Port of Tauranga's landmark alliance with freight company Kotahi and Maersk Line is likely to see deep draft 6500 TEU container ships calling at the port by the end of next year, says company chairman David Pilkington.
The deal announced late last week would see Kotahi and Maersk entering intoa 10-year commitment on shipping volumes through Tauranga and PrimePort Timaru, which was 50 per cent owned by Port of Tauranga.
In addition, Kotahi would take a 49 per cent share in Port of Tauranga-owned Timaru Container Terminal, which had a 30-year lease to run Timaru's container services.
"We've been working for some time to try to get commitment either from a shipping company or indeed from a significant shipper," said Mr Pilkington.
"What became very evident was that we needed a three-way arrangement, because the shipping company won't bring ships unless they've got a commitment of cargo, and the shipper won't back a big ship port unless they've got a long-term commitment."
Port of Tauranga had been engaged in major capital expenditure, which had included an expansion in the wharf area, upgraded crane capacity, as well as securing the resource consent for the additional dredging programme. The port was also about to take delivery of two larger tugs.
"The trick is to time the capital expenditure to match the business coming on," said Mr Pilkington. "But if you don't make the capex, the business won't come.
"The arrangement with Kotahi and Maersk gives us the certainty to push the button on the dredging."
The dredging was expected to start next year and to be finished by late 2015.
The agreement for Kotahi to take a share in the Timaru port came about because the company - which was owned by Fonterra and Silver Fern Farms - wanted a stronger relationship, he said.
"They were very clear that they wanted to cement a structure where both sides saw each other as a partner working to grown an effective and efficient long-term supply chain."
The deal was a good one for the port in terms of giving security over the investment in dredging, he said. "But it will also bring additional volume though the port. Our view is that once the big ships are calling at Tauranga, we expect other exporters and importers will start to look at Port of Tauranga as a good option."
Port of Tauranga chief executive Mark Cairns said the ability to accommodate the next generation of large ships would address New Zealand's disadvantages in international export markets, including distance from major routes and relatively small and dispersed freight volumes.
Mike Knowles, shipping manager for Zespri, a high volume shipper, said the deal was good news for the kiwifruit industry.
