Supply chain resilience boosted with new Kotahi-Port of Tauranga signing for Timaru container terminal

The agreement will process 180,000 containers through the Timaru Port. Photo / Alex Burton

New Zealand’s largest container freight manager, Kotahi, has committed to providing cargo to the Port of Tauranga-owned Timaru container terminal until 2030 in a move expected to boost exporter confidence in highly challenging supply chain times.

Kotahi, a joint venture between dairy exporter Fonterra and meat company Silver Fern Farms, said the export cargo volume agreement would provide certainty to the terminal’s operations and support the regional port network, as well as delivering confidence in stable ocean freight services to South Canterbury exporters.

The agreement, which extends a 10-year arrangement between Kotahi and the Timaru terminal signed in 2014, commits Kotahi to providing up to 180,000 TEUs (twenty-foot equivalent containers) over six years from August next year.

Kotahi chief executive David Ross said the volume the agreement covers of up to 30,000 TEUs a year is not materially different to the current arrangement, but the fresh signing is a big-picture story of exporters partnering with infrastructure owners to provide longer-term certainty and build supply chain resilience.

“It means the infrastructure owner makes the appropriate investment to ensure the Timaru terminal has the ability to keep operating as we need it to into the future, and the cargo owner has the benefit of knowing the terminal is making the investment needed to operate through to 2030 in this case.”

Port of Tauranga said the Timaru terminal in turn would continue with the upgrade of its core wharf infrastructure and buy a new mobile harbour crane.

Port chief executive Leonard Sampson said the agreement was an important commitment to supporting the domestic shipping network and efforts to decarbonise the supply chain.

Timaru, a regular port of call for shipping giant Maersk and, more recently, a fortnightly call for coastal shipping company Pacifica, is mostly a feeder port to the country’s bigger export gateways.

Its main cargo volumes are from Fonterra’s Clandeboye South Island processing site, supported by meat from Silver Fern Farms, some seafood exports and products from other Kotahi customers.

Sampson said the commitment to move 30,000 TEU a year from Timaru would avoid around 18,000 long-haul road and rail round trips annually.

“From a carbon emissions perspective, coastal ocean freight is more efficient than rail and road, making it the more sustainable transport mode in this instance.”

Kotahi’s Ross said without the fresh agreement, the Timaru terminal owners wouldn’t have the confidence to invest and all exporters would suffer.

“At this stage of our [supply chain] infrastructure, we need Timaru in the South Island to have this resilience especially given the weather events we have seen.”

Without an efficient Timaru terminal, all cargo would have to go to Lyttelton or Port Chalmers, Ross said.

“If they’re not operating - and we have seen in the past challenges there - then New Zealand would have trouble getting its exports away. We need Timaru for resilience options in the South Island.”

The commitment also gave confidence to shipping lines. Ross said it was difficult to say if the fresh agreement would lead to increased ship calls.

Shipping lines made those decisions, but it would give confidence to Pacifica, which had introduced a second vessel to its operations.

“For the Timaru community this is a big deal in terms of the services and other businesses that work around operations at the port.”