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Freight Partnership to Drive Competitiveness

19 July 2011

NEW ZEALAND - New Zealand dairy company Fonterra and meat processor Silver Fern Farms have launched a partnership that aims to bring New Zealand’s exporters and importers together to lift the performance of the country’s supply chain.

The Partnership, Kotahi, will match supply and demand for freight services on land and sea to get New Zealand products to distant markets around the world more efficiently.

Gary Romano, Managing Director of Fonterra Trade and Operations, said Kotahi will create a sea change that will help New Zealand businesses be more competitive in global markets.

“Export earnings are New Zealand’s bread and butter, just last year the collective return was over $40 billion. This is a great success story but as the world changes there is a real risk we will be squeezed out," he said.

"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.

“International companies, including shipping, are reshaping their business models to adapt to changing markets. If New Zealand is serious about being a truly global player we have to show leadership in areas like freight management. This is about taking the New Zealand economy to the world.

“The real driver for Kotahi is establishing an efficient and secure supply chain service that will ensure New Zealand businesses are able to operate with certainty and compete on a global scale,” he said.

When Kotahi starts operating on August 1 it will service approximately one third of all containers that leave New Zealand’s shores.

“We see real value in bringing freight management and purchasing into one partnership. At present, many smaller companies are handicapped because individually they ship relatively low volumes and don’t have consistent freight needs throughout the year.

"Through Kotahi’s ability to match supply and demand for freight across a variety of imports and exports we will be able to create efficiencies along the entire supply chain,” said Keith Cooper, CEO Silver Fern Farms.

Mr Cooper says exporters like Silver Fern Farms are facing a loss of international business if ocean freight services continue to decline.

“New Zealand is effectively the last bus stop on the planet. We are pitched against international companies that are much closer to our markets. Our ability to compete comes back to having efficient and reliable freight networks that offer quicker transit times and solid schedules. If we fail at this we put our exporting success story in serious jeopardy,” he said.

Kotahi’s establishment will also work in favour for freight owners and carriers by giving them more certainty around the country’s shipping needs.

“New Zealand exports are characterised by seasonal fluctuations and volatile demand. By coordinating our freight needs we will be much more consistent in our scheduling and will be able to better utilise freight capacity going north and south, on both land and sea. This means we will be able to attract better shipping schedules and bigger ships as well as reducing our carbon footprint by getting better at using what we’ve already got to full capacity,” said Mr Cooper.

The initial response from New Zealand business has clearly shown that there is a need for a partnership like Kotahi.

Flemming Gamst, whose brokerage Matchbox Brokers oversees a lot of New Zealand’s apple exports, said: “The creation of Kotahi is an important step towards like minded exporters and importers working together with service providers to achieve the most efficient and sustainable supply chain, jointly driving better value from supply chain assets. It is great to see Fonterra and Silver Fern Farms taking a leading role in what’s an important initiative for New Zealand Inc.”

Iain Hill, General Manager for KiwiRail Freight, said: “KiwiRail applauds the Kotahi initiative for recognising the advantage of managing freight demand across industries. The critical role of rail as a neutral line-haul provider will complement this new service offer to the market.”

Ports of Auckland Chief Executive Tony Gibson has also welcomed the establishment of Kotahi.

“Fonterra and Silver Fern Farms are to be congratulated for establishing this new venture. Greater collaboration among supply chain players has to be good for New Zealand. We’re a small country and need to leverage what scale we have.

“If Kotahi succeeds in improving vessel utilisation and providing greater certainty about demand for sea freight, it has the potential to achieve significant supply chain efficiencies. For Ports of Auckland, efforts to smooth peaks and troughs in export demand are also positive.

“We’re pleased to see New Zealand cargo owners seeking to play a larger role in decisions over logistics infrastructure and sea freight services, and look forward to working with Kotahi in the future,” he said.

Chris Greenough, Kotahi’s CEO, says Kotahi’s initial focus will be on working with exporters and ocean carriers to drive greater efficiency and service enhancements in sea freight.

He said cooperation with others to drive more efficient rail, road and port usage will naturally follow.

“There is a lot we can achieve fairly quickly to improve services and efficiency in the ocean freight space, but obviously in the long term these efficiencies will only be maximised if collectively we are able to work smarter on the land side too.”

Kotahi will first create a robust operating model for its partners’ freight before taking new customers on board in the coming months.

Appropriate authorisation from the Commerce Commission will be sought for Kotahi.

TheMeatSite News Desk



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