Tuesday, 06 July 2021 08:55

Shipping venture paying off

Written by  Sudesh Kissun
Joint shipping venture Kotahi - a collaboration between Fonterra and Silver Fern Farms - has a partnership with Maersk. Joint shipping venture Kotahi - a collaboration between Fonterra and Silver Fern Farms - has a partnership with Maersk.

Supply chains throughout the world are under pressure but Fonterra is making its logistics well, says chief operating officer Fraser Whineray.

He says joint shipping venture Kotahi - a collaboration between Fonterra and meat processor Silver Fern Farms formed after the 2007-8 global financial crisis - is helping New Zealand exporters continue sending food to overseas customers.

Kotahi now has over 50 customers and exports one-third of New Zealand's container traffic.

Whineray told the Smaller Milk and Supply Herds (SMASH) conference in Cambridge recently that Kotahi has a partnership with Maersk, the biggest container shipper globally. Kotahi is one of the shipping company's top three customers.

It has helped Fonterra and other NZ exporters move products and empty containers around the world and avoid storage-related costs.

"And when you are in trouble, because we don't swing $50 million across over the rail of a ship every day, you don't invoice it, and you can build up a working capital and storage [at] a heck of a rate of knots, you need partners that you can trust. Maersk is absolutely that," says Whineray.

"It's been very important for NZ to get imports in, empty containers in, so that we can ship stuff out. It's tight but it's going well for us."

Fonterra's half-year results in May showed that the co-op was eight days behind on shipping, an equivalent of $400m working capital.

So, getting products off rail is as important for the co-operative as picking milk up from farms.

Whineray says shiping routes can get jammed up pretty quickly. He doesn't expect the current global shipping woes to go away soon.

"The supply chain won't relieve for a while: what it needs people to stop spending as much money on goods.

"They should only spend a little or they should spend on services or something made in their own countries or in Europe and America."

Whineray explained that it wasn't the Covid bug that was impacting global shipping.

"It's not because ships can't sail. Everything that floats is trying to work the Pacifc pretty hard," he says.

Stimulus packages by the US and European governmnets mean people in these countries are staying at home with lots of money to spend.

And because they can't attend sporting events, festivals or do tourism, they are spending it on household items like TVs and upgrading homes on "a global simultaneous splurge". And this, Whineray says, is putting global shipping well beyond its maximum capacity.

"And when that happens, you get two weeks wait of Port Long Beach in California (US's second busiest cargo port)," says Whineray.

"At one point there it was faster to go through Panama Canal and offload on the East Coast, because it's a big going from China to the US and China to Europe, which now has shipping rates on a spot basis six times higher than what they were."

More like this

All eyes on NZ milk supply

All eyes are on milk production in New Zealand and its impact on global dairy prices in the coming months.

"Our" business?

OPINION: One particular bone the Hound has been gnawing on for years now is how the chattering classes want it both ways when it comes to the success of NZ's dairy industry.

Farmers' call

OPINION: Fonterra's $4.22 billion consumer business sale to Lactalis is ruffling a few feathers outside the dairy industry.

Wasted energy

OPINION: Finance Minister Nicola Willis could have saved her staff and MBIE time and effort over ‘buttergate’ recently by not playing politics with butter prices in the first place.

Featured

Australia develops first local mRNA FMD vaccine

Foot and Mouth Disease outbreaks could have a detrimental impact on any country's rural sector, as seen in the United Kingdom's 2000 outbreak that saw the compulsory slaughter of over six million animals.

NZ household food waste falls again

Kiwis are wasting less of their food than they were two years ago, and this has been enough to push New Zealand’s total household food waste bill lower, the 2025 Rabobank KiwiHarvest Food Waste survey has found.

Editorial: No joking matter

OPINION: Sir Lockwood Smith has clearly and succinctly defined what academic freedom is all about, the boundaries around it and the responsibility that goes with this privilege.

National

All eyes on NZ milk supply

All eyes are on milk production in New Zealand and its impact on global dairy prices in the coming months.

Machinery & Products

Leader balers arrive in NZ

Officially launched at the National Fieldays event in June, the Leader in-line conventional PRO 1900 balers are imported and distributed…

JDLink Boost for NZ farms

Connectivity is widely recognised as one of the biggest challenges facing farmers, but it is now being overcome through the…

New generation Defender HD11

The all-new 2026 Can-Am Defender HD11 looks likely to raise the bar in the highly competitive side-by-side category.

» Latest Print Issues Online

Milking It

Full cabinet

OPINION: Legislation being drafted to bring back the controversial trade of live animal exports by sea is getting stuck in the…

» Connect with Dairy News

» eNewsletter

Subscribe to our weekly newsletter