Fonterra signs 20-year Toll NZ deal, flags port services shake-up

Staff WriterNovember 12, 2004, 12:00 amNovember 12, 2004

Toll NZ has clinched a deal with dairy giant Fonterra to rail more 800,000 tonnes of produce a year to the ports of Auckland and Tauranga. The 20-year deal will cut thousands of truck movements a year from roads between the Waikato region and Auckland and Tauranga. It includes plans for a 50,000 metric tonne dry store to be built at a Toll-managed freight village earmarked for Hamilton. Fonterra Co-operative Group said the deal was part of an ongoing review of its national logistics arrangement &#8211 a review that it said will soon include a shake-up of its ports services arrangements. The group’s general manager of logistics, Nigel Jones, said the decision to move to rail reflected "increased confidence" in New Zealand’s network since Toll took over rail operations and the government reacquired the tracks. "Our agreement with Toll will eventually cut approximately 45,000 truck movements from Waikato roads and the main highways between the Waikato, Auckland and Tauranga," Mr Jones said. "It allows us to streamline our logistics operations and will contribute to our continuing competitiveness as a low-cost producer of dairy products." Mr Jones said the deal is part of Fonterra’s aim to develop "a port neutral operation" in the upper North Island. "This allows us to work with our key strategic ocean freight partners to further reduce total supply chain costs," he said. "With our reliance on shipping it’s vital we’re able to reduce port and service costs given the current environment that sees cost trending upwards, the result of a tightening supply in ship and container capacity globally." Toll NZ chief executive David Jackson said Fonterra had been one of the first companies it had approached once Toll NZ took over operations from Tranz Rail last year. Mr Jackson said the new track owner, New Zealand Railways Corporation had played a significant role in landing the deal. The agreement is typical of the partnerships that Toll NZ is seeking, he said. "It is an opportunity to co-invest capital in a long-term project that delivers value to stakeholders and will also have a significant influence on the efficiency and growth of rail in New Zealand," Mr Jackson said.