August date for Fonterra freight decision

Fonterra will decide by August whether the bulk of exports from its new Hamilton freight hub will exit the country through the ports of Auckland or Tauranga.

Fonterra is thought to have invested up to $15 million in the big freight village. Rail operator Toll said it was investing $11 million.

The hub will be operational in August, when milk starts flowing from the new dairy season, and Fonterra's seven Waikato factories start pumping out export product. It will handle around 600,000 tonnes of dairy product a year. The factories will be linked by rail to the hub, eventually eliminating 45,000 truck movements between the Waikato, Auckland and Tauranga.

Fonterra logistics general manager Nigel Jones said the co-operative would have to make a decision on its exporting logistics by August.

The decision will end months of haggling between the ports for P&O Nedlloyd's Eastabout 4100s 70 day around-the-world container service.

Fonterra is a major customer of the shipping line and has been reviewing its logistics chain in conjunction with the line. Auckland has the weekly service but the contract expires in December.

The market has been tipping Tauranga to win the service, because PONL has already switched its Asian service to Tauranga from Auckland. Fonterra was a key influence in that decision. That meant Auckland lost about 45,000 containers a year.

PONL could decide to consolidate most of its operations at Tauranga, the country's biggest export port which already handles 750,000 tonnes of dairy product a year.

A proposed merger between the world's biggest shipping line Maersk Sealand and P&O, the world's fourth biggest, means bets are off.

Fonterra, with revenues of $12 billion a year, is a major customer of both lines and will be negotiating the best deal from a merger. Maersk had completed due diligence on P&O and now shareholders were awaiting a formal offer, said PONL.

One analyst believes $1.20 could be carved from Ports of Auckland's share price if it lost the business, while Tauranga's would be up $1.15.