Congestion at the ports and a lack of space on planes and container ships is start to hit exporters, manufacturers and ultimately consumers in the pocket.
Global supply chains have been sluggish since Covid-19, delaying imports. And while export figures have been holding up well, growers say the difficulty and cost of getting a spot on air or sea transport is becoming onerous, just as the export season takes off.
Dieter Adam, of the Manufacturers and Exporters Association said his members were having a hard time getting products in or out of the country.
”It works both ways. A lack of raw materials coming in and able to ship products out and it’s getting worse all the time.”
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International flights out of New Zealand have dropped from about 600 a week to about 120, nearly halving air freight volumes.
That has hurt exporters of time-sensitive perishables. Strawberry Growers New Zealand executive manager Michael Ahearn said growers were ”right in the teeth” of the harvest.
But the hurdles they were facing meant many growers were resigned to lower returns this year – although local consumers would benefit from cheap strawberries.
Mainfreight has reported that Covid and slow ports have delayed its deliveries.
”The bottom line is we, the horticultural sectors that have a need for air freight, we are all facing a significant increase in air freight costs and that’s because quite simply there’s less capacity, and what capacity is available isn’t going as frequently.”
”We are predominantly a domestically focussed industry anyway and export is a kind of pressure valve, particularly in years like this year where we’ve got good growing conditions and the crop is quite big.”
Plastics NZ said delays in getting plastics into the country could well have a knock on effect for industries that relied on them.
”Plastics is used in pretty much every industry. Anywhere where you have a raw material in a supply chain [being delayed] … you’re going to be seeing delays in the production of that primary product” chief executive Rachel Barker said.
MITRE 10/Stuff
Rising freight costs are beginning to filter into the stores, with Mitre 10 announcing some price increases.
She said the rising costs of freight could well be passed on to consumers ”although ”in most cases, everyone in the supply chain is having the same issue so people are being reasonable”.
”Overall we’d like to see Government facilitate some solutions in that space.”
Some retailers are already signalling price hikes. Mitre 10 hardware chain has told its trade customers in a note last week that its supply chain was being tested across a range of categories.
As a result, rising freight costs meant prices for many of its timber and related products would increase by between 5 and 8 per cent in February next year.
The Ministry of Transport is leading a multi-agency group to keep tabs on the congestion. Supply chain manager Harriet Shelton said that the group was keeping a close eye on how the market was responding to the congestion issues.
“As we enter the usual peak season import/export season and contend with Covid-19 related surges in local and international sea freight demand and increased costs, we are working hard to ensure there are no regulatory hurdles affecting the supply chain.”
Major exporters received a warning in early November that they might have to wait some time for the supply chain to get back to normal.
Hannah Peters/Getty Images
Key staff shortages and automation issues have hampered Ports of Auckland’s ability to deal with a huge surge in demand, as well as having to observe social distancing at times.
The New Zealand Council of Cargo Owners, which serves exporters like Fonterra, Zespri and major meat companies, told members that ”cascading congestion issues” would take some time to clear, just as meat and dairy exports rose to a seasonal peak.
One major factor had been a port strike in Australia, which saw vessels scrambling to meet dates, and missing ”numerous” port visits as they tried to make up time.
While that problem was slowly improving, a series of issues at Ports of Auckland had also been at play.
Port spokesman Matt Ball said only half of a major automation project at the port, which was meant to go live in March, had been able to be turned on due to Covid restrictions.
Another major difficulty was getting the right staff to man all of the port’s eight cranes had compounded the problem.
Congestion has become so bad that some shipping lines have introduced a surcharge on cargo destined for Ports of Auckland, on top of shipping rates which sometimes several times higher than usual.
Shipping line MSC Mediterrean says delays and wait times for vessels to berth in Auckland of 10 to 13 days are being reported. It has added a US$300 per TEU (20-foot unit) surcharge for exports to certain countries.
The Council of Cargo Owners said the supply chain was clearly ”in a difficult position” as post-Covid volumes met peak dairy and meat export season.
”At this point there is no easy fix,” the council said. ”All New Zealand exporters and importers will need to provide robust forecasts to their shipping lines and lock in contracts and bookings as early as possible to protect their volumes.”
Some relief work is on the way. This week Kiwirail announced it was putting four extra freight trains from Port of Tauranga to Auckland’s Metroport to help ease delays.
And DHL Express has added capacity for an extra 19 tonnes of air freight a week in the form of a new five-day a week service, linking Christchurch, Auckland and Melbourne.
DHL Express country manager Mark Foy said a boom in e-commerce as well as the severe drop in commercial flights had sparked strong demand for air freight.
However, the express service had always been at the top end of the market and because it had its own planes and did not rely on commercial aircraft, it had not been subject to the same price pressures.
‘’We’ve put in an emergency situation surcharge to cover the additional charters we have put on. We certainly haven’t seen significant fluctuations in our daily rates.’’
The Ministry of Transport is also working to help New Zealand-based specialist port workers to get their work visas promptly to fill the staff shortages at Ports of Auckland.
In September the Government extended the International Air Freight Capacity (IAFC) Scheme, a temporary scheme introduced in March to support carriers keeping essential imports and exports moving. The scheme has been extended to March next year.
