly zoned Lambton Harbour Area (Northern Zone), it is not explicit how far this "adjacent land extends" and to what it extent it is conditional on the types of activities consistently taking place on that land. Given the importance of Bluebridge's operations both

2 See Appendix Five – New Zealand Shipping Federation Press Release. 3 See Appendix Five – CentrePort Annual Report 2017. 9

regionally and nationally, it is imperative that they are clearly included within that definition. It should not be left to interpretation.

4.10 Otherwise, there is the risk that Bluebridge's operations are not consistently given the appropriate protection from sensitive activities. This means that Bluebridge's operations would be exposed to a heightened risk of sensitive activities encroaching on its operations.

4.11 This is significant to Bluebridge's operations, as any sensitive activities (such as residential apartments) established too close to the operating wharves could result in those operating wharves having restrictions imposed on their operations, and ultimately the risk of being forced to relocate. Bluebridge has already had issues with complaints from occupiers of the Waterloo Quay apartments.

4.12 Internationally, there are multiple examples of the risks posed by sensitive activities being able to locate in close proximity to operating port areas. A case in point is the recent events related to East Darling Harbour in Sydney. This area of the inner Sydney harbour originally operated as a commercial port, and included a passenger terminal and a significant container port. Over time, residential and commercial developments were increasingly allowed to locate within close proximity to the operating port area, leading to greater public pressure and complaints with regard to existing stevedoring and related port activity.

4.13 In 2003, the Government of New South Wales designated a site within this area for redevelopment into a mixed use precinct, for balanced commercial, economic and environmental purposes. By 2006, Patrick Corporation, the last remaining stevedoring company operating in the area, had moved its stevedoring operations to Port Botany. This put an end to almost 130 years of shipping operations in East Darling Harbour.

4.14 Accordingly, Bluebridge considers it critical that its operations are expressly identified as Regionally Significant infrastructure. I discuss further below the changes that could be made to the Proposed Plan to provide that certainty.

Enabling Bluebridge's activities

4.15 While Bluebridge's primary concern is to protect its existing operations from encroachment by sensitive activities, it is also keen to ensure that the provisions applying to its operations are sufficiently and appropriately enabling of Bluebridge's operations. There are a number of examples of the Lambton Harbour Area being less enabling for these activities than the 10

Commercial Port Area. This reinforces the appropriateness of Commercial Port Area zoning applying to Bluebridge's operations, namely on Interisland Wharf.

5. RELIEF SOUGHT BY BLUEBRIDGE

5.1 In its submission, Bluebridge sought that its operations remain subject to the Commercial Port Area, rather than the Lambton Harbour Area (Northern Zone).

5.2 Bluebridge's preference remains for all its operations (including those on Interisland Wharf) to remain subject to the Commercial Port Area, and therefore clearly within the definition of Regionally Significant Infrastructure.

5.3 However, if the Commissioners were not minded to make that change back, Bluebridge seeks that the definition of Regionally Significant Infrastructure is amended to specifically include its operations. That could be achieved through the following change to the definition of Regionally Significant Infrastructure:

Regionally significant infrastructure includes:

 […]

 Commercial Port Area and Lambton Harbour Area (Northern Zone) within Wellington Harbour (Port Nicholson) and adjacent land used in association with the movement of cargo and passengers and including bulk fuel supply infrastructure, and storage tanks for bulk liquids, and associated wharflines.

(insertion underlined)

6. CONCLUSION

6.1 Bluebridge's operations contribute significantly to the New Zealand transport chain, regional and national resilience, and should be recognised accordingly, and explicitly, through recognising the wharves they operate on as Regionally Significant Infrastructure.

6.2 A shift in zoning to anticipate mixed use development in the long term on both Waterloo and Interisland Wharfs should not deprive current port-related operations from explicit protection in the short to medium term, especially 11

when it's operations are essential to New Zealand's freight and passenger network.

6.3 Therefore, for as long as Bluebridge's operations remain on Interisland Wharf, it must still be explicitly recognised (as it previously was) as Regionally Significant Infrastructure.

Edward Menzies 18 May 2018 Appendix One

MV Straitsman The Straitsman is the most modern vessel servicing the Cook Strait. It was built in the Netherlands in 2005. Strait Shipping purchased the Straitsman during 2010 and it began operating on the Cook Strait in December of that year.

The Straitsman is a purpose built Ro-Pax vessel with a freight and vehicle capacity of 1,248 lane metres and a passenger carrying capacity of 400. The Straitsman is a very stable and reliable vessel, suited to the sometimes challenging Cook Strait environment.

It is equipped with high-tech navigation aids, stabilisers, two powerful bow thrusters and in-line high lift flap rudders to ensure effective manoeuvrability. Accompanying these high-tech features are eco-friendly features which enhance fuel efficiency and use waste heat for heating hot water and the passenger areas.

The vessel is fitted out with a contemporary interior and provides reclining seating areas, family area, viewing lounge, extensive decking and a café. There are also 50 cabins on the vessel ranging from single room to family rooms, which can comfortably accommodate up to four adults. Each cabin has air- conditioning, a power point, chair and table, reading lights and a private ensuite.

There is a dedicated area for truck drivers, which includes a comfortable seating and entertainment area. Truck drivers can order three course meals from the café.

MV Straitsman

MV Strait Feronia Based on lane metre capacity the Strait Feronia is the largest vessel on the Cook Strait. Built in 1997, the vessel was purchased in 2015 and underwent a full refurbishment of its passenger areas before arriving in New Zealand and starting operations in June that year.

