Kotahi: Fonterra's export supply chain strength

​One of Fonterra's trump cards is its supremely effective export supply chain, based around the appreciation that this means much more than simply ‘logistics’. Central to this is Kotahi, the freight management partnership it established in 2011 with New Zealand’s other leading exporter, meat business Silver Fern Farms.

Supply and demand

The formation of Kotahi has had a significant influence on New Zealand’s domestic and ocean freight vendors, helping to contain supply chain costs while maintaining a regular shipping service. By pooling New Zealand‘s freight needs, Kotahi is able to match supply and demand to get products to markets around the world in a more efficient way.

The deal in June 2014 between Kotahi, the leading port of Tauranga and Maersk Line was a prime example of Fonterra's readiness to invest in its supply chain, with Kotahi even taking a small stake in the port.

What next for Kotahi?

Now as a next step Kotahi has announced the establishment of Coda – a new 50:50 joint venture with the Port of Tauranga. It entails the amalgamation of four of the partners' complementary domestic logistics businesses to create leaner and more efficient logistics. The business expects to move more than five million tonnes per year of containerised and bulk freight to and from freight hubs and key shipping ports.

Fittingly, Coda will be led by interim Chief Executive, Scott Brownlee, who was previously Chief Executive of Dairy Transport Logistics (DTL), the transport provider that Fonterra acquired in 2010.

These developments and the ongoing strategy bear testament to the fact that export supply chain competence is central to Fonterra's competitive advantage over many of the world's dairy exporters.