Farmers are being advised not to play the prime stock market this season, with exporters bracing themselves for another year of shipping disruption.
Silver Fern Farms (SFF) supply chain manager Dan Boulton says farmers should consign prime stock when they are ready and space is allocated, or they could face delays caused by shipping.
“As soon as they get space to get their animals away, then they should take that opportunity. Don’t delay,” Boulton said.
The Ministry of Transport reports a 6.3% increase in the number of ships servicing Oceania in the last year, but despite that, US shipping monitoring company Project44 reveals substantial year-on-year increases in vessel and shipment delays across most major trade lanes connecting China.
Exporters expect global supply issues will continue for another year, with some speculating it could last 18 months.
Shipping lines are addressing congestion by dropping ports from their schedules to reduce the amount of time vessels are idle, but this is delaying deliveries.
With the new production season about to start, meat and dairy companies say inventory levels are at normal levels or lower despite a year of container shortages, vessel scheduling delays and port congestion.
Boulton estimates 20% of global shipping capacity is currently delayed, and he says companies and exporters are working together to consider options, such as jointly chartering ships.
Weekly ship visits to several New Zealand ports have extended to fortnightly, which means more internal movement of containers to connect with ships and is causing some ports to close their marshalling yards due to container congestion.
Boulton says SFF has low inventory but has accessed more cold storage ahead of the new season, is simplifying its ordering systems to streamline the supply chain and looking at how to reduce the risk of delayed delivery of chilled meat.
He says its alliance with logistics company Kotahi has more than proven its worth, avoiding the worst of shipping delays.
Kotahi chief executive David Ross says NZ’s shipping schedule reliability is below the global average at a time when demand continues to trend above pre-covid levels.
Ross warns exporters may need to accept continued global supply chain disruption until new global shipping capacity arrives in the second half of 2022.
Last season Kotahi brought additional capacity to service NZ through its shipping partner Maersk and Ross says it will continue to work with freight operators this season.
NZ Council of Cargo Owners chair Simon Beale says shipping issues have been accentuated by teething problems with a new automation system at the Ports of Auckland, which could linger until next March.
This is causing congestion, disrupting shipping schedules and delays in relocating empty containers.
“Until Auckland performs, we will have issues because everything else performs around it,” Beale said.
For the first time in 18 years, Beale says his company, T&G Global, chartered ships to get product to market, including with Affco on a joint shipment to the US.
While there appears to be better availability of containers, Beale warns it will still be “touch and go”.
Alliance Group sales manager Shane Kingston says the signs ahead of the coming season are not great.
“For instance, in the Los Angeles-Long Beach area, there were approximately 25 vessels waiting to berth this week, which is consistent with the past six months.
“At this stage, we do not anticipate any significant improvement in the situation in the short-term,” Kingston said.
Despite these challenges, Kingston says Alliance inventory levels are substantially less than they were a year ago.
Fonterra’s director global supply chain Gordon Carlyle says the co-operative has “closed out the year in really good shape”, which he attributes to their collaboration with Kotahi and its partnership with Maersk.
The ANZ NZ Agri Focus says food demand has been artificially boosted by buyers building up stocks in case shipping disrupts supply lines.
“This has created additional demand that won’t be sustained once sufficient stocks are at hand,” it said.
It notes the shipping pinch point will be reached in the third quarter when global exports peak ahead of holiday spending.
