Fonterra has a bumper export shipping year - despite supply chain choke

Fonterra achieves export shipping record in historically challenging year - but it wasn't easy. Photo / File

Some good news for a change from New Zealand's bogged down supply chain - Fonterra has posted a record export shipping year through a mix of alliances, creativity and sheer hard work by hundreds of people.

The other piece of good news says Fonterra, is that Kotahi, its supply chain collaboration with Silver Fern Farms, the Maersk shipping company and Port of Tauranga, has been able to help other New Zealand exporters through the most challenging time shippers can remember.

The world's biggest dairy exporter and New Zealand's biggest business shipped around 2.59 million metric tonnes, equivalent to more than 200,000 twenty-foot containers in FY21.

During the 12 months, shipping companies bypassing New Zealand dropped available shipping capacity to 20 per cent, compared to 80 per cent pre-Covid, and shipping schedule integrity plunged from a long-term average of 75-80 per cent to below 35 per cent, the company said.

During the period what's known in the trade as "reworks" soared by 350 per cent on the previous year.

Fonterra chief operating officer Fraser Whineray said reworks are necessary when a ship misses a scheduled port call and export pick up and product has to be sent to another port or put on another vessel.

This means the significant amount of red tape paperwork and documentation involved in that shipment has to be reworked.

The FY21 shipping achievement beats a 2016 Fonterra record by 4000 tonnes. And that was a year of higher New Zealand milk production, Whineray said. In FY20 Fonterra shipped 2.49m metric tonnes of product.

While the Kotahi alliance anchored the achievement, Fonterra said a critical event team worked tirelessly to co-ordinate the efforts of around 800 people in the supply chain and another 100 in Kotahi and freight management company Coda Group.

"A lot of micro-co-ordination and innovation went on. The innovation could happen because we had relationships across the supply chain, which included KiwiRail and other freight companies.

"Shipping timetables are changing so quickly that innovation was required," said Whineray.

What lifted Fonterra's FY21 export volumes was not so much an increase in the weight of milk solids per kilograms shipped, but a weightier product mix, he said.

Fonterra is doing a brisk trade to food services with UHT products to China, particularly cream, and good sales of mozzarella cheese and cream cheese from new plants in the South Island.

Kotahi, New Zealand's largest supply chain collaboration, was formed in 2011 by Fonterra and meat company SFF in the wake of the GFC in the hope of providing a secure supply chain and to ensure New Zealand was a competitive export country.

In 2014 Kotahi signed a long-term strategic agreement with the Port of Tauranga and Maersk, the world's largest container shipping line.

Whineray said Kotahi, which was facilitating a third of New Zealand exports, now had more than 50 customers, small and large, which were benefitting from more export and import reliability.

It used vessels other than Maersk ships and had the ability to charter vessels to ease the pressure.

But until a Covid-pent up spending world stopped buying and importing merchandise particularly from China and Europe, and money began diverting back into sectors like tourism, the outlook was for shipping disruption "for some time", he said.