Customers force speed of change to hub ports
August 20th, 2009
More producers are likely to follow Fonterra’s lead and rationalise the number of ports they use, cutting costs and connecting with more frequent shipping lines. The ports of Timaru and Taranaki will see about a third of their container volume wiped out as Fonterra rails product from its Clandeboye plant in South Canterbury to Lyttelton Port and sends the output of its Whareroa, Taranaki, factory to Tauranga, Napier and Auckland. The reluctance of the port sector to progress with mergers and consolidation may become irrelevant with exporters such as Fonterra likely to play a broader role in defining NZ’s export infrastructure.
For Taranaki, the move by Fonterra raises a question over the port’s $20m dredging programme in 2007 to accommodate bigger draught ships like Auckland and Tauranga can. For his part, Taranaki Port CEO Roy Weaver is critical of the Govt’s financial support for KiwiRail, which gave the railway the confidence to stand its ground in tough negotiations with Fonterra. KiwiRail also picks up more South Island work from the dairy co-op, thanks to its long relationship with Lyttelton through the coal trade.
Lyttelton Port’s CEO Peter Davie says he aims to leverage the “enhanced” relationship with KiwiRail to offer more logistical options to other customers. The writing may be on the wall for indirect feeder ports, such as Timaru, where milk powder used to be trucked from Claneboye for shipping to an export port. Fonterra’s supply chain strategy manager, Nigel Jones, says historically there’ve been substantial cross subsidies of indirect services through regional ports by shipping lines.
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