Port of Tauranga, New Zealand's largest port company, is to buy two new gantry cranes and will shortly put out for tender dredging work that will allow it to accommodate bigger container vessels than rival Ports of Auckland can handle.
The Tauranga port's board today signed off on the purchase of two super post-panamax gantry cranes, capable of handling vessels of 22 or more containers wide. The company aims to be ready to accept 6,500 TEU (twenty foot equivalent container) vessels by August 2016, as part of a strategy to strengthen its position as a major freight hub. Currently it can handle 5,000 TEU vessels 'at the top of tide.'
The board has the confidence to make the investments after Port of Tauranga agreed to expand its partnership with Kotahi, the freight logistics company owned by Fonterra Cooperative Group and Silver Fern Farms that handles almost 40 percent of New Zealand's export cargo.
The new venture, called Coda, will include Tauranga's Tapper Transport unit, container packing firm MetroPack and 37.5 percent stake in MetroBox, which stores empty containers. Kotahi will pour its Dairy Transport Logistics (DTL) business into the venture as part of transactions scheduled to settle on May 1. The venture will make use of spare capacity on existing truck and rail links.
Port of Tauranga chief executive Mark Cairns says the assets were valued on a discounted cash flow basis , resulting in the port making a $2.5 million payment to Kotahi to make up the difference.
The partnership with Kotahi "is enormous for the port," Cairns told BusinessDesk. "We're coming out the tail end of a $350 million capex programme. This allows us to make those investments and hopefully guarantee we have the cargo and revenue to match."
Coda is forecast to move more than 5 million tonnes of containerised and bulk cargo a year to and from ports and freight hubs, according to the new company's chief executive Scott Brownlee, who was formerly CEO at DTL. It builds on a relationship forged last year, when Kotahi agreed to put 1.8 million TEU of export containers through the port over 10 years.
That deal allowed the Tauranga port to attract Maersk's Southern Star service, while Kotahi agreed to commit a total of 2.5 million export containers to Maersk over 10 years, giving the shipping company confidence to plan for the introduction of 6,500 TEU vessels. The partnership will also boost volumes through Timaru Container Terminal, which is now co-owned by Kotahi after Port of Tauranga sold down its stake, including output from Fonterra's Clandeboye plant in South Canterbury.
Tauranga port is developing an intermodal freight hub at Rolleston, south of Christchurch, which Cairns expects will replicate the success of Metroport, its freight hub in south Auckland.
The company lifted container volumes by almost 12 percent to 426,512 TEUs in its first half, and dairy and meat export volumes also rose, although the gains were offset by a drop in log volumes. Interim profit rose 8.2 percent to $42.6 million, although it was swelled by a one-time gain on the Timaru Container sale. Sales fell by $1 million to $136 million, missing a forecast by brokerage Forsyth Barr, and the company said it doesn't expect full-year earnings growth because of a downturn in forestry.
Cairns said the company is being cautious about the outlook and while he doesn't expect a pickup in log volumes in the second half, they are expected to recover in the next one-to-two years.
Port of Tauranga shares fell 1.8 percent to $17.30 and have gained 26 percent in the past 12 months, outpacing the NZX 50 Index's 17 percent gain.