The company revealed its plan involving a consortium of companies, including Fonterra, KiwiRail and Dynes Transport, at a heavy traffic bypass meeting in Mosgiel last night.
Rather than travelling to Port Chalmers, trucks would take goods to the depot where they would then be transported by rail to the port.
Community leaders told a capacity Coronation Hall such plans meant there was an even greater need for a heavy traffic bypass of Mosgiel, avoiding the main street Gordon Rd.
Port Otago chief executive Kevin Winders said they had run out of storage land at the port and bought land at Fonterra’s Mosgiel site some time ago.
"The beautiful thing is there’s a lovely big railway siding there so what it gives us the ability to do is bring the product in there and shuttle it straight down to the port.
He said KiwiRail, Dynes Transport and Port Otago proposed a partnership to Fonterra that would simplify their supply chain giving more rail capacity and allowing Fonterra to move trucked product from road to rail.
"We were a bit keen and we took this proposal to them a couple of years ago just to say this is what you could do with our land and your land and we could work together to solve some problems."
At the heart of the new model would be the upgrade of the Fonterra Mosgiel site to develop the "Southern Edge Logistics Hub".
However, this would bring an increased amount of heavy traffic through Mosgiel.
Mosgiel-Taieri Community Board chairman Andrew Simms said the inland depot was great news for those who used State Highway1 through Dunedin, or those who travelled on SH88 through Port Chalmers, but it was not such good news for those who used SH87 through Gordon Rd.
He said a heavy transport bypass to the south of Mosgiel needed to receive greater urgency from the community and the Dunedin City Council.
Cr Jim O’Malley said it would take five to six years to start work on the bypass.
"If today we decided to do it, by the time the government writes the cheque it would be four to five years and it would another two years before you see the works.
"I can assure you as ratepayers you do not want to be doing this as DCC alone.
"If we were to go ahead and do it ourselves without them as partners we could probably get it out in the next two to three years, but it could cost two to three times as much ...," Cr O’Malley said.
