Fonterra poser for ports

By PAM GRAHAM


Port of Tauranga could become the largest container terminal in the country if a review of Fonterra's freight logistics goes its way.

This is the conclusion of a Goldman Sachs JBWere report, which does the numbers on the dairy giant's plans in the upper North Island.

What is not known yet is whether it will shift freight from Ports of Auckland to Port of Tauranga or vice versa. But most investors believe the more fleet-of-foot Port of Tauranga is better positioned.

The Herald reported last month that Fonterra was considering centralising most of its upper North Island freight at a village on an 18ha Hamilton site next to a railway line.

Fonterra now trucks dairy cargo to the closest port and it is packed into containers in port-owned facilities.

The new freight village at Crawford Rd, which could be built either by Fonterra or Toll NZ, would warehouse, pack and move the freight on rail.

The Goldman Sachs report and another from rival First NZ Capital ask whether the freight village will be a catalyst for moving the big 4100-container ships run by P&O Nedlloyd on European services into Auckland to Tauranga.

P&O and Maersk are the shipping lines most associated with Fonterra, which requires vessels with plenty of plugs for refrigerated containers.

Any port decision is not as central to the creation of the new supply chain. But the chain's impact on ports is potentially huge.

First NZ said Port of Tauranga could lose 500,000 tonnes of exports, or 30,000 standard-sized containers to Auckland. Or it could win 390,000 tonnes, or 23,000 containers.

"Superficially, it would appear that Port of Tauranga has the stronger case for retaining and attracting additional Fonterra business," the First NZ report said.

Goldman Sachs said 100,000 containers could move to Tauranga if the big ships moved from Auckland. This would be equal to about 15 per cent of Auckland's container volume of 670,000 TEU (standard-sized containers).

"If this shift should occur, it would make Port of Tauranga the largest container port in New Zealand at around 600,000 TEU," the report says.

P&O's chief executive, Andrew Taylor, has noted the trend towards establishing dominant supply chains from inland sites to ports. Brokers expect P&O to make decisions about port calls in New Zealand in the next six to 12 months.

Ports of Auckland is establishing an inland hub at Wiri and has been talking to Toll NZ about use of rail. It has indicated it has been trying to get more business from Waikato.

Brokers will closely examine the price that business is won at and say that if freight shifts from one port to another other shipping lines will move into gaps that open, so there will be a net effect.

The reports say the driver for decisions is Fonterra's requirements.

Fonterra's logistics chief, Nigel Jones, and Toll NZ declined to comment.

Changes afoot

Fonterra is considering the centralisation of its upper North Island freight handling to an 18ha yard in Hamilton.

Ports of Auckland is competing with Port of Tauranga for the business.

Brokers say the deal could spark a move of large container ships from Auckland, boosting Tauranga's container volumes by as much as 100,000.