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Fonterra, Silver Fern out to wring efficiencies from freight

Friday 1st July 2011

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The nation's biggest dairy and meat exporters today launched a joint venture to boost efficiency in the transport linkages that underpin their supply chains.

The Kotahi partnership will match supply and demand for freight services on land and sea to get New Zealand products to overseas markets more efficiently.

Kotahi chief executive Chris Greenough said the initial focus was on working with exporters and ocean carriers to drive greater efficiency and service enhancements in sea freight.

"Cooperation with others to drive more efficient rail, road and port usage will naturally follow," he said.

Kotahi would first sort out its partners’ freight before taking on new customers, and would seek appropriate approval from the Commerce Commission.

Fonterra's managing director of trade and operations, Gary Romano, said Kotahi would trigger changes that could help other New Zealand businesses be more competitive in global markets.

“Export earnings are New Zealand’s bread and butter ... last year the collective return was over $40 billion," he said.

"But as the world changes there is a real risk we will be squeezed out.

"We are the most remote developed country in the world relative to international markets and the way we get our products to and from these markets is critical to continued success," said Romano.

"We have to show leadership in areas like freight management," he said.

"This is about taking the New Zealand economy to the world."

Kotahi would establish an efficient and secure supply chain service that to ensure New Zealand businesses were able to operate with certainty and compete on a global scale.

From August 1, it would service a third of all containers that left New Zealand by bringing freight management and purchasing into one partnership.

Many smaller companies were handicapped because individually they shipped relatively low volumes and did not have consistent freight needs through the year, so Kotahi’s ability to match supply and demand for freight across a variety of imports and exports could create efficiencies, said Silver Fern Farms chief executive Keith Cooper.

New Zealand exporters were facing a loss of international business if ocean freight services continued to decline.

"New Zealand is effectively the last bus stop on the planet," he said.

Local exporters were pitched against international companies much closer to key markets, and their ability to compete relied on having efficient and reliable freight networks that offered quicker transit times and solid schedules.

"If we fail at this we put our exporting success story in serious jeopardy," he said.

Kotahi could also give freight owners and carriers more certainty around the country’s shipping needs.

"New Zealand exports are characterised by seasonal fluctuations and volatile demand," said Cooper. "By coordinating our freight needs we will be much more consistent in our scheduling"

Better use of freight capacity on both land and sea could make it possible to attract better shipping schedules and bigger ships as well as reducing the carbon footprint of the exports.


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