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Joint Venture between Oji Fibre Solutions and Netlogix

Article by Andrew Bevin, published in National Business Review Monday 3rd December 2018

A joint venture between Oji Fibre Solutions and Netlogix wants to provide New Zealand with more stable, affordable shipping solutions and representation to large shipping providers.

Bearing360 is looking at becoming a middleman or facilitator, using Oji’s existing connections and port storage facilities to enable more consistent cargo rates and ensure a base cargo level at regular intervals, improving the use of cargo ships, leading to cheaper fees for exporters.

From inception in January 2019, Bearing360 will manage more than 70,000 container loads of export from New Zealand a year through an initial client base of 11-12 customers including Carter Holt Harvey, Daiken New Zealand alongside Oji’s companies and several small companies.

Oji is Japanese-based pulp, fibre, and paper manufacturer that has worldwide shipping operations. It has significant interests across New Zealand in forestry and wood processing and has shipping facilities through its Lodestar arm. Netlogix is a freight logistics provider based in New Zealand.

Bearing360 general manager Dritan Ramohitaj says recent changes in the worldwide shipping industry have had a negative impact on New Zealand exports and says the new venture will give exporters the scale to negotiate with big shipping companies.

Some ocean freight rates are at all-time lows and Bearing360 says it is impacting on New Zealand’s export industries.

In anticipation of growth that never came to fruition, shipping companies invested heavily in larger, more efficient fleets.

However, demand didn’t meet expectations and companies were forced to look at mergers and acquisitions, "You could argue there has been more change in the past two to three years than in the past 20 in the shipping industry. Consolidation has been significant."

Mr Ramohitaj predicts shipping companies will eventually thin down to just five major players.

Bearing360 is also trying to keep the market sustainable for shipping lines by levelling out cargo flows to improve predictability.

"The shipping lines fix their schedules and vessel sizes in advance, largely in anticipation of expected cargo volumes. The venture will be relatively consistent with our cargo by levelling out the large ups and downs to provide a more reliable base of container volumes. Ultimately, shipping lines can then get better use of their vessels, which should reflect more sustainable pricing for our customers," Mr Ramohitaj says.

The model is based on a Netlogix platform that links otherwise disparate truck companies allowing customers to send cargo across the country via the most efficient manner.

Netlogix chief executive Chin Abeywickrama says the company built an online portal for the venture, which allows exporters and importers to access a comprehensive network of global shipping lines, which might help the lines more accurately predict cargo volumes.

"It will integrate the global shipping market with local shippers. Benefits will include increased visibility of cargo and the ability to make one seamless booking across the whole global network," Mr Abeywickrama says.

Bearing360 wants to provide a more comprehensive service offering than current providers, with no single dedicated shipping provider and no particular alliance to any ports, giving the company an ability to craft logistics solutions customer to customer unlike existing shipping suppliers in New Zealand.

"There are various permutations of service offerings but I think the extent of what Bearing360 is actually offering to the market is unique,"  Mr Ramohitaj says. 

"The venture is port-agnostic, it can ship from any port, it doesn’t have to go through a particular pipeline and it uses a suite of shipping companies and basically tries to craft something that will suit any customer."

The venture will have access to Oji’s port facilities, which are already at every New Zealand port except New Plymouth. 

Netlogix and Oji hold a 50% stake each in Bearing360.