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Westgate cuts costs

By Graeme Kennedy

Friday 6th June 2003

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Westgate Port Taranaki has restructured its business with cost cuts, price increases and continued diversification to offset rapidly declining export volumes from the Maui gasfield.

Maui has for more than 15 years provided 90% of the port's volumes and 60% of income and its winding down will slash revenues this year by $7 million and almost halve liquid fuel and gas exports by two million tonnes.

However, the Maui-generated cargoes are being replaced by spectacular growth in other sectors, including containers, logs and fertiliser.

Westgate business development manager Jon Hacon said the new strategies included the port's first price increases since it became a company 15 years ago, with charges adjusted to match the cost of services.

Mr Hacon said Westgate had avoided price rises by continued efficiency gains ­ the company in 1985 employed 500 workers and handled one million tonnes of cargo while it now had 100 staff and a five million tonne throughput.

"But you can take efficiencies only so far before you have to raise prices," he said. "We looked at where we were losing money and applied the pricing to service costs ­ there is no real average increase as they vary depending on the type of ship and trade."

He said the new rates, effective from July 1, were struck after talks with individual customers.

New Zealand's second-biggest export gateway after Tauranga, Westgate began planning for diversification away from Maui several years ago and opened its Blyde container terminal in 1998 to handle the growing trade.

Container traffic has increased 750% from 6000 TEUs (20ft equivalent units) in 2001 to an expected 45,000 TEUs this year, driven mainly by dairy exports and Fonterra's increased use of the port as the company improved its logistics and supply-chain management.

"We are 60km from the world's biggest milk powder plant at Hawera," Mr Hacon said. "Just two years ago we were handling 18% from the plant and now it is 80%.

"Log shipments are up 400% as forestry blocks are now coming to maturity and fertiliser volumes have increased 40% with Ravensdown Fertiliser having us and Napier as their two hub ports."

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