A new "pop-up" depot will be built from the ground up at 160 Ravensbourne Rd, north of Moller Park, to accommodate about 2000 excess shipping containers.
Port Otago chief executive Kevin Winders said the current container terminal, in Port Chalmers, was "small and congested".
It primarily held a large proportion of empty containers that were upgraded and offloaded to customers coming into port.
While its volume had been fine for some years, increased transit business had put the port under pressure to move these empty containers so full containers could be stored in their place.
To address this, the shipping company decided to reopen a previously defunct depot. Fulton Hogan is due to start construction next week.
Mr Winders said the Ravensbourne depot was not a long-term solution, due to a one-way traffic flow, but space had been running out.
"The first approach for us is to look after our customers this season, so getting the Ravensbourne site up is just critical," Mr Winders said.
"It’s quite a well-needed requirement for us at the moment, and we’re pleased to be cracking on with that next week."
The Ravensbourne depot was last used about seven years ago.
"The bones" of a container operation were still there, Mr Winders said.
In combination with its current container depot at Strathallan St, which stored about 1500 containers, the additional depot in Ravensbourne would augment capacity and release pressure on the terminal.
It would offer an interim solution while the company progressed its "ultimate plans" of shifting to a new inland depot in Mosgiel for long-term growth.
"Ultimately we see our future out in Mosgiel for our inland depot and industrial hub out there . . . and growth into the years to come."
Attention would be diverted to its 8ha inland depot in Mosgiel, at the end of July, once the season had slowed down.
Port Otago would develop planning and enter construction "in due course", Mr Winders said.
