Big ship visits to New Zealand are on the horizon, following two new agreements today heralding a new decade-long ocean freight alliance.
Freight and logistics management company Kotahi – a joint venture between Silver Fern Farms and Fonterra – and Port of Tauranga have struck a strategic ten-year freight alliance. In addition, a separate long-term agreement between Kotahi and Maersk Line, the world’s largest container shipping company, will deliver a ‘step-change’ for New Zealand’s $95 billion international trade sector, including the $8.2 billion of annual meat exports.
Kotahi chief executive Chris Greenhough says Kotahi is focused on helping keep New Zealand competitive on the world stage, by paving the way for the new generation of container vessels to call in New Zealand’s waters, delivering significant efficiencies for exporters and importers. In 2010, potential savings for exporters as a result of ports being able to handle larger ships were calculated to be in the order of $338 million a year in the New Zealand Shippers’ Council report: The Question of bigger ships: securing New Zealand’s international supply chain.’
“We can help level the playing field for New Zealand in international markets. Increased collaboration will smooth out the peaks and troughs of our agriculture-driven export sector and drive a step-change in efficiency for the Kiwi export supply chain. These larger vessels will also be a catalyst for further efficiencies in land-based transport and the better coordination of truck and rail movements,” says Greenhough.
The new agreements are founded on the following:
- Kotahi has committed to provide up to 1.8 million TEU (twenty-foot equivalent unit) export cargo containers to the Port of Tauranga over the next 10 years, commencing 1 August 2014
- Kotahi has committed significant export cargo to Timaru Container Terminal (TCTS) for the next 10 years commencing 1 August 2014
- The Port of Tauranga has committed to investment in infrastructure to enable visits from the larger 6,500 TEU container ships within the next few years
- Port of Tauranga will, subject to certain conditions, issue shares to Kotahi and Kotahi will take a stake in TCTS, and
- Kotahi has committed to provide up to 2.5 million TEU export cargo containers to Maersk Line for the next 10 years, commencing 1 August 2014.
“A key aspect of the agreements is the continuing support for the long-term viability of New Zealand’s regional ports. Reflecting the strong growth of dairying exports from the South Canterbury region over the past three years, it has been possible to resume container ship calls to the Port of Timaru while also retaining significant volumes through Ports of Lyttleton and maintaining, long-term, container ship calls at a number of other regional ports,” he says.
According to Port of Tauranga chief executive Mark Cairns, the agreement will give Port of Tauranga the certainty to proceed with the infrastructure to accommodate the 6,500 TEU ships, which will in turn spur the development of New Zealand’s coastal shipping industry as freight consolidates on Port of Tauranga as the hub port for the country.
Kotahi and Port of Tauranga are continuing to explore and negotiate other operational efficiencies.
Maersk Line New Zealand managing director Gerard Morrison says: “The new long-term contract with Kotahi represents a new model of collaboration for our business and provides certainty for Maersk Line to build on our 17 year track record of providing premium services to the New Zealand market.
“Reflecting this, and due to the guaranteed freight volumes, Maersk Line has committed to introducing a new 4,500 TEU service from October 2014, to Tanjung Pelepas in Malaysia, to provide additional capacity, and complement, the current Northern Star and Southern Star services.
“We now have a clear path to work on the introduction of Maersk Line’s 6,500 TEU vessels to New Zealand. These ships are significantly more fuel efficient on a per-container basis and will reduce the carbon footprint of the ocean freight component of New Zealand exports by approximately 22 percent per container unit, compared to the existing New Zealand industry average,” he says,
The commitment of significant volume of export cargo to Maersk Line for New Zealand coastal and South-East Asia trans-shipment ports, gives the shipper certainty to plan for the introduction of 6,500 TEU ships to New Zealand. Further information on the new services to be introduced will be provided when details are confirmed.