Strait Feronia is a purpose built Ro-Pax vessel. It has a combined freight and vehicle capacity of 2,150 lane metres and a passenger carrying capacity of 400. Strait Feronia is capable of handling every type of freight from livestock to breakbulk or over-dimensional loads.

The vessel has a standard operating service speed of 17.5 knots. It is equipped with two Wartsila 8L46B engines and other marine features include bow thrusters along with Fincantieri stabilizer fins. During its short period of service to date, the Strait Feronia has established itself as a very suitable and reliable vessel for the Cook Strait environment.

The passenger refurbishments that were undertaken prior to entering service included a movie lounge, quiet lounge, family room, working stations, and the café and bar area. The Strait Feronia has 72 cabins including single, twin, double, family cabins sleeping up to five people. All cabins have air-conditioning, a power point, reading lights and a private ensuite.

MV Strait Feronia

Appendix Two

Bluebridge’s Sailing Timetable

Route across the Cook Strait and the approach to Picton through the Tory Channel

Appendix Three

The area, location and facilities leased by Bluebridge from Centreport prior to the 2016 Wellington earthquake

Appendix Four

The footprint of Bluebridge’s operations following the 2016 Wellington earthquake

Appendix Five

Cook Strait Ferries – Regionally / Nationally Significant

“If the Cook Strait stops, New Zealand stops. Last November’s earthquake highlighted this, but thankfully, ferry services resumed within hours of the event.” Mark Thompson - Interislander

As New Zealand learns the lessons from Christchurch and Kaikoura, futureproofing works like these will become more common across the country. We have a new understanding of the resilience that is needed in key pieces of national infrastructure like CentrePort.” – Paul Begley Supervisor HEB

New Zealand Shipping Federation Press Release - Scoop Independent News (Tuesday 29 November 2016)

Employment There are approximately 820 people directly employed in the ferry operations. If including Indirect employment as a result of goods and services supplied, then the NZ total is around 1,780 FTE’s. The GDP generated by the employment activity is around $170m.

Spending from travellers There are around 1.1m passenger journeys each year. Around 35% of the journeys are from overseas tourists. There is significant economic impact spending by passengers as they pass through and spend time in Wellington as part of their journey. The spending is estimated to generate employment for 1,660 FTEs directly and 2,135 FTEs in total. The GDP impact of the passenger spending for Wellington is estimated at $169m.

Total impact on Wellington from hosting the ferries is estimated at $330m GDP and 3,600 FTE’s.

CentrePort Annual Report 2017 CentrePort resumed Cook Strait ferry operations within 24 hours of the Kaikoura earthquake, which reinforced the need for New Zealand to have resilient facilities to support inter-island transport.

The Kaikoura earthquake highlighted CentrePort’s importance as a key strategic asset for the Central New Zealand economy, which contributes 25.8% of New Zealand’s GDP.

48 hours after the earthquake the Port had modified key operations to allow a resumption of the ferries, fuel, logs, and break bulk trade.

The earthquake highlighted CentrePort’s importance as a key strategic asset for the Central New Zealand economy, contributing $2.5bn a year to its GDP.

CentrePort is more than a transport hub near central Wellington. It is a network of partnerships that reaches across Central New Zealand.

Radio New Zealand – KiwiRail wants quake-resilient facilities for ferries (14 May 2017) – Excerpt from interview with Peter Reidy

KiwiRail wants new, earthquake-resilient facilities for the Cook Strait ferries, even if it has to share them with its rival, Bluebridge.

That comes as the state-owned company admits how close Wellington's port came to being unusable after November's Kaikōura earthquake.

Its chief executive Peter Reidy said thousands of trucks, railcars and passengers used the ferries each week, but the surrounding infrastructure was not up to scratch.

"It was very very close [in November], in fact we were very lucky," he said.

The quake showed how badly damaged critical infrastructure could be in a natural disaster, he said.

Catastrophic failure of the ferry terminals would have a massive economic impact, and the potential for that was already being seen in the increased cost of coastal shipping while the rail line from Christchurch to Picton was out, he said.

"The Cook Strait ferries is State Highway 1 over the water, really, so it needs to have a resilience plan,"

CentrePort would play a key role in the event of a major earthquake, handling thousands of tonnes of fuel and food, as well as vital infrastructure.

Peter Reidy stated that it was about the sort of investment Lifeline utilities, those which are needed in emergency situations, in Wellington needed to be more resilient, he said.

He said the ferry services were too important to lose in an earthquake. The Dominion Post – Kiwirail CEO Peter Reidy: Our Cook Strait emergency lifeline won't hold up in a big quake (12 May 2017) – relevant excerpt below.

In the event of a major natural disaster, the interrupted freight could be vital food, water, medical supplies and fuel.

Wellington and Picton both need modern, multi-user facilities with in-built resilience such as floating link spans. They need upgraded road connections to ensure access for critical supplies and equipment in the event of an earthquake. And both regions need plans for back-up berths and alternative temporary ports, should the worst happen.

With an imminent need to replace KiwiRail's Interislander fleet from 2020, KiwiRail has been working with CentrePort and Port Marlborough on an overall review of berth and terminal operations to ensure future facilities can accommodate road, rail and ship connectivity, and so that they are resilient and fit for purpose.

Resilient ports are important not only for Wellington, but for all of New Zealand. Working closely together is the way to ensure New Zealand has the risk management it needs and we are prepared for any eventuality.