The nation's freight sector should be focusing on building ocean cargo capacity, and flexibility in making connections to the shipping routes to key markets, rather than rivalry between individual ports, says Fonterra's general manager of supply chain strategy, Nigel Jones.
"That's a bigger issue for New Zealand to focus on, rather than the port issue," he told NZPA.
The nation's international competitiveness depended on its ability to connect directly with the large consumption markets in the US and Europe through Asia, he said.
Fonterra yesterday announced big changes in its export shipping, switching shipment of product made at its Clandeboye plant in South Canterbury from Timaru to the container terminal at Port Lyttelton for the next five years, and dropping the port at New Plymouth to ship production from its Whareroa plant new Hawera through Auckland, Tauranga and Napier.
The Timaru and Taranaki ports will each lose about a third of their cargo volumes in the changes, while Lyttelton will pick up a boost of as much as 10 percent in its container traffic.
The 65 percent reduction in Fonterra's sendings of Whareroa product through Port Taranaki, will result in about 22,000 containers being cut from the record 65,000 containers the port handled last year.
Port Taranaki spent $20 million in 2007 on dredging so that it could handle the same big ships that call at Auckland and Tauranga, but the port's chief executive Roy Weaver said Fonterra pointed to a 20 percent reduction in container slot capacity on shipping services to Asia, when it needed more options than the one service through New Plymouth.
By railing product to Auckland, Tauranga and Napier, Fonterra could connect with up to a dozen shipping lines, Mr Jones said.
"Rather than limited to one sailing per week out of these ports we have now got a multitude sailings per week out of these ports,.
"When you've got big operations like Whareroa in Taranaki and Clandeboye in South Canterbury, having only one sailing a week to handle that volume creates a very fragile supply chain," he said.
A delayed or missed loading could mean a failure to make the connection for transhipment at a bigger port, and an increase in such fragility was not helpful when the company was trying to run to increasingly-fine supply demands from customers.
There had been some phenomenal capacity reductions in shipping space out of New Zealand in the past year, Mr Jones said. There had been merging of shipping lines, and increased numbers of vessel-sharing arrangements between shipping companies, similar to code-sharing on air routes, and a reduction in freight space.
"As you get tighter on capacity, you've got to manage that capacity far more efficiently.
"The flexibility these changes give us allow us to do that." Most of the volume shifted from Port Taranaki will be moved to Auckland or Tauranga or Napier ports.
Pressed on the comparative advantages of Auckland and Tauranga, Mr Jones said there was a fine balance in the way Fonterra managed its carrier shares, how the shipping capacity fluctuated, and where the customer demand lay.
"It's a fine balancing act which varies from week to week," he said.
Rather than focusing on the specific port, the exporter's key driver was which shipping services suited its needs: "This is about building flexibility, particularly given the current capacity constraints" Further down the track the company would need to take into account introduction of the next generation of bigger container vessels, which would be important to Fonterra's plans for reducing the carbon footprint of its product.
The latest changes were unrelated to the carbon footprint work, but Mr Jones said New Zealand needed to encourage bigger ships to call at its ports.
"We've been a strong advocate of rail," he said.
It had been "sad" that the nation's biggest exporter had not been the biggest user of the rail network, but now there was scope for high volumes of Fonterra freight to underpin some rail services, providing basic loading to provide service regularity that would attract other exporters.
Mr Jones emphasised Fonterra did not see a case of road versus rail, but an overall need for "inter-modalism" because there were some situations where road freight made the most sense.
"When we're moving large volumes of finished goods, rail is a logical provider," he said. "Its large volumes, we can move it in big trains, and it goes from a single point to a single point: it's more environmentally friendly, and its sustainable".
Fonterra's farmer shareholders were thinking of their business in 20 and 30 year horizons, and New Zealand needed to be able to move large volumes by rail.
The Government is providing a $90 million subsidy of KiwiRail and Mr Jones said that control of the rail system returning to New Zealand ownership had helped Fonterra rely on it more for moving product to ports.
"We didn't have a lack of confidence in (Australian-owned) Toll, but there was significant uncertainty as to the ownership issues and sustainability of the ownership model - that hampered us being able to do anything longterm, because we didn't know what environment we were operating in.
He noted that planning was still necessary to move a manufactured product from Whareroa across the North Island to Napier's port, over the same rail line already carrying significant quantities of raw milk from Hawke's Bay and long trainloads of empty tankers going back the other way.
