UPDATED: Big deals bring big ships to New Zealand at last

UPDATED: A rare 10-year shipping contract will pave the way for global shipping line Maersk to bring 6,500 TEU container ships to New Zealand by the end of 2016, but they will initially call only in Tauranga.

Kotahi, the logistic company led by Fonterra Cooperative Group [NZX: FCG] and Silver Fern Farms which has 30 other exporter customers, has done a 10-year deal with Port of Tauranga [NZX: POT] under which it will provide 1.8 million containers to the port and will put cargo through Port of Tauranga’s Timaru Container Terminal in return for 1.5 percent equity stake in the port and 49.9 per cent ownership of its Timaru terminal.

The agreement replaces existing rebates Kotahi has, the size of which it would not comment on.

It has done a separate 10-year deal with Maersk Line which provides 2.5 million of export containers to Maersk over ten years.

Maersk Line managing director Gerard Morrison told a briefing in Auckland the 10-year deal was a first for Maersk in New Zealand, and “it is not something we have been able to do elsewhere in the world either”. It provided certainty so the shipping line could plan to bring bigger ships to New Zealand.

“We’ve been looking for ways to evolve from the traditional 12 month contract cycle that exists in this country,” Morrison said.

Maersk is introducing a new 4,500 TEU service to Tanjung Pelepas in Malaysia in October and will work on bringing the larger ships.

Port of Tauranga chief executive Mark Cairns said the agreement it had with Kotahi required Port of Tauranga to be ready to handle 6,500 TEU ships by 2016. The port will use a “big vacuum cleaner” to hoover up sand in its channel.

He said the volume the 10-year deal delivered to Tauranga “was a $5 to $6 billion deal to put some context around it”.

The agreements announced today ensured that New Zealand retained direct shipping calls and did not become a branch of Australian services, media were told.

The bigger ships will be 22 per cent more carbon efficient.

At this stage there isn’t a port in the South Island that can handle the 6,500 TEU ships.

Talks will be held with South Island ports but when the larger ships call it will initially only be a Tauranga, media were told. The growth of cargo in the South Island is large enough for a possible big ship port. It is also very unlikely that vessels larger than 6,500 TEU will call in New Zealand due to the depth of the ports.

Port of Tauranga will dredge its harbour more to accommodate the 6,500 TEU ships by the end of 2016. Its Timaru terminal gets an additional 52 vessel calls a year from this deal.

The port operator's shares gained 4.4 percent to $15.

(BusinessDesk)