Fonterra exit hits Ports of Auckland

Wednesday 4th January 2012 3 Comments

Ports of Auckland, facing protracted industrial action, stands to miss out on up to $100,000 a week in revenue once Fonterra Cooperative Group quits using the hub.

Port chief executive Tony Gibson blamed the Maritime Union of New Zealand (MUNZ) for Fonterra’s decision to re-route $27 million worth of weekly exports through Tauranga and Napier hubs instead of Auckland.

Spokesperson Dee Radrakrishnan told BusinessDesk it’s unclear as to how much the decision will cost the port, though it will miss out on as much as $100,000 a week, depending on trade volumes, once Fonterra leaves.

The dairy exporter’s exit comes a month after Maersk, the biggest shipper visiting New Zealand, switched its services to Port of Tauranga.

“With MUNZ threatening further strike action, it is inevitable that customers will look for alternatives and contingencies,” Gibson said in a statement. “Coupled with the departure of Maersk’s Southern Star service to Port of Tauranga, the loss of Fonterra’s business means that action is needed urgently.”

The union and the port have been at loggerheads over their employment contract, precipitating a strike and a lock-out last month – typically a peak period in the run-up to Christmas.

The departure of one of Maersk’s services is expected to cost the port $20 million in annual revenue, which amounts to about 11 percent of the $177 million Ports of Auckland made in sales in the year ended June 30.

Fonterra will cease using the Auckland hub from the end of the month until further notice.

The dairy exporter whittled down the number of ports it uses since 2009, and last year set up a freight alliance with meat processor Silver Fern Farms to build a bigger bargaining chip with international shipping lines.

Gibson said the port has made a final offer to the union, including a 10 percent rise on hourly rates and performance bonuses of up to 20 percent on hourly rates, plus the retention of existing benefits and entitlements. Workers will be expected to accept a new roster system in return.

“In the best interest of customers, staff and the port’s future, some constructive progress is needed from the union, and needed now,” Gibson said.

BusinessDesk.co.nz

Comments from our readers

On 4 January 2012 at 4:09 pm amused said:

I believe Ports of Auckland Management are over egging Fontera decision in respect to how it relates to strike action. Fontera has been rationalisinf and ramping up its use of Port of Napier for some time.

On 4 January 2012 at 4:29 pm Allan said:

Time for some bold action and inovative thinking, heres a thought, close down Auckland Ports as a commercial entity apart from cruise ships, set up inland ports south of the city where land and labour is available and feed through rail and road to the well proved Port of Tauranga which has the capacity and proven cultures to add real values. Then use the many billion dollars worth of real estate freed up to really make Auckland City and its port one. Also imagine the Auckland City roading networks without the port traffic and heavy trucks, massive savings on future roading requirments.Oh and the Unions that seem hell bent on destroying the Ports of Auckland now can go dig post holes for a job on $15 an hour

On 4 January 2012 at 10:26 pm Alberre said:

Surely the loss of business must result in a reduced number of personnel anyway. I expect that there are people who regard having a job going into 2012 as a bonus. For those that don't, maybe there are now additional port jobs available down in Tauranga.