Fonterra shipment hits record high amid pandemic due to supply chain resilience

New Zealand dairy giant Fonterra Co-operative Group shipped a total of record 2.59 million metric ton despite the impact of COVID-19, an increase of more than 4 percent year-on-year for the year ending July 31, according to its statement on Thursday.

Fonterra's chief operating officer (COO) Fraser Whineray said Kotahi, a joint partnership between Fonterra and New Zealand's largest red meat producer Silver Fern Farms, has been the key to this year's result.

Established by Fonterra and Silver Fern Farms about 10 years ago, Kotahi works with exporters, importers and industry partners to create a sustainable, more efficient supply chain.

"But it's not just Fonterra that's seen benefits from this. Through the scale that Kotahi brings with its strategic partnership with Maersk, many other Kiwi companies have been able to get their product off our shores," Whineray said.

Jason Stewart, the shipping manager at New Zealand Wool Services, shared Whineray's view and said there have been challenges, but the partnership has paid dividends.

"We have been in a position to keep our product moving through the long-term partnership we've had with Kotahi which has given New Zealand Wool Services a level of competitive advantage that others in the market don't have."

The supply chain has suffered a raft of challenges this year including shipping schedule integrity plunging from a long-term average of 80 percent to below 35 percent in the year.

"If that wasn't bad enough, there were temporary port closures and restrictions as well as container shortages", said Gordon Carlyle, Fonterra's Director of Global Supply Chain.

Reworks, or re-planning of the end-to-end chain due to changes in vessel arrivals, jumped by 350 percent in 2021 from the year before.

"The resilience of our supply chain has been a real differentiator with customers this year and we couldn't have achieved this without Kotahi," said Gordon.

Kotahi CEO David Ross warned it will still be hard graft for some time to come. "We continue to see operational bottlenecks from port congestion, vessel delays and port omissions which means we aren't receiving shipping capacity and containers in the time period that exporters require, making it a challenge to get products to export markets."