A Government investigation into international freight charges is recommending further privatisation of port companies.
The Productivity Commission on Thursday released a draft report into the costs of importing and exporting freight after a nine-month study.
The commission found that $5 billion is spent annually on freight to and from New Zealand, and though falling, the costs are at least 15% higher than in Australia.
Its report says port companies that are majority-owned by councils dominate the international transport sector, and should be considered for further privatisation with partial stock exchange listings.
It beleives they should be made to act as profitably as private businesses.
The report also says the port companies should have their purpose statements changed to match state-owned enterprises and councillors should be barred from sitting as directors.
Productivity Commission chairperson Murray Sherwin says under-performing port companies are making freight more expensive.
"Our ports, generally, fail to earn enough return to cover the cost of capital, so they're not justifying the investment that's being made in them.
"That's usually a pretty good measure of how well they're making their choices around managing costs, managing revenues and the investment choices they're making."
Mr Sherwin says the commission also recommends monitoring by the Government of port company performance.
As a two-month industrial dispute at Ports of Auckland rumbles on, it also recommends tightening the controls on transport unions and ending exemptions for international shipping companies from scrutiny under the Commerce Act.