Wednesday, March 28, 2012

The cost of the Ports of Auckland dispute

So, how much has the Ports of Auckland dispute cost the Auckland Council? They don't know, and neither do the suits they pay big money to monitor their investment for them. But Robert Winter has a stab at calculating it:

2011 Operational revenue $175.4 million

divided by 365 days

= approx. $480,000 daily operational revenue

Let's assume (generously) that the port is working at 15% of capacity as a result of the dispute:

= approx. $408,000 daily operational revenue loss

Additional costs as an effect of the dispute (legal fees, consultancy advice, extra security, research charges, PR costs), guessed at $20,000 daily:

= immediate losses about $430,000 daily (lost operational revenues plus extra costs). The real figure is probably higher.

So, let's assume that the dispute will go on at least until May 16th (unless the management strtaegy folds, which is likely):

49 days (from today) at $430,000 daily = $21.1 million losses

As he notes, the port being idle also means lower costs. But its certainly been a significant hit to revenue, which will have a significant impact on the port's bottom line and the dividend it pays to the people of Auckland. And you'd think the Council, of all people, would be concerned about that.