Freightways poised to launch inter-island chilled food air service

Freightways chief executive Mark Troughear. Photo / Supplied

Freightways is readying to start what is claimed to be New Zealand's first overnight inter-island chilled and frozen foods air delivery service using its jet fleet after a $100m-plus acquisition deal.

The listed company said the pilot for the new service would start in the next fortnight, following Overseas Investment Office clearance of Freightways acquisition of Big Chill Distribution.

The acquisition involved an initial payment of $117 million for 80 per cent of the enterprise value of Big Chill, a market leader in temperature-controlled transport. The balance is to be paid in 2022 based on its earnings performance.

The acquisition needed OIO approval on two counts - Freightways purchase of business assets of more than $100m, and Big Chill has a leasehold interest in 4.3ha of land in East Tamaki.

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Freightways is 66.1 per cent owned by New Zealand shareholders, with the balance held by overseas investors. It operates courier, express package delivery, business mail and information management services and has four 737-400 aircraft providing overnight express freight delivery.

Asked about the claim that its new inter-island air food delivery service would be a first,
Freightways chief executive Mark Troughear said in a written statement that traditionally, chilled linehaul and courier networks in New Zealand "exist in isolation to each other".

"Various services exist currently for delivery of chilled and frozen items via various courier companies, however regulations regarding the integrity of food through transport networks and increasing home delivery opportunities mean that a natural link exists between a dedicated refrigerated linehaul network (Big Chill) and the last mile capabilities of a traditional courier company (which) open up new opportunities....."

The company said the new service would offer a combination of overnight air and road transport services.

On the balance payable on the Big Chill deal, the company said it would be determined as a multiple of the increase in profit over the next two years so would not be determined until the end of the 2022 financial year.

Big Chill employed 370 people when Freightways acquired it.

Asked if there would be any job losses as a result of the deal or due to Covid-19, the company said "we imagine there will be more people employed over the longer term as the business grows.

"The impact of CV19 is being assessed constantly."