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Monday, 30 June 2014

Ménage à trois in Tauranga

Port of Tauranga Port of Tauranga Port of Tauranga

The Port of Tauranga, New Zealand’s largest port, says that the 10-year strategic alliance it has struck with freight company Kotahi gives it enough volume guarantees to proceed with its infrastructure investments to accommodate Maersk Line’s 6,500 TEU ships.

Kotahi, a joint venture between Fonterra Co-Operative and Silver Fern Farms, has reached separate agreements with Tauranga and Maersk.

It has committed to provide up to 1.8 million TEU export cargo to the Port of Tauranga over the next 10 years, and “significant” export cargo to Tauranga’s subsidiary Timaru Container Terminal (TCTS) over the same period.

"The agreement with Kotahi will be immediately earnings accretive for Port of Tauranga and will transform the New Zealand supply chain,” said Port of Tauranga chief executive Mark Cairns. "The cargo commitments give Port of Tauranga the certainty to proceed with the infrastructure to accommodate the 6,500 TEU ships.”

In New Zealand, Maersk Line currently operates five 4,500 TEU vessels and five 2,900 TEU vessels. It also operates five of the 10 vessels on the America service sized between 3,500 and 3,700 TEUs.

Under the new arrangements, Kotahi has committed to provide up to 2.5 million TEU export cargo containers to Maersk Line, while the Port of Tauranga has promised to invest in infrastructure to enable visits from the larger 6,500 TEU container ships “within the next few years.”

"We now have a clear path to work on the introduction of Maersk Line's 6,500 TEU vessels to New Zealand," commented Maersk Line New Zealand managing director Gerard Morrison.

In exchange for Kotahi delivering on its volume commitments, Port of Tauranga will issue two million shares to Kotahi, representing 1.5% of Port of Tauranga's issued share capital, in two tranches. Kotahi will also get a 49.9% shareholding in Timaru Container Terminal (TCTS), which will invest in port infrastructure, including another mobile harbour crane, to handle the increased container traffic.

"New Zealand doesn't have a big ship capable port and now is the right time for key players to work together to build a capability within New Zealand to receive these large vessels with all the efficiencies they will bring to New Zealand,” said Kotahi chief executive Chris Greenough. “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.”

Mr Cairns added: "Our ability to accommodate the next generation of large ships will also address New Zealand's disadvantages in international export markets, including the country's distance from major transport routes and its relatively small and dispersed freight volumes.”

Port of Tauranga operates wharves at Sulphur Point and Mount Maunganui in Tauranga, MetroPort Auckland, a rail-linked inland port in South Auckland, PrimePort Timaru and is developing a new intermodal freight hub in Rolleston, southwest of Christchurch.

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