OPERATIONAL/STRATEGIC BENEFITS FACTORED INTO ROI

Although he concedes this is not particularly fast, the project was also set up to provide greater operational/strategic benefits to the company, factors which are difficult to value, and so were not included in the ROI calculations.

Asked whether acquiring multi-functional equipment, rather than a dedicated chip loader, had ever been considered, Hardie points out that the only other bulk product being exported from the Port of Napier is fertilizer. “We discussed options with the fertilizer company and made some provisions for sharing of specific parts of the equipment. However, wood chip carriers have to be very tall to achieve a high air draft, whereas fertilizer carriers have a low air draft. Woodchip conveyors can therefore be inclined steeper than fertilizer conveyors.

Because of the space constraints at Napier, the cost of a fully multi-functional system to overcome these two issues would have been very high. The fertilizer company therefore declined to make this investment.”

Hardie believes that improving ROI could be achieved by reducing the cost of transporting chips, either internally or internationally. Other costs, such as maintenance on fixed equipment, are held down by using in-house staff, although work on mobile plant is outsourced. Equipment can be owned or leased, with purchases funded through bank credits. “Various factors influence this, ” he explains. “These include whether the equipment is fully utilised or not; if it is specialised and therefore wholly dedicated to a Pan Pac task; whether we can make use of the equipment on other contracts; and, finally, the company’s purchasing power at any one time.”