The decision to stop calling at Timaru stemmed from Fonterra's decision to "overturn the prevailing logic to bring ships to the cargo" and send most of its South Island product to Lyttelton.
BUSINESSDESK: Timaru has lost its container port, thanks to New Zealand government subsidies for its KiwiRail business and dairy co-operative Fonterra's decision to bypass Timaru in favour of Lyttelton port three years ago, Timaru port's chief executive Jeremy Boys says.
In a statement to BusinessDesk, Mr Boys said the decision by global container lines Maersk and Hamburg Sud to stop calling at Timaru stemmed from Fonterra's decision to "overturn the prevailing logic to bring ships to the cargo" and send most of its South Island product to Lyttelton.
It had chosen to rail product from major dairy processing plants at Edendale, in Southland and Clandeboye, south of Timaru, to Christchurch's container port, using a KiwiRail service "enabled by government’s investment in rail without requiring a full return", Mr Boys said.
"Whether we agree on these points, PrimePort [Port of Timaru] will now be at the forefront of change."
KiwiRail was repurchased from its Australian owner Toll Holdings, by the Clark Labour-led government and is now the subject of a major capital reinvestment programme, funded in part by the partial sale of state-owned energy companies.
The rail company was revealed yesterday to be considering axing 220 jobs as part of initiatives to make the business commercially competitive. The government wrote down the value of KiwiRail's land and network from $13.4 billion to $6.7 billion last month.
The combined Maersk and Hamburg Sud OC1/Trident service will now steam direct to Napier from Otago, the change taking effect in mid-September.
Mr Boys confirmed it will mean the loss of a container port in the South Island.
"This is the only container service into Timaru and although the port is at the epicentre of the South Island’s trade with perhaps the most direct logistics, it is difficult to see that the container business can continue or be put into a holding scenario without ships calling," he said.
"The outcome does not impede PrimePort’s [Timaru] clear direction as a breakbulk port."
The port company employs 55 permanent and 30 casual staff and "many will be impacted", Mr Boys said.
