Rockpoint stripped these revaluations out because they consider the process flawed, as revaluations to “market” value are often based on adjacent land use, frequently including inner-city residential and commercial property.

Since 1997, the 11 ports increased shareholders’ funds by NZ$1.3bn (US$986m) – but NZ$1.2bn (US$910m) of that was due to revaluations. Very little wealth was created by retained earnings (profits left after dividends have been paid).

This led Rockpoint to state: “Ports have been achieving inadequate commercial returns over an extended period. From a national perspective this is poor business. Given that most ports are wholly or overwhelmingly owned by councils, this underperformance is simply borne as a subsidy provided by ratepayers and taxpayers."

The analysts say that in the decade since 1997, containerised cargoes have risen 2.47 times, and bulk cargoes have remained flat. But ports’ real revenues have risen only 1.37 times and EBITDA has multiplied only 1.49 times.

Despite the substandard returns, ports have continued to invest heavily in plant and equipment (NZ$1.1m (US$835m) over a decade). This, said Rockpoint: “...might seek to meet parochial demands rather than defined commercial objectives.”

Rockpoint added: “What is now abundantly clear is that the recent short game of continued aggressive investment and marginal pricing to remain in contention for international trade is serving neither port shareholders nor the NZ economy well.

“Unless a new course is plotted, port returns will become increasingly inadequate and, were they not funded by ‘soft’ ratepayer dollars, reduced service capacity would become inevitable.”