Shipping rates to New Zealand have increased fourfold since April, access to shipping containers is being hampered by port congestion caused by resurgent global demand some vessels are not backloading empty containers.
The problem has been accentuated by industrial action at Australian ports and capacity issues and a skilled worker shortage at the Port of Auckland.
“This is proving disruptive to the NZ supply chain with congestion and gaps in schedules increasing landside costs and putting pressure on service levels,” Kotahi, NZ’s largest containerised exporter, chief executive David Ross said.
In a podcast to shareholders, Silver Fern Farms (SFF) supply chain manager Dan Boulton says key ports in China, the UK and North America were congested or closed due to congestion, disrupting global shipping schedules and forcing some ships to bypass NZ ports.
Ross says the value of strong strategic partnerships was coming to the fore during this crisis.
“Working collaboratively with our customers and partners, we have been managing this situation for a number of months and continue to operate at close to 99% container availability with good access to vessel space,” Ross said.
Ministry of Transport supply chain manager Harriet Shelton describes the situation as the culmination of a perfect storm, which is amplified by NZ entering its peak trade season.
“These international and domestic factors combine to result in a backlog in both imports and export containers, and difficulties in distributing empty containers around the NZ coast for exports,” Shelton said.
Strong global demand for shipping has caused an increase in container base rates and the imposition of congestion surcharges.
“As of December 2020, maritime freight base rates to NZ have risen fourfold since April and remain at historic highs,” she said.
And, trade is picking up.
“For example, across the country as a whole, for the month of December 2020, full container imports were up 18.7% on December 2019 levels and full container exports were up 3.5%,” she said.
“Empty container imports were up 17.5% on 2019 levels.
“Nonetheless, significant supply chain risks remain as a result of the backlog, including empty containers stuck in Auckland depots.
“This could impact exporters around the country in the coming peak growing and export season.”
Meat Industry Association chief executive Sirma Karapeeva says the supply of refrigerated containers is tight, but companies are managing the situation.
Central to that was careful planning of livestock flows into plants and product going out.
“It is also important for farmers to plan ahead as much as possible when dispatching livestock to processing plants and to keep talking to their processors,” Karapeeva said.
Custom Brokers and Freight Forwarders Association (CBAFF) chief executive Rosemarie Dawson says the seriousness of the disruption should not be underestimated.
“It is serious and likely to go on for at least the first quarter of this year and into the second quarter.”
ANZ agri-economist Susan Kilsby says delays getting product into and out of certain ports, including in China, is increasing shipping times and prompting customers to stockpile product.
“There have been some concerns that buyers may have stocked up on product to limit upside price risks and to ensure they have sufficient supply on hand to
counteract any logistical challenges, suggesting weaker demand ahead,” Kilsby said.
NZ dairy product is still getting to markets due to strong ties between Kotahi, which includes Fonterra and international shipping company Maersk.
Kilsby says port congestion means it is taking longer for ships to unload goods and in some cases goods are being diverted to alternative ports.
Shelton says Ministry of Transport officials are leading an intergovernmental group of officials, including the Ministry of Foreign Affairs and Trade, Ministry for Primary Industries, NZ Trade and Enterprise and Customs, to monitor developments and assess how the Government can assist.
It is also working with agencies to assist Ports of Auckland with work visas and immigration processes to fill shortages of skilled labour which has created a logistical pinch point.
