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Port Otago management has warned jobs could go following the loss of 10%-15% of its container traffic due to Fonterra consolidating its port usage.
The port has acted as a clearing house for the dairy company, with 17,000-25,000 containers transshipped from New Plymouth and Timaru to Port Chalmers, where they were stored and then reloaded on to direct export shipping services.
Last week, Fonterra announced it was consolidating the shipping of containers from those two northern ports to Lyttelton, Napier, Tauranga and Auckland, ending transshipping.
Port Otago chief executive Geoff Plunket said yesterday the impact of the loss of that business was significant and he had instigated an immediate review on all aspects of the company's business as a result.
"Obviously, losing 10% to 15% of container throughput we therefore have to look at how we operate."
The port employs about 320 staff, of whom about 230 are cargo handlers, and while the move could affect staffing levels, Mr Plunket declined to comment further.
Container volumes through the port had been growing, with the company handling 171,000 containers in 2007 and 209,000 in 2008.
Mr Plunket stressed that Fonterra remained the port's largest customer, and it also handled non-containerised cargo.
Staff would be consulted on the review and on the issues, but Mr Plunket declined to set a time for the review.
Fonterra is in the process of building a fourth milk drier at its Edendale factory in Southland and a dry and cool storage facility at the former Fisher and Paykel factory at North Taieri in anticipation of the continued growth of southern milk production.
Last week, the company said virtually all its dairy production from Edendale and the Stirling cheese factory near Balclutha would be shipped through Port Otago, with a small amount through South Port at Bluff.
Fonterra's supply chain strategy manager Nigel Jones said last week the port consolidation was designed to improve shipping services and to save costs.
He said container volumes through Port Taranaki would reduce by 65% and through Timaru by 80%.
In the case of Taranaki, Mr Jones said Fonterra would be moving from having one indirect service to Southeast Asia each week to having more than a dozen shipping options.
Rail would be increasingly used to shift containers to its key ports, including to its North Taieri store and from there to Port Otago.
The news coincided with simmering industrial action at the port over initiating a vessel operations team to work 10-hour shifts, a proposal resisted by the Maritime Union of New Zealand (MUNZ) and Rail and Maritime Transport Union.
The sticking point has been whether the team concept retained pay and conditions agreed to under a two-year deal struck in 2008.
The MUNZ Port Chalmers secretary, Phil Adams, said yesterday the unions had put forward money-saving proposals which had been rejected by management and he hoped they would look at cost-saving steps other than redundancies.
Mr Adams believed the extra production coming from Edendale would compensate for the loss of transshipping.
He said the port's ability to handle the large 4100-container vessels would guarantee its future.
"I believe the port's future is assured.
"We've had hiccups in the past and got through them before and we'll get through them again."