1 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 (c) Relief sought by Bluebridge. 2 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.